Used as a vintage backdrop to film scenes for “Wonder Woman 1984” and anchored by bankrupt retailers like Sears, the Landmark Mall in Alexandria was a relic.
Almost two decades ago, the City of Alexandria first began strategizing a redevelopment of the 1960s-era indoor mall, which closed in 2017, but plans for a new 18-hour community to take its place are now coming to fruition as construction is slated to begin this year.
“The community vision for the site is to really move away from the suburban interior mall surrounded by scenes of surface parking to a street grid layout that mimics lots of other parts of Alexandria in terms of size, scale and mixture of uses,” says Alexandria Economic Development Partnership President and CEO Stephanie Landrum.
Rebranded as WestEnd Alexandria, half of the 52-acre site is being developed by Foulger-Pratt in partnership with Seritage Growth Properties and Howard Hughes Holdings into a $1 billion project with as much as 290,000 square feet of retail and 1,962 housing units spread across almost 3 million square feet. The other half will be repurposed into a $2 billion, 1.1 million-square-foot hospital for anchor tenant Inova Health System, with a 2028 opening planned.
Vertical construction on WestEnd’s first phase is expected to start later this year, although a specific date is not yet set, according to Jay Kelly, vice president of development at Foulger-Pratt. That phase comprises a 120,000-square-foot medical office, and three multifamily buildings totaling 1,117 units with about 217,000 square feet of retail.
Foulger-Pratt also plans to seek permitting approval for four more buildings at WestEnd between 2025 and 2027, including approximately 1,000 housing units, a hotel and retail space. Foulger-Pratt is still in talks with tenants for the commercial space at WestEnd, but agreements are in the works with two anchor retailers, a large-format gym and a “big box retailer,” Kelly says.
The project remains on schedule as of early May, he adds, although costs have risen. The city’s investment is at about $185 million as of May, and the entire project is expected to cost “north of $3.2 billion,” Kelly says.
“In a very tough economic time, we’re excited about momentum and growth in that area of the city,” he notes. “It’s going to be a challenge to get projects financed right now and we’re up for it.”
In June 2022, Booz Allen Hamilton was without a chief diversity officer. The McLean-based Fortune 500 management consulting contractor’s chief diversity, equity and inclusion officer, Jon G. Muñoz, stepped down after a year in the role.
A year and a half later, Booz Allen hasn’t hired anyone new for the position — but that’s by design. Instead of hiring a new chief diversity officer (CDO) — a position that grew in popularity nearly 179% from 2019 to 2022, according to a LinkedIn study — the company restructured its leadership team in charge of diversity accountability.
Now, Betty Thompson, who has served as the firm’s chief people officer for 16 years, co-leads an executive council made up of senior vice presidents who represent different business sectors within the company. Thompson and her co-chair, Chief Engagement Executive Dennis Via, set the tone, strategy and expectations for Booz Allen’s diversity commitments, but each council member is responsible for holding their individual business areas accountable.
“To maintain sustained progress and impact, we’re learning you can’t have one person that everybody thinks is the owner of this,” says Thompson. “Progress and accountability need to be everyone’s responsibility.”
Booz Allen isn’t the only company reevaluating the way it structures leadership and accountability for diversity, equity and inclusion initiatives. As many companies made significant investments and leadership changes in 2020 in response to the Black Lives Matter movement that followed George Floyd’s murder by a Minneapolis police officer, firms are now confronted with the challenges that come with maintaining long-term commitments to DEI.
While some companies are holding fast to the commitments they made in 2020 or before, others have begun shifting titles and responsibilities, ultimately raising questions about what corporate DEI will look like going forward.
What’s in a name?
Looking at the 36 Virginia-based companies that made Fortune magazine’s Fortune 1000 list in 2023, it’s clear companies are rethinking the way they structure and lead DEI commitments.
Seven of the 36 firms have restructured their executive diversity role in the past two years, with some rearranging titles, some taking the word “diversity” out of the title altogether and others simply not hiring a new diversity official after one exits.
“We’ve definitely gotten into a new space and time where organizations are pulling back,” says Jamica Love, who resigned in June 2023 as the Virginia Military Institute’s chief diversity officer after two years in the role. “I really have felt it. I’ve seen it.”
Three of the Virginia-based Fortune 1000 companies — Boeing, Dominion Energy and Gannett Co. — changed titles for the leader overseeing DEI accountability, with the latter two companies removing the word “diversity” from the title altogether.
Dominion’s DEI program was headed by Maria Pia Tamburri until summer 2023, when Tamburri moved to head intergovernmental affairs for the Richmond-based energy utility and was replaced by Latoya Asia. While Tamburri’s title was vice president of DEI and employee engagement, Asia’s title is vice president of employee engagement and talent strategy. Asia’s responsibilities are the same as Tamburri’s were, a spokesperson for Dominion says, declining to comment further.
At McLean-based Gannett, the nation’s largest newspaper publisher, Kevin Terrell Heard has led the media conglomerate’s DEI initiatives since 2020. His title changed in July 2022 from diversity and engagement program manager to manager of inclusion and engagement programs. Gannett declined to comment.
“A lot of organizations have shifted their focus from diversity to more of an employee engagement approach,” says Tanisha Lewis, vice president of diversity, inclusion and social impact at the Metropolitan Washington Airports Authority. “Many of the diversity professionals are no longer called chief diversity officers or hold C-suite positions, but now have moved to more of an employee engagement or employee experience type of role.”
Unlike Dominion and Gannett, Boeing retained the diversity, equity and inclusion wording in their officer’s title, but added talent intelligence and employee listening.
“It doesn’t mean any departure from our existing commitments to equity, diversity and inclusion,” said Sara Bowen, who has headed the Arlington County-based aerospace and defense contractor’s diversity programs for five years and recently underwent a title change. “It just means I get to now work on really, really cool stuff in the employee listening and organizational research space, as well.”
Bowen’s title changed about a year and a half ago from vice president of global diversity and inclusion to vice president of global DEI, talent intelligence and employee listening. The additional focuses on talent and employee engagement go hand-in-hand with her DEI work, she says.
While most Fortune 1000 companies in Virginia include the word “diversity” in the title of the person in charge of programs focused on race, gender and underrepresented identities, those titles include a wide range of terms like inclusion, equity and human resources juggled around in various combinations.
When Stephanie Turner, who now serves as head of DEI for McLean-based not-for-profit government contractor Mitre, first started in the industry more than 25 years ago, the field was referred to as ethics and compliance, or affirmative action.
“Now you’ve seen people be a lot more creative and add on new things whether it’s belonging or culture,” says Turner. “Regardless of those changes, which to me are very superficial, the work never changed.”
Her title changed in March 2023 from vice president of inclusion, diversity and social innovation to vice president of diversity and chief sustainability officer. Like Bowen, Turner doesn’t see this shift as a shift away from designated diversity work, but rather as an opportunity to also focus on sustainability, which she believes intersects deeply with DEI goals.
Many companies are removing “diversity” from executive titles, signaling a shift in focus to an employee engagement approach, says Tanisha Lewis with the Metropolitan Washington Airports Authority. Photo by Shannon Ayres
Post-CDO
While some companies are shifting titles, others are doing away with chief diversity officers altogether. Along with Booz Allen Hamilton, three other Fortune 1000 companies in Virginia have lost chief diversity officers and not replaced them.
After Markel Group’s managing director for talent, diversity and inclusion, Trevor Gandy, left the Henrico County-based insurance holding company in late 2022, Markel transitioned his responsibilities to Joanna Browning, who has been with the company for more than 20 years and currently serves as senior managing director of people experience. Markel confirmed Browning has taken over Gandy’s responsibilities but declined to comment on the switch.
Ashburn-based IT company DXC Technology lost its global director of DEI in December 2022, but does not appear to have hired anyone new under that title and did not respond to requests for comment. Similarly, Arlington real estate investment trust AvalonBay Communities lost its director of DEI in October 2023 and has yet to re-hire and did not respond to requests for comment.
“People are saying that they’re still doing the work, but they’re ratcheting down,” says Love, adding that she’s seen a trend of companies not re-hiring after a chief diversity executive leaves or replacing the position with a role that has less authority or a less explicit connection to racial diversity.
Chief diversity officers’ primary role is to ensure diversity remains a priority within a company, and that a company is taking real action to meet diversity and inclusion goals. On average, companies that have a more diverse workforce, which is typically a main objective of CDOs, financially outperform those that don’t, according to research from global management consulting firm McKinsey & Co.
