The Chief Diversity Officer Will Be a New Kind of Executive, If We Let Them

BY Emily McCrary-Ruiz-Esparza | October 18, 2022

Among all of corporate America’s problems with job retention, one of the most concerning is the turnover in a newly prominent role: chief diversity officer. CDOs tend to stay in their roles only two to three years, about half the tenure of other C-suite officers. For many CDOs, as well as their colleagues, this is the result of one thing: frustration.

How did a role that so many companies created with great fanfare in the racial-justice movement of 2020 become a dispiriting job for many–and what can be done to improve the situation? From Day One talked with people who’ve held the job, as well as experts in the field, to get to the sources of the problem and look toward solutions.

To start with, the scope of the job is unlike almost any other top-leadership role. “Leading our inclusive culture efforts is an honor that requires a diverse skillset and the ability to anticipate the needs of a vast array of audiences,” said Vanice Hayes, chief culture, diversity and inclusion officer for Dell Technologies. “As rewarding as the job is, it can also be taxing. At times, it can feel like you're trying to solve world peace, like you’re a teacher, a counselor, a politician, a lawyer, a historian–you name it.”

A New Kind of Career Path

As befits a job that’s freshly emerging, there’s no traditional career path that leads to the CDO position. Read the resumes of ten chief technology officers, and you will see very similar backgrounds: advanced degrees in computer science or engineering, a track record building products or designing systems, years of experience managing tech workers and operations. The resumes of chief marketing officers and chief financial officers are similarly consistent. Even new C-suite additions, like chief information security officers and chief human resources officers, have identifiable backgrounds. By contrast, leaders in diversity, equity, and inclusion (DEI) who have spoken at From Day One events have included executives who began their careers in law enforcement and the ministry.

Graduate-school programs on how-to-be-a-CDO are still relatively new, points out Rachel Marcuse, the chief operating officer at ReadySet, a DEI-focused consulting firm. “That being said, we see successful CDOs come from varied backgrounds and experiences, including finance, HR, culture, and products or services. Deep expertise in DEI is crucial and can come from a combination of professional background, education, and lived experience.”

There is little consensus on the ideal resume for a chief diversity officer, but we may not need one. Andrés Tapia, the global DEI strategist at the management-consulting firm Korn Ferry, who was himself a pioneering CDO in the early 2000s, said that when he coaches clients on what to look for in a CDO, background doesn’t matter. He looks for someone who can think strategically, integrate perspectives, communicate well, and influence powerful people in the company. “Notice how non-functionally-specific those are,” Tapia said.

Though a handful CDOs have been around for decades, the majority have been in the role only a few years. The field is developing, and the recent swell in CDO appointments is in part a reaction to the ineffectiveness of the corporate DEI programs of the last 20 years. The old way may have been wrong, but it’s not clear what the new, right way will be. Still, DEI practitioners are looking in earnest.

“Coming into the role, depending on your previous perspective, you may think ‘I got this,’ but then when you get there, you realize it is quite expansive,” said Hayes. “Your previous perspective may have been both accurate and potentially narrow or limited in scope. So the way I handle that is just through focus: How do I make sure every single person that comes to work feels like they're included? Everyone should have the right to enjoy an inclusive work culture. That’s my baseline.”

Vanice Hayes, chief of culture, diversity and inclusion officer for Dell, will be speaking at From Day One’s Austin conference on Oct. 26 (Photo courtesy of Dell)

The chief diversity officer at Indiana University Health, Lisa Gutierrez, believes that without self-awareness, CDOs will repeat the mistakes of their predecessors. One of the biggest “is to only use your lived experience. A lot of people say, ‘Well, I have a lived experience.’ And I go, ‘I do too, but in the D&I space, it’s not just my lived experience, but everybody’s.’ The practice has gone to short-handing diversity work into just a couple of things,” she said. “If I were a newer practitioner right now, I’d be looking at what didn’t work in the past, and get into the front of the line of not doing that.”

Why CDO Is a Different Kind of C-Suite Job

Newly minted CDOs, whether or not they have the right experience or expectations, are not to blame for turnover. The C-suite has yet to accept that the CDO is a different kind of executive. Unlike other executives who own a department and run a P&L, the work of a CDO doesn’t happen in a single department, and there’s seldom an elaborate financial statement.

“We don’t own much,” said Channing Martin, who is the CDO at the advertising company IPG. “You’re being held responsible for diverse talent coming in the organization, but you don’t own recruiting. You’re being held responsible for developing underrepresented talent or women being promoted, but you don’t own L&D, you don’t own talent management.”

