Winning with diversity

t long last, corporate America appears to be getting the message: diversity can build a stronger, more competitive company. Now that the benefits of diversity are widely agreed upon, corporations are faced with the next step: taking diversity beyond the recruiting process into core business functions. By rethinking their internal processes to better manage the job development of people of diverse backgrounds, they are discovering new ways to leverage unique talents and perspectives to the best advantage of the business in a way that goes far beyond mere tokenism.

For many of these companies, leveraging diversity has become a core business objective. "Corporate diversity efforts have clearly accelerated dramatically in the past several years," said Michael Kennedy, senior client partner in the Atlanta office of Korn/Ferry International, an executive recruiting firm. "For just about all of the companies and clients that I call on, diversity is very high on their radar screens. With nearly every conversation that we have with senior and midlevel managers about their hiring objectives, the topic of diversity is not only a part of the agenda -- it is typically one of the top two issues on their priority list. This is very different from as recently as five years ago, when we would have to raise the issue of diversity ourselves. Now they are the ones to bring it up."

Increasingly, the mission of chief diversity officers, who report directly to the company chief executive, involves not only outreach and recruiting, but ensuring that the talents and perspectives of diverse employees, from rank-and-file staff members to managers, are pursued and valued. Achieving an effectively diverse culture of inclusion means not only fostering diversity in age, language, race and country of origin, education, sexual orientation and physical abilities, but also leveraging these persepectives. The most successful companies have created a culture where embracing varied perspectives is an integral part of their business tactics, from daily decision-making to strategic planning and career development.

"The big topic these days is integrating diversity into the business," explained Michael Wheeler, program director and strategic management consultant specializing in work force diversity for the Conference Board, a nonprofit research and networking organization that provides support and guidance for senior executives.

"This means recognizing that diversity is not just a recruitment, retention and employee development issue, but that the benefits of diversity can extend to marketing, expanding market share and improving customer loyalty. Companies have been pretty good about recruiting diverse talent, but now, once they get that talent in the door, they are looking for ways to really leverage that diversity. Diversity today has to be a comprehensive strategy. It has to include communication, education, recruitment and vendor/supplier relationships, and all these all need to be coordinated from the top. That comes from having a business sense that diversity is about business performance enhancement."

The reason, quite simply, is profits -- and not just altruism. "Having a diverse work force is good business on so many levels, but ultimately, the main reason is that if companies don't do it, their competitors will, and they will be getting more business when they do," suggested Gilroye Griffin, managing director for Korn/Ferry's diversity practice. "Instituting diversity is not some ploy to win at public relations. It is to win a competitive bottomline battle. I would say that 95 percent of diversity efforts are motivated by bottom-line profit results, and that is a good thing. Diversity has to be a business imperative. Anyone who is doing diversity for do-goodism will fail."

In the past, diversity was often restricted to hiring -- what is called "representation" in the human resources world. But focusing just on hiring, at the expense of aggressive and far-sighted career development, misses the opportunities that building a diverse work force can bring. "The representation only approach just begins to scratch the surface of what diversity can offer as a corporate strategy," said Billy Dexter, a board member of the Chicago chapter of the National Black MBA Association and president of the diversity and inclusion practice for the Hudson Highland Group. "To have sustainable impact and take the diversity initiative to the next level, the diversity initiative needs to be tied into a clear business case pushed by management at the highest levels."

For diversity initiatives to be effective, Mr. Dexter said, they first need be nurtured and pushed by senior management, and included in the company's cross-functional corporate strategy. Second, diversity must be instituted internally at all levels across the organization's work force, from entry level through mid-level to the executive level. "Diverse work groups and teams bring new perspectives to solving difficult problems," Mr. Dexter said.

Third, diversity must be engineered externally to have an effect on the company's marketplace, from suppliers and vendors to clients and customers, and help bring in new business from emerging, untapped markets. "The first step with any diversity initiative is always representation, but many initiatives can hover right there and not progress to the next level. If you really want to win with diversity, you have to have strategies that use diversity to positively impact the business and the marketplace. To do that, diversity initiatives need to be strategically aligned with business objectives."

Finally, any organization instituting a comprehensive diversity plan needs to have performance measurements, goals and projections in place to determine its effectiveness. "Making diversity work takes thought and organization, first and foremost," Mr. Dexter said. "If you really want to win at it, and you want sustainable change, you need to have targets and metrics. If you align diversity with business strategies, workplace strategies and marketplace strategies, all with involvement of senior management, and you measure your progress with targeted goals and metrics, then you can determine the return on your diversity investment."

Diversity programs at their most basic level are corporate initiatives that increase trust among social and ethnic groups who do not know enough about each other. That lack of understanding -- perhaps because of ethnic, religious, cultural or gender-related misunderstandings -- can cause enough friction in the workplace to make the corporation less productive.

Diversity initiatives have other components besides those that deal with ethnic and racial differences. "Reasonable accommodation," a main tenet in the Americans For Disabilities Act of 1991, expands the concept of diversity and inclusion to people with disabilities. The principal has also been applied to other people with special needs, such as working mothers and people who worship during the work week. Today, corporate diversity initiatives recognize a wide range of groups, including women, the elderly and lesbians and gay men.

