News Column

Striving For Diversity in the Face of a Recession

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In this historic era of company downsizing, government bailouts and spectacular corporate collapse, it would be all too easy for companies to suspend their diversity strategies.

But during times of economic malaise, maintaining a diverse workforce is more important than ever.

This month, HispanicBusiness Magazine releases its annual list of the nation's 60 most diverse companies. The index, based on an extensive survey completed in June by HispanTelligence -- the magazine's research arm -- offers up a snapshot of corporate America's top diversity beacons. The findings are as good as the data that HispanTelligence receives from an extensive survey sent out in the early part of the year. The data corresponds to several variables that are key indicators.

This year's fifth annual list shows which companies -- difficult times notwithstanding -- walk the walk when it comes to promoting diversity in its workforce, board leadership, marketing efforts and subcontractors.

The release of this year's list comes at a time when the president of the California Public Utilities Commission has advocated going above and beyond the agency's current supplier diversity goal in which 15 percent of the goods and services purchased would come from minority firms.

If successful in California, the movement to boost the percentage of supplier diversity contracts could pick up momentum across the country in the coming months.

The changes come as minority-owned and small businesses everywhere are looking to survive.

In an eerie reminder of the magnitude of last year's economic calamity, several companies on last year's list no longer even exist. They include Washington Mutual, Schering Plough and Merrill Lynch, all of which have been swallowed by other companies. Also, a careful analysis of this year's survey indicates that the nation's 60 model companies, exemplary as they are, on balance lost a little ground on maintaining a diverse workforce.

But the leaders are nevertheless laudable paragons, and while some companies have fallen off the list -- or collapsed altogether -- other notables have emerged. Newcomers to the Diversity Elite list include NV Energy, S.C. Johnson and MetLife.

Topping this year's 60 Diversity Elite is Southern California Edison, the power provider for 11 million people in the Golden State. This year marks a return to the No. 1 spot for the energy giant, which led the pack two years ago.

Last year, when Edison decided to launch a series of multicultural public service announcements in several languages, it didn't need to hire actors. Instead, the company looked to its own employees. Energized by the opportunity, some 600 employees this spring auditioned for 37 spots.

The commercials started airing in July, each featuring an Edison employee touting green-energy tips in one of several languages: English, Spanish, Cantonese, Mandarin, Korean and Vietnamese.

"We operate our customer base in a very diverse region of the country," Rich Martinez, Edison's director of human resources, told HispanicBusiness Magazine. "Because of that, we leverage the diversity in the region and we have a workforce that is reflective of that diversity."

Tough Economic Times

Economic recessions tend to take a disproportionate toll on minorities and the ongoing "Great Recession of 2008" has been no exception.

During the current recession, Hispanics and African Americans have been nearly twice as likely to lose their job as whites, according to the Economic Policy Institute, a nonpartisan Washington D.C. think tank. Even among the Diversity Elite, the average proportion of Hispanic employees in the past year has dipped, to 11.8 percent from 12.1 percent. Meanwhile, Hispanics make up about 15 percent of the nation's population.

Such figures serve as an important reminder: Although corporate America has played a major part in moving the nation's diversity needle, plenty of work remains.

"Very often, when we talk about this issue, we ask, 'What is the future going to look like?'" Carmen Van Kerckhove, president of the diversity-education firm, New Demographic, told HispanicBusiness Magazine. "Certainly that's valid. By 2050, whites will actually be a minority. But unfortunately, most workplaces simply do not reflect the general population of today, particularly as you go higher up the corporate hierarchy."

Even among the Elite 60, diversity in management positions lags far behind the makeup of the general population.

On average, for instance, 7.2 percent of the managers at any given Diversity Elite company in 2008 were Hispanic, according to the survey.

Studies show that encouraging workplace diversity isn't just about being socially responsible. It also drives the bottom line.

Keenly aware of this phenomenon is MGM Mirage, the second largest gaming corporation in the world. MGM's hotel and casino presence is expanding not only nationally, but also globally. This year, the company rose seven notches on HispanicBusiness Magazine's diversity index, to No. 24

At MGM, where 62 percent of the employees are minorities, a wall in the main building is adorned with a giant map containing thousands of pushpins, marking the hometown of every employee. By necessity, it's a world map.