The job, then, is influencing other executives to make DEI a long-term priority. “What works is when the leaders who run P&Ls start to own responsibility for DEI. That’s a game changer,” Martin said.

Tapia has found that in some cases, the C-suite appoints a CDO without much thought to qualifications or expectations because a figurehead, not an executive who influences global operations, is what the CEO wants. As a result, the key performance indicators for the role are simplistic: we want more people of color, we want more women leaders.

When this is the case, the CEO isn’t likely to value long-term strategy, and the work becomes programmatic. “If you’re not a strategic thinker, you’re going to become a tactical leader,” Tapia said. “The death knell of D&I is a tactical leader in charge because D&I lends itself to a lot of very fun programs, a lot of tactics,” Tapia said. “But they don’t bring about transformation.”

Executives like the sound of “unconscious bias training,” but “the nonsexy stuff is a structural and policy change that takes a long time,” said Martin. For example, designing a global system for employee self-identification. “That’s tedious and time-consuming and not fun. It requires legal insight, the risk team, the privacy team, the HR team, and the IT team to transform technology systems. Those are the things that really change an organization, but that could take a year and a half, two years.”

The programmatic CDO is also reduced to being reactionary. “You shouldn’t have to wait for somebody’s murder to be designing social-justice strategies,” Gutierrez said.

The Importance of Learning the Business

Many companies underestimate the amount of business acumen CDOs need. “Now you’ve got employment lawyers that are becoming HR leaders. You’ve got MBAs that are becoming HR leaders. As the HR function is being asked to be more of a business operation, you’ve got to have a skill set that can make that happen. And I think the same is going to be true for the diversity function,” said Janine Yancey, founder and CEO of Emtrain, a virtual HR training platform.

Chief diversity officers can be more effective by immersing themselves in their organization’s business, like those in the role of “HR business partner.” Said Gutierrez: “You have to understand the business of the business. The CDO has to fold themself into the natural rhythm of the business and find opportunities to change it.” For example, Gutierrez said that the “rhythm” of one of her previous employers was the Six Sigma framework for process improvement. “Six Sigma is about reducing variation. Diversity is about increasing variation, but in the methodology there are places to build variation in.”

When ReadySet advises on CDO appointments, Marcuse said, “we want CDOs to really understand the organizational mission or business and have substantial leadership or executive experience.”

Martin acknowledges how hard it is to set meaningful quantitative goals when there is no P&L. “There’s a standard of corporate governance, there’s standards around strong financial analysis. There’s no standard in DEI,” she said.

Measuring effects on employee behavior is a good place to start. For example, instead of counting the number of people who participate in unconscious-bias training, Martin says, look for the results, like when employees are celebrated on a peer-to-peer recognition platform, “how many people are responding when a woman is recognized, vs. a man?”

What are the stakes involved in CDO success? Aarti Shyamsunder, the global head of DEI at Accenture’s YSC Consulting, told Fortune recently that the cost of CDO turnover is significant, even if it may beunquantifiable. The loss is more than one of dollars and cents, “it’s about the message that it sends out, the loss of reputation, the suspicion or fear that it might cause, especially in minority group members’ minds. With all these sorts of intangible costs, it’s impossible to put an amount on it,” she said.

Tapia believes a good CDO sets the tone. “A smart, strategic, influential CDO will say to the leaders, ‘I’m happy to take the role. I am your right person, but I’m not the one that’s going to change it. You are. I’m going to work with your CEO and the C-suite because the only ones that can change anything in this organization in terms of culture and processes and priorities are the C-suite.’”

Emily McCrary-Ruiz-Esparza is a freelance writer based in Richmond, Va. She writes about the workplace, DEI, hiring, and issues faced by women. Her work has appeared in the Washington Post, Fast Company, and Food Technology, among others.


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Apprenticeships: a Classic Solution to the Modern Problem of Worker Shortages

