March 1998 — Reprinted From: San Francisco Chronicle BayLife Insert

Making Diversity Work in the New Millennium

By Michael J. Reid

Diversity has changed from a moral imperative to a bottom-line business decision as companies realize they can’t afford not to embrace it.

In the Bay Area and across the nation, the new buzz is diversity in team building. Spurred by the feverish pace of corporate restructuring, downsizings, mergers and acquisitions, these new teams of specialists are expected to be as ethnically diverse as the domestic markets to which they cater and as culturally sensitive as the global markets to which they export. They must also "think out of the box" to beat the competition.

As a result, for the first time, big business has privately welcomed diversity into its core business strategies. The motive? Profit, of course. According to research by Covenant Investment Management, stock in companies with strong diversity performed 2.4 times better than stock in firms that didn’t promote diversity.

Diversity’s benefits have been widely accepted: A diverse work-force responds better to diverse consumers and entry-level workers, the global marketplace demands an understanding of other cultures, and diverse task forces routinely outperform homogenous ones in creative problem-solving.

But it’s one thing to talk about diversity, and quite another to implement it and make it pay.

Companies which have successfully achieved and managed diversity have done so by quietly integrating it into their daily operations, and by investing in long-term changes in organizational design to maintain that diversity.

Here’s how they’ve done it:

Acknowledge the problem: A lot of companies like to blow the diversity horn, but few of them take a long, hard look at the ways their own internal operations stand in the way of progress. In San Francisco, Caucasians make up only 47% of the population, yet are found in 72% of all managerial and professional jobs, according to a 1996 study conducted by the Applied Research Center. Only 5% of professionals in The City are African Americans.

In Silicon Valley, minorities make up 81% of the unskilled labor force, while whites hold 80.5% of the jobs as officials and managers. In Contra Costa County’s public sector, that county’s public defender’s office cites an "atrocious record in minority advancement and retention." Throughout the Bay Area, whites have the lowest unemployment rate and the highest per-capita income, the report states.

Reach out/Reach In: When hiring new positions or staffing departments, reach out by including people of color in the applicant pool or hire a firm that will. And seriously consider not just including people of color in the applicant pool, but in the final selection process. It may take more work to find a fit, but chances are the person is out there.

Get help from Bay Area professional associations, like Asian Pacific Personnel Association, Peninsula Association of Black Personnel Administrators, BREAKOUT (Lesbian, Gay and Bi-Sexual Training and OD Professionals), Personnel Management Association of Atzlan (Hispanic) the Northern California Human Resources Council or Alumnae Resources (which focuses on women). Ask people in your industry who have been successful in diversity and team-building what has worked for them. Reach within to employees by offering flex-time, telecommuting, cultural celebrations, fitness and wellness programs, child- and elder-care programs, and by pro-actively announcing diversity programs and shifts in corporate culture. Tell workers what is being done and why.

Assess strengths and weaknesses and create a written action plan to present to management: Look at areas where your organization is doing well and examine what made diversity work in that area. In areas where diversity is lacking, identify how — in operations, cultural assumptions, management styles — those areas differ from the success stories. Build on your strengths. The action plan should include specific steps, accountabilities, target dates and follow-up and support. While each industry is different, remedies often include communicating the corporate values statement, developing strategies for recruitment and retaining diverse employees and on-going diversity training.

Integrate diversity into daily operations: At Core States Financial, for example, the company paid line managers to devote an entire year of their time to planning and developing a more diverse work-force. They used mentoring, role modeling and cross-functional job re-assignments to increase diversity throughout the organization without alienating whites or impacting shareholders’ returns.

At Hoechst Celanese, a large chemical company, the top 26 officers are required to join two organizations in which they are an ethnic minority. "The only way to break out of the comfort zones is to be exposed to other people," said CEO Ernest Drew. "When we are, it becomes clear that all people are similar. Adds VP Charles Langston: "Joining these organizations has been more helpful to me than two weeks of diversity training."

At Proctor and Gamble, diversity was improved through long-term career planning, frequent check-ins and creating advancement opportunities for people of color — without alienating whites.

San-Antonio-based Pace Foods, Inc. employs 180 people, of whom 75% are Mexican-Americans. The company prints it publications in English and Spanish and conducts meetings in both languages as well. Company chief Kit Goldsbury tells of an applicant who failed a mechanic’s test in English, but when tested in Spanish, scored "very very high." Good mechanics are good mechanics in any language — had the firm not been so flexible, a valuable hire would have been lost."

The biggest obstacles in achieving and managing diversity arise from three common myths:

Hiring trainers will make diversity happen: Hiring consultants for six weeks or six months to dismantle subtle racism that took many years to develop is ineffective and wasteful. Likewise, forcing employees to attend off-the-shelf diversity seminars not suited to the company’s culture doesn’t accomplish much more than to provide a legal defense for discriminatory business practices. Effective diversity training must be custom-tailored to a company’s work-force, readiness and specific issues and problems.

The most successful diversity trainings include small-group discussions, role-playing, case studies, videotaping of participants and role reversals (especially when managers play minorities). One game involves assigning small teams — chosen on the basis of their diversity in race, gender, physical ability, company departments, rank, etc. (including one "blind" person who is blindfolded) — to compete against one another to accomplish a task (like building a miniature water-delivery system). Instead of judging the winning team simply by how fast they complete the task, each team must demonstrate how each team-member contributed. If anyone was left out, the team loses points.

Diversity trainers and consultants can be of great value to an organization, but only when the organization’s leadership is prepared to implement the long-term systemic and operational changes needed to address problems.

Diversity equals higher profits.

Good management and employee commitment lead to higher profits. Diversity, which is only one component of good management, is often an investment in future success. At Du Pont, a group of African American workers opened up promising new markets for the company’s agricultural products by focusing on black farmers. And one of their multi-cultural teams gained the company about $45 million in new business worldwide by changing the way DuPont develops and markets decorating materials like its Corian countertops. But it took time.

Fortune Magazine’s Faye Rice surveyed successful companies with effective diversity programs and shared some lessons they learned, which include: (1) getting the CEO’s commitment, (2) tying diversity goals to salaries and bonuses, (3) addressing the concerns of white males, (4) examining compensation and career tracking for fairness, (5) allowing top executives to experience what it’s like to be a minority, (6) celebrating differences, (7) improving the supply of diverse workers, and (8) maintaining diversity goals despite down-sizing.

The goal of diversity is unity and racial harmony. False. Diversity is about valuing people’s differences and exploiting those differences to make money. In fact, when combined with open and honest communication, diversity often creates a difference of opinion with regard to such things as product design, manufacturing processes, marketing strategies, etc. Caused by differing world views, these differences of opinion, when resolved, often lead to superior business solutions and higher profits as a result of a free exchange of ideas.

The need for diversity is growing rapidly. Nationwide, white men still hold 60% of management jobs and 96% of senior executive positions. But by the year 2000, white men will make up just 15% of the entry-level applicants in the labor force, down from 47% in 1988.

In the Bay Area, where some predict the 2000 census will show the percentage of Caucasians is lower than the combined percentage of non-white groups for the first time since California was owned by Mexico, the need for successful diversity management is even more pressing.