Booz Allen has transitioned away from a single officer overseeing diversity work and moved toward embedding DEI across the company because of how far-reaching diversity work is, according to Thompson, as it can encompass everything from hiring, workforce development and retention to outward facing initiatives, community engagement and environmental governance.
“A true commitment to DEI means it must be built in — not bolted onto — the culture,” says Thompson.
A reckoning, four years on
After Floyd was murdered in May 2020, companies reacted with significant verbal and monetary pledges to address racial disparities. In 2021, those commitments remained overarchingly strong, according to McKinsey. In 2022, however, those metrics started to decline.
From May 2021 to October 2022, the pace of such monetary commitments from Fortune 1000 companies slowed 32%, according to a February report from McKinsey. Companies were also making relatively fewer public statements in support of racial justice, with the most significant decline seen in internal commitments.
“A lot of organizations didn’t understand what a heavy lift supporting a DEI effort requires,” says Lewis. “Organizations don’t always fully understand the commitment, and so, sometimes the support isn’t there for the programs so they can be successful.”
Nationwide, chief diversity officers have a turnover rate about twice as high as other executive roles, with an average tenure of 1.8 years, according to data from leadership consulting firm Russell Reynolds Associates. Among Virginia’s Fortune 1000 companies, the average tenure for CDOs is less than 2 1/2 years.
Since chief diversity roles began to grow exponentially in popularity, firms like McKinsey have found CDOs are often given overly ambitious or poorly defined job requirements and frequently lack the authority and support from leadership to execute their work.
“Usually, chief diversity officers have very small teams, very small budgets, and actually kind of lack the authority to make big decisions,” says Bowen at Boeing. “You have to achieve through influence, and that can be tough if you’ve got resistance from above.”
Both Love and Lewis referred to “political pressure” that companies are increasingly facing when it comes to diversity efforts. Despite the fact that more than 90% of 322 U.S. executives surveyed by employment law firm Litler in November 2023 said they were expanding or maintaining DEI programs, 59% of the C-suite execs also noted a significant increase in the backlash toward DEI efforts since June 2023.
That’s when the Supreme Court issued its ruling rolling back affirmative action in higher education institutions, which has informed some reverse racism lawsuits against companies like Gannett. Meanwhile, conservative think tanks like The Heritage Foundation have been targeting DEI efforts in higher education, also a hot topic in Virginia.
In April, Virginia’s chief diversity officer, Martin Brown, appointed by Republican Gov. Glenn Youngkin, said in a speech at Virginia Military Institute that “DEI is dead,” and it only existed on a state level because the General Assembly required it.
Love announced her resignation from VMI, the nation’s oldest state-funded military college, a little over a month later. “I felt I had accomplished everything I could at VMI,” she says of her resignation. VMU has since tapped an interim CDO.
As the school’s first chief diversity officer, Love was in the crosshairs of intense debate from VMI’s majority white student body and alums. Critiques included claims from alumni and conservatives that VMI was attempting to establish critical race theory, a concept that was banned in Virginia K-12 schools by Youngkin.
“I think every company is a reflection of the society we live in,” says Bowen. “I think our country has become more divisive over the past couple of years politically and socially.”
As Love continues working in DEI as a consultant, she remains as dedicated to the work as ever, she says.
“At the end of the day, I don’t care what title you give me,” Love says. “Can I do the work? Do I have the support? Do I have the freedom to do the work? That’s what’s most important to me.”
As the third wealthiest community in the U.S., McLean is known for its luxurious mansions and classic suburban feel. That’s starting to change.
In June 2021, Fairfax County supervisors adopted a plan, known as the McLean Community Business Center, to redevelop the town’s 230-acre downtown, bounded by Old Dominion Drive and Chain Bridge Road, to include zoned density and increased height requirements closer to the town’s core to transform it to a walkable village, a shift away from its car-centric strip malls.
The largest-yet phases of that transformation were approved by supervisors in October 2023. They include the Astoria, a seven-story, 130-apartment mixed-use building that will include 3,000 square feet of office and retail. Cost and a construction timeline have yet to be finalized, according to Michelle Rosati, who represents Astoria’s developer, JAG Partners.
Next door, candy and pet food manufacturer Mars, the largest privately held company in Virginia, is expected to begin an expansion of its headquarters, from 53,000 square feet to 125,000 square feet, during the summer, according to Pete Rowan, Mars’ vice president of U.S. public affairs. Mars declined to provide the anticipated cost of the project.
The Astoria is across the street from McLean’s first-ever mixed-use development, the Signet, a 123-unit luxury condominium with 5,475 square feet of retail space that has yet to be leased. The Signet was built in 2018.
“The major motivation was people moving to the area and feeling like we lacked a sense of community because we didn’t have a place where the community could gather,” Dranesville District Supervisor John Foust says, adding that the areas outside the business center’s boundaries will retain the suburban feel of old McLean to avoid becoming as urban as neighboring Tysons.
While McLean may not be aiming to copy Tysons, its transformation includes other projects that could achieve that village feel, including a 90,000-square-foot, 122-unit Sunrise Assisted Living facility that opened in spring 2023, and a nine-story, 44-unit condo building that began construction in March 2023. In April 2023, the owner of McLean Professional Park submitted plans to redevelop six townhouse-style office buildings into a 104-unit residential building.
“I think people are starting to feel like maybe change is actually possible and this is a catalyst that will lead to a revitalization of downtown McLean,” Rosati says.
Working as a mortgage lender in Roanoke for the past 18 years, Jason Bialek experienced everything from the financial crash of 2008 to the historic spike in home sales during the COVID-19 pandemic.
Following that bonanza in 2020, though, Bialek and others in the residentialreal estate industry will probably look back at this period as one of the most challenging times in their careers. Mortgage rates zoomed 5 percentage points over the past three years, and that’s combined with historic low housing inventory in Virginia, which has hurt real estate agents, lenders and current and prospective homeowners.
Bialek survived two significant rounds of layoffs in August 2023 at his company, Guaranteed Rate, the sixth-largest nonbank mortgage lender in the nation. Although he kept his job as a branch manager and vice president of mortgage lending, which he’s held since 2017, thousands of other employees were terminated. (The company declined to disclose an exact figure.)
The layoffs came after an influx of hiring at Guaranteed Rate during 2020 and 2021, right as the housing market peaked with the most home sales since 2006. In response, the company “probably” overstaffed, John Palmiotto, who resigned as the company’s chief of retail production, told the Chicago Tribune last summer. Palmiotto estimated the company’s layoffs were in the thousands nationally.
In Virginia, the lending industry lost about 12% of its loan officers in 2023, according to the Mortgage Bankers Association, and anecdotally, real estate professionals say they’re seeing many colleagues leave the industry following the Federal Reserve’s multiple interest rate hikes to address inflation, which significantly impacted mortgage rates. The central bank is expected to cut rates several times in 2024, from 5.25% to 5.5% to a possible low of 3.75% to 4%.
That will help borrowers, but rates are just part of the picture. Real estate agents and homebuilders are also preparing for major shifts in their industries’ landscapes, as the number of Realtors is already shrinking in Virginia, a reversal of the field’s growth in 2020 and 2021.
‘Eat what you kill’
A December 2023 report from Virginia Realtors observed a 9.5% year-over-year decrease in home sales across the state in November 2023 — the smallest year-over-year decline in statewide sales activity in about two years. “Some markets could finally be approaching the bottom of what has been a slow 2023,” the report stated, noting that active house listings also appeared to have reached a bottom.
Virginia Realtors President Tom Campbell said he expected to see some improvement in the tightness of the market. At 7.79% in October 2023, the average 30-year fixed mortgage rate was the highest it’s been since 2000, after hitting its lowest point ever — 2.65% — in January 2021.
With fewer people putting their homes on the market during this period of high rates and expensive house prices, real estate agents are leaving the industry after swarming to it starting in 2020.
From 2019 to 2021, 2,626 new Realtors in Virginia registered with Realtor associations, marking a nearly 6% increase across three years, according to the National Association of Realtors. During the past two years, however, more than 1,600 Realtors have left the association, bringing down the total number of registered Virginia Realtors from a peak of 36,445 in 2021 to 34,822 in October 2023.
“I think most Realtor associations across the state are budgeting for a modest loss in membership,” says Laura Lafayette, CEO of the Richmond Association of Realtors.