The U.S. labor market has become like a crazy quilt: mass layoffs in certain industries, along with dire shortages of workers in businesses ranging from accounting to trucking. To close the critical gaps, industries are turning to modern versions of an age-old institution: the apprenticeship. “Apprenticeships are the most promising solution to addressing the current labor shortage. Why? Because apprenticeships are jobs first and foremost–jobs that pay a living wage–not just training programs,” Ryan Craig, author of Apprentice Nation: How the Earn and Learn Alternative to Higher Education Will Create a Stronger and Fairer America, told From Day One. “They’re accessible to anyone with the potential and willingness to work hard–and much more accessible than tuition-based, debt-based college, or other training programs.”Causes of the labor shortage are many: A workforce quickly aging into retirement, the slowing of population growth, the burdensome cost of post-secondary education, lack of access to affordable childcare, and an increase in entrepreneurship. All of these have contributed to a shrinking workforce. As of January, the U.S. labor force participation rate is 62.5%. A couple decades ago, at the beginning of 2001, it was 67.2%.Employers are attacking the problem on many fronts. Some are pulling out the stops to retain older workers who might otherwise retire, and some are coaxing the semi-retired back to the office with flexible new arrangements. Others are dropping four-year degree requirements to broaden their talent pools, or bulking up benefits packages to include childcare, paid leave, and fertility benefits to attract and retain workers. Apprenticeships have joined that medley of solutions, with employers, advocacy organizations, and policymakers exploring and investing in the “earn-and-learn” model to fill talent pipelines from hospitality to healthcare to finance. Apprenticeships Beyond Blue CollarsApprenticeships represent a mutually beneficial way of hiring and training workers. Apprentices get on-the-job training, related instruction (often in a classroom or virtual classroom), and a paycheck all at the same time. Employers get the workers they need, trained to their specifications. In the U.S., apprenticeships are most often associated with skilled trades–it’s normal for plumbers, electricians, construction workers to complete apprenticeships–yet white-collar professions are only beginning to forge a connection with earn-and-learn programs. In 2020, professional services firm Aon announced that it would invest $30 million in its apprenticeship program over the next five years, with a goal of creating 10,000 apprenticeships in the U.S. within Aon and its partner organizations by 2030. In 2022, IBM committed to putting $250 million toward apprenticeships and other “new collar” programs by 2025.Aon’s program includes three tracks: insurance, HR, and IT. Apprentices take courses in insurance and business administration at partner colleges. Francheska Feliciano, the director of Aon’s apprenticeship program, told From Day One that career changers have found a home there. “We have found that those that thrive in our program tend to be career changers, but our program has a wide range of candidates with varied backgrounds, customer service, hospitality, or other service type roles.”Last year, the Biden Administration announced that it will invest $330 million to expand federally registered apprenticeships programs. In July, the Department of Labor awarded $17 million to expand existing apprenticeships and promote the model in new industries. In November, Maryland Governor Wes Moore committed $3 million to developing apprenticeships for public-sector jobs and $1.6 million toward the development of hospitality industry apprenticeships. “Maryland has set ambitious goals for expanding apprenticeship and we mean to meet them,” said Portia Wu, Maryland's Department of Labor secretary, in a press release. “Registered apprenticeship is key to our state’s economic success. We’ve already hit historic highs in apprenticeship adoption and today’s investments will accelerate our progress.”Alleviating the Local Labor ShortageApprenticeships could help solve local labor shortages for companies whose workers must be on-site–crucial for skilled trades like manufacturing or nursing–which are experiencing a pipeline problem of their own. Rather than recruiting the skilled talent from elsewhere, employers can use apprenticeships to develop the talent in their community. As housing inventory trails demand, employers who can tap their local talent markets will have the advantage, said Renee Haltom, the VP of research communications at the Federal Reserve Bank of Richmond, during a panel discussion last month at the Richmond Economic Forecast  “The regions that figure out housing are going to be ahead of the curve in terms of dealing with the coming demographic shifts,” Haltom said, referring to the aging U.S. workforce. Annelies Goger, who studies how to scale earn-and-learn models at the Brookings Institution, sees the advantages for local employers. Apprenticeships are a way to draw on local talent, and employers are more likely to retain locals than workers who have relocated, she told From Day One. “Rising rents have made it hard for employers to find and retain people only with the normal ways they’ve recruited people, so they’re looking into a lot of other ways and channels for finding talent,” Goger said. Apprentices Enter Finance and AccountingIn accounting and finance, more workers are retiring than are entering