"I think it's fair to say we probably have people from all the continents," Phyllis A. James, the company's senior vice president and senior counsel, told HispanicBusiness Magazine.

At MGM, where 14 percent of the managers are Hispanic, all employees wear a badge displaying not only their name, but also their hometown.

Such efforts can go a long way, not only for optimizing workplace morale, but also for bettering business.

"We have customers who come from all over the world, so it's very important for us to have a workforce that has the capability of relating to a highly diverse customer base," Ms. James said.

Multicultural Partners

What's more, the company's business partners are increasingly multicultural and international.

In 2005, the company embarked on a $700 million expansion of Connecticut's Foxhood Resort Casino in partnership with the Mashantucket Pequot Tribe. MGM also has projects springing up in China, United Arab Emirates and Vietnam.

But MGM's most spectacular development is happening right in the heart of the Vegas strip. That's the CityCenter, a gargantuan mixed-use complex on 76 acres that, when completed later this year, will constitute the largest privately financed development in the United States. This, too, has an international component: The $11 billion project is jointly funded by the Dubai World, the investment arm of the Dubai government.

Another company with its eye on diversity's prize is Macy's department store, which this year ranked No. 14 on the Diversity Elite list.

Like MGM, Macy's understands that diversity consciousness is sound business policy, plain and simple.

"Seventeen of our top 20 markets are already minority-majority," Corliss Fong, the company's vice president for diversity strategies, told HispanicBusiness Magazine.

To reflect this diversity, nearly half of the employees at Macy's -- and a third of all the managers -- are minorities.

Fong said the concept of diversity is embedded in the DNA of the company, not a mere perfunctory "program."
"To me, that is like a full relationship," Mr. Fong said. "It's more than just writing a check."

In Baldwin Hills, near Los Angeles, Macy's houses a museum on African- American history, which last year hosted a "Civil Rights Walk of Fame" showcasing the shoes of Civil Rights leaders.

This year's company posting the biggest improvement was Wells Fargo Bank, when its Diversity Elite ranking leapt to second place from 16th.

Despite the one-year boost, Wells Fargo executives say the company's diversity awareness is nothing new. Indeed, the company's tradition of publishing Spanish-language advertisements and hiring bilingual agents dates back to its founding in 1852, according to company literature.

"I'd like to think what we have done is continue to tell our story internally and externally," said Patricia Crawford, the company's senior vice president for diversity and inclusion. "That's the goal: do it right and continue to do it, and over time it will manifest itself."

In 2008, Ms. Crawford said, 20 percent of the company's new hires were Hispanic.

Supplier Diversity

Sound diversity strategy isn't just about hiring and marketing. It's also about supplier diversity.

One company with a good recent track record on supplier diversity is the bruised and battered Chrysler LLC. In 2008, 16 percent of the company's total purchasing budget was allocated to minority suppliers. That amounts to $3.8 billion.

Still, the company was lambasted by critics this spring for closing down a large number of minority dealers.

Mike Palese, Chrysler's manager of corporate communications, said the company has had to make wrenching decisions just to survive.

"While we have slid back a little bit the size of our minority dealership pool, the size of the minority-dealership portion of the overall dealer population actually increased slightly," he told HispanicBusiness Magazine. "You could say we pretty much held our own."

Also a telling indicator of a company's commitment to diversity is the face of its leadership.

Once again, Southern California Edison fared well on this measure: Its 12-member board of directors includes two Hispanic members: France Cordova and Luis Nogales.

Bank of America, meanwhile, made a newsworthy milestone on this front, electing its first African-American board chairman, the physicist Walter Massey.

Speaking with HispanicBusiness Magazine, BofA diversity executives Jose Garcia and Geri Thomas said although Massey is the bank's first African- American chairman, the bank has a long tradition of diversity appreciation.

Thomas, an African-American woman, is the company's senior vice- president of Human Resources and Global Diversity. She began her career while working at the bank in customer support in 1970, while a resident of Atlanta.

"I came to work after my freshman year in college," she told HispanicBusiness Magazine. "It was supposed to be a summer job. It has been a long summer."

Mr. Garcia, now the senior vice-president of diversity and inclusion, was hired in 1985 as an accountant, long before the bank had established its Hispanic affinity group -- which he co-founded.

"We have always taken pride in how diverse we are," he said.

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