One of the primary reasons, she says, are the “golden handcuffs” keeping homeowners from selling because they purchased their house with a much lower mortgage rate than the current one. More than 60% of homeowners with a mortgage have a rate that’s lower than 4%, and 82% have a rate under 5%, according to Redfin data.
Increased rates heavily impact buying power, with every percentage point increase adding about $35,000 to the cost of a house, says Ryan McLaughlin, CEO of the Northern Virginia Association of Realtors. For those trying to sell homes and mortgages, that’s a major disincentive for their customers.
“It pushes so many people out of the market when the rates are 7.5% versus 5.5%,” Bialek says. “I mean, you’re talking millions of people that are pushed out of qualifying when the rates change like that.”
At the end of 2023, the national 30-year fixed mortgage rate was 7.45%, a slight decline from last autumn, but still high for many buyers — especially prospective first-time homeowners.
Home sales in Virginia had fallen 12% year-over-year as of October 2023. While lenders are facing a 75% decline in mortgage activity compared with 2021, according to Fannie Mae, Realtors rely on sales commissions for their income, so dropping home sales could reflect a significant drop in revenue.
Lafayette says about a quarter of those who left the Realtor profession at the end of 2022 had fewer than five years of experience, according to data her association has collected.
“I think our larger firms are designed to weather these storms,” she says, adding that she wouldn’t be surprised to see those firms shrink their footprints in response to the downturn. “It tends to be an ‘eat what you kill’ profession, so you’ve got to have some cash reserves.”
Although it hasn’t manifested yet as a major factor in Virginia, a $1.8 billion federal jury verdict in October 2023 against the National Association of Realtors and several large brokerages — holding that they artificially inflated commissions to real estate agents — could alter the national residential real estate landscape, some experts have noted. In addition to the damages awarded, which could rise as high as $5 billion, home sellers would no longer need to pay their buyers’ real estate agents. Although the NAR plans to appeal the verdict, there are similar lawsuits currently wending through other courts, and investment banking firm Keefe, Bruyette & Woods estimated in a November 2023 New York Times report that commissions could decline as much as 30% annually.
For Brad Thomas, a Realtor at Vinton-based Mountain View Real Estate who’s been in the business since 2008, the changing headwinds of the market have meant leaning more on commercial sales and his house-flipping business to make up for the downturn in residential sales.
“It definitely is hurting certain people in the short term, but that’s the natural progression of the real estate market,” says Thomas. “Everything goes in cycles.”
To Thomas, these cycles are necessary to keep a healthy market, which he believes was not the case in 2020 and 2021 when consumers were buying houses well over asking prices and sometimes without an inspection.
Now, a house that was getting 10 or 11 offers two years ago is getting just one or two, he says. Yet despite less competition, home prices are still rising.
Inventory battle
Richmond-area builders are facing a tight inventory of buildable lots, says Danna Markland, CEO of the Home Building Association of Richmond. Photo by Matthew R.O. Brown
In addition to rate hikes affecting the national residential real estate market, Virginians particularly have been impacted by low housing stock, which is adding pressure to housing affordability and the amount of supply real estate professionals have to work with.
Nationwide, unsold inventory was at a 3.6-month supply in October, reflecting the estimated number of months it would take for the current homes on the market to sell. Virginia had a 2.2-month supply during the same period.
A six-month supply is associated with moderate home price increases, and anything below that is expected to push prices up rapidly, according to the NAR. In Richmond and Northern Virginia, two of the state’s tightest markets, inventory supply is as low as 1.5 months and 1.05 months respectively, according to reports from those regions’ Realtors associations.
NAR said in December 2023 that the Washington, D.C., region, including Arlington County and Alexandria, ranked No. 10 in its list of markets with the most pent-up housing demand.
And in Richmond, “we’ve had an inventory shortage for a very long time. You’ve got real estate professionals who have less pie on the table to share,” says Lafayette. “It’s created a very challenging environment to work in and a challenging environment for some people to make the income that they would have made just two years ago.”
Low inventory is one of the reasons home prices are still ticking up in Virginia despite decreasing demand, and professionals like Bialek and Lafayette say they’re not optimistic about prices going down.
“A lot of people think they should wait for home prices to come down [before buying],” Bialek says. “That’s not going to happen.”
The effort to replenish housing inventory is under threat as builders have “blown through” their supply of buildable land since 2020, when they were addressing the spike in demand during the early pandemic, says Danna Markland, CEO of the Home Building Association of Richmond.
Lot inventories in Virginia have declined from a 36-month supply in 2012 to a 12-month supply in 2022, according to the Virginia Housing Commission.
“If we don’t address our land inventory, all these builders will not have the land product to be able to deliver a home to the market,” Markland says. “We could see a very different Richmond-region builder dynamic in the next five years.”
Although there’s been a “flurry” of new homebuilding, that spike will likely not be sustained and is really just making up for lost time, Markland says. The rate of housing stock growth in Virginia has been under 2% since the 1960s, according to the VHC, and was less than 1% from 2010 to 2020.
Limited buildable land for new home construction is also compounded with increased in-migration to areas like Richmond, Markland says. In total, the Richmond region added 27,640 people between April 2020 and July 2022, with close to 13,000 new residents moving from Northern Virginia to Richmond in 2021 alone.
At certain points over the past three years, Richmond-area builders reported up to 50% of their sales went to buyers from outside the metropolitan area, Markland says, as white-collar employees working from home had more geographic flexibility.
“There should be a heavy emphasis on increasing housing supply,” says McLaughlin, adding this can be facilitated by easing zoning regulations for developers.
2024 outlook
Virginia Realtors Chief Economist Ryan Price wrote in the organization’s November 2023 report that active listings were down by 0.7% from the previous year, although new listings rose by 0.3%. The median home price statewide was $385,000, up 5.5% from November 2022 — but in Northern Virginia, the median price was $656,500 in November 2023, up 5.72% from the same month in 2022.
Price wrote that the small decline in active inventory — the lowest decrease in the past eight months — as well as increases in listed homes in Central Virginia and parts of Hampton Roads indicate that the inventory levels “could be stabilizing.”
But Markland isn’t as optimistic about the Richmond region. She says land supply constraints could impact the price of new home construction, since buying and prepping land makes up a significant portion of construction costs.
“Even though we see fading strength in sales performance, there’s no way for those average prices to come down when markets are at a premium,” Markland says. “Construction of the home only makes up about 60% to 70% of the cost of the property. That land factor can swing significantly in the price.”
While rate hikes and sales decreases have eased, real estate professionals in Virginia continue to face evolving challenges. In part because of the limited land supply in areas like Richmond, the state’s inventory problem is likely to get worse before it gets better.
“The industry is waving this distress signal. We have a crisis on our hands, and we’ve got to address it,” says Markland. “But it can’t just be industry coming to the table, because lots are approved by local government.”
At the end of October, United Way of Southwest Virginia broke ground on its $25 million project to convert a former Kmart store in Abingdon into a regional workforce development and child care hub. It’s an attempt to address the region’s workforce shortage, one of the most pressing issues among area employers.
“There’s a lot of folks that aren’t participating in the labor force,” says Travis Staton, president and CEO of United Way of Southwest Virginia. “That means they’re not employed and they’re not working.”
Only about half of the region’s population participates in the workforce, leaving many local employers struggling to attract and hire employees. While Staton is still working to identify the many barriers contributing to this low participation rate, he and local employers are investing in new strategies, like bridging the gap between education and employment and providing affordable child care.
“You need to ask … why are they not participating in the labor force?” says Staton.
Southwest Virginia, which includes 16 cities and counties from Bland, Wythe and Carroll counties westward, was long defined by its natural resources, particularly coal. Like many of its Appalachian neighbors, the region’s economy has been historically tied to mining, and was ranked as the fourth most coal-dependent area in the U.S. in a 2021 report by the federal Interagency Working Group on Coal and Power Plant Communities and Economic Revitalization.
During the past three decades, Virginia’s coal production — the majority of which occurs in Buchanan, Dickenson and Wise counties — has fallen from 46.6 million tons in 1990 to less than 10 million in 2020, according to the Virginia Department of Energy.
Although mining jobs are down, other economic development projects bringing employment to the region have helped put Southwest Virginia ahead of the rest of the state in terms of post-pandemic job growth. One example is the temporary Bristol Casino, which is looking to more than double its workforce in the next year as the permanent Hard Rock Hotel & Casino Bristol opens.