the field. According to a 2024 analysis by the U.S. Chamber of Commerce, “even if every unemployed person with experience in the financial activities or professional and business service sectors were employed,” the report reads, “only 42% and 44% of the existing job vacancies in these industries would be filled, respectively.”In 2022, the Association of International Certified Professional Accountants (AICPA) and Chartered Institute of Management Accountants (CIMA) launched the first federally registered apprenticeship for finance and accounting professionals, and in its first year signed up 17 employers from 15 industries, including healthcare, industrial gas, banking, and manufacturing. One hundred apprentices have registered with the program in its first year.When AICPA and CIMA set out to create apprenticeships, the aim was to address the worker shortage in the accounting and finance field with early career talent. “When we started talking to employers who would want to hire people from these programs, we found that they were more interested in reskilling workers,” said Joanne Fiore, AICPA’s VP of pipeline and apprenticeships. Rather than recruit new talent, employers wanted to use apprenticeships  to retain their current workforce and train them as strategically minded contributors. The purpose of the Registered Apprenticeship for Finance Business Partners is to develop management accountants for the finance function of the future–not just number-crunchers, but “key players in strategic decision-making and broader business transformation,” said Fiore.Even if this program is able to shrink the skills gap, the labor shortage is likely to persist. There just aren’t enough young people entering the field to balance out their retiring elders. One problem: the profession has a reputation for being, well, dull.To fill the talent pipeline, and help rebrand the profession, AICPA and CIMA have piloted a youth apprenticeship program in Maryland high schools, aiming to drum up excitement and interest in the field among young people.Customizing the Programs Organizations, employers, and educators have found ways to tailor apprenticeship programs to their needs. They’re not just for recruiting, they can be deployed for talent development as well. “With the digital transformation of our economy, tens of millions of jobs now require workers to use tools to build things–only the tools are digital and workers no longer need to wear hardhats,” said Craig, author of Apprentice Nation.Often, those skills are software related. Where hospitals and healthcare providers use Epic, marketers use HubSpot, and HR uses Workday. “Companies are increasingly demanding that applicants for these jobs already have these platform skills–skills which are much harder to learn in a classroom than on-the-job via an apprenticeship,” Craig said.“Apprenticeship brings an organic culture of learning into any workplace and helps business perform better,” writes Jean Eddy in Crisis-Proofing Today’s Learners: Reimagining Career Education to Prepare Kids for Tomorrow’s World. “An apprenticeship program breathes new life into workplaces and lets employers quickly tap into a culture of learning that so many now are desperate to build.”Scaling Earn-and-Learn to Quell the Labor ShortageApprenticeships are difficult to start, and they’re difficult to scale. Few employers have the infrastructure to both employ and train unskilled workers at the same time, and most require the help of intermediaries like the AICPA and CIMA, which provide the instruction and the infrastructure.While it may be a while before apprenticeships alone make a dent in the labor shortage, analysis of the success of existing programs is promising. Not only are retention rates high–Aon, for instance, retains 80% of its apprentices–the Department of Labor estimates that employers get a 44.3% return on investment for apprenticeship programs.“While traditional apprenticeships emphasized hands-on skill acquisition under a mentor, modern apprenticeships often integrate technology-based learning, including virtual simulations and online coursework, to complement on-site training,” said Katie Breault, SVP of growth and impact at YUPRO Placement, a recruiting firm focused on skills-based hiring. Finance and tech roles are particularly suited to apprenticeships, she told From Day One. “Industries undergoing digital transformation, for example, greatly benefit from such programs. They offer real-time learning opportunities, crucial for staying relevant in dynamic fields.”The problem with apprenticeships as a solution to the labor shortage is that we just don’t have enough of them yet, said Craig. Plus, in his estimation, they’re under-funded and under-marketed on both the demand and supply side. “Many young people and their parents think of apprenticeships as a ‘second tier’ option–if they think of them at all,” he laments in Apprentice Nation. White collar employers may be thinking much the same. Yet as investment continues and apprentices pop up in surprising places, like the finance department, enthusiasm may spread. “It certainly fits the accounting profession,” Fiore said. “And if it fits the accounting profession, my sense is that it will fit many professions.”Emily McCrary-Ruiz-Esparza is a freelance journalist and From Day One contributing editor who writes about work, the job market, and women’s experiences in the workplace. Her work has appeared in the BBC, The Washington Post, Quartz, Fast Company, and Digiday’s Worklife.(Featured photo by Amorn Suriyan/iStock by Getty Images)

