Most
companies in the US now understand the benefits of a diverse workforce,
although many still lack the infrastructure to attract and retain one. But is
diversity a liability or an asset? asks Pepi Sappal
Imagine
an organisation filled with people of all generations, colours, cultures and
accents, where every individual’s background, sexual orientation and family
circumstances are accepted, valued and catered for. Although such workplaces
are rare, many companies are striving to become "diversity friendly",
especially in the US.
When
you look at the figures, it’s easy to see why. In the US, minority groups alone
spend more than $650bn. A survey carried out by US-based Internet research firm
Harris Interactive Inc and marketing firm Witeck-Combs last year, put gay
spending power at $450bn annually in the US. That’s roughly the same amount as
the country’s 33 million Latinos are expected to spend this year. If you add to
that the spending power of the retired population plus the nation’s millions of
disabled, it certainly makes a compelling case for investing in diversity. If
companies want a share of this pie, then their talent must represent this
consumer base.
"The
best way to do that is by recruiting a diverse workforce that mirrors your
customer base," says John Brock, COO of Cadbury Schweppes. "A diverse
workforce is also essential in a global economy. It is the best way to expand
into new markets and stimulate new business ideas, as well as improve customer
relations. By managing this diversity effectively, we get a better
understanding of our customers and do well in our markets all over the world.
And that’s a significant competitive advantage."
Organisations
that have invested in diversity initiatives have reaped the benefits. Take the
Union Bank of California (voted the No 1 Best Company for Minorities in 1999 by
Fortune magazine) – its stock appreciated at a 34% compound rate for the past
five years. In fact, Fortune’s Top 50 best companies for minorities as a whole
actually outperformed the S&P 500. No wonder other organisations are
following suit.
But
companies are not pursuing diversity solely because of bottom-line benefits.
Demographics have also influenced the increasing take-up of diverse candidates.
Given that minorities will account for 41.5% of people entering the workforce
between 1998 and 2008 (as confirmed by the Bureau of Labor Statistics) in the
US, diversity-friendly initiatives will be key to attract them.
According
to CEO of Cap Gemini Ernst & Young Geoff Unwin, the demographics in the
West are working against the needs of global corporations. "The rising
demand for talent, combined with falling birth rates, is resulting in fierce
competition for the best recruits. Given that tomorrow’s workforce will come
from the developing parts of the world, a diverse make-up now is crucial to
attract that talent in coming years. After all, without them we don’t have a
business," points out Unwin, who is now personally dedicating 60% of his
time to talent spotting.
So,
who are the hot targets? According to a joint survey on recruiting and
retaining a diverse workforce carried out by the Society of Human Resource
Management (SHRM) and Fortune magazine, the most sought-after groups are
African-Americans (78%), followed by women (74%), Hispanics (69%) and
Asian-Americans (58%).
Diversity,
at least in the US, is no longer just about increasing the number of women and
minorities, says Lisbeth Claus, professor of HR management at the Fisher
Graduate School of International Business at the Monterey Institute in
California. "The corporate definition of diversity evolves beyond race and
gender, to include age, disabilities, sexual orientation, ethnic culture and
religious affiliation." SHRM’s survey reflects this trend. Today, 43% of
companies are targeting individuals with disabilities, 31% are searching for
older workers (aged 50+), and 15% are pursuing the gay and lesbian working
population.
It
is not just skills shortages that are bringing older workers back in vogue.
According to Martin Bennett, VP of consulting at Chicago-based cross-cultural
firm Cendant Intercultural, those companies that shed their seasoned managers
for younger replacements at a fraction of the cost have realised that they now
lack the fathers and grandfathers to maintain corporate values. "So they
are now bringing back these seasoned professionals from retirement to coach the
young work-hards and reap the benefits of the accumulated wisdom of those aged
60-plus," says Bennett.
Nor
can organisations afford to ignore the pool of disabled workers, who remain a
largely untapped resource. According to the National Institute of Disability,
two-thirds of people with a work-limiting disability are not members of the
labour force, despite the fact that 44% hold a college degree and 75% are
computer literate.
