From Bad To Great And Back To Worse?

— Making Diversity Stick

By Susan Klopfer, author
Profit From Diversity; Getting Along With Others

“Am I surprised, you’re asking me?”

Bill and Kay are sharing a private moment talking about diversity changes planned for their regional bank,
along with the initial executive board response.

“Well, I knew we would have some resistance from at least one board member after we presented the
plan. I guess I am a little surprised that Jerry K. used ‘research’ to back his opposition, saying diversity
training simply doesn’t work,” Kay tells Bill.

“Next board meeting, I’ll have even better data,” Kay smiles.

Kay won’t have to look very far for solid data on diversity successes and failures:

Ten years ago, a large midwestern company was considered an early diversity leader, with its strong
work/life benefits, promotion of women, and high rates of hiring, along with frequent public
announcements about having an inclusive corporate culture. But this has dramatically changed for the
"ABC" Company - an organization that was once a mainstay on a popular Top 50 list.

ABC first achieved a high rank with DiversityInc one year after its chief diversity officer joined diversity-
related organizations and was a visible face of corporate diversity. The CEO held senior leaders
accountable for results and meeting with leaders of the employee-resource groups. ABC’s workforce and
lower management was racially diverse, especially compared with the industry averages, but there
remained a gap at the top levels of management," according to Barbara Frankel of DiversityInc.

So what happened to unglue this company so quickly from the top 50 list (its name and information
disguised by Frankel)? A change in CEO is the answer -- a new executive officer who quickly reacted to
the economic problems faced by nearly all U.S. businesses.

ABC was hit hard by the economic turbulence in the last three years and its chief diversity officer had
never figured out how to “talk” diversity to the CEO, and could not support maintaining diversity as a
business imperative. Many failures accompanied ABC's fall from diversity: managers quit tracking
participation in employee-resource groups and there were no more metrics for mentoring and supplier
diversity -- no way to assess what was working and what was not, and how this affected the bottom line.

"The chief diversity officer did not have frequent access to the CEO or to his direct reports, reporting in
two levels down to the head of HR. [He] was viewed strictly as a staff person whose business advice was
not considered," Frankel writes in “3 Case Studies: Why Companies Decline on the DiversityInc Top 50”
(2010).
While other similar companies were innovating and adding diversity-management practices, ABC dropped
best practices: The CEO quit meeting with employee-resource groups or supporting supplier-diversity
goals, alternative career tracks were not offered for employees with long-term family concerns, and
managers quit participating in formal, cross-cultural mentoring. There was a decline in racial and gender
diversity at the top and while the company was downsizing, Blacks and Latinos were leaving at a rate
triple that of whites, according to Frankel.

Can the ABC Company be fixed? Not without a solid change management approach: If ABC's board
seeks a solution, this would be a perfect time for a reassessment of the role of diversity and the hiring of a
new chief diversity officer, a senior line-of-business executive reporting directly to the company's CEO.
(Five years ago, only 15 percent of chief diversity officers reported directly to the CEO and almost all
reported to the head of HR. Today, 30 percent report directly to the CEO and less than half report through
to HR.)

The most critical factor would be gaining CEO support, requiring someone with the ability to gather and
present solid diversity data. Ideas presented to the CEO must be business focused and backed by valid
data showing the relationship between increases in diverse representation, employee engagement,
productivity and innovation. “Jerry K. is not too far off base,” Kay tells Bill.

“Many corporate diversity programs have taken a beating in recent years, and some for good reason.”

Kay explains that some of the first research on diversity training suggests that some current practices do
not help much. “Other studies began insinuating it can actually hurts, and some some employers began
abandoning it altogether.”

For several decades, enlightened companies have worked to increase tolerance in the workplace and
protect themselves against discrimination lawsuits. Many larger US corporations now offer diversity
training — from videos and Web seminars to workshops and retreats — with spending on such efforts
totaling in the billions. With purse strings tight and the debate over diversity training effectiveness, some
companies are reevaluating whether it’s needed – or better, recognizing it is definitely needed and how to
do it right.

Overall, 68 percent of organizations recently polled reported diversity training and mentoring, down from
76 percent in 2005, according to an October survey of about 400 employers by the Alexandria, Va.-based
Society of Human Resource Management. Eric Peterson, manager of this organization’s diversity and
inclusion initiatives, asserts that employers looking to cut costs in lean times may eliminate diversity
efforts as a short-term fix because such efforts can offer quick savings. Ultimately, Peterson says,
companies that ignore diversity likely will be at a competitive disadvantage.

His organization’s study found 84 percent of the companies that have maintained diversity programs said
their efforts are at least “somewhat’’ effective, citing benefits such as a better public image, lower
employee turnover, and improved profitability.

“Longer term,’’ Peterson said, “It’s a strategic imperative

Other research suggests current training programs are lacking. One study using about thirty years of data
from more than 800 midsize and large US companies, published in the American Sociological Review,
found diversity training has modest effects, especially at large companies. Published in 2006 and
expanded in 2007, these researchers found that associated diversity training actually with a small drop in
the likelihood that some minorities would become managers — perhaps because training may foster
backlash.

Diversity training works best when it is voluntary, emphasizes cultural awareness, and avoids heavy legal
content, the research concluded. Still the main finding is that other diversity efforts are more effective.
Mentoring programs and task forces with responsibility for diversity show “positive and more consistently
significant’’ results for both women and minorities, as example.

Reports Frank Dobbin, a Harvard University sociologist and one of the study’s authors, “The overall story
is that training isn’t doing very much.’’ Psychologist Elizabeth Levy Paluck of Princeton University and
Yale University political scientist Donald Green in the 2009 Annual Review of Psychology reported that
some types of training may backfire. In one 2000 study business students shown a diversity training video
urging them to suppress negative attitudes about the elderly actually gave a negative review of older job
applicants than a group that didn’t get these instructions.

There really is no way to know what type of diversity training is truly effective because so little well-
designed field research exists. These findings don’t mean that companies should abandon diversity
training. Instead, they should evaluate how successful a program is — beyond assessment forms filled
out by applicants.

“They should be saying, ‘We don’t have the time or money to waste on programs that are ineffective, or
worse, harmful,’ ’’ Dobbin and these researchers conclude.

So, Kay must go back to her bank’s executive board and emphasize to Jerry K. and other members that
diversity’s focus is evolving away from a strictly legal approach — what not to do or say to avoid being
sued — toward emphasizing how helping employees better understand differences can advance a firm’s
business strategy. Further, companies are broadening their definition of diversity in order to include not
just women and racial minorities but also gays and lesbians, older and younger workers, parents, and
even different personality types.

“I must tell Jerry that many companies are trying new training formats to increase accessibility. For
instance, Microsoft Corp. uses instructor-led training combined with a variety of electronic formats such as
“on-demand’’ online learning sessions so they can tailor programs to a global workforce. Requirements
and content vary, depending on a particular business unit’s needs, according to the company’s global
diversity and inclusion director.”

Kay tells Bill that it is critical for all regional bank employees to be at the same level of understanding
about what the company’s stance is. “We are not going to rely on traditional classroom training, but will
include events like voluntary lectures that address issues in diversity and inclusion, like how to better
manage “Generation Y’’ employees or how to comprehend some basic Spanish phrases. We will make
use of mentoring and set up a diversity council.”

“Sounds like you are ready to go back to the executive board for another shot at diversity,” Bill tells her.

“Now, you don’t think I’m going in there alone!” she laughs.