“We currently have about 600 team members and, by next July, we look to have 1,300 to 1,400 team members,” says Marina Alvidrez, Hard Rock’s vice president of human resources for the Bristol casino.
Hard Rock is “looking for personality” and a good attitude in prospective employees — the casino will provide all other training, Alvidrez says. With pay rates starting at $18 an hour, she’s confident about attracting workers, but says other employers are finding they have to increase salary offerings and other benefits.
Hard Rock Hotel & Casino Bristol plans to hire a total of 1,300 to 1,400 workers for its $400 million permanent resort casino opening in summer 2024, says Marina Alvidrez, the casino’s vice president of human resources. Photo by Earl Neikirk
“When I hear a new company bringing in 250 jobs … I cringe,” says Lennie Gail Mitcham, executive director of The Southwest Virginia Alliance for Manufacturing. “We’ve got 380-something companies who can’t fill the job openings that they currently have.”
Mitcham’s organization works with 41 of the more than 350 manufacturing companies across Southwest Virginia. On SVAM’s website, alliance members are currently advertising 154 job listings, some of which are looking to hire more than one person for a particular job, Mitcham says.
Job hopping
Unemployment is higher in Southwest Virginia (3.9%, compared with 2.5% statewide) than other parts of the state, but the larger gap is in labor participation. Just over half of Southwest Virginians participate in the labor force — about 12% lower than the state average, according to the Virginia Employment Commission.
On top of nationwide labor trends, Southwest Virginia has unique workforce barriers, primarily including transportation, housing and child care, Staton says. In 2021, 40% of mothers of children under 6 in far Southwest Virginia were not in the labor force, compared with 26% statewide, according to data from the University of Virginia’s Weldon Cooper Center for Public Service.
Another challenge contributing to the region’s low workforce participation is public health. More than 25% of Southwest Virginians of working age report having a disability, and the seven localities with the highest disability rates for people ages 18 to 64 are in Southwest Virginia, says Hamilton Lombard, a Weldon Cooper Center demographer.
And while Southwest’s remoteness causes more than two-thirds of young adults to stay in the region, a better rate than other rural parts of Virginia, that same remote nature can be a barrier to attracting economic development, Lombard says. So, given the region’s job prospects, he says, “young adults in Southwest Virginia are less likely to be employed or in the labor force, helping depress participation rates further.”
What’s more, the region is not immune from national trends already making it difficult for companies to recruit and retain workers.
“We’re in this new dynamic of what the employer-employee relationship looks like,” says Glenn Goad, CEO of Atlanta-based internet provider EarthLink, which has a new office in Wise County. Goad, who says he’s faced difficulties hiring and keeping workers, believes many of the problems he faces are national trends brought about by the pandemic. “With COVID, we created this new world for employees called ‘flexibility.’”
Goad has struggled to adapt his company to the desires of incoming employees, particularly the younger generation, he says, leading to significant turnover. At the beginning of six-week training sessions at EarthLink’s Wise, Goad offers $500 to any new hire who will attend every day of the training.
“I’ve been doing this long enough, I know I won’t lose my $500,” he says, adding that a training class will typically start with about 20 new employees and often end with five or six.
Southwest Virginia has a turnover rate of about 8.3%, about six percentage points higher than state and national rates, according to U.S. Bureau of Labor Statistics data. Across the country, turnover rates are higher among younger generations, with Gen Z having some of the highest job-hopping rates of any generation, a 2022 Gallup poll shows.
Younger workers “are willing to job-hop for 50 cents an hour,” says Mitcham.
That difficulty in retention leads to an even greater labor shortage for mid- and high-skill jobs, as employers often prefer to hire employees from within who already have been trained and are familiar with the company, Mitcham says.
“They’re willing to hire individuals who show strong soft skills,” she says. “We need more soft skills. Employees are not understanding that they have to show up to work on time, they have to show up regularly. They’re not understanding a chain of command.”
Lennie Gail Mitcham is executive director for The Southwest Virginia Alliance for Manufacturing, which represents more than 350 area manufacturing businesses such as motion controls maker Columbus McKinnon’s plant in Damascus. Photo by Earl Neikirk
Barriers to work
High job vacancies aren’t the result of people not wanting to work or being lazy, says Staton, of United Way.
The region spans roughly 7,000 square miles, so people must often commute significant distances to find good-paying work, making reliable and affordable transportation a vital but somewhat lacking resource for local workers, Staton says.
Another area where Southwest Virginia is well behind the rest of the state is child care. Statewide, Virginia is about 12% short of needed child care slots, according to a 2019 study from the Bipartisan Policy Center, while Southwest Virginia has almost a 30% gap, meaning more than 7,000 children in the region don’t have child care or rely on a parent who stays at home.
“When you think about a lot of people sitting on the sidelines, if you don’t have child care … especially [for] young professionals and young families, there’s typically somebody sitting at the house not in the labor force and the other person is going to work,” Staton says.
Many parents feel they are dedicating so much of their paycheck to child care that it’s more valuable to stay with their child and ensure quality care, he adds. The average annual cost of child care for an infant in Virginia is more than $14,000, making Virginia the ninth most expensive state for child care in the country, according to a June report from the Economic Policy Institute.
That means child care costs for Southwest Virginians with a single child could be a third of their annual income, which averages $45,340 for the region, per the Bureau of Labor Statistics.
In a survey of 150 businesses, United Way of Southwest Virginia found more than half of those employers said the need for child care was impacting their ability to hire and retain talent, says Staton. One of those companies is Abingdon-based K-VA-T Food Stores, operator of the Food City supermarket chain that’s the second largest employer in Southwest Virginia.
“We, along with other employers, have been very frustrated about not being able to get people back into the workforce,” K-VA-T President and CEO Steve Smith says. “Time and time again, child care comes up as a big opportunity.”
Addressing the problem
Food City has experienced worker shortages on the retail and corporate sides of the business, Smith says, which is why the company is partnering with United Way and donating $4 million to help establish United Way’s regional workforce and child care hub under construction in Abingdon.
Funded through a mix of public and private funds, including federal funding from the American Rescue Plan Act, the planned 87,000-square-foot facility will dedicate about a third of its space to providing child care for about 300 children, ages 5 and under. The rest of the space will be dedicated to serving students from kindergarten through high school, offering educational resources and opportunities for kids to explore career options as they get older, with a goal of reaching 30,000 students per year at full capacity, to Staton. It will include a GO TEC lab with 3D printers and robotics and other technologies for K-12 teachers, as well as a workforce exploration center.
“We like to think we’re working on both sides of the continuum right now,” says Staton. “Historically, [we] have a lot of disconnect and opportunity to bridge the gap between the world of learning, which would be the educational system, to the world of work.”
Adding internships and training programs for students is a popular strategy among employers addressing labor shortages, including CGI, an IT consulting firm with more than 375 employees in Lebanon.
The average CGI worker spends nine years at the company, with turnover rates roughly half the industry standard, according to Luke Layne, director of CGI’s Lebanon onshore delivery center. The company, which came to the region in 2006, has become well known locally, Layne says, for its work with students, including sponsoring a STEM camp for local middle schoolers and participating in a career expo through United Way that puts CGI’s name in front of 4,000 seventh-graders — essentially every student of that age in the region.
Mitcham, too, believes investing in student outreach is key, especially since she says she finds students aren’t aware of or have misconceptions about manufacturing jobs in the region. Manufacturers are increasing internship opportunities and partnering with vocational and higher education schools like Mountain Empire Community College and the University of Virginia’s College at Wise to spread awareness about manufacturing, as well as cultivate highly sought soft skills.
In terms of retaining young people who may be prone to job hopping, it’s a matter of showing them “a roadmap” to advancement and an appealing future with a particular company, Mitcham says.
“A lot of Gen Z are more willing to stay if you provide them with a good work environment,” she says. “The data says that you can wave a dollar at me, but if you don’t provide me with a work environment that I’m going to enjoy or have no opportunities for advancement, I’m going to stay where I’m at.”
Some companies increased hourly pay from around $10 to $16 since the pandemic began, Mitcham says. Layne, at CGI, also believes his company’s salaries have helped attract and retain workers. CGI starts employees about $5,000 higher than the region’s annual salary on average, according to employment website Indeed.
More so than salaries, says Goad, at Earthlink, flexible work schedules and an appealing work environment seem to be top priorities among younger employees, and he is even considering a four-day workweek for some corporate positions.
