Debunking diversity Featured

8:00pm EDT March 26, 2009

The million-dollar question about making an investment in diversity is: Will it pay back?

While experts say diversity in the work force is a business imperative, defining diversity by employees’ physical attributes won’t foster a functional or profitable environment.

In fact, the definition of diversity is always evolving. Twenty years ago, the word spurred thoughts of gender issues since men held a high majority in the work force, while today the gender gap is narrowed and is less of a concern. Diversity’s definition has expanded, and diversity of thought, education, socioeconomics, religion and life goals are only a few of the seemingly endless list of terms people use when defining the term for themselves. These differences in your employees can make or break your business. If you foster an inclusive environment, where all employees can contribute thoughts and plans to improve your product or service in confidence, you will improve your bottom line.

A February 2009 Groundbreakers report by Ernst & Young defines diversity as an equation for success and notes that research has proven diverse groups outperform homogenous groups even in cases where the nondiverse groups have heightened abilities. Scott Page, a professor of complex systems at the University of Michigan at Ann Arbor, created the diversity prediction theorem, which says the collective ability of any crowd is equal to the average ability of its members plus the diversity of the group, claiming diversity is a sure way to attain a strategic advantage.

“Any business will be a richer organization with a variety of diverse perspectives,” says Randi Menkin, director of global work force diversity for UPS. “It’s a business imperative to tell people that you believe in what you do or customers won’t want to do business with you. If you add diversity throughout your business, you will have a better shot at understanding all of your customers’ needs and predict what they want.”

Still, the return on investment is the hard evidence you want to justify devotion of time and money. Some say it’s difficult to quantify diversity ROI, but metrics are attainable. If you start with a plan that establishes your company goals and maps out a strategy, you can document the benefits and obstacles of a diverse team’s functionality that will best benefit your business.

Why it’s important

Since the country’s demographics are continually changing, a failure to branch out and move past your comfort zone when hiring and communicating with employees will ultimately result in financial punishment for the business.

“It can be difficult for a 50-year-old to be managed by a 30-year-old boss,” says Donna M. Klein, president and founder, Corporate Voices for Working Families, a national business membership organization representing the private sector on public policy issues. “Training to maximize the benefits of these differences instead of allowing them to divide workers is essential. Business benefits are the same as mixing age, race and gender outside of business. It makes for a more interesting conversation at a dinner party.”

U.S. Census Bureau reports show Hispanics are the fastest-growing population, with an increase of 121 percent since 1999. The Asian population nearly doubled since 1990 and the African-American population is predicted to increase to 65.7 million strong by 2050, an increase of 15 percent since 2008.

“Any homogenous group will provide predictable results in problem-solving,” Klein says. “But a diverse group comes up with ideas and problem-solving techniques that would otherwise have never been thought of. Allowing knee-jerk reactions of stereotypes to get in the way of hiring and working with a diverse group is really limiting your potential.”

Affinity networks — employer-recognized employee groups who share a common race, gender, national origin or sexual orientation — are a great way to attract and retain diverse employees. Networking by affinity groups reduces turnover and gives companies insights to consumers they otherwise may have never understood.

General Motors Corp.’s People with Disabilities Affinity Group has been a consistent resource for providing input and support relative to accessibility of products and services. The group played a role in helping OnStar develop the addition of TTY capability, the text telephone for the hearing impaired, for OnStar-equipped vehicles. Another example of diversity was witnessed in PepsiCo Inc.’s Hispanic professional organization called Adelante. Its Hispanic employee network provided insights that resulted in the development of the guacamole chip. In the first year of distribution, PepsiCo’s Frito-Lay division sold $100 million in Lay’s guacamole chips.

“If you provide the environment for the diverse group of employees to thrive, their contributions will be endless,” says DeAnne Aussem, director, market diversity leader, Southern California, Phoenix and Las Vegas, PricewaterhouseCoopers LLP. “You may help form affinity groups or create a network of partners — local support structures that will lead you to a hire. You don’t set out to hire a specific gender or race—– but you do want to have options. These networks put the word out there for a diverse group to apply. Post positions at job fairs, colleges, Web sites and newspapers.”

What you need to know

Diversity isn’t about being politically correct; it’s about keeping your business competitive.

