LAKE BUENA VISTA, Fla.–Among the business goals that might fall under the environmental, social and governance umbrella, diversity, equity and inclusion now isn’t seen as just a goal but a tool to recruit workers in a tight labor market.
That was the message delivered by Abe Eshkenazi, the CEO at the Association for Supply Chain Management. He joined in a presentation on diversity, equity and inclusion and its role in the supply chain workspace at a session held as part of the Gartner Supply Chain Symposium.
Also making the presentation was Dana Stiffler, a distinguished vice president and analyst at Gartner.
Eshkenazi said many supply chain leaders in the past had not been actively pushing an agenda to add diversity, equity and inclusion to their workforces. What changed that was the pandemic, which he called the “trigger” to different behavior.
“When you’re really struggling to retain and hire talent, you have to ask, ‘Do people even want to work for us?’” Eshkenazi said. Many supply chain leaders are “waking up” to the fact that Gen Z — generally defined as people born between 1997 to 2012 — is looking at the inclusion principles in a company before signing on.
“Gen Z is keeping a lot of executives up at night,” Eshkenazi said. “It is not that people don’t want to work. They want to work differently.” He added that 80% of supply chain jobs were retained during the pandemic; both Eshkenazi and Stiffler expressed the view that given the chaos in the supply chain, that number was relatively strong.
That supply chain executives have increased their focus on diversity, equity and inclusion was evident in statistics reviewed by Stiffler from a Gartner annual survey.
In the 2021 survey, 59% of supply chain organizations said they “considered” gender in building their workforce. In 2022, it was 76%. Similar differences were seen in ethnicity and race (62% vs. 75%), age (37% vs. 51%), and nationality (29% vs. 44%). The only area that dropped? “None of the above,” down to 11% from 21%.
But Stiffler also discussed what she called the “say/do gap,” where a company says it is focused on these principles but doesn’t actually do anything about implementing them.
For example, she said the survey showed that of the respondents, only 62% have specific diversity, equity and inclusion goals, and only 40% have initiatives aimed at actually reaching them.
And if you’re a smaller company, you’re less likely to have what Stiffler’s slide presentation described as “formal targets.” Of the companies surveyed, 44% of supply chain organizations in global companies with more than $5 billion in revenue had formal DEI targets. But that number dropped to 25% for large companies with $1 billion to $5 billion in revenue, 31% for the medium segment, which takes in not just the companies up to $5 billion but also down to $100 million, and to just 10% of companies that had less than $100 million in revenue.
Beyond considering just at how a company’s workforce looks at the present, Stiffler made the case that getting diversity in supply chain jobs now is paying off in the future in creating a more diverse management layer.
Data on the percentage of people of color showed that the global companies had a higher percentage of executives in that category than the smaller operations. On the vice president level, larger companies had 14% of those positions filled with people of color. The smaller companies, with less than $100 million in revenue, had that percentage at 8%. For managers and supervisors, the gap was 25% to 16%, and similar gaps existed in other categories.
Translating a diverse workforce into a more diverse management structure is more challenging in what what Stiffler said is an industry that has “rarely one entry or exit point.” She noted that somebody who wanted to be CFO of a company could have a reasonable plan to reach that goal. But if the plan is to be chief supply chain officer, “every industry has a different track.”
Across all company sizes, 30% to 35% of employees in supply chain organizations are people of color, according to the survey.
However, ultimately, what survey respondents said were the best results of diversity, equity and inclusion initiatives were not just numbers but outcomes.
For example, 51% of survey respondents said that “inclusive leadership” led to a work culture that “equipped leaders to think/act more inclusively.” That could be seen as a race-neutral outcome, but it was the top response, as opposed to the 31% who said the diversity, equity and inclusion initiatives led to “improved recruitment of people of color” and 28% who said a key outcome from those initiatives was a “restructured talent process to mitigate bias.”
And the one answer that would seem to be closest to pursuing these goals simply for the sake of pursuing them — diversity, equity and inclusion metrics included in management scorecards — got mentioned by just 26% of respondents. (Multiple answers could be submitted, so the total exceeded 100%.)
The survey also compared outcomes at private vs. public companies. Data was presented that shows the average supply chain salary for a person of color is $98,000 at a public company. At a private company, it’s $78,000.
That gap narrows significantly when the issue is gender rather than race. The median supply chain salary at a public company for a male is $90,000. For a woman, it is $85,000.
The survey also showed that 59% of supply chain organizations responding to Gartner have no plan on how to implement their stated gender pay equity objective.
Yet the narrowing of the gap is continuing. Eshkenazi said one of the reasons is that for the second year in a row, the survey revealed that women under 40 are making more than their male counterparts, though specific data was not presented.
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