As EarthLink wraps up construction on a new 30,000-square-foot office in Wise County, employee demands are top of mind for Goad, who is making sure large break rooms and common areas are included in the design.
“If you just go back 10 years ago, nobody was spending extra money to build that into a building that’s supposed to be built to be efficient,” he says. “As an employer, we’re now challenged with how we figure out how to fit into this new paradigm.”
The Birthplace of Country Music Museum Photo courtesy The Birthplace of Country Music Museum
Southwest Virginia at a glance
Located within a day’s drive of six capital cities, the southwestern tip of Virginia is known for its mountainous natural beauty, as well as a history of coal mining and cultural richness. It includes Bland, Buchanan,Carroll, Dickenson, Grayson, Lee, Russell, Scott, Smyth, Tazewell, Washington and Wythe counties, as well as the cities of Bristol, Galax and Norton. While coal mining and other natural resource extraction have long dominated the region’s economy, other industries have grown up in recent years, including customer support centers. Tourism has also grown in Southwest Virginia, thanks to the region’s rich history of Appalachian music, crafts and outdoor recreation. It is also home to Mountain Empire Community College and the University of Virginia’s College at Wise.
Population
366,695
Top employers
Walmart
Food City
Lee, Russell, Scott, Tazewell and Wise county school systems
Foundever (formerly Sitel)
Paramont Coal Company Virginia
Select hotels
The Sessions Hotel (Bristol) 70 guest rooms, 2,311 square feet of event space
The Bristol Hotel (Bristol) 65 rooms, 3,800 square feet of event space
The Martha Washington Inn & Spa (Abingdon) 63 rooms, 3,200 square feet of event space
The Inn at Wise (Wise) 49 rooms, 5,000 square feet of event space
Western Front Hotel (St. Paul) 30 rooms, 2,000 square feet of indoor and outdoor event space
Nicewonder Farm & Vineyards (Bristol) 28 rooms, 44,000 square feet of indoor event space
Restaurants
Burger Bar (Bristol) American, theoriginalburgerbar.com
Draper Mercantile and Trading Company (Draper) American, draperisfordreamers.com
The Tavern (Abingdon) American, abingdontavern.net
Eatz on Moore Street (Bristol) American, eatzonmoorestreet.com
Major attractions
Southwest Virginia is home to a 300-mile music heritage trail known as The Crooked Road, which honors its contribution to gospel, blues and bluegrass, as well as The Birthplace of Country Music Museum in Bristol. The Appalachian Trail also runs through the middle of the region, with a hiker hub and Trail Center in the town of Damascus, which hosts the Appalachian Trail Days Festival with up to 20,000 attendees annually. Grayson Highlands State Park‘s wild ponies in Mouth of Wilson and Natural Tunnel State Park‘s massive caves in Scott County are some of the natural splendors that attract visitors, as well.
From 2017 to 2022, McGuireWoods, with offices in 21 cities, added 36.6% in revenue, and still the state’s largest law firm is pushing for yet more growth.
With roughly 1,000 lawyers, 300 of whom are based in Virginia, the Richmond-based firm — the nation’s 50th largest firm by number of attorneys — works hard to maintain a local, community-oriented feel.
“McGuire doesn’t feel massive,” says Mike Herring, managing partner of the firm’s headquarters office. “There’s definitely a sense of community, notwithstanding the size.”
In 2022, McGuireWoods yielded $977.4 million in annual revenue, up from $715.4 million in 2017. For Chairman Jon Harmon, this kind of consistent growth is key to McGuireWoods’ survival and success. Since taking over as chairman at the end of 2017, Harmon has helped the firm build its revenue, expand its departments and gain major awards like being named as one of the Financial Times’ most innovative law firms in 2018 and 2019.
“I believe the legal industry is consolidating and that, over time, there’s going to be haves and have nots,” says Harmon.
Harmon came into the leadership role on the heels of some of McGuireWoods’ largest mergers and acquisitions, which helped the firm grow in scale and profits. Now, he is working to continue that national and international expansion, while maintaining what makes the firm unique, he says: its inclusive culture.
Building a giant
Founded in 1834 by President James Monroe’s private secretary, Egbert Watson, McGuireWoods is a full-service law firm with corporate, individual and nonprofit clients. It is the 64th largest law firm in the world by revenue, and ranks 52nd among U.S. law firms, according to Law.com.
Some of the firm’s biggest victories have included winning a $501 million judgment against North Korea in the 2017 torture death of University of Virginia student Otto Warmbier. McGuireWoods also represented Arlington County-based Boeing in settling a class action suit that would have encompassed 200 million class members.
Additionally, the firm represented Dominion Energy in its $13.5 billion acquisition of South Carolina-based SCANA, and again represented the Richmond-based Fortune 500 utility in 2020 in the $8 billion sale of Dominion’s natural gas transmission and storage business to Berkshire Hathaway Energy.
McGuireWoods’ scale and capabilities have increased in the past two decades, in large part due to two major mergers, resulting in the addition of major offices in Chicago and Charlotte, North Carolina.
The first was McGuireWoods’ 2003 acquisition of Chicago-based Ross and Hardies, establishing McGuireWoods’ health care practice, which has become one its “marquee practices,” according to Harmon. Three years later, McGuireWoods also merged with Gordon & Glickson, another Chicago company, cementing McGuireWoods’ presence in the Windy City.
McGuireWoods’ 2008 acquisition of Helms Mulliss & Wicker, one of North Carolina’s largest law firms with 160 lawyers at the time, established a third major office for the firm in Charlotte. That firm did a lot of work for banking clients, so the merger allowed McGuireWoods to increase its work with financial institutions and alternative lenders, Harmon says.
Harmon has said publicly he is seeking opportunities for more firm mergers, but nothing has been announced yet.
Apart from mergers, Harmon says his growth plan for McGuireWoods involves deepening investment in five practice areas he believes will yield the highest return on investment: health care, financial institutions, private equity, energy, high-stakes investigations and litigation.
High-stakes investigations is the area of expertise of Casey Lucier, a partner at the firm who specializes in antitrust and government investigations. During her roughly 10 years at McGuireWoods, Lucier says she has seen significant investment in both of her areas of specialization.
“I think the way that both groups have grown has really been attracting and retaining superior talent,” she says. “The special thing about McGuireWoods is that … our lawyers can be big parts of their communities and have a livable family life, and yet they’ll be able to practice at a high level.”
Designing for retention
McGuireWoods’ growth into a national firm has helped draw increasingly high-level clients, which in turn has helped attract talent like Lucier, who says she was drawn by the firm’s national and international scale. What’s really helped retain employees, though, she says, is maintaining a culture of encouraging work-life balance and individualized support.
“The firm just puts a high priority on making sure that people have a livable life while still practicing law at the highest level, and that we all work together,” she says. “Really, that’s how we deliver the best results for our clients.”
This is important for Harmon, who says hiring and retention can be the biggest challenge for a firm of McGuireWoods’ size. In 2021, the legal industry experienced its highest-ever turnover rate among associates, according to a Thomson Reuters study.
“Continuing to retain your talent is certainly one of the challenges in a very competitive legal market,” Harmon says. “Other firms take note, and they try to poach your talent.”
For Lucier, her ability to juggle family life while still practicing law with major national clients first attracted her to the firm, as she was moving from Washington, D.C., with her family. She built on this by creating the Family Leave Liaison program, which designates an attorney in each office who acts as a point person for attorneys who are expecting or just welcomed a baby.
Harmon and Herring have had to adapt to build the right culture, they say; younger lawyers are looking for very different things than firm leaders were when they started their careers more than 20 years ago.
“The practice of law has changed a lot for guys like me and Jon who’ve been at it for decades,” Herring says. “I think we are continuing to be really attentive to the preferences and needs of our younger lawyers.”
McGuireWoods “puts a high priority on making sure that [attorneys] have a livable life while still practicing law at the highest level,” says partner Casey Lucier. Photo by Matthew R.O. Brown
From culture to practice
This focus on younger lawyers’ needs has led the firm to further uplift its pro bono practice — as well as nonlegal community work — which has long been a staple of McGuireWoods’ work but has increased in recent years, partly due to demand from new lawyers, Herring says.
“It’s funny, during interviews, [pro bono work] is one of the things that I find myself getting grilled on,” he says. “There’s an intimacy to it that I think we don’t enjoy sometimes with our other transactional work.”
