Diversity as a Business Driver
By Jack Gordon

Ever since the term "diversity" gained traction in the 1980s, managers and proponents of corporate initiatives conducted under its flag have insisted that their efforts are not only about social justice. Diversity also is good for business.

Seen in its proper light, the argument goes, managing or valuing diversity does not just have to do with stamping out prejudice, complying with anti-discrimination laws, promoting good corporate citizenship, or "doing the right thing" with regard to women and minority groups. Those goals are important, yes, but diversity also is a key factor in organizational performance. It is a central concept that underlies, and ought to inform, a thousand strategic and tactical decisions. A company that gets the right handle on diversity, as it applies to employees and customers, will outperform companies that don't—in unsentimental metrics such as sales, profits, market share and stock price.

One advocate of that view is Herschel Herndon, vice president and chief diversity officer for retail giant Best Buy. But when Herndon follows its logic, he concludes that diversity training programs, as the distinct entities we have come to recognize, probably ought to disappear. In an ironic sense, he argues that "integration" is diversity's next frontier.

"We've got to get better at integrating diversity concerns into our work streams and our training programs instead of treating diversity as a separate thing," says Herndon, who has served as a manager of diversity initiatives for three different companies since 1996. From the perspective of corporate performance, "diversity as a bolt-on hasn't worked particularly well."

It bothers Herndon that the prevailing mindset or context for diversity discussions is still: "Let's talk about new-hire training, then let's talk about diversity training, then let's talk about training for managers who are going to open a new store."

It is more effective, Herndon says, to treat diversity considerations as a natural part of training aimed at precisely such business concerns as how to open a new store successfully. A current Best Buy training program does exactly that. Issues such as community demographics and talent-sourcing opportunities are integrated into the new-store training as if they were normal, and rather obvious, business concerns—which they are, he says.

Herndon believes that sort of integration is what will help Best Buy gain a competitive advantage with diversity. "We think the way of the future is to treat diversity as a part of how we approach all of our work, not as a separate thing," he says. "That's what we're excited about."

Julie O'Mara, a Castro Valley, Calif., organization development consultant who has specialized in diversity issues since the early 1990s, is sympathetic to that view, though she would not go so far as to eliminate diversity as a distinct training topic.

Certainly, organizations that claim to see diversity as a business driver should be integrating it into other training and systems, O'Mara says. But just as there are skills and knowledge specific to, say, selling, she believes there also are skills and knowledge specific to diversity. "You'll always need sales training to build specific skills," she argues. "I think the same is probably true of diversity."

Justice

Even if that weren't so, O'Mara argues, the social-justice values associated with diversity initiatives probably will prevent the topic from being fully integrated into pure business concerns.

From a strictly business perspective, O'Mara says, diversity definitely applies to subjects such as how to open a successful new store. It also has as much to do with issues such as blending two corporate cultures after a merger—or managing people with different personality types—as it has to do with the traditional "primary" factors of race, gender, ethnicity, disability and sexual orientation.

The business case for diversity is real and usually easy to make, O'Mara says. But one reason advocates take pains to build that case is that they fear social-justice arguments alone will not prove compelling to executives and hard-hearted number-crunchers. The irony, she says, is that the "push-back" against treating diversity strictly as a dollars-and-cents issue comes as often from executives as it does from disadvantaged groups who want diversity initiatives to focus on their concerns, not on mergers or Myers-Briggs personality types.

Executive groups tend to fall into the "business" camp or the "social justice" camp, O'Mara says, but it is not uncommon for executives in client companies to balk at a business-first view of diversity. "They'll say, 'No, we want to be doing this because it's the right thing to do.'"

In most companies with aggressive diversity programs, today's answer seems to be that executives want their initiatives to address both types of goals. But the trajectory is toward an increasing focus on the business case.

By the numbers

Diversity efforts at BMO Financial Group of Toronto date back to a 1990 task force that investigated the advancement of women in the corporation, says Marjorie Paddock, co-director of diversity and workplace equity, who works out of BMO's Chicago-based subsidiary, Harris Bank. The task force reported that while three-quarters of BMO employees were women, only 13 percent of managers and 9 percent of executives were female.

Over the next few years, three additional task forces reported on employment trends for people with disabilities, aboriginal people (the Canadian equivalent of Native Americans), and other minorities. The company began to track hiring, promotion and termination data for various groups, and to hold managers responsible for meeting certain goals. Quarterly reports containing this data still go to all managers, and progress has been significant, Paddock says. For instance, 34 percent of BMO executives are now women.

Along with the changes in tracking and measurement systems came training programs which, in the '90s, concentrated on building awareness of biases and stereotypes, Paddock says. Employee "affinity groups" also formed around characteristics such as race, ethnicity and disabilities. BMO now has nine of these groups in Canada and the United States, representing aboriginal people, visually impaired employees, African Americans, Asian Americans and gay/lesbian/bisexual/transgendered (GLBT) people, among others.

Over time, Paddock says, both formal training programs on the corporate level and the more casual lunchtime-speaker type of offerings sponsored by the affinity groups have come to concentrate less on awareness and more on skill-building. Instead of just debunking stereotypes about various groups, for instance, training is more likely to focus on topics such as, "How can managers engage employees from diverse backgrounds?" Some of that training is embedded or integrated into leadership and personal development courses at BMO's Toronto-based Institute for Learning.