Emily McCrary-Ruiz-Esparza | February 14, 2024

DEI Starts Over: How It Needs to Adapt to Survive the Battles of 2024

When Elon Musk and other headstrong billionaires start using you as a punching bag, it might be a smart time to duck. In his latest tirade against diversity, equity, and inclusion (DEI), Musk attributed the door plug blowing off a Boeing 737 Max 9 jet earlier this month to the aviation industry’s efforts to diversify their workforces. “Do you want to fly in an airplane where they prioritized DEI hiring over your safety?,” he wrote on X, formerly Twitter. Citing no evidence, Musk’s claim echoed the conspiracy theory asserting that DEI led to last year’s collapse of Silicon Valley Bank, which proved to have no basis in fact. While corporate America proudly carried the banner of DEI in recent years, 2024 is shaping up as the year in which many companies will be lowering the profile of their efforts and changing the approach of their programs. Recognizing that the term DEI has become another cudgel in the culture wars, joining “wokeness” and ESG, corporate leaders are responding to a wave of legal and political challenges. Among them: The Supreme Court is considering a case that could inspire a raft of regulatory complaints against DEI programs, charging them with reverse discrimination; conservative billionaires are funding a wave of lawsuits against such programs; and red-state politicians are threatening to follow the example of Florida and Texas by passing  new laws threatening to limit the scope of DEI. “They’re starting with letters, but I don’t think that they’re bluffs,” said Zamir Ben-Dan, a Temple University assistant professor of law. “It’s going to be a problem,” he told the AP. “It’s going to lead to a decline in racial diversity in the workforces.”Corporate America doesn’t want that to happen. In a survey late last year by the Conference Board, none of the 194 chief HR officers said they plan to scale back DEI initiatives, programs, and policies; 63% said they plan to attract a more diverse workforce. Employers say that an embrace of diversity and inclusion has become an important corporate value when it comes to recruiting the workers they need, especially younger ones who tend to favor diversity. As Fortune put it, “DEI Is Dead. Long Live DEI.” Yet companies are looking for ways to step away from the term “DEI” as well as aspects of programs that could make them legally vulnerable. “Companies are really starting to look at other ways to do the work without saying that they’re doing the work,” Cinnamon Clark, cofounder of Goodwork Sustainability, a DEI consulting firm, told Axios. Among the pressures and the responses that will characterize the evolution of DEI this year:The Supreme Court’s Other Shoe to DropOnly a day after releasing its historic decision last year to outlaw affirmative action in higher education, the U.S. Supreme Court agreed to hear a case that could have a parallel impact on DEI programs among corporate and government employers. In Muldrow v. City of St. Louis, a police sergeant alleges that she was transferred out of her prestigious job because of her gender, thus violating Title VII of the Civil Rights Act, which forbids discrimination according to race, gender, and other protected characteristics. Lower courts have upheld the city’s argument that Muldrow failed to demonstrate that the transfer amounted to an “adverse employment action” that caused material harm.The Biden Administration has supported Muldrow’s case because it could enable more people to file discrimination cases with the Equal Employment Opportunity Commission [EEOC], yet a broad interpretation of Title VII by the Supreme Court, relaxing the need to prove harm, could also “open the door to a flood of reverse discrimination claims against certain workplace diversity, equity and inclusion programs–such as mentoring and training programs for underrepresented groups–that ordinarily would not survive in court,” the Washington Post reported. “Such complaints have become more common since the Supreme Court overturned race-conscious college admissions in June.”Well-Funded Legal ChallengesEdward Blum (pronounced “bloom”), a white, 73-year-old former stockbroker, has made it his life’s work for more than three decades to stamp out affirmative action. He does not have a law degree, but he spends his day planning lawsuits to challenge affirmative action in the Supreme Court, helping to persuade the court to hear eight cases. Most recently, in June, he was in large part responsible for bringing the case that led to the court’s decision to outlaw affirmative action in higher education (Students for Fair Admissions v. Harvard College).Since then, he has been suing elite law firms over their DEI language. Many firms have yielded and made changes to avoid litigation. While Blum told Bloomberg Law that he’s done suing law firms–“There’s nothing left for us to do in that space,” he said–legal experts are watching where he’ll turn next. “Well, I think employment is one area that I think will garner greater attention, not just from me, but from other organizations, other legal policy foundations,” he told the New York Times. “I also think that some of the things that we associate with higher education–internships, scholarships, certain research grants–those need to be revisited if they have been race-exclusive.” One group that Blum founded, the American Alliance for Equal Rights (AAER), filed a lawsuit last August against Fearless Fund, “an Atlanta-based venture capital firm run by two Black women, alleging that the fund is engaging in racial discrimination by running a grant