Gaps in pay and career progression, health and wealth adversely affect people of color in the US — particularly Black Americans. Mercer’s Stepping Up for Equity report highlights that the majority of US companies are simply unaware of how their employee benefits and diversity, equity and inclusion (DEI) initiatives affect their Black populations and contribute to these gaps. The report found:

 

  • In the last 12 months, Black employees represented only 8% of an organization's average workforce. Further, total percentage of hires for Black employees in the past year was 45% compared to 22% non-Black employees, yet the total exits for Black employees was over half that, at 26%, showing that turnover remains a key challenge.
  • 85% of employers are not tracking health benefits utilization by race/ethnicity and only 10% of organizations have implemented health equity initiatives.
  • 77% do not monitor retirement/savings plan deferral rates or investment elections by race/ethnicity.

It can be challenging to identify and correct the root causes of workforce inequities. The good news is that companies have the tools to uncover the extent and sources of the gaps, and then take action to remedy them.

 

We undertook this research to help employers craft a clear, comprehensive and impactful roadmap for closing the career, health and wealth gaps in the US workforce for Black employees. So where are we now, and where do we go from here?

 

1. Target talent pipelines over hiring. Organizations have seen some success in attracting and hiring Black talent, especially at the top of the organization. However, many fail to address - or even recognize - the most acute area of concern: high turnover rates among Black employees. We see strong evidence of a revolving door preventing companies from building up an adequate pipeline of Black talent. Even despite tight labor markets, turnover rates are substantially higher for Black employees, at 26% compared to 17% for non-Black employees.

 

Rather than relying simply on exit interviews or other qualitative assessments, organizations can learn much from analyzing the running record of actual turnover. This can help them uncover the predictive antecedents of turnover and develop retention policies that target the drivers unique to their challenges.

 

2. Managers matter. Often diversity training, testing, and recruiting goals don't create the intended results. Diversity Training is often viewed as simply compliance-oriented and risk mitigation. In fact, these tools may generate more bias and disengage individuals not from under-represented groups in many cases. Managers specifically need continued education on managing diverse people of their current workforce, including ethnicity and gender.

 

Additionally, representation of Black employees at the manager level still significantly lags. Our research found total exits for Black employees at the manager level was 20% compared to 12% for non-black employees. Manager roles are particularly critical not only for representation, but also for driving outcomes and career advancement among all Black employees. It is also important for lower-level Black employees to see people who look like them in higher-ranking positions.

 

3. Develop and implement health equity initiatives. Given almost half of Americans receive employer-sponsored health insurance, employers have a distinct opportunity to confront health disparities through their central role in providing access to health insurance, benefits, education, and targeted interventions for their employee populations. Based on available demographic data that displays disparities, the plan sponsor, health plan, and consulting teams should work together to develop health equity initiatives, including key metrics, timeframes, accountability, and clinical guidelines. The implementation of these initiatives would be implemented by the health plan by educating, communicating and working with providers in their networks regarding effective strategies to address identified health disparities and goals for health equity.

 

4. Don’t underestimate the wealth gap. Understanding utilization is an important step in determining if financial wellness programs are meeting the needs of Black employees and whether the programs offered are working, such as retirement/savings plan deferral rates, investment elections, participation in defined contribution plans and utilization of employer-sponsored budgeting, credit management, and financial counseling or a similar tool. Our research found only 4% of companies track racial or ethnic differences in saving behavior, and only 2% of companies track racial or ethnic differences in investment behavior.

 

5. Equality over assimilation. We often ask individuals from under-represented groups to assimilate using a single narrow standard of professionalism through development programs and promotion criteria. Organizations must ask themselves: Are the least privileged groups being asked to change their behavior to achieve equity? Is there a culture of conformity? Employers should focus on equipping all employees with the awareness and skills needed for an inclusive culture through allyship training, while implementing a roadmap for culture change if listening tools identify areas of concern.

 

Mercer’s research has shown that diverse organizations are healthier, more productive and better able to solve problems, creating more thoughtful and innovative solutions that serve a wider base of customers. That creates a positive flywheel — better business outcomes, customers’ needs are being met in a better way, all the while creating individual and societal benefits. If enough companies address this together, we will begin to see real progress.

Building a diverse, equitable and inclusive workplace has become an imperative for a growing number of organizations. As these organizations are finding out, an effective DEI strategy requires commitment, structural transformations, and cultural and behavioral changes.

 

Mercer’s latest global DEI diagnostic results shows positive news: many organizations are making DEI part of their business strategy. However, they recognize there’s still a lot more they can do to translate their commitments into real action.





Telvin Jeffries
Senior Principal, Mercer
Kaia West
Inclusion and Diversity Leader, US & Canada, Mercer
Melissa Swift
US Transformation Leader, Mercer

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