Another difference between the diversity efforts of the early 1990s and BMO's initiatives today is that they now operate within a specific framework, called the D/WEB Model (for Diversity Workplace Equity Business), which links them to defined business priorities. The D/WEB Model illustrates diversity's relationship to six key goals: the acquisition and retention of talent; managerial competency; brand equity; customers and communities; legislative compliance; and corporate values and strategy. A senior executive council uses the model to set goals for specific diversity initiatives and to ensure that they remain pointed at desirable targets.

At international accounting firm Ernst & Young (E&Y), the diversity effort is driven by a corporate value statement calling for an "inclusive and flexible environment," says Leslie Jones, E&Y's Americas director for diversity strategy and development.

Philosophically, Jones says, the demand for inclusiveness applies not just to factors such as race and gender but to differences in thinking styles and other individual characteristics. "But you start where you have data," she says. Like most organizations with aggressive diversity campaigns, E&Y tracks the makeup of its workforce closely. Last year the company reported proudly that 40 percent of its employees were women and 20 percent were minorities.

Beneath the value statements and the demographic head counting lies a conviction that diversity is good for business. "Research shows that diverse teams bring better solutions than homogeneous ones, which allows us to deliver higher-quality service to clients," Jones says.

Diversity is essentially an organization development effort, Jones says, "and any OD effort is successful to the degree that you tie the people strategy to the business strategy." For instance, one high-profile E&Y diversity initiative is a formal mentoring program that pairs minority employees with more experienced members of the firm. From a social-justice perspective, she says, "Everyone agrees that mentoring is something everyone in an organization needs in order to succeed. We've found that some of our diverse professionals don't necessarily get those opportunities naturally."

Jones says the mentoring program also serves a direct business purpose. "It makes sure people are positioned to get the right experiences to build their resumes and the skills they bring to our clients," she says.

"Ernst & Young doesn't make widgets," Jones says. "For us, it's all about the intellectual capital on our balance sheet." To her, that means anything that increases that capital and equips employees to provide better service to clients is a dollars-and-cents initiative.

Chasing customers

At Bausch & Lomb, the $2 billion vision-products company headquartered in Rochester, N.Y., a quarterly report to executives on the racial and gender makeup of the workforce "has the highest level of exposure of any matrix in the organization," says Cindy Marushak, the company's manager of organizational effectiveness.

Hiring and promotional goals are tied to census figures. "We have already met census goals, but we want to be the benchmark for women and minorities," Marushak says.

Though the concern with hiring and promotional priorities continues, Marushak says that the most significant change in Bausch & Lomb's outlook on diversity over the past five years has to do not with employees but with marketing to customers. "Most of our previous advertising targeted doctors, ophthalmologists and optometrists," she says. Now the company is doing more consumer marketing—and targeting some of its advertising at specific groups.

For instance, Marushak says that gays and lesbians are considered "early adopters," more likely than the general population to undergo new procedures like Lasik eye surgery. In 2005 the company plans to do some targeted advertising in GLBT-focused magazines such as The Advocate.

Diversity-related market studies have turned up other useful consumer information as well. For instance, Marushak says, women make 85 percent of household decisions related to health care. That includes decisions about what kinds of contact lenses family members will wear. "We're looking at the incidence of eye diseases in Hispanics and African Americans to see what the trends are and how they match with our product offerings," she says.

Marushak says that even the employee affinity groups at Bausch & Lomb—the networks of Hispanic, African American, GLBT and other types of employees—serve two business purposes, because they have a market focus as well as an inward-looking one. "They help us better understand our employees and better understand our customers," she says.

At Reynolds & Reynolds, a $1 billion supplier of management systems and services to automotive retailers, diversity initiatives are based on four major goals. One is simply to "create a diverse workforce and an environment that values diversity in all its forms," says Cathy Ponitz, director of diversity at the company's Kettering, Ohio headquarters. But the others are to expand relationships with minority car dealerships, to develop outsourcing and supplier programs that target minority and female-owned businesses, and to demonstrate Reynolds's commitment to diversity through community involvement.

The dedication to a diversity-valuing environment manifests itself in forms including ongoing awareness training and an annual "diversity week" featuring guest speakers, performers and an array of ethnic foods in the company cafeteria. But Ponitz says the focus is moving increasingly beyond celebrating diversity for its own sake and toward specific issues relating to the workforce or to the market.

For instance, the Kettering headquarters has a number of employees from India and Pakistan. "They tend to be a tight-knit group," Ponitz says. "They eat lunch together and socialize together outside work. We wondered if we were isolating them… Did they bond together out of necessity? Should we be doing something?"

In a series of brown-bag gatherings, the Asians explained that they worried the opposite might be true. They hung out together because it gave them an opportunity to speak to people in their native languages. "We may be excluding getting to know you, rather than vice versa," they said.

Echoing Herschel Herndon's thoughts about integrating diversity work with business concerns, Ponitz says she knows the company is on the right track when diversity issues arise organically in meetings and strategy sessions on other topics. "It's a thrill," she says, "when you have a sales organization that comes to its own conclusion about [the fact that] we had clients in South Florida but no Spanish-speaking sales associates from the Panhandle down."

Reprinted from Training magazine

Jack Gordon is editor-at-large for Training. edit@trainingmag.com