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Scoring Minnesota companies on DEI initiatives. Do policies match pledges?

Ethan Nelson

Dec 1, 2022

Changing the Landscape

2020 was the year of the statement, Anne Phibbs says. The Minneapolis-based diversity and inclusion expert, who's held various roles in the DEI space since the 1990s, said that was a good start, but only that: a start.

That's partly why the Business Journal started producing its three lists to track employer diversity last year, wherein Minnesota organizations are ranked by the percentage of their workforces that don't identify as white. After Minneapolis police killed George Floyd at 38th and Chicago in 2020, Minnesota companies large and small drafted statements acknowledging the need for diversity in hiring and inclusion in the workplace. We wanted to see which companies that had publicly committed to diversifying their ranks had actually taken steps to do so.

For this report, the Business Journal surveyed more than a thousand Minnesota-based organizations, including public and private companies, as well as its largest nonprofits and government entities. The survey asked for information on the number of people of color who work at each organization, serve in C-suite positions, sit on the board of directors, and have ownership in the company. The Business Journal calculated the percentage of people of color in each of those roles and ranked them on three lists representing small, medium and large companies (scroll down to see all of them).

In the second year the lists have been produced, progress is happening, but for some employers more than others. Companies that responded to the survey or otherwise made this information available in annual filings reported on average that their workforces were 32% nonwhite, up from 29% last year. Worth noting is the fact that these lists are made up of organizations that chose to submit their information, so the average racial makeup for all companies in Minnesota is likely more white than this sample.

Of the 73 organizations that responded to the survey or whose information was publicly available (one more than last year's count), more than half reported that their workforces are made up of at least 23% people of color, which makes them more diverse than the state of Minnesota. About one in five companies said their C-suite is at least 23% nonwhite. A little less than half of those organizations that reported information on boards of directors said their boards were at least 23% nonwhite.

"After George Floyd, a lot of clients approached diversity like a project without a long-term plan," said Phibbs, who founded consulting firm Strategic Diversity Initiatives in 2017. "A lot of people released statements, formed a committee or two, and that went on for six or so months."

After that, because of labor shortages, "a lot of companies started saying, 'We can't hire anyone, period,' " she said. They weren’t intentional about DEI practices in hiring.

The initial urgency companies exhibited in 2020 isn't being shown anymore, but still, overall interest in improving DEI practices has never been higher, she said. However, to achieve any further progress, much more than a statement is needed.

"That statement is very much the easy part," she said. "The hard work is saying, 'We're going to keep doing this.' "

Dream candidates

For companies that are actively trying to change how they approach diversity in hiring, rethinking what kind of candidate is the best fit for a given role might be helpful in expanding the candidate pool to include more diversity.

Minnesota for months has had one of the lowest unemployment rates in the country, and employers in many cases are looking to fill roles quickly. That sometimes leads to hiring managers being too strict with their requirements because they're uninterested or unable to train potential employees that lack certain skills or experience, narrowing the candidate pool.

On the other hand, reassessing hiring requirements, like dropping a four-year degree, could have the opposite effect, and lead to more diversity among lists of potential candidates. Seventy-six percent of the state's Black population over 25 don't have college degrees, according to figures from the U.S. Census Bureau. Among the white population, 59% don't have four-year degrees.

"Companies seem to be still fairly stringent about the exact profile or background that they need," said Adam Hoffarber, managing partner of Minnetonka-based SkyWater Search Partners, which conducts searches for executives. "Like, 'I need X candidate, I want them to have five years of experience working on X, Y and Z, right now.' They don't have the ability to train. They are way too short-sighted."

Employers in recent months have increasingly removed barriers like requirements that candidates have a college degree. An early 2022 study by Harvard Business School that analyzed job postings over the course of a few years predicted that the nation will open up 1.4 million jobs to candidates without degrees in the next five years. Much of the reset on degree requirements has come from adjustments in the sales and finance sectors, the report said.

"Unfortunately, for those organizations that are not really taking this seriously, over the long term, they're gonna lose that top talent that they really want to have in their organization," said Cecilia Stanton Adams, CEO of the Minneapolis-based Stanton Adams Diversity Institute, a consulting firm that helps train people in DEI.

However, advocates and state officials say companies are still leaving talent on the table, partly by continuing to look for employees in the same places they have for years.

Minnesota has for months had one of the country's tightest labor markets, with more than three open jobs for every job seeker as of the latest count. The state's Department of Employment and Economic Development has been pushing employers to look at newly arrived immigrants, recent retirees, formerly incarcerated people, and other groups as potential sources of talent.

"It really isn't about lowering the bar," said Stanton Adams. It's about thinking differently about talent. We have talent that we have available to us. I think that if we can kind of turn our thinking or mindset a little bit and start to see that we're surrounded by so many great resources and untapped talent pools, then we're going to see a lot more engagement, and people are going to stick and stay at organizations a lot longer."

Employers also should keep in mind that hiring is more than just offering a candidate a job. Once a candidate is hired, companies have to make sure they have practices in place to make sure new hires feel included and want to stay on staff.

"Even if we can find really strong, qualified, diverse candidates, some of the times, unfortunately from the client's perspective, those candidates may not be interested," Hoffarber said.

Nonwhite candidates sometimes think, " 'Am I just going to be the token diversifier? Do they actually believe in this? Is this a long-term strategy for these guys?' Because I think what they're really trying to figure out is if these folks and these companies are walking the walk," he said. "And sometimes we lose candidates in that process."

First steps

For companies looking to start improving their DEI practices, there's no single correct way. Here are a few things to consider:

  • It might help to start with a third-party audit of your situation. Take stock of who works for you

  • Make sure that when forming a strategic plan for diversifying your workforce, you include every piece of your company structure, from entry-level employees to your C-suite.

  • If you're forming a diversity committee, consider not including your top executive in the group. "You want [the committee] to advise your senior leadership team," Phibbs said.

  • You don't need to do everything at once. That can be overwhelming, especially to companies who don't already have the human resources infrastructure in place to make big changes to hiring processes.

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