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Today, the
smartest organizations in the world are recognizing that
their diversity can be a source of competitive strength.
Instead of merely monitoring minority representation
within the ranks—a standard goal of diversity programs
past—they’re implementing holistic strategies that seek to
better understand their employees’ backgrounds, styles and
perspectives, and then leverage them for real business
benefit.
Consider
IBM Corp., which in the mid-1990s began talking frankly
about diversity and what it could do for the company’s
bottom line. It launched a new unit to focus on serving
previously untapped segments of the market, such as
African-Americans, women and people with disabilities.
Today, that effort yields almost $1 billion in annual
sales.
To create
a diversity strategy that builds on differences to deliver
business value, implement the following
practices:
1. ASK THE
RIGHT QUESTIONS.
Jack
O’Kelley, a management consultant with Katzenbach Partners
in New York, advises companies to begin with some
straightforward questions:
What are
the diverse populations we aren’t currently serving?
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How are
their needs different?
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How can we
use our diversity to reach them?
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How can we
better leverage diversity—for instance, do we need to
recruit more aggressively from a particular identity group
or should we invest in improving the performance of
internal teams?
He also
recommends doing a four-part analysis of opportunities to
leverage diversity in your organization’s work force,
marketplace, supplier network and community. In each, a
simple return-on-investment calculation will tell you
where you’ll get the biggest bang for the buck.
In a
project Katzenbach Partners recently performed for a large
energy company, analyzing diversity initiatives delivered
four positive results. First, targeted marketing to
Hispanic consumers would yield an additional $30 million
to $36 million in net annual contribution margin
(including the cost of marketing). Second, by reducing
attrition levels among women and minorities, the company
could save an estimated $5 million to $7 million a year on
recruiting, training and lost productivity.
Third, by
better understanding supplier diversity and knowing where
to focus investment, the company identified $2 million to
$4 million in revenue opportunities and cost savings.
Finally, optimizing funding to community organizations
resulted in an estimated $2 million to $3 million impact
to contribution margin through a combination of cost
savings and increased sales.
2. BUILD A
STRONG INFRASTRUCTURE.
As with
any critical initiative, the chief executive should be
your diversity strategy’s champion. And bringing in other
senior leaders will ensure that the diversity strategy
isn’t isolated.
IBM’s
success in reimagining the role of diversity can be traced
directly to 1995, when, under the leadership of then-CEO
Lou Gerstner, it established eight task forces of senior
leaders representing major demographic groups, including
teams devoted to women, African-Americans, white men and
people with disabilities.
The task
forces’ purpose was to help management get to know these
constituencies, understand what made them unique, and use
that understanding to improve the company’s results. But
they quickly became forums for starting conversations that
once had been taboo.
Indeed,
IBM—which now boasts 194 “diversity network groups” around
the world—has become an exemplar of recognizing
differences and learning from them, whether they pose
challenges internally or opportunities externally.
3. LISTEN
TO YOUR PEOPLE.
Beginning
in 2007, pharmaceutical giant Merck formed teams of senior
leaders who represented key identity groups within the
company globally. Merck asked each team to answer four
questions:
1. How can
we accelerate leadership development from your group?
2. How can
we advance inclusion of your group?
3. How
might we impact the image and buying decisions of your
group?
4. Are
there key external alliances we should have with your
group?
Chief
diversity officer Deb Dagit says that with the help of its
employees, Merck has already identified several key
opportunities to leverage its diversity in areas such as
product development, regulatory compliance and marketing.
For
instance, one team was recognized in 2007 for obtaining
Halal certification for Gardasil, its vaccine for the
Human Papillomavirus, clearing the way for it to be
marketed to Muslim women as hygienic, which its chief
competitor can’t do with its rival product.
4. HOLD
EVERYONE ACCOUNTABLE.
As with any other corporate initiative, the results of the
diversity efforts need to be measured and everyone in the
organization held accountable. Creating value through
inclusion should be a category in year-end performance
evaluations for senior leaders on down.
And the
metrics must be written in the language of the evaluees’
business unit and the context of their responsibilities.
Thus, while an HR manager might be on the hook for
recruiting high-potential females across the organization,
the sales and marketing staffs would be challenged with
increasing market share with gay and lesbian consumers. |
