The US has endured a complicated relationship with the concept of diversity, equity and inclusion for generations. And truth be told, racism and discrimination against other races, cultures and lifestyles has been a troubling part of the country’s history since before its founding.

The trajectory of the workforce solutions ecosystem’s DE&I journey has also been checkered. To some, it appears that organizations’ focus on DE&I shifted to other pressing concerns as the Covid-19 pandemic stretched on. Safety concerns, remote work policies and economic challenges took over any discussions industry leaders may have been having.

But a deeper look by SIA’s reporters finds DE&I remains a priority. Many staffing firms and workforce solutions buyers are still working quietly — or not so quietly — and diligently toward a more diverse and equitable environment for their internal staff, contingent workers and client companies. Meanwhile, research conducted by Staffing Industry Analysts independently and with partners corroborates this. Here’s a look at various DE&I initiatives, both big and small, that are underway, the opportunities they represent and, done right, what they mean for the workforce solutions ecosystem.

Government Steps In

It wasn’t until the civil rights movement of the 1950s and 1960s that the US government began to take note of the severity of the DE&I problem and its effect on society and the workforce, resulting in legislation such as the Equal Pay Act of 1963, which made it illegal to pay different wages to men and women if they perform equal work in the same workplace. Additional legislation followed, including the Age Discrimination in Employment Act of 1967, the Pregnancy Discrimination Act of 1978 and the Americans with Disabilities Act of 1990.

While many businesses adhered to these types of employment regulations, others continued to discriminate against workers based on race, sexual preference and identity, gender, disabilities, etc. — and they often got away with it.

And staffing providers? They paid little attention to DE&I, focusing instead on filling clients’ needs with the workers requested.

The Tide Shifts

There has indeed been a shift, says Megan Ksenzakovic, VP, strategic accounts, at Tandym Group (formerly Execu|Search Group). After George Floyd, “DE&I was sort of in the revolution bucket, and now I feel it’s kind of flowed into the evolution bucket,” she says. “Revolution is demanding, and it’s immediate, and it’s in your face. And evolution feels like it’s much longer term, much more thoughtful and much more intentional and purposeful.”

Staffing firms and contingent workforce program leaders are planning for the longer term, seeking ways to achieve goals, measure results and align contingent numbers with their objectives. “I think that that conversation has taken a much more serious seat at the table, as opposed to a knee-jerk response,” Ksenzakovic adds.

The Data Speaks

The racially motivated murders of George Floyd, Breonna Taylor and Ahmaud Arbery in 2020 and the subsequent Black Lives Matter movement shined a spotlight on DE&I. As a result, staffing firms and contingent workforce programs began to take hard looks at their bias, practices and how they could change and make a positive impact. And they found there is plenty of room for improvement.

In 2021, SIA asked a sample of 320 US firms which current and forthcoming issues staffing companies were concerned about, and DE&I ranked third from the bottom with 24% of responses. And in terms of gender equality, a survey conducted by the Women in Business Collaborative indicates that while women account for a majority of the internal workforce at US staffing firms, they are still underrepresented at the upper levels, holding only 46% of executive positions and 36% at the board level. Women comprise 60% of the entire workforce within the largest staffing firms globally; however, that figure drops to 34% at executive leadership positions. Globally, SIA estimates staffing to be a $620 billion industry.

Meanwhile, SIA in 2020 partnered with Consciously Unbiased, HireTalent and Beeline on a custom research project to examine contingent workforce programs’ diversity and inclusion efforts. “The Future of Diversity and Inclusion in the Contingent Workforce” report indicated that organizations have failed to prioritize DE&I within their contingent workforce, with just 26% of respondents agreeing that DE&I is a strong priority among their contingent workforce.

But there is a glimmer of light. Due to the heightened awareness and momentum around the importance of DE&I, nearly two-thirds of respondents to that survey said they expected their organizations’ contingent DE&I to become a higher priority moving forward. And subsequent reporting (see “Two Steps Forward”) provides evidence that DE&I initiatives have been drafted and put in place.

A Business Imperative

DE&I is no longer just an HR strategy but a business imperative. Multiple studies show that diverse companies, teams and boards outperform their nondiverse counterparts, posting greater levels of innovation, customer service, employee engagement and long-term growth. Today, enough staffing firm leaders and end users of contingent labor in the workforce solutions ecosystem understand this.

The recognition of the benefits of DE&I can be traced back to at least November 2019, when the Business Round Table, an association of CEOs of America’s leading companies, released its Statement on the Purpose of a Corporation, which declares that shareholder value is not the only purpose of a corporation. Among other promises, the 181 executives signing the statement committed to investing in their employees.

“This starts with compensating them fairly and providing important benefits,” the document states. “It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.”

The statement was game-changing for other CEOs, as it gives them cover to move forward with DE&I initiatives because they fit the purpose of investing in their workforces.

And the financial bottom line? Research finds that firms with diverse teams are more profitable.

SIA surveyed more than 250 business leaders from the US, Europe and APAC whose companies use contingent labor for its “Future of Diversity, Equity, and Inclusion in Contingent Workforce: 2022 Update” report. According to the report, DE&I leaders in 2022 outperformed followers in areas such as access to talent, ability to fill open positions and ability to attract talent — providing a significant competitive advantage in today’s tight labor markets.

Two Steps Forward

While strides have been made, there is much work ahead.

“We have to start realizing that there’s no malicious intent, [even though] everyone is so uncomfortable with the topic,” says Sirmara Campbell, chief HR officer at LaSalle Network. “And we have to start being uncomfortable with it and realizing that it’s a safe space.” But it can’t be an HR initiative, she says. “It has to start from the top; if your managers and company leaders are not on board, I don’t think it will succeed.”

Here is a look at prevailing trends and how they have helped the DE&I work that is being done:

An evolving remote workforce. The post-pandemic acceptance of remote work has enabled organizations to seek and engage talent from wider geographic areas — including areas that are typically diverse and underrepresented in certain sectors, such as IT and other STEM fields.

Enabling diverse gender identity and gender expression. Employers are more accepting of people’s gender identity, pronouns and gender expression, recognizing the benefits that a range of perspectives and life experiences brings to the table.

Multigenerational workforces. Although baby boomers are reaching retirement age, many are choosing to remain in the workforce. At the same time, Gen Z candidates are entering the workforce and evaluating employers’ DE&I efforts when deciding whether to apply for positions; for example, a survey by Gen Z recruiting platform RippleMatch found that 75% of candidates would reconsider applying at a company if they were unsatisfied with its DE&I efforts.

Corporate buy-in. More than a dozen of the world’s large employers in December 2021 adopted criteria to mitigate data and algorithmic bias in human resources and workforce decisions, including recruiting, compensation and employee development. The companies are members of the Data & Trust Alliance, an organization focused on responsible data and AI practices, and this is its first initiative.

Technologies. Firms are developing innovative technologies with features such as AI machine learning, algorithms, text mining and natural language processes that with proper guidance can address DE&I issues. At the same time, attention is also being paid to bias that stems from AI hiring tools.

VMS advancements. Vendor management systems have evolved from a system of record that initially underpinned processes where contingent workers are sourced through staffing firms, most likely an MSP, to a more valuable product supporting organizations in the wider employment ecosystem such as statement of work and, more recently, direct sourcing of contingent workers. SIA’s “Future of Diversity, Equity, and Inclusion in the Contingent Workforce 2022” report highlights that 83% of contingent workforce managers indicate they would seriously explore or are already exploring VMS-derived diversity data.

Hiring diversity professionals. Staffing firms have increasingly added diversity experts to their executive suites. These include industry leaders such as Spencer Stuart, which ranks as the largest US executive search firm; Heidrick & Struggles International Inc.; Kelly; and UK-based global staffing firm Impellam Group.

Obstacles to DE&I

While businesses that use contingent labor know how they would benefit from achieving DE&I, and staffing firms are aware of what their customers want and are working closely with them to provide the right people for the right jobs, the needle on DE&I initiatives hasn’t always moved. What is holding them back?

The primary barrier inhibiting contingent workforce programs from progressing on their own DE&I initiatives is limited information from staffing partners regarding candidate diversity, cited by 47% of survey participants in SIA’s “The Future of Diversity, Equity & Inclusion in the Contingent Workforce 2022 Update” report. However, that situation is an improvement from two years prior, when 52% of participants lacked data from suppliers.

“The number one barrier is data — and analysis of that data that doesn’t exist,” says SIA’s John Schroeder, the author of the report. However, the 2022 report saw an incremental 20% increase in tracked metrics from 2020.

“This is all good, but 20% of a bad number is still kind of a bad number,” Schroeder says.

The reasons for lack of data are layered and interconnected, according to the report.

“It is not just about asking candidates and workers to provide diversity data. It is [knowing] what specific data to ask for, when to ask for it, who should ask for it, how it should be used and managed, and what common understandings, definitions and standards need to be applied in cooperation with data and staffing partners to maximize efficiency in gathering data,” Schroeder writes in the report. “Many of these questions remain unanswered, and where there are answers, there isn’t necessarily unliteral agreement or understanding from the market about how best to collect data and how to use it wisely.”

The second notable tranche of barriers relate to legal anxieties. In particular, 42% of participants in both years’ surveys noted concerns about legal exposure due to co-employment risks; legal exposure due to reverse discrimination was also a concern.

Concerns notwithstanding, if organizations don’t take on DE&I more fully for their employed and nonemployed workforces, they open themselves to other liabilities, potential discrimination lawsuits and employee actions. They would also be at a competitive disadvantage in terms of attracting talent. It’s a catch-22 situation. To go forward, employers have to navigate potential minefields. If they don’t, they will be caught in legal quicksand that could undermine their efforts to stay competitive — not to mention jeopardize their business.

Insiders’ Lessons

So the question is, how can staffing firms and contingent workforce programs weave DE&I into their processes? Staffing leaders shared with SIA some of what their professional experiences have taught them about DE&I in the staffing industry and how to stay afloat:

Embed equity. Overall, equity must be embedded into systems for progress to be made. “A systems framework matters, so when DE&I is just a policy in a handbook and not part of the system of which the company operates, it won’t move the needle exponentially and companies will continue to experience turnover,” says Michelle Sims, CEO, Year Up Professional Resources.

Be transparent. Employees want transparency in DEI efforts. “Employees want to understand the purpose of the business and ensure the purpose is seen and heard throughout the organization,” Sims says. “And when it is not, they are speaking up or speaking out with their feet.”

Be relatable. Leaders should show their vulnerability in accepting and admitting that they are not always going to get it right, but they are trying. “Transparent, real leaders are relatable, and this is what people want today, especially since we have seen each other’s living rooms in our Zoom home offices,” Sims says. “It is harder to get to know people in this virtual/hybrid world, so transparency is paramount to action, not just making statements.”

Accept complexity. DE&I is not just about gender, ethnicity or sexual orientation, says LaSalle Network’s Campbell. “It’s about people being different — growing up differently,” she says. “There’s a lot of layers and complexities, and everyone is still learning and growing on how to learn the differences of what DE&I truly means.”

Diversify your staff. Because people’s networks tend to be like them, having a homogenic recruiting staff will result in a similar talent pool. Black recruiters, for example, are underrepresented almost as much as Black technologists are, according to Chad Douglas, founding partner and chief revenue officer of staffing firm Primary Talent Partners. In response, the company made a big push to increase Black recruiter representation internally; further, it requires everyone joining the company to achieve their diversity recruiter certification within 90 days. “There’s generations of challenges that Black workers have faced as far as bias and prejudice from the hiring community,” Douglas says. “We can very quickly get to that level of trust with that talent community if we’re representative within our own organization.”

Team up to upskill. Upskilling and reskilling have become critical talent acquisition and retention strategies amid the skills shortage. They have also become a popular pathway for building skilled diverse teams. Some staffing firms have established partnerships with Historically Black Colleges and Universities (HCBUs) and related organizations in their initiatives. Primary Talent Partners is one. HCM Staffing and Consulting is another.

In addition, HCM’s consulting group works with client partners to provide internal upskilling and reskilling of their existing diverse talent to move them up the corporate ladder. “We’re excited about our talent-first approach, and we also want to work with partners that understand that diversity, equity and inclusion is not a check-the-box,” says Eddie Bright, Jr., HCM’s global CEO. “It’s a journey, and they’re willing to make that journey together.”

Other staffing companies are following a similar approach.

The Road Ahead

An increasing priority over the next few years will be to align contingent workforce diversity goals with those implemented for the employed workforce.

When questioned about their current and future strategies around the contingent workforce for SIA’s “2022 Workforce Solutions Buyer Survey” report, 56% of respondents indicated they already had programs in place to encourage candidate diversity, while another 37% say they are likely to explore the strategy within the next two years. Meanwhile, the creation of a program for diversity suppliers was cited by 64% of respondents, with another 29% listing it among their two-year plans.

Today, contingent workers comprise a significant portion of organizations’ overall workforces — a median 27% — yet just 32% companies currently have a program in place to align these workers to their overall diversity goals. However, a majority, 55%, will be likely to explore this strategy in the next two years.

This means in two years’ time, an overwhelming majority of companies may be on the road to having their overall workforces reflect the diversity of their communities. It’s just a step in the journey, but a promising one indeed.

It has been a long road even since 2020. Despite the ebbs and flows of the DE&I journey, there has been a shift in how the workforce solutions ecosystem thinks about diversity and actions that are being taken. And that is key. The staffing industry and users of contingent labor have made some progress in diversifying their workforces. Are we where we need to be? No, but we are moving in the right direction. And the collective efforts of the players in the workforce solutions is — slowly but surely — moving the DE&I needle forward.

With additional reporting by Claire Cook, Craig Johnson and Danny Romero

Editors: Subadhra Sriram and Sharon Thomas