Utilities represent one of the least diverse industries in the U.S. today, being 85% white and 80% male, according to a 2020 U.S. Bureau of Labor Statistics survey. The clarion call from policymakers, shareholders, and communities for significant social change has driven many U.S. utilities to create diversity, equity, and inclusion (DEI) goals in response. Enabling some of this social change is the industry’s transition to becoming more digitized and distributed, which will require significant recruiting and hiring in the coming years. Additionally, utilities generally have an aging workforce that may create natural attrition and opportunities for increased diversity.
This path toward a diverse and inclusive industry will be difficult. In our work with many utilities, we have identified five major challenges that may slow or prevent companies from meeting their DEI goals, and techniques to overcome them.
Utility DEI Progress
While many utilities have taken meaningful steps toward becoming more diverse, equitable, and inclusive, some are at the early stages. The first step to garner consensus within the organization is to establish that a DEI strategy is inherently valuable. However, determining priorities can be a difficult and lengthy process. Some have created diversity offices, developed strategies, and begun executing on programs and initiatives to move their organizations toward their goals. Regardless of the stage of development, it’s important to recognize that goal setting and implementation is a continual, iterative process without a true “endpoint.” The most effective programs use their data to determine where to adjust to maximize the efficiency of their efforts.
Improving the racial, ethnic, and gender composition of an industry—or a company within that industry—cannot change overnight. How quickly transitions occur depend on dynamic changes in a company’s workforce through natural attrition and growth opportunities. This can be highly influenced by the number of qualified diverse applicants. Understanding and tracking current and historical employment decisions will help utilities identify “blind spots” and reveal opportunities to become more diverse organizations.
For Millennials and Gen Z workers, an organization’s culture can be as important as compensation. Having a transparent DEI strategy can be one way to signal the organization’s values. In addition, with STEM-related skills (science, technology, engineering, and math) growing increasingly relevant for the energy sector, community-based outreach also helps engage youth from an early age, igniting interest in the field long-term. Here are five questions to help utilities drive an effective DEI strategy.
- What dynamics are shaping the diversity of your workforce?
Companies often compare a current snapshot of their organization to competitors or an external industry benchmark to assess progress. These point-in-time comparisons provide a naïve view of an organization and offer little insight into the long-term employment patterns or future diversity opportunity. A company’s workforce at any point in time is the cumulation of past direct employment activities, including recruiting, hiring, promotion, and termination. Indirect employment processes such as compensation, training, succession planning, and performance management have a considerable impact. Assessing the flow of people to, from, and within your organization will identify trends over time to help identify opportunities to become more diverse.
- Have you leveraged your data to optimize talent acquisition strategy?
All aspects of the employment cycle—recruiting, hiring, promotion, termination—can introduce barriers to diversity, equity, and inclusion. To effectively create change in the organization, assessing how each of these elements affect your workforce is key. Understanding where your higher-performing, longer-retained, and most-diverse candidates are sourced can help optimize talent acquisition strategy.
For example, when examining recruiting practices, you should consider:
- Where are we recruiting candidates?
- How does our outreach to universities, geographies, employment agencies, and online job postings impact the talent we draw?
- Are employee referrals hindering growth of diverse groups?
- When filling senior positions, do we promote from within or prefer lateral hires?
- Are the preferred qualifications discouraging diverse applicants who may be qualified?
- At what stage of the selection process are diverse candidates disproportionately falling out?
- Are there barriers to upward progression?
Similar consideration should be given to each stage of the employment lifecycle. Employers on the cutting edge develop data-driven insights from historical lines of progression within their organization. Modeling how individuals progress through the organization to build internal benchmarks to measure against actual promotions allows leaders to identify where barriers of upward progression need to be addressed. If your diverse talent faces barriers to upward progression, this may create retention issues for top talent and create higher turnover amongst your diverse groups.
- Are you losing key talent?
Not all turnover is equal. Employers are keen to keep their top performers as well as employees in hard-to-fill positions. Looking at attrition rates by voluntary and involuntary leavers can be particularly informative. An employer might find the diverse population is voluntarily leaving at a higher rate than the non-diverse population, suggesting cultural issues. Exit interviews can be used to see if there is a pattern that indicates why a diverse group might be leaving at a higher rate. Or, the utility could more directly measure cultural issues that may affect inclusion or belonging. Employee engagement surveys, small group listening sessions, or “stay interviews” can be used to capture more qualitative insights and transform them into quantitative data points that allow the employee’s view to be understood by leaders.
One such insight may be gender-based unconscious bias. In this case, manager coaching and mentorship programs might help address these challenging workplace dynamics. Follow-up listening sessions with managers and employees of both genders could help to better understand stigmas or underlying issues that need to be addressed by leadership.
- Do you use metrics to create accountability within your organization?
Monitoring your progress at different organizational, functional, vertical, and geographic levels against internal, external, and attrition benchmarks enables leaders to set focused action plans that maximize the utility’s return on investment. Metrics tied to the organizational structure hold leaders accountable. Issues may differ by function, geography, and line of business, but ultimately you want to leverage data in ways to help set focused action plans.
The frequency of when to evaluate outcomes will vary by organization, but at a minimum, we recommend an annual review, with management reporting on their plans for the upcoming year. A quarterly review period allows for more timely insights, but smaller organizations may not have enough personnel transactions to make use of this frequency. Review periods that are shorter than quarterly may lead to inappropriate response and be less helpful.
Cutting edge DEI programs are using data to drive strategy. There is an opportunity for utilities to leverage the data they have readily available. Creating appropriate benchmarks involves careful consideration of data integrity and analytic design that reflects the business’s employment practices while also incorporating aspirational changes to those processes. The effectiveness of tracking diversity efforts demands accurate data and sound methodology. This will help facilitate leader buy-in and demand accountability. Tailored benchmarks allow you to create appropriate goals and achieve support from all management levels, which are key to promoting and maintaining diversity efforts.
It’s an old cliché, but what gets measured gets done. Using data to guide strategy, the utility industry is well-positioned for diverse growth over the next decade.
—This article was a collaborative effort by Matthew Thompson, Jim McMahon, and Quenton Wright from Charles River Associates.