One of the firm’s most notable pro bono cases was an $8 million settlement in 2018 for human trafficking survivor Kendra Ross, which was the largest civil single-plaintiff human trafficking award in U.S. history, according to McGuireWoods’ website.
Some of the firm’s other pro bono cases have included work on landlord-tenant disputes and aid for immigrants and refugees. For example, Lucier successfully represented an immigrant mother in a custody battle, and, years later, her team helped the mother and daughter both gain U.S. citizenship.
Incorporating innovative technology and prioritizing diversity, equity and inclusion are other significant aspects of McGuireWoods’ culture, both of which are also becoming bigger parts of its legal practice.
“One of the things that I think is really impacting all of us is AI and how that’s going to shake out,” says Harmon.
In August, McGuireWoods hired a new chief innovation and artificial intelligence officer, Peter Geovanes. Based in Chicago, Geovanes will lead development and implementation of AI-enhanced tools to improve service to clients as well as firm operations.
And in mid-September, McGuireWoods launched its DEI practice team, which was created to address some of the legal complications emerging from the U.S. Supreme Court‘s decision rolling back affirmative action in higher education. The practice team will help clients navigate potential legal issues related to DEI programs and comprises lawyers from firm teams specializing in topics ranging from labor and employment, education, corporate governance and government contracting.
Along with committees dedicated to attracting and hiring diverse candidates and holding leadership accountable for promotion and development of diverse employees, McGuireWoods is seeking to “intensify” its DEI efforts by bolstering recruitment programs and networking groups for minority associates, Harmon says.
“It’s important to us and our clients,” Harmon says of his firm’s diversity initiatives. “It all stems from our strategic plan, which is to become a national powerhouse.”
Logan Barry began working as a reporter for The Progress-Index newspaper in Petersburg in 2018, less than a year before a merger placed his paper under the ownership of Tysons-based media conglomerate Gannett. In August, he joined a federal class action lawsuit filed in the U.S. District Court for the Eastern District of Virginia alleging Gannett engaged in reverse racial discrimination.
The suit claims Gannett — the nation’s largest publisher of newspapers, including its flagship, USA Today — hired a Black woman instead of Barry, who is white, for a role for which Barry feels he was more qualified. Barry’s lawsuit alleges that the hiring of “a Black woman with less accolades and experience … satisfied the racial quotas Gannett was seeking to achieve.”
Now running his own media relations consulting firm in Richmond, Barry says, “Management informed me that I was amongst the highest performers in the newsroom and that they intended to tap me for what I understood to be a full-time leadership role.”
In 2019, that leadership role was filled, and according to the complaint, Barry was never given the opportunity to formally apply for the role. He stopped working at the paper in 2020. (The woman whom he alleges was hired in his place could not be reached for comment for this story by press time.)
Barry is one of five named plaintiffs — all of whom are white — in the class action suit, which alleges Gannett’s diversity, equity and inclusion (DEI) policy is “an intentional, companywide and systematic practice of discrimination against non-minority workers.”
Although such suits have been filed in the past, they now appear to have more chance of succeeding, following the U.S. Supreme Court‘s ruling in June that rolled back race-based affirmative action policies at universities. The six conservative justices found such policies violate the 14th Amendment’s Equal Protection Clause. The August suit against Gannett quotes from Chief Justice John Roberts’ opinion: “Eliminating racial discrimination means eliminating all of it.”
Although the ruling focuses on college admissions policies and not directly on workplace diversity, “the Supreme Court’s [decision] has some overlapping themes with the lawsuit against Gannett,” says Adam Sanderson, a Rochester, New York-based employment attorney representing the plaintiffs. Echoing Roberts, he adds, “The ruling has made clear that it is the court’s view that eliminating racial discrimination means eliminating all of it.”
As of Oct. 12, the lawsuit had not been served on Gannett, but it was expected to be served within 90 days of the complaint’s Aug. 18 filing. After the company is served, it will have 21 business days to respond, according to the court.
“Gannett always seeks to recruit and retain the most qualified individuals for all roles within the company,” Gannett’s chief legal counsel, Polly Grunfeld Sack, said in a statement. “We will vigorously defend our practice of ensuring equal opportunities for all our valued employees against this meritless lawsuit.”
The Supreme Court’s decision bars higher education institutions from using race as a factor in admissions as a means of achieving diverse student bodies, with the exception of U.S. military academies. The practice was already illegal for businesses under laws such as Title VII of the Civil Rights Act of 1964 that prohibit any kind of employment discrimination.
Still, experts say the ruling may have an increased impact on companies, as nonprofit legal advocacy organizations like Students for Fair Admissions — which sued Harvard and the University of North Carolina — begin to pivot toward suing businesses over their DEI policies.
University of Richmond law professor Hank Chambers says the U.S. Supreme Court may be willing to make more decisions on discrimination in private employment. Photo by Matthew R.O. Brown
In his concurring opinion on the ruling, Justice Neil Gorsuch wrote that Title VII, making it illegal for an employer to discriminate against someone because of race, color, religion, sex or national origin, should be interpreted the same as Title VI, which bars discrimination in any program or activity that receives federal funds and was a key policy used in the affirmative action decision.
This suggests the Supreme Court could be open to hearing further cases on the issue of discrimination, specifically in private employment settings, lawyers say.
“The case itself doesn’t really say much to businesses,” says Hank Chambers, a law professor at the University of Richmond who focuses on constitutional law and employment discrimination. “What it does suggest is that the court may well be willing to get back into the area and make some additional decisions or make some additional law in the area.”
Building enough cases to create or alter specific laws on employers’ DEI practices seems to be a primary goal for organizations that are suing companies for reverse discrimination, says Linda Goldman, a Los Angeles-based lawyer at Ogletree Deakins. “People are focusing and trying to expand a lot of these rules there and make law.”
Barry says he hopes his lawsuit will result in Gannett ceasing its DEI policy, though he did not specify whether he wants to see a change in the law. “I seek respect for my professional skills and my hard work,” he says. “I seek the same for all individuals.” (Barry did not address whether his case is funded or assisted by any third-party organization.)
Some of the national backlash to DEI could be a partial response to recent corporate hiring patterns prioritizing diversity, especially following the 2020 Black Lives Matter protests. During 2021, 94% of more than 323,000 jobs added by 88 S&P 100 companies went to people of color, according to a study published by Bloomberg News in September.
Just as higher education institutions have been fielding lawsuits about their admissions policies, businesses may see an uptick in litigation similar to the class action suit brought against Gannett in Virginia.
Laura D’Agostino, a Centreville-based lawyer with Pacific Legal Foundation, a nonprofit public interest legal organization that takes on libertarian and conservative issues around individual and economic freedom, is one of the attorneys looking to expand the law on diversity-related policies in both the public and private sectors. She’s representing a white former Seattle city employee who is suing the city government for allegedly fostering a hostile work environment due to its DEI initiatives.
While the case was brought against a public entity, D’Agostino believes it speaks to growing litigation over racially hostile work environments, which, she says, she expects to be the next major debate in law.
“Even though the Supreme Court’s ruling was specifically looking at things from the educational perspective, we believe that the principles articulated in there, particularly about the fact that people are to be viewed as individuals and that race cannot be this determinative factor, we think that this is slowly going to be impacting the private sector, as well,” she says.
Edward Blum, a conservative legal strategist who founded Students for Fair Admissions in 2014, has pivoted to targeting the private sector, filing three lawsuits in August. Two of those suits were brought against law firms offering fellowships for minorities, and the third was filed against an Atlanta-based venture capital fund providing grants to Black women who own small businesses.
In late August, a former executive at Morgan Stanley sued the multinational bank and financial services company in the U.S. District Court of the Southern District of New York, alleging in the lawsuit that he, a white man, was terminated in May and replaced by a Black woman “with significantly less experience and qualifications for the position.” According to the lawsuit, the action “was the result of the firm’s attempt to comply with its diversity and inclusion objectives.”
Rather than relying on Title VII, all four of these cases reference Section 1981 of the Civil Rights Act of 1866, a post-Civil War policy that’s becoming a popular tool in reverse discrimination suits, according to Goldman.
“A lot of what we’re seeing is organizations with an anti-DEI agenda, like the people who brought the [Students for Fair Admissions] case, bringing other claims under Section 1981 and seeking to expand that law,” Goldman says. “We didn’t see that before.”
