The lack of a diverse workforce in commercial real estate is a critical issue facing the industry.
In 2017, the Bella Research Group and the Knight Foundation conducted research showing that white men held more than 75% of C-suite jobs in the U.S. commercial real estate industry, while Black men held just 1.3% of those positions. White women were in 14.1% of senior executive-level jobs, while women in minority groups held fewer than 1%.
Bernadette Smith, CEO of the Chicago-based Equality Institute, led a session at NAIOP’s 2021 Chapter Leadership and Legislative Retreat that provided strategies to help real estate companies address this longstanding issue, which has taken on greater urgency amid the country’s rapidly changing demographics.
According to Smith, diversity and inclusion efforts often suffer due to a basic human tendency to make unfounded assumptions about other people.
“The subconscious part of our brain categorizes people into little boxes,” she said. “These boxes are essentially stereotypes. To ‘unassume’ these assumptions, we have to slow our brain down. We have to pause and be thoughtful.”
Smith said some assumptions are harmless, but many are not.
“Some assumptions prevent us from seeing the full picture,” she said. “They prevent us from seeing someone’s unique gifts and what others might offer an organization. When we don’t take the time to be deliberate about including others, we actually end up excluding others, because inclusion requires intention.”
Smith said the same concept can be applied to the networks that help real estate professionals advance their careers.
“The reality is if your network looks like you, you are inadvertently communicating that you’re unavailable to people unlike you,” she said. “You’re sending a signal without even realizing it. In companies, we tend to offer opportunities to further our career goals to people like us.”
To bolster that point, Smith cited research from the Women in the Workplace 2018 study by Leanin.org and McKinsey. It revealed that talent pools at U.S. corporations are fairly diverse for entry-level positions, but much less so at the C-suite level.
“As people get promoted, there is a much higher percentage of white men in leadership roles,” she said. “The leadership provides opportunities to people who look like them. It perpetuates on and on and on. We have this really subconscious way of being with people who are just like us because it’s comfortable and familiar.”
How can organizations be more diverse? Smith said systems must be changed, and everyone on the team must be dedicated to changing.
One way companies can do that is to stop using résumés to find job candidates. She cited the example of the financial services firm Capital Group, which was concerned that its pool of interns mostly came from the same cultural backgrounds. After getting rid of résumés, the next class of interns was 50% female and 58% nonwhite.
Smith said another way to find diverse candidates is to take extra efforts to reach out to underrepresented groups such as veterans, those on the autism spectrum, people of color and LGBTQ individuals.
“Change the system of how you hire and how you make decisions,” she said. “It might mean stripping gender or information that might influence decisions such as what college they went to out of résumés. If you remove those things from résumés, it actually reduces bias..
According to Smith, IBM now requires degrees in only 43% of its open positions. Google has also done away with college requirements and offers a six-month program online that the company treats as the equivalent of a four-year degree.
Additionally, Smith said remote-first jobs will often attract a more diverse talent pool.
“If your company is in a city like San Francisco, not a lot of diverse talent can afford to live in the Bay Area,” she said. “We’ve proven the past year during the pandemic that remote work works, and offering remote-first as an option for employees can help a lot.”
The payoff to hiring more diverse personnel can be remarkable for both staffing and the bottom line. Smith said multinational consumer goods company Unilever recently achieved gender balance in its management team of 14,000 people. And a 2015 High Impact Talent Management Survey found that companies with inclusive teams have 2.3 times higher cash flow per employee over a three-year period.
“It doesn’t happen by accident,” Smith said. “It takes setting goals, making everyone on the team accountable for those goals, and making sure that all your directors, managers and employees specifically have diversity and inclusion accountability in their performance metrics.
Smith’s Equality Institute teaches organizations to use the ARC method to gain clarity in any situation.
ARC stands for Ask, Respect, Connect. According to a post on the Equality Institute's website, ARC can be used in everything from “organizational strategic planning, 1:1 meetings with employees, and even difficult conversations.”
Smith presented some questions that can challenge the status quo for hiring in an organization:
Smith said these questions could be asked at companywide listening sessions.
