Surprising Ways Your Engineering Organization is Not Being Equitable
TLDR:
$ is still the #1 factor in retention, next to having good people managers
Current benefit packages contribute to institutionalized racism & sexism
Formal reviews & written feedback are inequitable, proven unsuccessful, unwanted, and costly to an organization
People trained to think as engineers are intrinsically unprepared to give equitable feedback
AEC companies can change their processes to retain talent, especially women and carers, by updating their policies and collaborating together
We’ve all heard about the high unemployment rate and the conundrum of simultaneous labor shortage. Experts are calling this the Great Resignation with a Microsoft study showing 41% are thinking of quitting and tech turnover rates are 1/3 of their workforce. Post-lockdown, job uncertainty has waned. We’re finding that previous employer processes are outdated, employees want more flexibility in their work, and inflation is on the rise. People don’t want to go back to pre-pandemic salary figures. The labor market has officially shifted.
The AEC (architecture, engineering, construction) industry is especially poorly positioned. The infrastructure bill will increase labor demand. In a tangential labor market, it’s not uncommon for our colleagues in tech to stay at a job for 1-2 years. This will trickle into other STEM companies as we partner with and compete against tech in the upcoming decade, leveraging digital environments to deliver the upgraded infrastructure.
Not all turnover is bad. It can improve talent and reduce complacency making the company more competitive. However, there’s a high cost associated, about 6-9 months of their annual salary, and can be detrimental if top talent is lost. New hires will be asking on average 5-20% more than current employees in the same job category, with reports of some companies pre-emptively giving these significant raises and companies like Amazon and Uber already dolling out millions in hiring incentives.
To deliver all this infrastructure work, AEC companies will need to collaborate to keep people interested & excited about the industry.
Water quality drainage area, Lady Bird Lake, Austin, Texas
Filling the labor market with women/womxn
Women are a portion of the workforce that have had historically higher rates of turnover in engineering when compared with other skilled professions such as accounting, medicine and law. Top that with the Shecession where 47% of women have used their PTO for childcare duties and have sacrificed $800 billion globally in lost income. That means there’s a possibility for change that can be stood up from within the industry by appealing to womxn and carers, both those thinking about leaving the industry and those who left previously.
Another reason they may leave is that employees don't always chose their projects - it's a function of the market and what work the company is pursuing. For disadvantaged employees, their supervisors may put them on activities that are necessary for the company but less valued by the direct supervisor. In lean methodology this is known as “necessary waste”. Then they get mediocre reviews because their contributions aren’t considered as important as their counterparts'.
It’s a self-fulfilling prophecy, widening the promotion gap. For women, this is one of the main reasons they drop out of the industry at mid-career. They’ve gotten perpetually further from what they wanted to do and are getting paid less. COVID-19 has accelerated this with 57% of women in engineering burned out (compared to 36% of men), which we can assume is partly from women being the primary carers during a pandemic. If the industry doesn’t get ahead of it, they can expect to go in the wrong direction for diversity, costing companies even more money.
The OG in retention
There’s lots of talk about culture and work satisfaction, but data has shown that money is the primary motivator for employee retention across generational boundaries. However, even that goes out the window if employees don’t have good people managers, making employees 4x more likely to quit and 2x more likely if they aren’t being recognized appropriately.
Employers will have to be agile to the new labor standards, progressed by tangential industries, to succeed in tomorrow’s market; Appealing to womxn and other carers is a place to start.
Benefits are aN equity issue
Benefits are 34.8% of salary, according to the BLS. That may be the case for some employees — but for others it is not accessible without red tape, with benefits needing to be renewed yearly and manually by the individual. Others are buried deep with nuances that if employees are changing jobs as often as is the new normal will be difficult to navigate, no matter how user-friendly any individual front-end. Overall, benefits can be fantastic to woo new hires but I’m about to show you how they can also be inequitable allowing those with more time, training, or institutional knowledge to fully capture the coverage.
