Diversity’s Challenge

In today’s tumultuous economic environment, when survival is paramount, it is difficult for businesses to argue that a specific function, program or initiative should be considered “sacred” and left untouched. This is certainly true of diversity programs, especially as they often are defined or perceived. Properly structured, however, a diversity program can remain a priority focus and can even be instrumental in helping a business to get through challenging economic times.

Many corporations have been applauded for diversity programs that are considered highly effective. These highly effective programs often have a number of components in common. First, they define “diversity” broadly to include several contexts: ethnic, religious, age, gender, national origin, sexual orientation, geographical, political, socioeconomic condition and disabilities. The diversity initiative therefore focuses on creating a consistent methodology for identifying, attracting, hiring, retaining, motivating and promoting the best and brightest among these various groups, starting with lowering barriers for entry into the organization.

Placing these diverse individuals in key functional areas of the company relates to another critical component of an effective diversity initiative: Diversity must be integrated into all aspects of the business. One of the goals of an effective diversity program should be to move from special projects and initiatives to broader business strategies that are fully integrated into all business strategies. Diversity can move from the acquisition of talent that mirrors the customer base to integrating the acquired talent into all of the functional areas of the business. At this point, the advantages of having a diverse business should start to influence broader business decisions, the ultimate goal of diversity.

For instance, in the past, many diversity programs consisted primarily of naming a minority person as a “director of community relations,” with a staff — sometimes small — and a budget — also sometimes small. With this approach, it is difficult to justify this department as a priority when budget cuts must be made. A more effective approach is to draw up a strategic plan that engages all of the core functional areas of the business: sales and marketing, procurement, human resources, legal, accounting and tax, finance and compliance. The diversity initiative should also be reflected in the vendor and supplier base with a goal of ultimately being reflected in the customer base of the corporation.

Sponsorship at the highest levels of the organization is the third critical component of an effective diversity initiative. This sponsorship comes only after there has been agreement on the “business case” for the program, i.e., acknowledgement of the program’s benefits (primarily, economic) to the organization. Once the “business case” has been made, it should be accepted by executive-level management and implemented as a corporate mandate, with a long-range plan for it to gain traction throughout the organization.

Too often, many within the organization are not motivated to adopt such a program simply because it is the right thing to do. Instead, they must be persuaded that it can provide an economic benefit to the organization. Communicating the initiative and, as a part of its implementation, educating the entire organization about its outcomes are key to the plan’s acceptance and to the creation of an environment where everyone feels comfortable and self-actualized.

Retaining a diverse work force initially requires an understanding of the diverse groups and how best to utilize the resources and benefits they bring. The focus should be on inclusion, on embracing the makeup of the work force, rather than simply tolerance. Retention also involves ensuring individual success through corporate training programs that benefit all employees and the corporation, including organizational, leadership and management development programs, and team building.

The community outreach component of a diversity initiative, sometimes considered expendable and not a part of an important business function, not only brings name recognition and creditability to the organization, but also promotes employee pride as a result of the organization’s good works in communities with which the employees identify. An organization with a well-structured diversity initiative that is fully integrated into the business, and which effectively has become part of the overall corporate strategy rather than a mere program, cannot and should not want to eliminate that initiative. Such an initiative would, in fact, be very difficult to eliminate.

Most important, an effective diversity program can be beneficial to the business at anytime, especially during challenging economic times. For example, a diverse work force can help the organization to better understand the needs of a diverse marketplace in terms of the products and services that should be developed and offered.

In a global environment, as the marketplace becomes more diverse, the competitive advantage will go to organizations that can understand and respond to the needs of the diverse global marketplace.

Similar benefits accrue from targeted marketing and sales. Just as the diverse work force can help the organization to understand the product and service needs of the global marketplace, it can also help the organization’s strategies to effectively brand and market these products and services to individuals. 
An effectively diverse work force also is an effective recruiting tool. The best and the brightest among various groups are attracted to, rather than deterred by, an organization that is a microcosm of society. Morale and job satisfaction tend to increase when an effective diversity program leads to a natural diversity throughout the organization. As data from the U.S. Census Bureau show, ethnic minorities comprise roughly one-third of the country’s current population, but by 2040 are predicted to make up the majority of the population.

Perhaps less compelling for some, but important nonetheless, an effective diversity program can minimize concerns related to legal compliance and risk management since there is presumably a reduced likelihood of lawsuits related to noncompliance with laws prohibiting discrimination in employment. In addition, a successful diversity initiative that reaches down to the supplier/vendor level will be critical in helping the organization to meet its obligations under government contracting regulations (with federal, state and local governments) that encourage and sometimes require the use of certain categories of vendors.

In economically challenging times, businesses benefit from taking advantage of initiatives that can give them an economic edge. With today’s increased emphasis on talent as a key contributor to the success of an organization, and with the acknowledgement of the value of a diverse talent pool, ending diversity initiatives that are integrated into the business at all levels seems an unwise move. Where diversity initiatives are not totally integrated into the business as a success strategy, a strong case can be made against the benefit of those initiatives.

In the global economy, U.S. companies are competing against companies in emerging markets, not just companies in countries historically viewed as competitors. These emerging countries, such as India, South Africa and Mexico, tend to be more nimble and more adaptive to change, including change to acknowledge and accommodate the product and service needs of the world.

Mancur Olson, a leading 20th-century American economist, wrote that powerful nations like the United States tend to get trapped by their own success, or at least face the threat of doing so. In his The Rise and Decline of Nations, he argues that these nations become so dominant that they are fooled into thinking that they know best. Their social and political instincts tend to get locked in place, becoming rigid and sclerotic, thus making it hard for them to respond to changing economic conditions. This in turn cracks open the door for new nations to stick their feet in — nations that have taken a few notes and can more readily respond to and deal with new conditions. A low-wage labor force that also allows them to compete in a more cost-effective manner often bolsters these new nations, giving them an even greater advantage in a global economy.

In powerful nations, the commitment to diversity may very well become the differentiator that will determine which [currently successful] business organizations will survive in perilous times and in a highly competitive global marketplace.  “If you are successful, all that proves is that you know what used to work. There is real danger in parking by past successes,” a Stanford University instructor once said. Old assumptions often do not fit new realities.

Companies that work at ways to remain effective in changing times are merely positioning themselves for exciting opportunities that await organizations that are prepared for the future. Effectively integrating diversity into an organization’s operations across all functional areas — with senior management sponsorship, acceptance by midlevel managers and overall employee buy-in — can be one way to understand and address new realities.