Taking into account the number of discouraged and/or demotivated workers, or the extent of the decline in labor force participation, some economists put the “real unemployment rate” at around 22%. In a new report, Allen Austin examines the value of DEI in helping to mitigate the effects of today’s labor shortage.
May 6, 2022 – Employers are facing a labor shortage like we never imagined. Today, unemployment is reported at 3.6%, the lowest since rising to 14.7% in the early days of the pandemic. While that number may sound good, this statistic is hugely misleading, says Allen Austin’s Rob Andrews in a new report on the subject. Some economists suggest that the “true unemployment rate” is actually closer to 22%. The most reported unemployment rate (U-3) does not take into account the number of discouraged and/or demotivated workers, nor the extent of the decline in labor market participation (LFP).
U-3 measures the percentage of American workers over the age of 16 looking for work but unemployed. It does not recognize workers who have given up, quit or are stuck in part-time jobs while looking for full-time work. Mr Andrews points to a more precise statistic, U6, which considers those out of work and those stuck in part-time jobs or who are not motivated enough to keep looking. Today, U6 is estimated at 8.1%, but even that doesn’t paint a clear enough picture. The American LFP has seen the biggest 12-month decline since 1948 and, according to the Pew Research Center, more than 4.2 million people have left the workforce.
“The reasons for our current workforce situation are beyond the scope of this post, but suffice it to say that many organizations are in deep trouble,” Andrews said. According to the US Bureau of Labor Statistics, there are 5.9 million job openings and employers seem unable to fill critical positions. In Allen Austin’s research, employers with strong employment brands are in much better shape than most and aren’t forced to increase compensation just to retain employees. “Beyond compensation, there are three important boxes that business leaders are trying to check right now to mitigate the effects of our current labor shortage and what some are calling ‘the great resignation. ‘” Mr. Andrews said. “Those three elements are: leading with purpose, stakeholder engagement and diversity, equity and inclusion. Today we focus on the latter.
Defining diversity in 2022
So how do we define diversity in 2022? For decades, Allen Austin has told organizations that employ diverse leadership teams to perform better and retain talent better. But what does diversity really mean? Diversity of course includes gender and race. “It also means diversity of thought, generation, culture, wiring, nationality, political orientation, communication style, and more,” Andrews said. “Building a truly diverse and inclusive business is far more complex and challenging than most realize, and it affects every sector on the planet: public, private, nonprofit, academic, private equity and venture capital. – the works.”
Houston-based Rob Andrews is founder and CEO of Allen Austin, a leadership consulting and executive search firm. He leads Allen Austin’s Global CEO, Consumer Packaged Goods and Durables practice, and is also a member of the firm’s Leadership Consulting, Private Equity, Industry and Marketing practices. Drawing on his previous work experience as COO of major convenience and supermarket chains, Mr. Andrews searches for board members, CEOs and senior executives across a wide range of industries. .
If you could build a truly diverse leadership team and workforce overnight, Andrews says you’d still have a lot of work to do. “Diversity is not synonymous with inclusion,” he said. “Like any other corporate endeavor, the first step in a corporate transformation towards diversity and inclusion begins with a transformation of the board, CEO and leadership team.” Mr Andrews says if it doesn’t start there, by maintaining support from the top, you are just “whistling Dixie”. He says that achieving your diversity goals will require:
- Aligning the Board, CEO and Executive Team in a commitment to a journey that never ends.
- Write a statement that details what diversity means to your organization.
- Commit to countering the unconscious biases that exist in even the most evolved leaders.
- Carefully design and provide tools to recognize and counter unconscious bias.
- Be aware of training programs that make people defensive because they appear to be remedial rather than developmental programs.
- Ensure alignment of your leadership teams from the boardroom to the front lines.
- Ensure disciplined hiring practices focused on shaping the culture you aspire to.
- Operate with a clear objective that engages all stakeholder groups.
- Develop qualitative measures to monitor the state of your cultural health.
- Celebrate and appreciate employees for their unique characteristics and perspectives.
“This isn’t an exhaustive list, but it should give you a good idea of the journey we’re all on,” Andrews said. “Beyond hiring exceptional and diverse talent, there is a need to fully engage your workforce. Attracting and motivating diverse workers will be key to building the business of the future; and the old worn-out definition of diversity no longer applies. In the early 1990s, when we talked about diversity, it was all about gender, race and affirmative action. Today, it’s about total diversity: gender, race , ethnicity, geography, generation, sexual orientation, wiring, and more.”
Millennials, for example, (also known as Millennials) are the demographic cohort following Generation X and represent the largest generation in history. There are no specific dates for the start or end of this cohort; demographers and researchers generally use the early 1980s as initial birth years and the mid-1990s to early 2000s as final birth years.
Mr Andrews points to Jason Dorsey, who has built a hugely successful consultancy practice focused on helping people understand, motivate, manage, sell, communicate with and otherwise deal with multiple generations, says those who get the generational nuances will win , and those that will not. Dr. Dorsey’s research facility, called the Center for Generational Kinetics, has determined that we will be dealing with seven different generations in the coming years. These generations, he says, are no longer determined by birth years, but by context and behaviors.
Related: Leadership Development Pays Off in Times of Crisis
Mr. Dorsey and his team have identified several important trends. The first is directly related to diversity: our emerging generation (Gen I) is the most diverse in history. The implication is that all Gen I notices about diversity is its absence. “This generation won’t remember a time when we didn’t have an African American president, gay marriage or Facetime,” Mr Andrews said. “They won’t remember a time when their school didn’t look like the United Nations. For decades, diversity has been a good business idea and a good strategy. To move forward, it is a necessity.
The second trend in Dorsey’s research is technology, but in a very different way than most of us think. Millennials, contrary to popular belief, are not necessarily tech-savvy; they depend on technology. America’s millennials number around 80 million, the largest in history. These are the people who are going to be in charge if they aren’t already. The emerging generation is changing the way older generations operate, and that is inevitable. Mr Dorsey says failing to understand this will bankrupt many businesses. He says smart leaders will completely change the dialogue. They will no longer worry about differences between generations, gender or ethnicity, but will begin to celebrate and harness the power of the totality of diversity.
“We are seeing a sea change in what it will take to serve on the board and lead the organizations of the future,” Andrews said. “No longer can any leader be the catalyst for the success of the entire organization. Leadership today involves shifting the focus from individual excellence to creating a culture of high-performing teams and collaborative success. In this article, at least five very different perspectives on diversity are presented.
“The best teams, whether they focus on board-related activities, investment strategy or operational tactics, are carefully designed to leverage the greatest diversity possible while being united with purpose and common vision and maintaining consistent values,” said Andrews. “A difficult balance exercise for sure.”
To read the full whitepaper, click here.
Related: Transforming Company Culture and Driving Performance in the New Workplace
Contributed by Scott A. Scanlon, Editor; Dale M. Zupsansky, editor; and Stephen Sawicki, Editor – Hunt Scanlon Media