program exclusively for early-stage companies owned by Black women,” the Washington Post reported.While Blum has often been portrayed as a one-man-band, challenging major institutions on his own, a study by the Democratic Policy & Communications Committee, produced by seven prominent Democratic senators, called Blum’s various organizations “fronts for corporate mega-donors seeking to change the law through the courts.” In particular, the report cited Students for Fair Admissions as “funded primarily through the Koch [Brothers] operation’s shadowy dark-money operation DonorsTrust, known as the ‘dark-money ATM of the conservative movement.’” Blum has a fellow traveler in Stephen Miller, the arch-conservative former Trump Administration advisor best known for his hard line on immigration issues. Miller has been zealously targeting corporate DEI programs through his well-funded group America First Legal. Since 2022, his group has filed 25 complaints against companies with the EEOC. Miller’s organization has notched few legal victories, but that may not be the point. More than 85% of the AFL’s budget went to advertising, while only 4% was spent on legal services, the Daily Beast reported. Even so, “at least six major U.S. companies including JPMorgan Chase have modified policies meant to boost racial and ethnic representation that conservative groups threatened to sue over,” a Reuters review of corporate statements found.How Corporate Employers Can RespondWhile corporate leaders in the Conference Board survey said they don’t intend to pull back on DEI, the combination of corporate austerity and high-profile backlash is surely depleting the resources available to DEI. In a report last October, Forrester, a research and advisory company, found “the percentage of companies that funded a DEI function with an endorsed strategy and personnel dropped from 33% in 2022 to 27% in 2023; we predict that this number will fall to 20% by the end of 2024 in the wake of cuts that disproportionately affect DEI teams. As a result, too many companies will default to ‘check the box’ efforts such as heritage days, leading to performative–rather than substantive–DEI programs.”Organizations that are still motivated to maintain their commitment the principles of DEI will need to adapt their approach. “As the law inevitably evolves in a more conservative direction, the new legal standards will be absorbed into the field of DEI, transforming it as an enterprise. While this shift will occur organically, smart organizations can avoid a lot of pain and expense by thinking about how to adapt in a more intentional way,” reports Harvard Business Review. In their HBR story, Kenji Yoshino and David Glasgow, lawyers at New York University and authors of Say the Right Thing: How to Talk About Identity, Diversity, and Justice, identify three aspects that can make a DEI program legally risky: it confers a preference for some individuals over others, the preference is given to member of a legally protected group under Title VII, and the preference relates to a palpable benefit, like a job, promotion, or L&D opportunities.Given those criteria, write Yoshino and Glasgow, the specifically risky programs include hiring quotas, tiebreaker decision-making for hiring and promotions based on identity; group-specific internships and fellowships; and tying manager compensation to diversity goals. While all of those measures may be designed to compensate for systemic biases, “it is clear that the conservative supermajority of the Supreme Court does not agree with such a worldview.”Reshaping Programs as Well as the LanguageTo avoid charges of reverse discrimination, employers can make several changes to existing plans. Among other things, they can make DEI initiative more identity-neutral yet still designed to remove bias, like making employee-resource groups and other affinity groups open to all, rather than restricted based on identity. “These approaches do not ‘lift’ certain groups above others, but ‘level’ the playing field for everybody,” write Yoshino and Glasgow.The language, too, is shifting, with more focus on the “inclusion” aspect of DEI, as well as “belonging” and “well-being.” Reported the Post, “While some demographic-specific efforts will probably remain, overall, corporate DEI is likely to shift and focus more on ‘universal’ efforts to make recruiting, hiring and retention more successful for everyone.” Even as they adjust to the risk of being sued for reverse discrimination, employers have to make sure they don’t over-correct in the opposite direction. “Getting sued for a regular discrimination claim from someone who belongs to an underrepresented identity in the workplace is still more common than a reverse discrimination claim from a white person,” reports Thomson Reuters.  Companies shouldn’t abandon DEI initiatives that help to make those from underrepresented backgrounds feel more welcome or offer more opportunities to succeed, NYU’s Glasgow told Reuters, “because doing so could create an environment that is more hostile and unwelcoming to people who belong to these marginalized groups.” For example, he said, eliminating mentorship or sponsorship opportunities that were helping more women advance through an organization might lead to a more one-dimensional leadership team–a prospective setback to decades of progress.Andrea Sachs, a graduate of the University of Michigan Law School, began her career as a lawyer in Washington, D.C., at the National Labor Relations Board, then spent nearly 30 years in New York City as a reporter at Time magazine.  (Featured photo by Violeta Stoimenova/iStock by Getty Images) 

