News Column

Best Companies 2011: Diversity Plunge

June 7, 2012

RICHARD LARSEN, Deputy Managing Editor

Fifty million Hispanics account for 16 percent of America's population. The total minority population, of which Hispanics are the majority, comes to 36.3 percent. Such demographics, revealed by data from the 2010 census, show the shifting nature of the consumer marketplace, the national workforce and the communities in which people live. They also point out the increasingly diverse nation the United States is becoming.

For America's corporations, diversity has become the underpinnings of mission statements, internal policies, business strategies and community outreach. And with good reason. With the United States' demographic becoming more ethnically and racially diverse, and with more women entering the workforce, those corporations that embrace diversity gain a stronger foothold in the marketplace.

Consider, the purchasing power of Hispanics alone was put at $1 trillion in 2010 and estimated by HispanTelligence, the research arm of HispanicBusiness Inc., to increase to $1.3 trillion by 2015. With purchasing power like this floating around, corporate buy-in to the concept of diversity at all levels of business seems a prudent step to take.

As Ernie Gutierrez, president and CEO of the HispanicBusiness 500 company Allied Industries Inc., said concerning his recent election as vice chairman of the California Hispanic Chambers of Commerce, diversity is a give-and-take proposition. "The time has come for Hispanic businesses to take full advantage of opportunities now available. In addition, it is time that both corporate America and government take the voice of the Hispanic community more seriously."

Each September since 2005, HispanicBusiness has focused on singling out the efforts of the best companies and the best postgraduate schools in business, engineering, law and medicine on diversity as it relates to Hispanics -- in short, taking a snapshot of the state of diversity in the U.S.

The methodology for determining which businesses and schools make the lists is complicated. Businesses are ranked by 32 variables that determine how each approaches the issue of diversity, including such criteria as board membership, leadership ranks, recruitment and retention, marketing and community outreach, and philanthropy. Postgraduate schools are ranked on five variables, including the number of Hispanic students enrolled, number of Hispanics who earned degrees and percent of faculty who are Hispanic.

This Year's Leaders

AT&T tops the 2011 Best Companies for diversity directory. It has made the top 10 every year since 2007. Except for 2009 when it dropped to No. 9, AT&T has ranked No. 1 twice (this year and 2008) and No. 2 twice (2010 and 2007). Two other firms have been on the Best Companies for diversity directory for the past five years -- Southern California Edison (SCE), which has place in the top five each year, ranking No. 1 twice, in 2009 and 2007; and Bank of America, which reached No. 3 in 2009 but otherwise remained in the bottom half of the top 10. Three companies -- Comerica Bank, Wal-Mart Stores Inc. and Marriott International Inc. -- have been on the list four of the last five years.

AT&T's policy on diversity is to "lead from the top and embed diversity and inclusion," Debbie Storey, senior vice president of talent development and chief diversity officer told HispanicBusiness magazine.

Verizon Communications, No. 2 on the Best Companies directory, believes diversity and inclusion make good business sense, but it prefers to embrace diversity not merely as a strategy for competitive advantage, but because it is the right thing to do.

Pacific Gas and Electric ranked No. 3 on the directory, telling HispanicBusiness magazine that it is the need for good customer service that drives its diversity and inclusion initiatives.

Rounding out the top 10 Best Companies for diversity are, in descending order, SCE, Comerica Bank, Wal-Mart Stores Inc., Bank of America, McDonald's Corp. (which was No. 1 in 2010), Union Bank (which returns to the top 10 for the first time since 2007) and Marriott International Inc.

In terms of commitment to widening opportunities for minority-owned businesses, the top 10 companies on the Corporate Diversity directory spent $31.4 billion in 2010 with minority suppliers. Such spending is important because it allows small, disadvantaged businesses to gain valuable experience and to create a track record that can help secure further contracts with corporations.

Breaking out the companies on the Corporate Diversity directory by sector shows that the list is dominated by three sectors -- energy, 10 companies; finance, 15 companies; and service, 20 companies. Automotive, manufacturing and retail firms had from three to six companies on the list. One company in the transportation sector made the list. None from the construction sector made it, but that might be because the construction sector, one in which Hispanics had made up 25 percent of the workforce, according to the Bureau of Labor Statistic, took a brutal hit in the Great Recession.

Going Forward

It has not always been easy to inculcate the idea of diversity into the corporate mind. Many viewed it as a "feel good" idea to promote but not actively pursue. A 2007 survey on diversity at businesses by the Society for Human Resource Management found that less than one-third (30 percent) of organizations had an official definition of diversity. Of those that did, large companies, those with 500 or more employees, were apt to have an official definition of diversity (43 percent of total respondents with definitions). Of medium-sized companies (100 to 499 employees) only 16 percent had a definition and of small companies (1 to 99 employees) only 14 percent did. Today, each of the top 10 firms on the Best Companies for diversity directory devotes several web pages to their diversity program and efforts.

The importance of diversity efforts in the workplace was underscored Aug. 18 when President Obama signed an executive order "to promote the federal workplace as a model of equal opportunity, diversity and inclusion." The order set a 90-day deadline for development of a governmentwide Diversity and Inclusion Strategic Plan and a 120-day deadline from issuance of the government plan for the head of each executive department and agency to develop agency-specific diversity and inclusion strategic plans.

Diversity efforts are on a fast-forward roll, and yet, in many ways, this is just the starting point for understanding what diversity is and is not. As more corporations, organizations and communities embrace the concept of diversity, it will be necessary to ask: Is diversity merely a business strategy, a way to look good in the consumer marketplace and to employees, or should there be a more all-encompassing understanding of the concept?

Beginning a dialogue among all involved in diversity efforts will be the first step toward answering these questions. From these answers and the ensuing dialogue will come a robust definition of "diversity."

Source: (c) 2012. All rights reserved.

Story Tools Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters