Diversity scorecard: Is the industry keeping pace with the population?


The signs are everywhere: French instructions on tissue boxes and laundry detergent. Choices for Spanish at the ATM or during call routing. Somalians now populate Portland, Maine and recently opened a shopping mall in suburban Columbus, Ohio. Mexicans live and work in Ames, Iowa and Hyattsville, Maryland. In a word, America’s demographics are changing and, as a result, employers are facing major new challenges.

Multiculturalism is not a vague notion for a distant future but diverse new immigrant groups continue to embrace the American dream of a better life through hard work and perseverance. Are they upwardly mobile? Yes. Are they starting at the lower rungs of the corporate ladder? Yes. Will they be knocking on your door soon? Most assuredly, yes. Today’s marketplace is beating to a different drum and smart corporations are recognizing and responding accordingly.

Where does the multifamily industry stand in this evolving America? Fortune Magazine’s list of the best Top 50 companies for Minorities for 2003 is a good indication. Real estate related firms cited for their excellent minority employment records include: Fannie Mae (2), Freddie Mac (8), Wyndham International (12), Hyatt (18), Hilton Hotels (20), Marriott International (22), and MGM Mirage (31).

Is this list impressive? Most certainly but with one exception: there is not one residential real estate, apartment developer, or property management firm among them.

Tomilee Tilley Gill, founder of Executives Unlimited, a nationwide executive search firm, considers the list reflective of the service-based hospitality industry, which closely interacts with the public and therefore must have a diverse staff in order for their patrons to feel comfortable. (See: “Dividends from Diversity” by Gill) Further, she believes that “there is diversity in a number of real estate and property management companies however their size would not afford them a place on the Fortune 50 list” which includes firms with receipts in the billions.

What the data says

The demographic makeup of our workforce both in general and for the apartment industry is changing according to a 1999 study of demographic trends for property managers released by the National Multi Housing Council (NMHC). Based on U.S. Department of Labor and economic census reports, the NMHC study shows our workforce is growing older and more diverse. The apartment industry, which employs nearly 500,000 people of whom some 135,000 are property managers, will not be immune from these changes in the composition of our workforce. Labor experts say those firms who plan ahead to meet these changes will fare better than those who resist or ignore them.

The number of workers in the pivotal 25-44 age group is expected to decline sharply. Older workers age 55-64 will account for just about half (44 percent) of the net growth by 2006, compared to only a 2 percent growth rate from 1986-1996. Broader changes will appear in the racial and ethnic makeup of the labor force as well. Hispanic workers will increase at a 3.1 percent annual rate, more than four times the 0.7 percent rate of white non-Hispanics and greater than the 1.3 percent growth projected for African Americans. Asians and Native Americans are expected to grow at a 3.5 percent rate.

A breakdown of the labor force as it will look in 2006 shows 11.7 percent Hispanic, 11.6 percent African American, and 5.4 percent Asian/other. Non-Hispanic whites are expected to comprise 72.7 percent of the workforce.

As you can see from the data provided by NMHC, the composition of property managers in our industry closely parallels that of the overall workforce in terms of race, ethnicity, and geographic mobility. Notable exceptions are a greater presence of women property managers than in the overall labor force. There are 5.2 percent more female property managers (52.6 percent) than male (47.4 percent). The study also shows that property managers are older and better educated than typical workers.

The long road

Equal opportunity in employment has been the letter of the law since enactment of Civil Rights Legislation some 40 years ago during the era of President Lyndon B. Johnson. Specifically, Title VII of the Civil Rights Act of 1964, “protects individuals against employment discrimination on the bases of race and color, as well as national origin, sex, and religion” and applies to organizations with 15 or more employees.

Honoring the spirit of the law, however, has been yet another story. Just one look at the Equal Employment Opportunity Commission (EEOC, the federal agency created to implement the law) docket finds a multitude of complaints by employees alleging discriminatory practices.

According to the EEOC website statistics show that in 1992, there were 29,548 race-based complaints filed and a decade later the number was slightly higher with 29,910 or 35 percent of 2002’s total. For this same decade, monetary damages awarded rose dramatically with $81.1 million in settlements awarded in 2002 compared with $31.9 million settlements awarded in 1992.

To assist employers, the EEOC has made available a comprehensive program to train, assist and implement strategies for achieving success through diversity. These include Technical Assistance Program Seminars (TAPS); Customer Specific Training Programs (held on-site); Federal Sector EEO Issues and Complaint Procedures; and Technical Assistance Materials. Fees vary and in some instances there is no charge.

The good, the bad and the ugly

Fannie Mae, the largest private-sector provider of multifamily financing for affordable and market-rate rental housing in the nation with a multifamily portfolio of $96 billion, is a leading example of putting diversity to work. Its CEO Frank Raines is the first African-American CEO of any Fortune 500 company. As of June 2003, women comprised 51 percent of Fannie Mae’s total workforce, with 25 percent as officers, 24 percent as directors and 25 percent within the management group.

To some extent, Fannie Mae’s diversity is derived from its roots as a government-established entity. Yet it is hard to deny the recognition the company has gotten for its record on diversity: named second among the best 50 companies for minorities by Fortune Magazine and DiversityInc. Magazine; named one of the best three companies for women of color by Working Mother; and cited as one of America’s top companies by the National Association for Female Executives.

“For Fannie Mae, our diversity is both a much-envied corporate asset and a competitive advantage,” said Daniel H. Mudd, Fannie Mae Vice Chairman and COO in a speech delivered on Diversity Day in December. “For us, diversity is not just a moral imperative; it’s a strategic imperative that allows us to accomplish our mission of expanding homeownership.”

Changing the white male-dominated corporate culture to embrace both women and minorities has been at the heart of the struggle for employment diversity, particularly in real estate, where the access to significant capital, a vitally important key to success, has often been denied to these constituencies.

CB Richard Ellis (CBRE), one of the nation’s largest commercial real estate firms with more than $1.75 billion in revenue and $9 billion in loan originations, prides itself on a reputation for excellence as an employer and professional organization. That image has been tarnished recently when CBRE found itself the subject of a lawsuit filed by a manager from the Chicago office, charging that the firm violated her Title VII rights and maintained a hostile environment for women. The company also faces the threat of a class action suit over alleged sex discrimination.

From the complaints and affidavits, it is alleged that female employees of CBRE faced a pervasive atmosphere of sexual intimidation and offensive comments, emails, and physical conduct on a regular basis. While more than 14,000 employees work in 250 offices located in 48 countries, CBRE’s support staff is nearly 100 percent female serving brokers and managers who are “overwhelmingly” male.

Karen Lee Whitney, director of employment and employee relations for CBRE stated in court depositions that as recently as 2001 there was an “insidious problem in several offices” involving offensive email.

Efforts by CB Richard Ellis to have the case dismissed in May 2003 were unsuccessful and in October 2003, the Court found the company knowingly destroyed emails requested by the plaintiffs and acted in bad faith.

A statement released by a CB Richard Ellis spokesperson who asked to be unnamed, said: “Allegations such as those included in the lawsuit are of great concern to us, especially since CB Richard Ellis works so hard to maintain a workplace where women thrive, grow and succeed. We are aggressively investigating these issues, and, based on all the facts we have, we believe the lawsuit unjustified. We are frustrated that we weren’t made aware of these specific issues until the suit was filed. We have formal procedures in place for reporting and resolving such issues and our ‘Harassment-Free’ workplace policy sets the bar much higher than the law requires. We have a strong track record of protecting employees from harassment and no employee should ever be reluctant to come forward with issues or complaints.”

Ironically in 2002, the same year the lawsuit was filed, CBRE launched The Women’s Network. According to the website: “CB Richard Ellis’ commitment to foster an environment where women and men have an equal opportunity to succeed is a vision shared by the Women’s Network. It is through the endorsement of key initiatives by top leadership that cultural change happens for the best.”

“An advisory board has been established by the Women’s Network to work with senior management in providing guidance for gender-related programs, including recruiting, mentoring, training, networking and career development.”

Lisa Konieczka, a CBRE tenant representative for office clients based in Chicago and one of the top 50 brokers in the country, is founder of the Women’s Network.

“We started in 2000 with 35 women at a breakfast meeting to share backgrounds and exchange business cards,” said Konieczka. “In 2003, we had a meeting with 275 women and 75 men.”

According to Konieczka, everyone is eligible to join the Network and there is no criteria to join. The organization is a grassroots entity staffed by volunteers and its mission is networking and mentoring.

While primarily a commercial property management and investment firm, CBRE operates two successful multifamily units, a multihousing group and a senior housing group. Regardless of the size of its role in the multifamily industry, the situation facing CBRE is a wakeup call to the liabilities that accompany failure to create a viable environment for diversity that both serves and protects all employees’ rights.

What’s ahead for diversity?

Last fall, Ward Connelly’s Proposition 54 in California, which sought to eliminate race from consideration for education or employment, was defeated. The Supreme Court affirmed the use of race as a factor when it rendered its decision in the Michigan Law School case Grutter v. Bollinger last June.

In the analysis of legal scholar and author Michael Higginbotham, Professor of Law at the University of Baltimore Law School, “the Grutter case is important because it keeps affirmative action legally viable at least for the time being. That is why it is so critical because the possibility to have closed the door was made available to the Court. By a narrow margin (5-4), with Justice O’Connor writing the decision, the Court kept the door open.”

When considering executive candidates, Ms. Gill looks for people that bring “achievement, energy, knowledge and leadership skills yet can grasp their hands around the bigger picture by relating to the corporate culture and embracing a vision for its future.” And from her vantage point, Ms. Gill feels that the multifamily industry is doing well with diversity in the middle ranks and that it is only a matter of time before qualified and experienced executives reach the upper ranks where the visibility is higher.

Author: Sheryl P. Simons