However,
despite pumping millions into efforts to attract these niche groups, many US
companies are failing to attract this talent effectively. Sharon Hall, who
heads up the diversity practice of international executive search firm Spencer
Stuart, believes this is because many firms have just woken up to the fact that
they need diversity, so they are trying to play catch-up without putting the
infrastructure in place to support diverse recruits. "In fact, we believe
that the majority of companies are only 50% ready for diversity. Although they
now understand that diversity makes good business sense, they just haven’t got
the infrastructure in place to attract and retain it."
When
that happens, diversity initiatives can turn into a liability rather than an
asset. If diversity initiatives are to work, it is important that all employees
within a firm understand their importance. Prejudice can be so subtle and
deeply ingrained in a society that it takes a continuing effort to create an
atmosphere in which everyone sees ample opportunity to get ahead.
But
without diversity training initiatives in which all employees are exposed to
age, racial and religious differences, and gay and lesbian issues, problems are
bound to occur. "So recruits who are perceived to be different run the
risk of being alienated," says Michelle Fantt Harris, regional vice
president of HR at insurance broker and risk advisor, Marsh Inc, in Washington
DC. "Or worse, their efforts are sabotaged by resentful colleagues."
This
lack of education leads to unacceptable behaviour because of myths such as,
"It’s about filling quotas, and the less-qualified people will get jobs
even if they are not quite qualified for the post."
However,
although corporations like Ford and Texaco have taken steps to roll out
diversity training programmes in recent years, it is only when they face
discrimination charges, or a costly cultural faux pas has been made in, say, a
marketing effort, that companies fork out for them.
As
well as educating the rest of the workforce, it’s important to have initiatives
to help retain a diverse workforce. "If these diverse recruits are to be
successful, they need to know unwritten rules, things like the attributes that
will help them to succeed within that firm," says Harris. "It’s also
important to be upfront with them. Inform them about any opposition that exists
within the company’s diversity efforts, the possible risks of sabotage and how
to deal with it. At least this way, they are prepared to deal with any problems
that might arise.
"And
if these diverse recruits are to make it to those senior and board-level
positions, they’ll need to have access to mentors and support networks – groups
of like-minded people they can interact with, for help and advice," she
adds.
Finally,
it’s important to make these groups feel that they belong. "If an employer
and existing employees don’t make these people feel they belong, or can
contribute, regardless of their age, gender, background, accent or race, they
are unlikely to stay in that environment for very long. And the company has to
start that costly recruitment process over again," adds Professor Lisbeth
Claus.
It
is no wonder recruitment consultancies vet their clients carefully when asked
to find diverse recruits. "Many organisations come to us lamenting,
‘What’s wrong with us? Why don’t they want to join our firm?’," says Hall.
"By carrying out a Diversity Recruitment Quotient (a tool unique to
Spencer Stuart) whereby a consultant goes in and analyses the company’s
materials and environment from a minority’s perspective, we can tell a client
exactly why diverse applicants aren’t joining them. And if we find that a
company’s environment is not conducive to diverse applicants, we won’t do a
search for them until they are ready, as they’re unlikely to retain that
talent."
Despite
the problems that come with diversity, Lisa Willis Johnson, chair of SHRM’s
Workplace Diversity Committee, believes companies that promote it will benefit
in the long run. She describes this as the new social movement within the
workplace that takes pride in the individual. "It’s not about compliance.
Unlike equal employment opportunities and affirmative action regulations,
diversity initiatives are voluntary efforts. And companies that value diversity
show they have a deeper commitment to equality. It’s something corporations do
not only for competitive advantage, but also for that ‘feel good’ factor,"
says Johnson, who, as the deputy director of HR at the City of Columbus, is
also looking for talent globally in a bid to hire the best the world has to
offer.
Johnson
firmly believes that every employee appreciates a diversity-friendly company,
regardless of whether they belong to a minority group, because it indicates
that an organisation is caring, thoughtful and progressive – and that’s an
asset.
Further
information…
–
SHRM provides a number of resources for those interested in diversity issues,
such as its newsletter Mosaic and its Diversity Toolkit. Log on to www.shrm.org
for more details.
–
Regular news updates are also available from www.diversityinc.com
–
Pacific Bridge’s Website www.pacificbridge.com, contains a link to its on-line
library, which contains articles on Asian HR issues.
Diversity
efforts in the rest of the world
Efforts
vary greatly around the globe. Because most countries do not have such a
diverse mix of people as in the US, their initiatives are not as advanced. In
fact, in some nations, diversity is non-existent simply because of their
homogenous make-up.