Section 1981 is broader and has been more widely interpreted than Title VII, creating more of an opportunity to expand antidiscrimination laws to cover reverse discrimination claims.
Some reverse discrimination suits have been successful for plaintiffs, and those victories have come with significant dollar amounts; in June, a white Starbucks manager was awarded almost $28.3 million after alleging discrimination in her firing, and, in 2021, a Charlotte, North Carolina, jury awarded $10 million to an executive at Novant Health who claimed he was fired because he was white, although a U.S. magistrate judge reduced the amount to $4 million. While these high-dollar awards aren’t extremely common, their value is reason enough to give businesses pause.
Scott Shepard, a fellow at the National Center for Public Policy Research, a conservative think tank, and a graduate of the University of Virginia School of Law, says he expects to see a lot of companies with more newly established diversity programs roll back their policies as more lawsuits crop up. His goal is to also deter firms with longer-held DEI initiatives, which Shepard says can be done by “roundly” suing those businesses.
The U.S. Supreme Court ruling “was just a ratification for businesses that all of the many programs that they’ve initiated, particularly in the years since the summer of 2020, will be found illegal and will cost companies … a tremendous amount of money unless they start changing very quickly,” Shepard says.
Sustaining DEI
After Minnesotan George Floyd was murdered by a Minneapolis police officer in May 2020, there was a roughly 55% uptick in corporate job openings for diversity, equity and inclusion roles, the Society for Human Resource Management reported in 2020.
More recently, though, that demand has dwindled significantly, according to Tiffany Jana, founder of Richmond-based TMI Consulting, which provides DEI advising services to businesses ranging from small startups to Fortune 500 firms.
“Over the past year or two, we’ve seen like 300 chief diversity officers disappear, equity-related titles are disappearing, people are being laid off left and right,” Jana says. A Revelio Labs report showed the attrition rate for DEI roles was 33% at the end of 2022, compared with 21% for non-DEI roles.
“For the people who were looking for a reason to loosen their investment, for whatever reason, this ruling is giving them … more justification for taking their investments out of their DEI programs,” Jana notes. But businesses that are genuinely committed to DEI will be able to maintain their programs, as long as they ensure everything is strictly legal under existing laws, Jana adds.
“Even in the [Students for Fair Admissions] case, Chief Justice Roberts noted that diversity in general is a perfectly reasonable goal,” says Chambers, the UR law professor. “It’s really a question of how you get there.”
When it comes to avoiding litigation, there are several pitfalls companies fall into, but the bottom line is ensuring all recruitment and inclusion efforts have a tangible effect on the business and are clearly defined as a value-add to the business model, Jana says.
It’s important to stay away from explicit quotas or “too aggressive goals that start to look like a quota,” Goldman says, such as aiming for a percentage of the workforce to be made up of a certain identity within a certain timeframe.
Giving executives incentives for hiring diverse employees is not illegal, as quotas are, but it puts companies at higher risk for litigation, says Goldman, who described DEI policy as a “risk continuum.”
“This idea that DEI is risky is not a full picture. No DEI is also risky,” she says. “You have employees filing suits on both sides.”
When Shepard is researching companies that might be at risk of reverse discrimination suits, he keeps an eye out for three types of initiatives: policies incentivizing executives to hire or promote minorities, companies using only vendors owned by minorities, and training programs that divide people into groups.
Likewise, D’Agostino says she has taken a special interest in employee affinity groups, a concept from educational environments that has expanded into workplaces, which sometimes group individuals based on race, gender or other identity facets such as sexuality.
These are all issues that can be avoided with the right wording and human resources education, Goldman and Jana both say. Overarchingly, companies will likely be taking a closer look at their DEI policies.
Corporate reaction — whether to roll back policies, alter them to ensure legality or maintain the status quo — will depend on the quality of companies’ commitment to diversity, Jana says. “If we’re scared of every possibility of litigation, we will never get anything done.”
In 2016, amid concerns over how the Virginia Economic Development Partnership was being run, the General Assembly directed Virginia’s Joint Legislative Audit and Review Commission to examine VEDP‘s organizational management and performance.
“There was a perception, at least publicly, that [VEDP] was a fairly good organization that was successful in bringing in business,” says Hal Greer, director of JLARC, the state government‘s watchdog and oversight commission. However, “when we got there, we were just shocked to learn what was going on there in terms of the management of the organization — or lack thereof.”
Greer’s team at JLARC found that VEDP, the state authority charged with expanding and diversifying Virginia’s economy, lacked “fundamental things” like performance metrics, a marketing strategy, strong communication with partners and operational guidance for staff responsibilities, he says.
“It was very dark days” for VEDP, recalls Jay Langston, who worked at VEDP for nearly 14 years before becoming executive director of the Shenandoah Valley Partnership in 2018. “There was a little bit of this attitude, ‘We’ll tell you how to operate,’ rather than, ‘We’re here to assist.’”
There was also no structure around awarding incentives to businesses or monitoring whether companies were doing what they had promised in order to receive those incentives, resulting in a consistent problem of clawing back funds when businesses did not meet performance metrics.
VEDP “lacked a strategic plan,” says Greer.
A lot has changed in the seven years since Greer’s team reviewed VEDP, though. With new leadership, the organization is still working to catch up after inefficiency and mismanagement left Virginia behind many of its competitors as an attractive spot for business expansion and development.
As it aims to make up for lost time, VEDP’s plan for fiscal 2024 reaches far beyond the next year, representing a pivot from solely focusing on attracting major business developments to a more holistic approach aligned across government sectors to achieve overall economic well-being.
Catching up
Amid JLARC’s investigation, VEDP’s governing board of directors began to initiate a restructuring. VEDP’s CEO at the time, Martin Briley, stepped down in March 2016 following a closed board session to discuss personnel issues. An interim CEO was appointed the next day. JLARC released its report in 2017, outlining the many dysfunctions at VEDP and recommending a slew of structural changes.
“I would say it really started at the top. You had leadership that just was not committed to the fundamental aspects of running an organization,” says Greer.
Steven Moret, Louisiana’s former secretary of economic development, was hired as VEDP’s new CEO in 2017 and brought on his assistant secretary from Louisiana, Jason El Koubi, as his second-in-command.
“We basically set to work to make VEDP a stronger organization,” says El Koubi, who took over as VEDP’s president and CEO after Moret left in 2021. “We’re catching up fast, but we are still catching up.”
A big part of that is expanding VEDP’s marketing of Virginia as a great place to do business and positioning it higher on rankings of the best states for business climate, according to El Koubi.
“Virginia tends to do better on the rankings that are based on objective data than it does for the rankings based on the perceptions of corporate executives across America,” he says.
Before the JLARC report, VEDP was investing $0 in marketing, according to El Koubi, who says the state economic development authority now spends about $2.7 million annually on marketing. Still, VEDP is trailing its competitors by a significant margin, with some other economic development organizations investing more than $10 million per year, he says.
“We do a fantastic job of marketing Virginia to tourists,” Secretary of Labor Bryan Slater says. “But we need to do the same thing when it comes to attracting business and work. That involves taking an aggressive marketing approach.”
Another goal of VEDP is ensuring every region in Virginia plays a part in economic growth so anybody who lives in a particular region has access to jobs and other economic opportunities within commuting distance.
“We do a fantastic job of marketing Virginia to tourists,” state Secretary of Labor Bryan Slater says. “But we need to do the same thing when it comes to attracting business and work.” Photo by Matthew R.O. Brown
Innovative framework
To spur VEDP forward, El Koubi and his team have designed what he calls an innovative framework to guide their economic development strategy in the coming years starting with the state’s 2024 fiscal year, which began July 1.
The framework has three primary focuses: investing in Virginia’s strongest industries, building “ecosystems” that attract and drive business, and improving collaboration with other government agencies for a more holistic approach to economic development.
VEDP hopes to capitalize on the largest sectors within Virginia’s internationally tradeable industries: logistics, manufacturing and knowledge work (software, cybersecurity, financial services, etc.). Together, those three areas make up almost 65% of economic growth within the tradeable sector, according to VEDP.
“If we can lead in these core growth sectors, we’re going to lead overall,” says El Koubi.
Particularly in manufacturing and logistics, Virginia is not yet a leader but has enough momentum to move toward becoming one with enough investment, El Koubi adds. VEDP has been working closely with the Virginia Community College System to accomplish that goal, as VCCS has been focusing on increasing the number of manufacturing graduates it produces, according to VCCS Chancellor David Doré.