The expansion of diversity has not come without a cost to most corporations. The skills needed to develop trust between different groups and to bring attention to what have been termed "micro-inequalities" in the workplace need to be taught. In many cases, skills need to be re-learned.

One of the challenges with institutionalizing diversity is reshaping popular attitudes about how to recognize and appreciate the differences among people. "In the past, we were told to ignore differences between people, and now we are being told to recognize them and value them," noted Mr. Wheeler of The Conference Board. "Twenty years ago, the term we used was 'color-blind.' But now a 'culture of inclusion' is a more popular term. Being unaware of diversity is no longer a goal. We now want to appreciate the differences. People aren't color-blind. Heightening the awareness and acceptance that differences do come into play in the decisions we make can only be a good thing."

Achieving true diversity of thought and ideas in a corporate culture that respects the differences among employees and customers alike is the ultimate goal. "For us, a journalistic organization, it is absolutely critical to reflect, understand and report on the communities around us," said Cindy Augustine, senior vice president of human resources of The New York Times Company and president of The New York Times Company Broadcast Group. "Great organizations thrive on diversity of thought and ideas. Since our core purpose is to enhance society by creating, collecting and distributing high quality news, information and entertainment, it requires that we report on the nation and the world with perception and insight. By having a staff as wide as it is deep and broad in perspective, backgrounds and experience, we are able to capture the multitude of voices of America with true fidelity."

For a corporate diversity initiative to have lasting positive effects, it must inspire employees on a personal level and give them a sense that their contributions are valued and respected within their organization. One way corporations foster career development is by creating active internal career development programs that link mentors with mentees. Setting up affinity groups of employees is another method to celebrate corporate diversity. Affinity groups often set up their own mentoring network to guide the careers of new employees.

There are also a host of independent organizations built with the express purpose of supporting and promoting the careers of diverse job applicants. The New York Times Company works closely with several outside organizations, like the National Association of Black Journalists, to broaden their job applicant pool. The Times also sets up outreach programs based in historically black colleges and universities to attract talented high school students and recruit the top performers. Hiring managers are held accountable for their hiring decisions. "Managers are expected to recruit from a diverse pool of candidates when they hire job applicants," explained Ms. Augustine. "If they don't hire from a diverse pool, and we don't believe that they have tried hard enough to choose from one, then they can lose part of their bonus."

Once a person is hired, The Times Company tracks the progress of its employees up through the ranks of its properties, including The New York Times, the International Herald Tribune, The Boston Globe, 16 other newspapers, eight network-affiliated television stations, two New York City radio stations and more 40 Web sites, including NYTimes.com and Boston.com. The Times Company's human resources department organizes mentoring programs to help new employees understand how best to navigate the corporate culture and plan a career The Leadership, Excellence, Achievement and Purpose (LEAP) program invites promising talent to join a one-year management training program. "We have lot of women and minorities in the LEAP program, although it is open to everyone," said Ms. Augustine said. "It is an effective tool we use to create a diverse organization and make sure that we have diversity at all levels.

The ultimate advantage of building a diverse work force is achieving true diversity of thought and ideas. Diversity of thought comes naturally from a corporate culture that respects and celebrates the differences among employees and customers alike. "From a company perspective, we look very carefully at diversity and how important diversity is to us as a business," said Joseph Campanelli, president and chief operating officer of Sovereign Bank. "We strive to achieve the concept of diversity in the thought process. We don't want people that don't question one another, and who don't look at things differently. When you look at how many different cultures we have within our communities, you are at a competitive disadvantage if you don't understand the uniqueness of each culture."

Diversity also helps companies better reflect and appeal to their local marketplace. Both the demographics of the New England marketplace and the customer base of Sovereign Bank have changed dramatically over the past 10 years, said Mr. Campanelli, whose bank has its roots in Pennsylvania and New York. In 2000, Sovereign acquired 300 branches from Fleet Bank, and then acquired several other banks in the Boston area, many with large immigrant populations. "We are in the service business, and if we don't understand those communities, we are not going to be effective in reaching out and making them choose Sovereign over our competitors," explained Mr. Campanelli. "We have to understand the demographic shifts and create products that the changing marketplace demands. Our customers are going to choose the company to service them that they feel most comfortable with, and we need to be sure that we are a part of the communities we serve."

Hiring a staff that speaks the language of the local community, and shares its local customs, is key for a customer service-base organization. "We need to speak and understand all the different languages being spoken in our community banking offices and our call centers," said Mr. Campanelli. "We need to embrace the idea that we don't all have to dress the same way. We need to be a part of the community, and have people from nearly every nationality working for us. That is what makes Sovereign a great company to work for."

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• Profiles in Diversity
• Percentage of Board Seats held by Women at Fortune 500 Companies
• Number of Women Corporate Officers in America's 500 Largest Companies
• Asian-Americans Fastest Growing Ethnic Group
• US Buying Power, by Race