By Tammy Worth
September 2009

For many businesses, diversity is a smart choice. But experts in the field agree that in coming years, diversity will be required of organizations to remain competitive in the shifting marketplace.

“The ability for an organization to remain competitive will be dependent upon its ability to mold to the changing workplace,” says Donna DeBerry, president of DRP International, a diversity-consulting firm in Austin. This includes retiring baby boomers; an increasing number of women and immigrants; and generations X and Y, which tend to be more inclusive than their predecessors, she says.

Changes in the workplace are the result of various shifts in U.S. demographics. Among these are shifts within the country’s racial and ethnic makeup. People of color have reached 100 million, according to a May 2007 report by the U.S. Census Bureau.

The white population accounted for 18 percent of the country’s 2.9 million growth between 2005 and 2006, according to the report. The Asian population increased by 3.2 percent, the black population rose by 1.3 percent and Hispanics accounted for almost 50 percent of the growth at 1.4 million.

But the demographic shift creating a new customer base and workforce is not the only reason to implement diversity initiatives within a company’s business strategy. Increased globalization, improved financial results and employee retention are all part of a growing business case for diversity.

 

A Required Approach

“Embracing a culture of diversity helps to improve financial results,” says DeBerry. Diversity also strengthens a company’s brand, unifies the corporate culture and empowers stakeholders, she adds.

“It’s all about that innovation that happens with a diverse team of people,” she says. “They bring in diverse cultures, skills and talents to a team. There is a purity that exists in a group of people when you have all these experiences together.”

In today’s new economy, success requires a global perspective as well as knowledge of other cultures, says DeBerry. Whether doing business nationally or internationally, she adds, people want to see others who look like them in their local businesses. Customers will shop and dine where they feel comfortable. Employees will work at companies where they feel welcomed and valued.

 

The Business Case

One of the motivators behind AT&T’s diversity initiatives is ensuring the company is able to compete in the global marketplace, says Belinda Grant-Anderson, AT&T’s vice president of workforce development and diversity.

Other reasons she cites include customer retention, increased employee engagement, business growth, higher employee productivity, and a greater ability to recruit and retain talent.

Women and people of color represent a majority of the individuals entering into today’s workforce, says Linda Jimenez, chief diversity officer and staff vice president of diversity and workplace culture at the health care benefit provider WellPoint Inc. For that reason, it is critical for companies to be able to recruit and retain diverse talent.

“Retention is critical,” she says. “It costs at least four times an employee’s salary to replace that employee.”

To measure diversity gains, Jimenez says WellPoint looks at the age, race and gender of new hires, promotions into management, senior leadership, and board of directors. They also track supplier diversity, the frequency of internal and external diversity communications, awards earned by the company, and placement of philanthropic dollars.

 

The Workforce Focus

When it comes to the workforce, recruitment and retention are two major areas of focus right now, DeBerry says. “Companies are scrambling for diverse talent,” she adds. “And when you talk about evolving and really getting it, the innate place it has to happen is in the workforce. It’s the core and everything else will be a domino effect.”

According to AT&T’s Web site, the company’s workforce is 44 percent female and 39 percent people of color. Forty-one percent of its management is female (above the average of most Fortune 500 companies) and 28 percent are people of color (compared to 12 percent nationwide).

“We want to make sure we don’t get too wrapped around trying to prove diversity is the right thing to do,” Grant-Anderson says. “It has to become part of everything within the company.”

Many organizations point to their inability to find enough women or people of color to fill positions, says DeBerry, and this is mainly because they don’t know where to look. “Ninety percent of the time they are not looking in the right places,” she adds. “I think it’s OK to mainstream everything, but you will only get a percentage of the diverse talent you are looking for if you don’t widen the search.”

DeBerry says businesses need to expand their search beyond traditional or Ivy League colleges. She recommends looking at historically black or Hispanic universities, partnering with organizations such as the National Council of La Raza or National Urban League, and using women- and minority-owned executive search firms.

