The competitive advantages of DE&I

Features - Workplace Diversity & Inclusion

Research shows that workplace diversity, equity and inclusion initiatives can benefit a company’s bottom line and provide advantages in the hiring process.

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September 24, 2021

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Some publicly traded companies in the metals and recycling sectors have embraced workplace diversity, equity and inclusion (DE&I) initiatives, noting the benefits to decision-making as one possible outcome as well as improved financial performance. Schnitzer Steel Industries Inc. and Sims are among them.

Australia-based Sims Ltd., in a June blog post, writes that it is working to increase the number of women it employs from 21 percent to 25 percent. “A diverse team improves the quality of decision-making,” the company writes in part, adding that it also benefits customer insight and innovation.

Sims also points to the higher profitability that companies with ethnically and gender-diverse workforces have, and research from McKinsey bares this out.

The London-based consultancy found that diverse boards perform better than those that feature less diversity among their members. In a 2019 analysis, McKinsey found that companies in the top quartile for gender diversity on executive teams were 25 percent more likely to have above-average profitability than those in the fourth quartile. This represents an increase from 21 percent in 2017 and 15 percent in 2014.

McKinsey also found that companies with less diversity were “penalized,” according to the consultancy. Those companies ranking in the fourth quartile for gender diversity on executive teams were 19 percent more likely than companies in the other three quartiles to underperform on profitability—up from 15 percent in 2017 and 9 percent in 2015. Companies that ranked in the fourth quartile for gender and ethnic diversity were 27 percent more likely to underperform on profitability than all other companies in McKinsey’s dataset in 2019.

A business imperative

“At Schnitzer Steel, diversity, equity and inclusion are strategic business imperatives that are integral to all aspects of our business, including our engagement with customers, suppliers and the communities where we operate,” says Stef Murray, chief diversity and inclusion officer and vice president of human resources. She works out of Atlanta for Schnitzer, which is headquartered in Portland, Oregon.

“The business case for diversity, equity and inclusion is clear,” she says. “Companies that prioritize diversity, equity and inclusion enjoy higher profitability, greater innovation, increased sales and better retention.”

Additionally, Schnitzer recognizes that prioritizing DE&I will help the company better reflect the demographics of the communities where it operates, Murray says.

To develop the program, Murray says she engaged with experts across multiple industries and disciplines before preparing a formal program proposal to the senior leadership team. “We also hired an external consultant to conduct a workforce analysis to gain insight into our current standing, including organizational expectations around the impact of a formalized DEI program.”

Murray says Schnitzer’s DE&I strategy harmonizes with its broader talent management strategy, allowing it to attract, develop and retain the best talent.

Creating an inclusive environment

Schnitzer’s inclusivity strategy starts with an understanding of its workforce and an effort to accommodate employees’ varying needs, she says. This led the company to launch Employee Resource Groups, or ERGs, which are “voluntary, employee-led groups designed to celebrate diversity and foster an inclusive workplace aligned with Schnitzer’s mission, core values and goals,” Murray says.

“The first group to launch was a veteran’s ERG, a group that supports our effort to create a rewarding place to work for veterans, who make up roughly 6 percent of our workforce,” she says.

Murray says that during Pride Month in 2019, Schnitzer launched its Pride (LGBTQ+, or lesbian, gay, bisexual, transgender, queer and other sexual identities) ERG. “Since inception, the group has organized virtual meetings, social events and started a confidential hotline for employees who may have questions about the LGBTQ+ community at Schnitzer, need workplace support or would like to get involved with ERG activities,” she adds.

In 2020 and 2021, the company also launched ERGs for Black, Hispanic and women employees as well as BUILD (Building Up Individuals’ Lives Daily), which Murray says is a group dedicated to volunteerism and community engagement.

Avoiding bias

Implicit or unconscious bias describes attitudes or associated stereotypes a person might have with another person or group of people without conscious knowledge. It can take the form of racism, ageism or sexism and can affect the hiring and promotion process.

Murray says process-oriented strategies can help companies address implicit bias in talent management. “For example, at Schnitzer we require all interview panels for leadership positions to have at least one female employee, and all candidate slates to include at least one female,” she says. “Other strategies require internal training and focus more on behavior change, which can be harder to measure and manage.”

Murray continues, “At the end of the day, addressing implicit bias needs to focus on creating talent management environments that are more inclusive for women, people of different ethnicities, people of color, people from the LGBTQ+ community and all other backgrounds.”

Rather than trying to imitate leading DE&I programs, she suggests meeting the culture where it is. “Keep in mind that DEI is a journey, not a destination. The field is forever changing and evolving along with society, and change management strategies are required to sustain DE&I programs within an organization.

“It’s also critically important to conduct a workforce analysis to assess the company’s current performance and future opportunities,” Murray adds. “This analysis will help guide the goal setting process, including targets and changes to existing practices.

“Finally, I would suggest that companies secure commitment from the executive leadership team, communicating at this level early and often,” she says. “Without proper attention and buy-in, DEI programs may not gain the traction needed to achieve and maintain success.”

For small companies overwhelmed at the thought of making DE&I a more prominent part of their human resources strategy, Murray offers some advice. “Be patient and strategic. Develop a plan and break it down into manageable tasks. Start with a DEI Steering Committee to involve of a cross section of the organization. Make the business case for DEI and leverage existing research around DEI programs and their positive impact on organizational performance. Remember that in today’s market, companies with robust DEI programs have a clear competitive advantage in the hiring process.”

The author is editor of Recycling Today and can be contacted at dtoto@gie.net.

Below are interviews with women and minorities in the recycling industry. These individuals share their experiences and thoughts on how far the industry has come with diversity, equity and inclusion.