Professor
Amin Rajan, chief executive of research group CREATE, looks at the history of
diversity policies in organisations in the US
Key
Drivers
The
Civil Rights Act of 1964 prohibits employment discrimination on the basis of
race, colour, religion, sex or national origin.
Its
implementation over the years has resulted in a number of litigation cases,
involving high-profile companies such as Texaco, Coca-Cola and Kodak.
That
the Act has had an influence on employment practices is not in doubt. But it would be over-simplistic to attribute
the surge in interest is having in a diverse workforce in the late 1990s in the
US to an Act passed some 30 years previously. In fact, the recent interest has
stemmed from two developments. These are:
–
Labour market projections for this decade show about 80 per cent of newcomers
to the labour market will comprise women returners, African Americans, Hispanic
Americans and Asian Americans. As such, they will constitute the principal pool
of new talent.
–
Secondly, they will also become major consumer groups in their own rights.
According to a Conference Board XXX (checking) report published in 2001, the
buying powers of these groups then were as follows:
Women: $1096bn
African
American: $533bn
Hispanic
American: $359bn
Asian
American: $225bn
Disabled
market: $461bn
UK
influence
These
trends have influenced the corporate approach to workforce diversity in the
US. No comparable data is available for
the UK market but the US data has had a considerable influence on UK employers,
quite apart from their own in-house market assessments.
Employers
in both countries have sought not only to achieve a more balanced workforce,
but also to have higher representation and retention of women and other
minority groups in senior jobs to reach diverse buyers and retain top talent.
Business
Impacts
As
in the US, UK organisations have found progress has not been easy. Many
companies that have received widespread recognition for their diversity
programmes are still finding themselves in legal battles over discrimination
charges. For example, retail giant
WalMart is currently facing a case involving pay discrimination yet it was
ranked number one in Fortune’s Most Admired Companies.
Furthermore,
the effects of diversity may only have an indirect impact on business, such as
when a diverse workforce can identify market approaches that can be implemented
by the existing salesforce. No nationwide studies have been carried out to
assess the business impact.
It
is very difficult to isolate the impact of diversity on the bottom line when so
many other factors are also involved. The best one can do is to carry out the
customer and employee perception studies and track individual cases where
diversity has led to business results.
There
is little doubt that the market and innovation arguments command powerful
appeal on both sides of the Atlantic.
The
following two examples of companies are typical of what happens in many US
corporates:
A
large consumer products conglomerate has had significant success in the last
decade in extending its market sales to diverse customers through unique
product samplings, using community groups, and targeted product
innovation. The success was attributed
to the insights of diverse leaders inside the business.
The
company also provides incentives to senior management in relation to their
diversity performance – which can involve the awarding or loss of up to 10 per
cent of stock options. However, the company’s success on diversity is
attributed more to the desire to enter new markets than management incentives.
At
another services company, leaders who understood the Hispanic market started a
targeted initiative by customising an existing service to meet the needs of
that market – especially the language needs. This has been very successful in
raising the market share with the success being attributed to the ‘special’
insights of the leaders. Peers have emulated this success in relation to new
products.
Diversity
is part of the fundamental business strategy and corporate values. Leaders recognise that to better reach world
markets over competitors, they have to attract the best talent, show respect
for the individual, build inclusive cultures and leverage the differences to
target different customer segments. Each
senior leader around the world is required to set a clear diversity action plan
for which she/he is held accountable.
Key
Lessons
Five
general factors have been critical in ensuring workforce diversity helps the
business. These are:
–
Commitment of the CEO and senior team, sustained over a long period of time.
The emphasis on the sustainable commitment is critical – once the initial
diversity focus is over, many candidates are left hanging in the balance with
insufficient support and little prospect for advancement
–
Affinity groups. These provide
invaluable personal networks. Companies either establish these or encourage
employees to do so. Groups may establish their own agenda, run training events,
network formally or informally, raise legitimate concerns with senior managers,
provide mutual support, actively participate in recruiting, sponsor mentoring,
or even suggest market opportunities
–
Diversity councils. Large companies are increasingly creating these high-level
bodies to review and monitor corporate performance on diversity matters. Quite
apart from their implementation role, their existence has symbolically sends
out strong strategic signals.
–
Targeted recruitment. Companies are finding certain activities work
particularly well. These include:
targeting colleges which focus on particular diverse groups, increasing
visibility at targeted conferences, advertising in publications targeted at
diverse audiences and increasing visibility and involvement in external
diversity forums.
–
Supplier management. Many companies are finding minority-owned suppliers are
not only providing cost-effective sources, but also provide credible channels
into diverse markets
At
a more detailed level, the following specific lessons have also been noted:
–
Diversity management is a long-term process, with no quick fixes
–
Although training in itself is not a solution, any training needs to focus on
behavioural as well as awareness issues
–
An engaging management style operating in an inclusive culture is vital
–
Negative publicity through litigation creates a negative legacy that takes a
long time to fade.
