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Diversity - Is Corporate America On Board?

Diversity has become an important watchword in corporate America today. A number of corporate managers credit diversity with strengthening their workforce, improving productivity, and enhancing customer relations. However, the question remains: Is senior leadership in corporate America simply paying lip service to the diversity ideal? Or are corporate officials taking concrete steps to ensure diversity in the workplace?

A survey of more than 120 human resource professionals from Fortune 1000 companies offers evidence that diversity is more than a platitude in corporate America. The research shows that the professionals surveyed believe that diversity initiatives have had a "direct impact" on corporate profits and have enabled their companies to maintain a "competitive edge." According to the survey, which was a joint project by the Society for Human Resource Management and Fortune Magazine, 79 percent of those surveyed believe that diversity initiatives have enhanced corporate culture, with 77 percent maintaining that it has improved recruitment of new workers. A whopping 91 percent of respondents said that diversity efforts had enabled their organizations to remain competitive, with 79 percent saying that diversity improves employee morale.

Debra Cohen, SHRM's vice president of knowledge development, has been quoted as saying, "Many HR professionals at top U.S. companies say the number of African-American, Hispanic, female and older employees in their work force has increased over the past five years. These top companies are taking advantage of the clear benefits of diversity programs and a diverse work force as a competitive edge. Most diversity programs started in the early 1990s and are still growing rapidly."

The survey also found that companies are addressing various aspects of diversity in the work force. The overwhelming majority of companies, 96 percent, addressed race, while 88 percent addressed gender and 85 percent tackled ethnicity. Sixty-five percent set their sights on age, while 64 percent launched disability initiatives. Interestingly enough, 54 percent addressed the issue of religion, while 57 percent approached the controversial issue of sexual orientation. Meanwhile, 38 percent addressed the issue of language as part of their diversity initiatives.

Surveys are one thing—testimonials are another. We can learn much from the real-life experiences of minorities within the workplace. Lee Cowan is an African-American who is a local sales manager for WQXR, a radio station owned by the New York Times. Cowan was promoted from account manager to local sales manager as a result of her participation in something called the LEAP program. Cowan stated, "The objective of LEAP is to train New York Times employees like myself to be the best they can be and get them ready for future managerial positions within the company." Another testimonial comes from Ron Coard, an African-American who is an assistant vice-president of commercial real estate for Sovereign Bank. Coard states, "Diversity is not just window dressing here. They are walking the talk. They are taking areas of the bank that are traditionally not very diverse and finding ways to make them more diverse." Coard adds, "The whole notion of diversity to me is trying to get the workplace to reflect the overall community by being as heterogeneous as possible, and by doing so, encourage a diversity of ideas."

Another measure of diversity in corporate America is the percentage of women holding seats on the boards of directors at the largest companies in the U.S. These percentages have risen steadily since 1995. For instance, a survey of Fortune 500 companies revealed that 54 percent of companies have 25 percent or more female directors, compared to 11 percent in 1995. Meanwhile, a census of corporate officers revealed that women represent nearly 16 percent of corporate officers in the 500 largest U.S. companies; in 2000, the figure was 12.5 percent, while in 1995, it was only 8.7 percent. That means the proportion of female corporate officers has nearly doubled in the last few years. The president of Catalyst, the company which conducted the survey, is Ilene Lang. Lang states, "Smart companies know that women are good for the bottom line." The data show that companies with the highest percentage of women in top management have a financial performance that is 35 percent higher than companies with the lowest percentage of female managers.

Diversity is likely to only gain in significance in corporate America in the years ahead. The 1990 census showed that the U.S. is more of a melting pot today than ever before. In the decade of the '90s, the foreign-born population exploded, to 31 million people. In fact, they now represent 11 percent of the total population. It is estimated that Hispanics, African-Americans, and Asian-Americans represent 30 percent of the overall population, or 85 million people. In the ten largest U.S. cities, these three groups actually represent the majority of the population. It is estimated that this group signifies more than $1.5 trillion in yearly purchasing power. Saul Gitlin, an official with Kang & Lee Advertising, has been quoted as saying, "The total size of the Asian, Hispanic and African-American population in this country is equal to that of the baby-boomer generation. Imagine for a moment how much discussion there has been over the last five to ten years about servicing the needs of the baby boomers. It is the sheer size of the baby boomer population—and now the multicultural generation—which dictates that businesses must respond to the consumer needs of both audiences."

At one time, corporate diversity initiatives were launched by human resources departments in order to satisfy disgruntled workers. Today, the initiatives have come into their own, and are often tied to employee compensation and performance reviews. According to Billy Dexter, the president of the diversity and inclusion practice for the Hudson Highland Group, "Corporate diversity programs have become a business imperative for a number of reasons. The most important reason is the need for companies to reflect the demographic changes within the United States. The second is marketing. There are emerging markets that are presenting themselves every year, and it's important for companies to develop marketing strategies—to expand their appeal to geographic regions, to people of different races, genders and to other untapped markets." He adds that the talent pool for jobs also demands diversity programs. It is estimated that by 2050, 85 percent of job applicants will be minorities and women. The most qualified applicants will be searching for companies with effective diversity programs.

A number of corporate managers have responded to this situation with bold initiatives. For instance, some corporations now employ a chief diversity officer in order to oversee diversity programs. These programs ensure that women and members of minority groups own a growing share of a company's suppliers. Companies strive to employ a diverse work force, while offering benefits designed to retain qualified employees.

Diversity officers also help to form networking groups for various ethnic, racial, age, and disability groups. Other companies work directly with outside organizations designed to promote diversity in the work force. For instance, the National Society of Black Engineers partners with Fortune 500 companies to help African-American engineers succeed in school and in the workplace. Zillah Matare-Fluker of United Technologies Corporation comments that the association "is important to us because it is the largest source of African-American engineers in the world. They have a very large membership, with representation from every one of the engineering schools we look to for graduates."

Meanwhile, Michele Lezama, executive director of NSBE, said the partnership between the organization and its corporate sponsors "make(s) a significant difference in the ability of top corporations to find and hire diversified candidates. UTC has a significant diversity effort, which I would label as 'best in class.' They are committed to making sure that they have the best talent, and they recognize that you need to bring in people from different backgrounds and ethnicities to achieve what we call diversity in thought."

In most progressive companies, a "culture of inclusion" has become a normal part of business operations. This is true for financial institutions, pharmaceutical companies, defense contractors, and federal agencies. The aim is to make the workplace more closely resemble the nation at large, making the company a more attractive place to work. It has been said that the most successful companies today have devoted a significant amount of effort to becoming more diverse and understand how to deal effectively with a multicultural marketplace. And, in a majority of cases, these diversity initiatives are led by top management. Frank Planes, president of the New York chapter of the National Black MBA Association, has said, "I spend my time educating companies, when they reach out to us, on how to enhance their diversity programs. We work with them on finding that champion within their company—at the top. You want companies to implement diversity programs with a top-down approach. If it has support from the top, and is done right, it can really increase revenues in the long run. Diversity works."

Years ago, some skeptics believed that diversity programs were just a political ploy designed to increase affirmative action. However, over the years, it has become clear that diversity initiatives are actually instrumental in helping to boost the financial fortunes of companies across the board. In the years ahead, one can expect diversity programs to increase, as people of color become an even more powerful force in the American economy.

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