Europe
The
UK has reached the stage with diversity that the US reached some six to eight
years ago, where people confused it with equal employment opportunities and
affirmative action regulations. Sheraz Arif, MD of Cornerstone Unlimited, a
diversity consultancy in the UK, believes that Britain is behind the US for two
reasons.
"First,
the population of the USis somewhere in the region of 250 million compared to a
population of only 55 million in the UK. Approximately 30% of Americans belong
to the minority population compared to just 5% of the UK’s population,"
says Arif.
"Second,
most of the ethnic groups in the UK have been present for no more than about
five decades, whereas many of America’s ethnic groups have been part of the
country’s fabric for well over a hundred years. Therefore, the UK’s diversity
initiatives will always look as if they are ‘behind’ when they are compared to
US initiatives.
"A
direct result of these historical and demographic differences is that diversity
is an established item on the political, cultural and commercial agenda in the
US, which is openly discussed and a natural part of the recruitment process – a
process that has just begun in the UK," explains Arif.
Unfortunately,
there’s a strong belief in Europe that underqualified people are given jobs on
the basis of their ethnicity or gender. Firms like Cornerstone are still trying
to educate Britain that it is not about positive discrimination, sacrificing
quality or filling quotas, but about quality.
Employment
lawyers are predicting that Europe may well follow the US in terms of
age-discrimination legislation. The US has had legislation promoting a more
age-diverse workforce since 1967 and the UK could embrace it in the next few
years. For example, the British government is currently running an age-positive
campaign encouraging older workers not to take early retirement.Â
The
US law forbids recruitment on the basis of age and stops mandatory retirement
except for bona fide executives with guaranteed pensions. American companies
and employment agencies are unable to run job advertising and cannot make
referrals based on age.
This
is enforced in the US by the Equal Employment Opportunity Commission (EEOC),
which can prosecute, although the number of law suits has fallen from 130 in
1992 to 36 in 1999.
Commentators
are warning European employers to prepare for the possibility of legislation in
this area by work towards making their workforces less hostile to older
workers.
For
some countries, this is a huge challenge. France, for instance, still heavily
specifies age ranges in all its recruitment advertising.
Asia
Discrimination
against women, ethnic minorities and foreign nationals remains rampant in Asia,
says Ames Grosse of Pacific Bridge, a US-based recruiting and HR consulting
firm specialising in Asia. "Diversity has not been embraced as a virtue in
most of these countries, and integration is generally only allowed when
absolutely necessary to get much-needed skills," says Grosse.
"In
Japan, for example, foreign nationals are generally unwelcome. Japan is not
known for its commitment to diversity. Its largely homogenous society often
sees difference and diversity as a liability, not an asset – hence the
often-quoted Japanese proverb ‘the nail that sticks out will be hammered down’.
Because of this, foreign workers often face discrimination and barriers to
entering Japan’s society and workforce, even when they are sorely needed.
"Today,
registered foreign workers represent just one-tenth of 1% of Japan’s total
workforce. The United Nations estimates that, over the next 50 years, Japan
will have to import 600,000 workers annually to counteract its rapidly ageing
population. Were it to do so, within 50 years one-third of Japan’s population
would be foreign," adds Grosse.
"However,
given its record with respect to immigration and ethnic diversity, Japan will
probably find other ways to counteract its shrinking workforce. Shifting
manufacturing and other jobs abroad, as opposed to bringing foreign workers to
Japan, increased hiring of part-time (often female) workers, and utilising
retirees and other non-traditional workers are more likely solutions to Japan’s
looming worker shortage than is massive import of foreign labour."
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A
case in point is Casio in Tokyo. "Despite the skills shortage, we’ll try
to avoid importing talent for now," says Chikafuso Miyamoto, corporate
vice president, general affairs and HR at Casio. "To ease the skills
shortage here in the short term, we are discouraging people from taking early
retirement, offering incentives to stay at work until 65, as well as
encouraging more women to enter and remain in the workplace.
"In
the past, women rarely made it to senior posts because they would leave after
getting married. Now, we encourage them to stay and take up senior posts. In
the long term, however, we’re more likely to transfer operations to other
countries – it’s cheaper, less hassle and avoids the problems that accompany
diversity."
