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June 05, 2003
Can Your Business Afford Not To Have a Diverse Workforce?
by Jason Cook,

According to the 2000 census, for the first time in history non-Hispanic whites are the minority population in the 100 largest U.S. cities. By 2010, almost half of all new workers will be individuals traditionally classified as minorities. In addition, women will soon represent half of the U.S. workforce. The Bureau of Labor Statistics confirms that by 2008, women and minorities will comprise nearly 70% of net new entrants to the workforce. These numbers will directly affect corporate recruitment strategies of the future. Also, according to a survey conducted by the Society for Human Resource Management (SHRM), 62% of job seekers prefer to work for organizations with a demonstrated commitment to diversity.

One of the current measures used to identify how larger companies are succeeding at diversifying their work force is to look at the diversity population among executives at Fortune 500 companies. Only 3% of this group are members of a nonwhite minority group. Granted, these are the top rungs of the ladder, but there is clearly some room for improvement.

Many companies are aware of the issues associated with diversity in the workplace and are trying to do something about it. IBM is a perfect example of this. In 1995, they conducted an internal initiative to increase diversity awareness and identify issues that needed to be addressed. "We looked at recruiting, mentoring, stereotyping and external agencies we should work with," says Ted Childs, Vice President for Workforce Diversity at IBM in Armonk, N.Y. One of the many positive results from this initiative was an increased presence of diversity employees in the upper ranks. From January 1996 to September of 1999, IBM increased the number of African-American executives from 62 to 115 and women in the company's executive ranks rose from 17 to 54. In fact, many companies do have policies and initiatives--whether formal or in formal--in place to address diversity. These range from committees to work groups, mentor programs to affinity groups. Some companies even provide incentives to management personnel to encourage the achievement of diversity goals within their organization.

As an example, nearly 76% of Fortune Magazine's 50 Best Companies for Minorities award bonuses to managers who achieve measurable diversity goals. "At the basic level, diversity programs are designed to make everyone feel good," states Robert Grossman, a lawyer and a professor of Management Studies at Marist College. "Companies are sponsoring wonderful diversity initiatives that are outlets for people to voice their concerns and views without fear of retaliation…The sharing is good; it provides validation and it improves race relations because it generates a dialogue," adds Lisa Willis, Chair of SHRM's Diversity Committee.

And while there is tremendous value added to the corporate culture by having an emphasis placed on the diversity awareness, there is also a great deal of evidence that supports the financial advantages to diversity. Top management at PriceWaterhouseCoopers recognizes that diversity is a natural fit with their business goals. They realize they must foster diversity to retain young executives who themselves come from diverse backgrounds and are sought after by other firms. Diversity is a business asset. In fact, studies show that customers and clients weigh a company's diversity reputation when making purchasing decisions. This is a particularly important factor as manufacturers continue to watch the redistribution of America's purchasing power among various minority groups. Some organizations might balk at costs associated with establishing diversity programs at their company (training, recruitment fees, etc.), but these costs are short-term and are far outweighed by such long-term factors as greater employee loyalty, retention, and productivity.

A recent SHRM survey cited the additional benefits of decreased complaints and litigation (a further cost savings as well as morale booster). These litigation costs can be quite significant, as Hughes Aircraft learned in January of 1997. Plaintiffs in the Hughes case were awarded damages of $17 million as a result of an internal claim of racial discrimination. That same SHRM survey also showed that over half of the companies involved in that survey indicated they felt diversity strategies helped them progress into entirely new markets. A company that has a diverse workforce is better able to understand the diverse markets it serves; particularly when doing business overseas or in culturally diverse areas of the U.S.

According to Helen Drinan, President and CEO of SHRM, "Companies that recognize the strategic value of human capital are the companies that succeed in today's marketplace, where a company's competitive edge is its people, top U.S. companies agree that a diverse workforce means a significant impact on the bottom line." Current research indicates that companies that address the issues of diversity in the workplace will maintain a strong competitive edge in the recruitment of their most valuable new employees well into the future.

If diversity in the workplace adds such great value, how do companies go about attracting a diverse population? Reputation, for one, goes a long way. Prospective employees often take into consideration a company's reputation for maintaining and promoting an atmosphere of diversity in the workplace when they consider where to go to work. However, reputation alone won't draw the kind of numbers that are necessary these days. Recruitment is a key factor. "In their search for talent, corporations are likely to recruit at high-profile institutions," says Ron Johnson of Standard and Poors. Johnson points to the attractiveness of recruiting candidates from predominantly black schools, for example, as a means to target the recruiting effort. Likewise, some companies, such as GE, Federal Express, AutoZone, and others have turned to the military as an excellent pool of diversity candidates. These companies have portions of their budgets specifically dedicated to the recruitment of former military candidates. Why is the military such a good place to find diversity candidates? Actually, the military has led the charge in the United States for years in the area of diversity, and Corporate America has often taken its cue from the military in terms of diversity practices.

Not only does the military represent an incredibly diverse group of talent, but these individuals are already accustomed to working in an extremely diverse work environment and are sensitive to issues that some of their civilian counterparts just entering the workplace have not faced. Within the last two years, minorities have accounted for nearly four out of every ten new recruits going into the military, and recent statistics show that almost one in five new military recruits is a woman (totaling 30,000-35,000 women per year). Consider, then, that there are approximately 200,000 people transitioning out of the military and into the civilian workforce each year. The bottom line is that companies like Exxon-Mobil and many others recognize this is a vast pool of diversity talent from which to draw their future leaders. Fortunately for them there are recruiting agencies that specialize in placing former military candidates and through them they are also able to take advantage of these strong diversity numbers.

Edwin L. Bowman, former head of equal opportunity at Dow Chemical Company, has made a great case for a company's need to be diverse in today's corporate society. He stated that "Demonstrating social awareness and responsibility as a corporate citizen speaks volumes about a company to its customers, shareholders, employees and the communities where they live. Diversity reflects the company's progressive nature and open innovative thinking." So when you ponder how you want your company to be perceived, perhaps Mr. Bowman's revelation is something to think about. Even if your current diversity program meets today's needs, how prepared are you to compete in the changing cultural climate of the future?

  About the Author
Jason Cook, of Bradley-Morris, Inc
Jason Cook is an Executive Consultant with Bradley-Morris, Inc., a staffing firm which specializes in placing former military individuals with technical and leadership backgrounds into jobs in Corporate America. He originally joined the company in 1998 to help start up the company's IT/Telecommunication Division. He has additionally served in the capacity of Corporate Trainer, and as a member of the Executive Steering Committee for the company, for which he currently serves as Chairman. Jason came to Bradley-Morris out of the military, having served as a Captain in the Army in both Germany and the United States. He is a 1993 graduate of the United States Military Academy at West Point, NY. Jason, his wife and two children currently reside in Atlanta, GA.

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