Every hiring manager in AEC says “we have great benefits”. That makes great benefits pretty average in my book. So I wanted to know: what really is a great benefit? Turns out, it’s not super easy to tell. To fix this, I’ve started to crowd source benefit package details to understand the stats. If you work in the AEC industry please fill out this google spreadsheet. There’s already a lot of data there for you to browse.
Individual companies aside, We need to make benefits less time consuming and more transparent Across the industry if we want to be more equitable to disadvantaged employees and those without money mentors.
great benefits
Here are the benefits that I’ve gotten throughout my career as an engineering consultant.
My benefits starting in Aug 2014 - Notice my 401k contribution was suspended in 2020 and lack of knowledge on the HSA contribution meant I lost my eligibility in 2016. There is inequitable access to benefits - those with time and perseverance can wade through the details while others may be missing out on eligible coverage.
As a womxn and a millennial, culture and flexible working are non-negotiable for me so that’s not part of the conversation. After COVID-19 I won’t care for a hiring manager to tell me that flexibility is a great benefit. It’s average.
My out of pocket for dental may be $20/month but what is covered by the insurance? Lots of variability, nuance, and ever-changing small fonts.
A lot of potential for a lot of Inequities in 401(k)
We already know the inequities of pay gaps between different gender and ethnic groups. Benefits are no different. Let’s say Hypothetical Company, LLC does a 50% match rate up to 6% salary. It’s a pretty common benefit. A $50,000 salary employee is eligible for $3,000 however the employee is spending a greater portion of their paycheck which means that HC LLC is likely matching much less than the eligible $3,000.
Compare that to a $150,000 salary employee that is eligible for $9,000. So whereas someone at the higher end of the payscale can get almost $30,000 a year funneled away (which then compounds) the equity gap widens between the two employees. I did find it helpful to know that just north of $150,000 the benefit plateaus at this hypothetical company. Now if the company matches at 300% up to 6% of the salary, imagine the gap that forms between low and high income earners.
We already know there’s an institutional pay gap between demographics. If an employee is being underpaid in base salary compared to their peers, they’re also being underpaid in benefits with major financial repercussions that extend across their lifetime.
Downtown, Lady Bird Lake, Austin, Texas
You’ll notice that my 401(k) benefit was halted in 2020. My company didn’t do any layoffs after the first COVID-19 surge but revoked this discretionary benefit. Let’s say it was halted for a full year at HC LLC, then a $100,000 employee would have lost $6,000 from their retirement pay, compounded by a conservative 7% over a 30-yr lifetime is the equivalent of a $45,674 loss. That’s a lot of money to a financially disadvantaged employee. Even more, if they had started this in company stock which performed well in 2020, this is worth almost $500,000 in a lifetime.
Companies need to be held accountable for their track records of revoking discretionary benefits so employees can make informed decisions about their financial future when looking at job offers.
The benefit is also only vested one time per year now but which they still call “fully vested”; some companies don’t have it fully vested until 3 years into that person’s service according to my crowd sourced data. All of this language is confusing but ultimately means… a) if someone quits before the payout, they lose the benefit for that year; b) an employee loses any financial gains they could have made on that match until it is actually (really) vested; and c) companies might not actually be telling the full truth in their documentation because there are no checks and balances.
Folks, not all benefits that are spelled out the same way actually function equally. We need to work together to do an industry-wide meta-analysis to understand the discrepancies so that people aren’t dropping out of engineering faster than other job types…making every company lose.
How to fix it
Benefits are confusing. Employers are well aware that turnover is about to happen. They can’t just sit on the sidelines if they want to be competitive and live up to their social equity values they talk about on their social media feeds. Supply and demand economics indicate that it benefits everyone to keep employees in the industry.