“When you invest in talent development at the community college level, that is going to drive economic development,” Doré says. “These go hand in hand.”
This was certainly true for the Lego Group when it chose Chesterfield County to be the site of a $1 billion factory complex, which broke ground in April. The Danish toymaker is using the Virginia Talent Accelerator Program, a training and recruitment service managed by both VEDP and VCCS, to help fill the 1,700 new jobs it’s bringing to the area.
“We are very pleased with our experience working with VEDP, beginning with site selection and as we’ve pivoted to hire and train our first group of colleagues,” says Carsten Rasmussen, chief operations officer, for the Lego Group. “VEDP and the talent accelerator have been instrumental in our ability to recruit, hire and train our new team.”
Working collaboratively with VCCS is also part of building the business-friendly ecosystems referred to in VEDP’s innovative framework, which ideally will provide strong workforce talent to incoming or expanding businesses, as well as housing and health care for new employees.
“The innovation framework talks about building a stronger ecosystem,” says Doré. “I see the Virginia colleges as pivotal to that talent pipeline, which I think is central to VEDP’s plans.”
Creating site development opportunities across the state is another crucial aspect for building those ecosystems, El Koubi says. Virginia has had some major successes in attracting development projects, including Lego’s Chesterfield County facility and Amazon Web Services’ January announcement that it plans to invest an additional $35 billion building data centers in Virginia by 2040, but El Koubi says consistent funding is necessary to ensure these types of developments keep coming to the state.
“In selecting the Chesterfield County site,” Lego’s Rasmussen says, “we prioritized shared values, a skilled and diverse workforce, and infrastructure needed to support regional and national consumer demand.”
In January, Gov. Glenn Youngkin announced $90 million in site development grants through VEDP, and, in September, the General Assembly put another $200 million for site development into the revised budget. This kind of investment needs to be consistent going forward because Virginia is “decades behind” competing states, El Koubi says.
While Virginia has landed some major corporate headquarters in recent years, including Amazon.com’s multibillion-dollar HQ2 East Coast headquarters in Arlington County, it lags behind other Southern states in industrial site development. Out of more than 120 industrial development megaprojects landed by Southeastern U.S. states from 2015 to 2022, Virginia landed just one: the Lego plant.
“What we have not done at the state level is really assisting regions and localities with developing sites to address local expanding businesses … and new businesses that are coming in,” says Langston with the Shenandoah Valley Partnership.
Site infrastructure and many other attracting factors for business, such as low taxes, fewer regulations and better quality of life, are beyond VEDP’s direct control, which is why collaboration is such a major part of the authority’s plan going forward.
The final aspect of the innovative framework is a “whole-of-government approach” to economic development, with VEDP working closely in alignment with other state and local agencies, according to documents outlining the plan. This is something that will become even more important as Virginia establishes its new Department of Workforce Development and Advancement.
A bigger picture
The new department, which is still being formed, is charged with consolidating a litany of workforce-related agencies under one roof. In September, Youngkin appointed Carrie Roth, commissioner of the Virginia Employment Commission, as the department’s first leader.
Previously, the state’s workforce initiatives were spread across six cabinet secretaries,
12 agencies, roughly 30 individual divisions, 14 local boards and more than 40 websites, according to Slater, who spearheaded the creation of the consolidated department.
As the new department comes to fruition over the next year, VEDP will be a close partner and will act as a liaison between workforce development initiatives and prospective businesses looking to expand or locate in Virginia, Slater says.
“The VEDP is working on bringing all of the pieces together so that you’re really kind of working in a synergistic way,” he says. “I think that’s really the key … [to] how we deal with workforce development and economic development on a more comprehensive map and taking a 30,000-foot view of how it all fits together and how it all works.”
How workforce development is handled and who’s responsible for it have been hotly debated topics for several decades in Virginia’s legislature, as competing sides viewed it as something that should be business-focused versus worker- or education-focused.
The new department’s focus will be “a combination of the two,” working with agencies across state government and putting money directly into their hands, according to Bill Leighty, who served as chief of staff to Govs. Mark Warner and Tim Kaine and is helping to develop the new department.
“There’s a vast difference of opinion out there of exactly what workforce training entails,” Leighty says. “That is the whole point of the agency … to bring it under one common thread where everybody can work together and row in the same direction.”
The budget for the new department passed at the end of the summer, so it won’t be until July 2024, when the new budget goes into effect, that the department officially opens. Until then, it will be a matter of consolidating back-office operations like email addresses and accounting codes, which will likely cut back on some inefficiencies, Leighty says.
The real work will begin in summer 2024, when the department will be fully in motion — and VEDP will play a critical role in defining the department’s future.
“Then the great debate will … center on, ‘What are we going to use all these resources to do?’” Leighty says. “VEDP has to be very astute about what the future needs are going to be in targeting those training programs to the needs of the business community.”
Eric Tan opened his business, VA Wholesale Mortgage, a month before the COVID-19 pandemic sent the housing market into three years of unprecedented fluctuation.
During those three years, Tan has managed to not only survive but reach an average revenue growth rate of 2,230%, landing the firm at No. 252 on the 2023 Inc. 5000 list, Inc. Magazine’s annual ranking of the nation’s fastest-growing privately held companies by percentage revenue growth. VA Wholesale Mortgage is also the top-ranked Inc. 5000 company in Hampton Roads this year.
Tan, a Navy veteran, primarily focuses on providing home loans to other former and current military members, a business model that’s helped solidify the firm as one that prioritizes clients above profits.
“I think [Tan] made a decision that this business was going to be truly for the client and for our business partners,” says Daniel Solis, vice president of sales. “I think that’s why a lot of people partner with us and work with us.”
Along with building its revenue, VA Wholesale Mortgage has invested in veteran-focused advocacy. The company received the U.S. Department of Labor’s Medallion Award in 2022 for its commitment to hiring veterans, as well as an invite from Gov. Glenn Youngkin to the ceremonial signing of a state law providing property tax exemption for disabled veterans, which the firm supported.
Ranked second highest among the region’s Inc. 5000 companies is Melone Hatley, a Virginia Beach-based family law firm that placed No. 575. It now has offices in Fairfax and Loudoun counties, Richmond and Charlotte, North Carolina.
Managing Partner Rebecca Melone decided to strike out on her own after a string of stints at companies she felt either didn’t truly listen to clients’ needs or overworked its attorneys. “If I fail, I fail. I’m going to try my own thing and see how this plays out,” Melone says, recalling her mindset when she started her own practice.
About 10 years later, the attempt has played out well: Melone Hatley has experienced a 1,032% growth rate in revenue over the past three years. A key to that success has been creating the kind of firm Melone couldn’t find when she was job hunting: one that prioritizes clients’ needs and provides professional development for attorneys.
“I feel like I’m getting to create the job that I used to look for,” Melone says.
Also in Virginia Beach, Born Primitive co-owners Bear Handlon and Mallory Riley opened their clothing company in a garage in 2014, producing and selling a pair of shorts geared toward Olympic weightlifting. Now, Born Primitive, which is ranked No. 1,931 on this year’s Inc. 5000 list, is launching two sister brands — a line of clothing for military members and first responders, and a line of outdoor apparel. It’s also making its first foray into performance footwear. The company marked a three-year growth rate of 291%.
“I think it comes down to committing to making really quality products, combined with strong brand ethos,” says Handlon, the company’s CEO. “When you have both, you build a really loyal following of customers that keep coming back.”
For Handlon, who’s also a veteran, that means maintaining a loyal fan base by branding his company as “unapologetically patriotic,” while also supporting several veteran-focused charities.
Born Primitive, VA Wholesale Mortgage and Melone Hatley are all first-timers on the Inc. 5000 list, along with six other local companies from a range of industries, including construction, insurance and government services.
Real estate development, property management and construction firm The Breeden Co., a mainstay in Hampton Roads, has appeared on the list the past two years, moving up 240 spots to No. 2,631 for 2023.
Breeden President and CEO Tim Faulkner says much of the 62-year-old company’s 205% growth rate can be ascribed to expanding its third-party construction and property management divisions.
A great business plan, Faulkner emphasizes, is built on great employees.
Breeden board chairman, founder and owner Ramon W. Breeden Jr. “believed in the team and invested in it,” Faulkner says. “Assembling the right team is the key to success.”
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