Andrea Sachs | January 17, 2024

Could Older Workers Be the Solution to the Labor Shortage?

Where are the workers? The list of occupations suffering critical shortages in the U.S. keeps getting longer: teachers, nurses, bus drivers, social workers, accountants, air-traffic controllers. While the problem is relatively new, it’s becoming a long-term one. “The number of humans available to work is starting to go down,” said HR consultant Josh Bersin in a recent From Day One webinar. “Over the last four years or so, from the pandemic on, we talked to so many companies and heard the same thing over and over again: We don’t have enough people, we don’t have enough skills. We don’t know where to source them.”A major cause of the problem is demographic: the Baby Boom generation is retiring, a trend that sped up during the pandemic, and fertility rates are declining all across the developed world. In 2024, for the first time, Generation Z will represent a larger portion of the workforce than the Baby Boomers.Yet therein lies one of the solutions: persuading older workers to stay in the labor force longer, as well as creating opportunities for younger generations to have longer careers. In February, the Wall Street Journal ran the headline, “Here Comes the 60-Year Career.” The story profiled Millennials setting themselves up for six decades of work comprising multiple career switches, returns to school, detours, and sabbaticals. Millennials and younger generations have no choice but to think differently about their careers, the reporter Carol Hymowitz wrote. “Because they are likely to live healthily into their 90s or longer, they must learn to navigate 60-year careers instead of the traditional 40-year span.”But longer careers punctuated by breaks and reinventions are not just the Millennials’ doing. The Boomers are already experimenting. In 2022, the job website Indeed noted an increase in the number of people “unretiring.” Short of savings or restless in retirement, older workers are increasingly stepping back into jobs they left a few years ago, this time looking for flexible hours, part-time consulting jobs, or even gig work. “We’ve had this model of working from the moment you graduate college or high school until you’re 65,” Sania Khan, chief economist at the talent intelligence platform Eightfold, told From Day One. “Employers are realizing that this is an outdated model.”Though a growing part of the population, older workers have represented a shrinking portion of the workforce, especially during the pandemic. While labor-force participation among Americans aged 15–54 has recovered to pre-pandemic levels, it has not bounced back among those aged 55 and older, much of this due to excess retirements of Baby Boomers.At the same time, the national unemployment rate has been below 4.5% for two years, and employers are struggling to find the workers they need with the skills they need.This leaves employers wondering: how can we encourage workers to stay on the job?In a Tight Labor Market, There Is No Room for Ageism “Necessity is kicking ageism to the curb, pushing businesses to reevaluate hiring strategies and perceptions when it comes to this essential part of any workforce,” reads an Eightfold report. “In a strange twist, the looming labor shortage may be the kick that’s needed to shift the narrative on age and employment. As the supply of workers tightens, organizations are finding themselves in a bind, and they must take a closer look at experienced workers, those with a lifetime of skills and wisdom to offer.”There are 9.5 million open jobs in the U.S., but only 6.5 million unemployed workers, a labor shortage that affects almost every industry in almost every state, according to the U.S. Chamber of Commerce. Companies can’t afford to discriminate, and often-marginalized groups are reaping the benefits.Data: Glassdoor analysis of Census Bureau data. Chart: From Day One adaptation of graphics by Axios and Glassdoor To recruit and retain older members of the workforce, employers are embracing age-inclusion. PNC and Bristol Myers Squibb have added benefits like workplace menopause support and healthcare to match. Fannie Mae and Booking.com now offer grandparent leave so workers can take time away from work to care for new grandchildren. Recruiters are scrubbing age-biased language from their job descriptions. Financial counseling services that include retirement planning are a popular new addition to total rewards. Some employers are offering “flextirement” arrangements that allow retirees to come back part-time or temporarily.Some organizations are actively hiring from older demographics. Especially when the customer base is seniors, it makes sense that the company is staffing seniors as well. One of them is Naborforce, a gig-work platform where seniors can request help from “nabors” for tasks like setting up a computer, getting to the grocery store, or doing the laundry. The average Naborforce client is 83 years old. Almost three-quarters of nabors–the gig workers who power the platform–are 50 or older.