The small print and nuances are not an AEC employee’s specialty, nor should it be. But by the lack of transparency across the industry we are deepening the inequities experienced by different demographics and contributing to institutional racism. Companies that want to compete in the new job market should look to clarifying their benefits and making them more equitable within their company. Money mentoring is important and cannot be left to the employees that know about money resources and choose to do it in their off-hours. Make benefits an on-the-job training. Require this as a course to get ABET accreditation. Put it in the FE exam. Collaborate together to give an apples to apples view of different companies. We all have a responsibility to fix this.
Formal Reviews are an equity issue
Now that we’ve looked at money, let’s look at the next best way to retain employees - by having good managers. It's no surprise that managers and employees alike hate the yearly review process. For starters, I rarely hear of something that is said in an annual review that actually changes a person's behavior but have heard plenty about off-base, ageist, sexist, racist biases that were perpetuated during the process. EVEN WITH ANTI-BIAS TRAINING. The corporation that popularized the idea of yearly reviews (from the same CEO known for "rank and yank" 10% of your staff and "brutal candor") doesn't even use it today. However, 95% of companies have adopted the practice.
Any time a supervisor has visibility on radical candor from their peers, it links compensation to feedback. Unless those two are divorced, an organization can’t objectively evaluate and promote staff, nor are they getting the most out of the time spent doing this process.
I'm not saying positive things don't happen, but it's not conducive to how humans are programmed. Even more, people grow based on conversations with their mentors, who they trust. This stressful quarterly or yearly event encourages procrastination of hard conversations, distracts expensive staff for no observable gain, and has not proven to be effective. Netflix (from the book “No Rules Rules”) suggests that ranking employees leads to internal competition instead of competing against the real competitors. They don't even protect companies from litigation and could be used against them in court. If the goal is mentorship & employee growth, then written reviews are not the way to accomplish that.
With 69% of people who think the annual review process is flawed, it may not be just millennials that are changing this process. In fact it's already been ditched by corporations Deloitte, Adobe, Accenture, and General Electric. Expect to see a rework of the system at your engineering firm, with a focus on streaming feedback so that employees have a constant pulse on their performance, rather than a twice-a-year batch delivery. (andromedadumont.com)
Feedback-based reviews get us further from a meritocracy by their inevitable biases and distract us from spending time on what matters to the organization.
Reviews that are connected to compensation
Here are mine.
Early on in my career, my company at the time did more smaller bonuses. Those have fizzled out so base salary is a larger portion but more consistent. The “No Raise” boosts refer to additional responsibilities with no compensation increase. Equity raises were to bring me up to market value when noticed by others or company-wide increases. I was also overtime eligible and showed how that contributed to my overall pay in my last salary post.
In my last salary reveal, I discussed the struggle of women individually and how that translates to a global gender pay gap. If you missed it, read From $0 to 6 Figures - A Woman's Worth. In that post I shared my work life from entry-level to industry salary. In summary, I received few raises generally because I was the annoying junior employee and people supported me even if it didn’t always look good in my favor known as gender blow back.
Notice that just because I got bonuses and exceeds ratings on almost* every review (hey, y'all knew I was an overachiever already), that still translated to below-inflation yearly raises in which I then had to correct by fighting for larger salary boosts. The current system is exhausting. It’s not hard to link that and the pay gap to the reason women drop out of engineering professions at higher rates than less male-dominated industries. It feels more unfair to them.
Likewise, a system based in outdated years-experience metrics prohibits high performers from reaching higher levels and disrupting the industry like they’ve done in tech. To woo people back into AEC, employers should consider a results only work environment (ROWE), not years experience.
From consultant rate schedules to compensation job codes, years experience a person has in the industry does not begin to describe maturity, emotional labor, and soft skills needed for the most complex projects of tomorrow.
I-35, Lady Bird Lake, Austin, Texas
Engineers have a tough time doing the emotional labor needed for reviews
You’ll notice I said “almost*” every one of my reviews was exceeds ratings. One year I had a new supervisor who was not familiar with me before my review time. They were overeager to be helpful and took someone venting about me as a reason for me not to get an “exceeds” rating that year. My supervisor didn’t have that context to know this was a difference of opinion in management style and so despite their best intentions was not able to have a productive conversation with me about it. I very nearly quit that day.