 

Supplier Diversity

James Harris, the director of supplier diversity for H-E-B, a San Antonio-based grocer, says the company has focused on diversity in its pool of suppliers for more than nine years.

From a supplier diversity standpoint, minority suppliers better understand the needs of H-E-B consumers, Harris says. “They are connected with their needs and it makes us more reflective of the communities we serve.”

Harris adds the company is able to save money by using minority suppliers as they are often smaller and more efficiently run.

Each area of procurement at H-E-B, such as produce, meats, construction and transportation, has a supplier champion in charge of seeking opportunities in their area to work with minority businesses. Harris says the organization measures its spending with minority suppliers by department and collectively.

“We put money back into the community when we buy from minority suppliers,” he says. “Whether construction or food producers, most are Texas suppliers, and that’s important to us.”

 

Multicultural Marketing

Supplier diversity and marketing are also part of WellPoint’s focus. “A committed focus on supplier diversity opens access to multicultural markets, leverages flexibility of small business and realizes significant cost savings for an organization,” says Jimenez. “And with the shifting demographics, there is a whole venue of expanding multicultural consumers to consider.”

Jimenez says her organization takes a holistic approach to diversity. “We offer benefits to over 36 million Americans and know that not all of our customers speak English and not everyone has the same disease management practices,” she adds. “In the workplace, what may be a successful diversity initiative in California may need to be tweaked in Wisconsin.”

Jimenez adds that they also try to actively engage in community partnerships in all of their markets nationwide. An example is their annual Saturday WellPoint Community Service Day, during which associates are engaged with their family and friends in community projects.

“We get involved in local chapters, present at conferences, sponsor scholarships – it’s something that’s long-term and ongoing,” she says.

 

An Inclusive Environment

Once companies have recruited diverse talent, they often flounder when it comes to treatment of these employees, says Carmen Carter, a consultant and founder of the Women’s Multicultural Council in Texas.

“One big question is, what do you do with the people when you get them?” says Carter. “When we show up, our person shows up with us.”

Grant-Anderson says that diversity is fundamental to AT&T’s success, so the company has implemented numerous programs to help with employee advancement and retention. The AT&T Self-Development and Learning Resource Center offers assistance with resume writing, building interview skills and diversity awareness and education.

“Once someone becomes part of the AT&T family, we have a lot of internal programs to help them develop,” she says.

AT&T’s Leadership Development Program has been in place for 20 years and focuses on building “strong and diverse leadership,” says Grant-Anderson. Hundreds of employees have participated in the program, nearly half of which have been women and/or people of color.

Jimenez points out that one of WellPoint’s programs, its talent acquisition and leadership development pipeline, helped to replace former CEO Larry Glasscock after his retirement with Angela Braly, a working mother who is now one of the few female CEOs in the country to run a Fortune 50 company.

While diversity tracks differences, inclusion examines how synergies are created within an organization, Jimenez says.

“Inclusion makes a corporation resonate so they not only look like the communities they operate in and the customers they serve, but they think and act like them too,” she adds. “That is what is going to drive business performance.”

 

The Future of Diversity

The face of diversity will be changing in years to come, says DeBerry of DRP International. Because of the shifts in the workforce, she adds, the message will change from one of race and color to one of overall inclusion.

“It’s not going to be about raising a playing field,” she says “It will be where all are competing on the same playing field.”

Jimenez says WellPoint has seen steady, incremental progress in its diversity initiatives in recent years. “With diversity comes innovation and creativity,” she adds. “Diversity makes us react and think differently, approach challenges and solve problems differently, make suggestions and decisions differently and see different opportunities. Superior business performance requires diversity of thought and tapping into unique perspectives.”

Grant-Anderson says that diversity is already part of the business process at AT&T – from training, to customer service, to internal teams and people in the field.

“When you look at the future and see what it takes to be successful, companies that can leverage diversity will have a competitive advantage,” says Grant-Anderson. “It is a fundamental, core way of doing business.”