“Effective diversity isn’t about meeting quotas; it’s about functionality and making your business better through understanding, taking action and creation of a desirable product,” says Jennifer Melton, EEOC/diversity management consultant for F&H Solutions Group. “You must do this tactfully. Recruit for core competencies with consideration to all of the candidate’s abilities. Think about how they can make you stronger.”

Keep in mind the customers who you want to attract and then investigate opportunities in markets in which you want to expand or improve business. If you’re interest is in attracting a broader customer base, employees should mirror the communities in which you want to expand. Forge relationships with diverse community organizations and let them know about opportunities in your organization. Sponsoring events that interest diverse groups makes your company more attractive to diverse candidates. For example, host events in coordination with Cinco de Mayo, Chinese New Year or Disability Awareness Month, and make your business’s diversity interests and job openings known.

If you’ve established affinity groups within your company, they can also help with recruiting. They may be able to give you suggestions that will help your business attract more diverse candidates and offer ideas of where to post positions.

Starting an affinity group is easy.

“Initiate employee resource groups by providing the resources, such as the facility or work hours, in which they can meet,” Melton says. “Employee resource groups can give a better idea to employers as to where women, for example, or Latinos may look when seeking employment. If you are posting job openings in one newspaper or on one Web site, those might not be sources in which diverse groups are seeking employment. Job fairs are an excellent place to recruit. Post new openings on local Web sites (and at) colleges historically known to have minority or diverse students.”

Hiring managers also need to keep in mind how to motivate and manage their staff as part of a recruiting plan. Experts encourage incentives for staff contributions to a diverse work force, considering employees’ job satisfaction can be your best advertising.

“There are some costs associated with having diversity,” Klein says. “The benefits far outweigh time and financials. Mentoring employees to ensure that you attract the best diverse talent is an important step. Retaining the right employees takes a little more effort however. You need to make sure diverse employees don’t feel like they’re sidelined, uninvited or unwelcome. This is in part achieved through a policy or mission statement but must be lived to be convincing.”

Address diversity in your business by evaluating your current actions. Think about what you should do the same or change with your current products or services. Keep in mind the change in demographics — the customers who you want to attract. Pinpoint who your users are — including age ranges. Then, investigate opportunities in markets in which you want to expand or improve business. This is an area in which insight from you affinity groups will be beneficial.

After setting an appealing tone, you can shift focus to who will be responsible for converting the business plan into action. Recognize the needs of product improvement for example and assign employees’ roles and put a skilled diversity manager in charge. Incorporate ideas from your employees that allow alternative ways to oversee programs. When looking for new ideas, form a cross section of teams with different experience levels to brainstorm.

“You can give monetary and other recognition incentives for adopted plans,” Melton says. “If you create scorecards and performance management tools that access progress, you can continue to evolve best methods. The employees and management must ‘own’ the idea of a functional diverse team.”

Tangible benefits of diversity can be determined through these methods, as well. Keeping track of the benefits diversity has brought, such as a reduction of employee turnover, an increase of innovative products or the annual sales figures since you began to incorporate diversity into your corporate culture, will help you decide if you have effectively recruited, trained, created an environment for and maintained the culture that will allow your company to be sustainable at the global level.

When handling hurdles to the mission of a welcoming diverse work force, managers need to keep in mind how to motivate and manage their staff. Penalties for those who are resistant to promoting your diversity plan are frowned on by the experts and instead encourage incentives for those excelling.

“Diversity didn’t come along until long after the civil rights movement,” Klein says. “It has been a 25-year-old effort in business, and we aren’t quite there yet — where we can say we’re operating at a level where diversity is fully functional. This is a business imperative that is beneficial to any industry, but the challenge is that everyone values the differences.”

To boost diversity competence, you can invest in team development programs, leadership development programs and rotate employees’ duties.

“If you’re vanilla, you can only sell your company to a vanilla consumer,” Menkin says. “It can be difficult to relate to others if you don’t have experience with other types of people, and working with a diverse group helps you do that. Diversity in the workplace represents the three pillars of success, which include growth, talent management and reputation management. With growth, your diverse work force will help you market to a wide range of customers. Talent management benefits the company by recruiting and effectively managing employees, and with a diverse work force, you can maintain your reputation by working in the community to reflect an image of how you want to be perceived as a company.”