Next, it’s important for managers to respect the data and answers they gather.
“Actively listen to those answers,” Smith said. “Don’t dismiss them. Respect that this is a process.”
Finally, it’s important to connect the answers to solutions that have accountability for the organization’s leaders. But connection doesn’t stop there, Smith said.
“You have to connect your employees to each other, so that they can continue to have these conversations,” she said. “You want your employees to feel like their voices matter, that they can feel safe at your organizations. Don’t ask those questions and leave them hanging. This really requires some in-depth analysis to figure out what’s happening right now to know where to go.”
Smith said companies must prepare for the arrival of Generation Z into the workforce. This is the population cohort born between the mid-to-late 1990s and the early 2010s. According to the Census Bureau, Gen Z represents 19.9% of the U.S. population.
“They are the youngest generation in the workforce, and they are incredibly diverse,” Smith said.
According to Pew, 52% of Generation Z is non-Hispanic white. (By comparison, 61% of Millennials were non-Hispanic white in 2002.) A quarter of Gen Zers are Hispanic, 14% are Black, 6% are Asian, and 5% are some other race or two or more races.
“These young people are your future,” Smith said. “What they are expecting is a commitment to antiracism and a commitment to equity. They value diversity and inclusion. They want to feel like their input is valued. You’ve got to do the work of analyzing where you are to know where you will go. You’ve got to have specific, clear goals, and you have to make those goals public.”
Next, Smith explored ways to let underrepresented talent know that they are valued.
She said homogeneous teams that think in similar ways are not very innovative — but neither are diverse teams where people don’t feel like their ideas are valued.
She cited the example of clothing retailer H&M, which in 2018 put an image in its online store of a Black boy wearing a hooded sweatshirt that read “coolest monkey in the jungle.” According to the New York Times, “the image was widely criticized online for its reference to a monkey, an animal that has long featured in racial and ethnic slurs.” H&M removed the image from its online catalog and pulled the sweatshirt from its product line.
So how did an image that was so offensive to so many people get approved? Smith offered some possibilities.
“Maybe there were no Black people taking part in the process,” she said. “Or maybe there were, and they felt like they couldn’t speak out. So it’s unclear if H&M’s problem was a lack of diversity or a lack of inclusion.”
According to Smith, companies should strive for teams that are psychologically safe. These are teams where the members feel that their voices matter and make a difference.
“If you have a culture of psychological safety, you’ll find that it is a much healthier workplace with a higher retention rate,” she said.
In 2012, Google began a project “to study hundreds of Google’s teams and figure out why some stumbled while others soared,” according to a 2015 article in the New York Times. After two years of research, the company found that psychological safety is the No. 1 factor for their most successful teams.
That level of comfort is not common in U.S. workplaces, however. According to the Deloitte University Leadership Center’s 2013 report “Uncovering Talent,” 61% of employees “cover” some part of themselves at work, causing them to be less productive. A 2014 Harvard Business Review article that cites the report provides examples:
“A gay person might be technically out, but not display pictures of his partner at work. A working mom might never talk about her kids, so as to appear ‘serious’ about her career. A straight white man — 45% of whom also report covering — might keep quiet about a mental health issue he’s facing.”
Smith challenged managers to share their vulnerabilities and give their teams permission to do the same.
“You’d be shocked how much it opens people up,” she said.
Trey Barrineau is the managing editor of Development magazine.
Why Allyship is Important
As part of her session at NAIOP’s 2021 Chapter Leadership and Legislative Retreat, Bernadette Smith of the Equality Institute explored the concept of allyship. While the phrase is common in activist circles, it also has applications in the workplace.
Smith said allyship is an active and consistent practice of using power and privilege to achieve equality, lift others up and give them opportunities. This can include speaking up when someone make derogatory comments in the workplace about underrepresented groups, because silence is usually interpreted as tacit agreement.
“It’s using power and privilege to lift others up, to give them opportunities,” Smith said. “Use your power and privilege to offer people assignments and opportunities. Invite people to high-profile meetings. Modern leaders speak the names of underrepresented folks when they’re not around. They make sure that they elevate those voices even when they’re not in the room.”