“There is a big group of untapped resources–empty nesters and retirees who are not looking for a job, but love the flexibility. They are craving purpose, they want to feel needed, and they’re craving connection,” founder Paige Wilson told From Day One.Not only is the company’s gig workforce predominantly seniors, Wilson is actively recruiting older workers to her staff. In November, Naborforce piloted its first “golden internship” program. Paid interns come into the office 10–12 hours per week to advise on user experience, marketing, messaging, and business operations. The first intern, a former nabor and retired business owner, is in his 70s. “Our target market on all sides of our business are seniors or close to it,” said Wilson. “We are not discarding older people. We are hiring them like crazy,” Wilson said.As Workers Retire, the Skills Gap GrowsAmong companies whose workers skew older, workforce planning is getting tougher. In certain industries and roles, older workers are retiring, but no replacements are on their way.For global logistics company Pitney Bowes, finding young workers with the right skills is getting harder. “Electromechanical [engineering] is a skill set that our service force is very much in need of,” said Andy Gold, the company’s chief HR officer. There are fewer qualified candidates coming out of schools and training programs than there used to be. Younger professionals seem to be more interested in programming the machines than building them, he said.For now, the company is trying to recruit from within, finding workers who are willing to learn the new skills. They’re also talking to older workers about their retirement goals so they can train younger ones before clocking out for good. Gold isn’t the only one wondering where the talent went. In other industries whose workers are long-tenured and have decades of experience, the talent pool is drying up. “For some of the professional service jobs, for example, the qualifications needed are time-intensive,” said Jen Schramm, senior policy advisor at AARP. “[Companies] can look ahead in their workforce planning and see on the horizon that they will have a shortage. In the long-term, they will have to increase the labor pool of people that have the correct certifications or qualifications or licensing. But in the near term, they don’t have time to wait.”Early this year, the Greater Richmond Transit Company, or GRTC, which operates mass transit services in Richmond, Va., experienced a bus-operator shortage (due in part to retirements) so severe that it interrupted normal service and blocked planned expansion projects. According to the Bureau of Labor Statistics, the bus service and urban transit sector has the oldest median worker age–52.4 years–among all industries in the U.S.As of January 2023, the GRTC employed about 230 bus operators; it needed 50 to return to pre-pandemic service and an additional 20 more to expand. The company couldn’t find the talent it needed, so GRTC created its own pool by covering the cost of commercial drivers-license training for new hires.By November, that gap had been closed, with more than 300 full-time operators hired, 27 working on a part-time basis, and 35 more in training. GRTC also sweetened the deal for new hires, who got a signing bonus, and for all operators, who got a 43% pay raise.The Value of Long-Term Knowledge and LoyaltySome employers may not need to cultivate their own talent pools to fill immediate openings. Older workers are a solution to both the skills gap and the labor shortage, said Eightfold’s Khan. “Employers see that they have a skills gap. They know that they have to switch over to a skills-based workforce planning solution in the near future,” she told From Day One. “I think they haven’t started to see older workers as a resource quite yet.”The world is spoiled with a wealth of knowledge represented by an aging workforce. According to the 2020 U.S. Census, the number of people aged 65 and older grew five times faster than the whole U.S. population did in 100 years. In 1920 fewer than one in 20 Americans were 65 or older; as of 2020, it’s one in six. “We should give them a choice,” Khan said. “Those who want to continue working and feel that they’re capable should be able to, and they should be valued as a resource.”Employers opting to fill vacant spots with younger, “cheaper” workers are losing institutional knowledge and wisdom built on decades of experience. Plus, older workers tend to be more loyal to their employers. “We’re going to see a very stark labor supply and demand imbalance very soon as these workers age out of the workforce and retire,” Khan said.The Legacy Stage of One’s CareerIf careers are getting longer and changing shape, with employees embracing career lattices instead of career ladders–could there be new stages too? Andrés Tapia, global strategist for diversity, equity, and inclusion at consultancy Korn Ferry, favors a new segment to working life, a denouement between career and retirement known as the “legacy stage.”In the legacy stage, older professionals on their way to retirement rework their professional contributions with schedules, benefits, and compensation to match. “It will be about mentorship and wisdom,” Tapia said. In exchange for fewer hours, very flexible schedules, and sabbaticals, legacy workers may get lower pay and less decision-making power. “A lot of Boomers feel vigorous and in charge, they want to keep ‘riding the train,’” but some roles do need to be vacated so younger workers can move in and get the experience. “It’s about reciprocal adaptation between generations,” Tapia told From Day One. “Older workers have to stop diminishing the contributions of young workers and younger generations have to be inclusive of older ones.”As workers age, they enjoy passing on their knowledge, said Schramm at AARP. “Companies that are savvy about having a multigenerational workforce, that’s something they leverage, but they do it from both sides”–giving younger workers the opportunity to pass their knowledge to older generations too.“Many people are not ready to retire at age 65, but age discrimination really starts at age 55,” Tapia said. “That’s when people start feeling devalued.” But if we create a legacy phase where decades of knowledge is elevated to its own category, he argues, “rather than coasting by default, you coast by design.”Emily McCrary-Ruiz-Esparza is a freelance journalist and From Day One contributing editor who writes about work, the job market, and women’s experiences in the workplace. Her work has appeared in the BBC, The Washington Post, Quartz at Work, Fast Company, and Digiday’s Worklife.   

Emily McCrary-Ruiz-Esparza | December 13, 2023