I did a poll on my instagram and was surprised to find that of the names I recognized in the AEC industry, they had mostly selected “Not at all” for how useful they found formal reviews. Turns out, people who make good engineers, don’t generally make good people managers. Interestingly, the supervisors that feel that they are being the most objective in the review and raise process, tend to exhibit the most bias, in what is known as the overconfidence effect. They’re rooted in their right-ness. The more diverse the industry gets, the more critical this piece will become.
Engineers make great coaches and mentors. The engineer brain is trained to find patterns and Black/white boundaries. A company is setting these people up for failure if they think they will make good formal review conductors, the antithesis of a good engineer.
Longer-term employees are blind to incremental change
Managers that do know their employees well also have a difficult time because humans aren’t good at recognizing incremental change. Just as you won’t notice a friend slowly losing weight, it’s difficult for managers see incremental career growth in a system that links their perception to the employee’s pay. This is compounded by the fact that supervisors aren’t often following the job market shifts. Supervisors are promoted because of legacy in the company and their valued technical work… who are arguably the people least connected to fluctuations in the job market.
According to Netflix, HR has to do the work of finding market value and have regular conversations about personal-top-of-market salary in order to retain top talent. At Netflix they tell their employees, before you say “No”, say “How Much?” to recruiters. That way their HR crowd sources the ever-changing market data and can be sure they actually are paying top of market like they say they are.
Engineers are highly paid professionals, so they don’t need to be doing a job they are poorly suited for and have little market knowledge about.
How to fix it
At this pace we’re already behind in fixing all this aging infrastructure even before we’ve lost staff to the more lucrative tech industry. Here are some other ways to fix it:
Stop doing reviews and written feedback.
Owners and consultants can think about moving towards cost-plus contracts and other models that aren’t focused on hours but rather results.
Corporate HR can take on the supervisory roles when it comes to compensation. HR professionals can matrix with the employees’ direct mentors and coaches which sets the example to employees that they should also be matrixing their support structure in a company. This saves the high-dollar technologists for winning high-dollar work, not doing yearly reviews.
Develop algorithms for compensation that are free from bias, looking into equity across the company and across the market. Competing companies create a win-win by working together to be inclusive to the most marginalized or disadvantaged staff. Inclusion makes a really good growth strategy in a retention-focused industry.
Walmart is trying to tackle the problem of managers not understanding the best track for their employees, because they only see the current track that person is on, instead of a tailored development path. Another way is to map skills, not career paths, at an HR-level to visually see the best fit for a person.
A company equity study is different from a pay gap study. In a pay gap study, a company can look at the value people are contributing in a single job category. An equity study is more thorough and analyzes the mobility of employees as well.
DPR has no job titles to promote a flat organization.
Data shows that only 2% of principals in AEC are under the age of 40…the age you can be the United States President. Addressing the representation gap can lead to a culture shift.
Salesforce President and Chief People Officer Cindy Robbins shared how they facilitate an organized airing of grievances: “One of the best examples of how we do this is through Chatter, our companywide internal communications tool. Everyone can have a voice on Chatter. In fact, we have an Airing of Grievances group where employees are encouraged to raise their concerns.”
Pilot a program like LinkedIn's Perk Up with $500 a quarter for employees to use as they want--personal trainers to dog walkers, and other ways to make their work/life balance and worklife easier. My company has previously done rideshare and safe holiday travel in December for $50 reimbursement per employee.
I would love to hear other ideas you have in the comments.
Listening: Khruangbin. Look em up - I bet you’ve heard Texas Sun before.
Watching: Madam Secretary. Can we just pause to admire a show where the drama is in the international negotiations and they’ve done a great job showing what secure, healthy family dynamics can look like?
Reading: Never Split the Difference by Chris Voss. It’s fun to read about FBI negotiations.