News Column

U.S. Economy Gets a Lift from Diversity Best Companies

September 1, 2010

Frank Nelson

Diversity and inclusion programs are proving to have a much broader effect than once thought. "There's no doubt in my mind (spending with minority-owned businesses) has a positive net effect on local economies," says Joyce Ibardolasa, director of diversity and inclusion, PG&E.

The embrace of diversity by corporate America is achieving something rather unexpected just when our economy most needs it: creating jobs by pumping money into small- and medium-sized businesses.

Grass-Root Effort
Supporting grass-roots enterprises is happening through programs that extend the diversity principles to suppliers of goods and services, specifically to businesses owned by minorities, women and disabled veterans.

Companies on the elite list of most diverse companies do not stop with diversity in their own ranks. They also work hard to ensure their suppliers and contractors are also inclusive, creating a trickle-down effect which is nourishing the whole economy.

Theresa Torres, director of diversity and employee experience, says Verizon works closely with minority businesses encouraging them to become second-tier suppliers and with the National Minority Supplier Development Council.

San Francisco-based utility PG&E, which supplies gas and electricity to 15 million customers in central and northern California, spent around $928 million last year with minority owned businesses.

That's about 25 percent of total spending says Joyce Ibardolasa, director of diversity and inclusion. "There's no doubt in my mind it has a positive net effect in local economies," she said.

The slice of the pie PG&E cuts for minority suppliers is bigger than the 21.5 percent target recommended by the California Public Utilities Commission, and that's also the case with Southern California Edison.

Broad Range of Services

From legal services to digging trenches, the Rosemead, California-based Southern California Edison utility spent almost $730 million last year with minority-owned businesses while downstream spending with minority sub-contractors was close to $178 million.

For the 60 companies on this year's elite list, treating people equally and fairly irrespective of ethnicity, gender, sexual orientation, age, disabilities or any other "minority" status is second nature.

"It's part of our culture. It's part of how we do things, day in, day out," says Ms. Brinkley, of AT&T. Th e same philosophy holds sway among Verizon's 208,000 employees. "Diversity is extremely important to us. We want to make sure we're representative of the community we're privileged to serve," says Mrs. Torres.

Ms. Ibardolasa says employee engagement and an inclusive work environment at PG&E helps foster innovation, the free flow of ideas, and the sparking of solutions. "Bottom line? We're able to meet the needs of our customers faster and more effectively."

If a community sees that a company cares about them, the community will want to do business with that company, believes Salvador Mendoza, vice president of diversity and inclusion for Hyatt Hotels.

Mr. Mendoza says diversity is embedded throughout Hyatt's U. S. operations, which include about 215 properties and roughly 40,000 staff, of whom 59 percent are minorities and about half are women.

He says the benefits of diversity touch all aspects of Hyatt's business. "(But) we don't see it as a minority development program," he adds. "We see it as a leadership and management program which makes sure it's diverse and inclusive."

Macy's, the only retailer in the Diversity Elite Top 10, is something of a pioneer in this field: in 1866, company founder Rowland Macy appointed Margaret Getchell superintendent of his store in New York.

America's First Woman Executive

That earned Getchell the title of "America's first woman executive", says Corliss Fong, vice president of diversity strategies at the Cincinnati-based retailer. Today Macy's employs around 150,000 people, of whom over 75 percent are women.

Company president and CEO Terry Lundgren is chairman of the National Minority Supplier Development Council, and almost half the employees in around 850 stores are minorities.

Ms. Fong says that reflects the very diverse communities where the retailer does business, a close working relationship that sparked "My Macy's", a strategy giving managers influence and input in customizing their stores for local consumers. "That has really given diversity a strong presence," says Ms. Fong.

Like other companies, Macy's is heavily invested in employee resource groups, also known as affinity groups. "Employee resource groups provide a way to network and bond across functions and levels within the organization," Ms. Fong said.

Such groups typically support women, African Americans, Hispanics, Native Americans, those with roots in China, Vietnam, the Philippines and the Middle East, the disabled, plus gay, lesbian, bisexual and transgender employees.

The Advent of GenNext

SCE, with a dozen groups promoting cultural awareness and inclusion, has added a new one, GenNext, which reflects the seismic shift s taking place in demographics as newer generations replace retiring baby boomers.

Diversity and inclusion also involves an increasingly multicultural approach to advertising and marketing. For example, SCE's Web site is available in English, Spanish, Korean, Chinese and Vietnamese, while call centers offer a choice of seven languages and have translation services available for another 150.

Another characteristic of companies making the Diversity Elite Top 10 is their engagement with community groups and organizations, often with a philanthropic emphasis on supporting educational initiatives and social issues.

AT&T is in the forefront of those addressing a common concern unacceptably high school drop-out rates, which can reach 50 percent among some minority groups. AT&T Aspire is a $100 million program tackling this issue by helping students prepare for college or employment.

"Diversity is not something that sits on the shelf," says AT&T's Ms. Brinkley. "It's something we live and breathe every day." The 59 other companies in the Diversity Elite would certainly agree with that.

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