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SHRM Home > Publications > HR Magazine > Articles

August 2006Vol. 51, No. 8

Diversity Finds Its P lace

More o rgan iza t ions a re ded icat ing sen io r - l eve l execu t i v es t o d r i ve d i ve rs i t y

i n i t i a t i ve s f o r b o t t o m - l i n e e f f e ct .

By Robert Rodriguez

The role of the leader of diversity efforts has certainly changedand not just in a change of title to chief diversity officer (CDO).Today, the need for a big-picture thinker on diversity issues isgreater than ever, driven by such factors as demographic

changes in the U.S. workforce and the extension of benefits toworkers significant others regardless of marital status.

But certainly the biggest driver for higher-level diversity strategyis the need to tap the creative, cultural and communicative skillsof a variety of employees and to use those skills to improvecompany policies, products and customer experiences.

One company did just that: The Latino Employee Network atFrito-Lay, the snack food division of PepsiCo, proved invaluableduring the development of Doritos Guacamole Flavored TortillaChips. Members of the network, called Adelante, providedfeedback on the taste and packaging to help ensure that theproduct would be regarded as authentic in the Latino community.

The Adelante members insight helped make the guacamole-flavored Doritos one of the most successful new-productlaunches in the companys history, generating more than $100million in sales in its first year alone.

The fact that one of our diverse employee groups helped to make this product so successful is oneexample of just how we leverage diversity to drive business results, says Amy George, vice president ofglobal diversity and inclusion at PepsiCo, the convenience-food and beverage company based inPurchase, N.Y.

To gain such bottom-line business advantages from diversity initiatives, many organizations areemploying methods of understanding and relationship-building that encourage all employees to beheard. And those organizations are relying heavily on a new breed of diversity leader who can developstrategies to achieve those goals.

Part of a top diversity executives role in any organization is to integrate diversity into every aspect of abusiness, including the workforce, customers, suppliers, products, services and even into the communitya business serves, says Raymond Arroyo, chief diversity officer at Aetna, a diversified health carebenefits provider based in Hartford, Conn.

Thus, the changes in the top diversity job reflect new demands and expectations not only of this oneposition, but also of the entire diversity function.

The Bottom Line

Most organizations have come to realize that diversity efforts can affect the bottom line, but few takeaction. In the 2005 Society for Human Resource Management Workplace Diversity Practices Survey

Report, nearly three out of four organizations said they ensure that diversity is a consideration in everybusiness initiative and policy, but only 21 percent had staff dedicated exclusively to promote workplace

SHRM report: 2005Workplace Diversity

Practices Survey Report

SHRM article: Tapping theHispanic Labor Pool (HRMagazine)

Report: 2005 DiversityAnnual Report (Aetna)

Web site: The Associationof Diversity Councils

SHRM book excerpt:

Diverse Teams at Work:Capitalizing on the Pow er ofDiversity

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diversity practices.

By demonstrating an impact on the bottom line, top diversity executives can raise the profile of theeffort. Until recently, the commitment many companies had to diversity was fundamentally based onmoral, ethical and compliance reasons, says Rudy Mendez, vice president of diversity and inclusion atMcDonalds Corp., the global food service retailer based in Oak Brook, Ill. But now that we can addbusiness impact, diversity executives are being given a much bigger role.

An indication that diversity executives aregetting a bigger role is the fact that manyare gaining the chief title, although theyusually still report to the chief HRexecutive. When looking for someone tofill the role of diversity leader, HR mustfind someone who is first a good businessexecutive. That characteristic is needed toconnect the dots from diversity initiativeto business strategy to higher profits,according to Edwin Garcia, vice presidentof corporate diversity and inclusion atKimberly-Clark, a global health andhygiene products manufacturer based inRoswell, Ga. You cant be a true businesspartner if you dont have solid businessacumen, he says.

Monica Emerson, executive director ofdiversity at DaimlerChrysler Corp., theautomobile company based in AuburnHills, Mich., says: As a diversityexecutive, I not only have to have solidbusiness capabilities, I need to be veryknowledgeable of the different businessesin my organization to align diversityinitiatives to support the needs of thebusinesses. You wont be respected or

have credibility if you dont understandthe business issues of the organization.

But business skills alone are not enough.Diversity executives should be skilled inmultiple areas of professionaleffectiveness. CDOs must possess stronginfluencing skills because they often pushdiversity initiatives across a largeorganization and need to persuade othersto support their efforts, George says. Sheadds, If a companys diversity program is driven by only one person, that diversity program is bound tofail.

Listening skills are also critical for diversity executives because they are exposed to a variety ofviewpoints on key issues. In addition, diversity executives cite the importance of having an open mindbecause the job requires them to get out of their comfort zone and experience things they may not befamiliar with or be naturally drawn to.

Measuring Impact

CDOs today are taking diversity measurement beyond common diversity metrics such as turnover,workforce representation year-to-year and employee satisfaction scores. Diversity is no longer aboutcounting heads; its about making heads count, George says.

For example, Aetna tracks the percentage of employees who are multilingual and encourages employeesto learn a second or a third language. Aetnas employee networks offer language classes during

lunchtime for all those employees who are interested in learning a second or third language.

Executive Commitment at P epsiCo

Diversity programs cannot succeed withoutcommitment from the organizations top executives.PepsiCos executives demonstrate their commitmentto diversity by holding themselves accountable.

Each of the CEOs direct reports is responsible forthe growth and development of a different group ofemployees. One executive partners with blackemployees, for example, another one with women,

yet another with Latinos, and one with gay, lesbian,bisexual and transgender employees. To help createa truly inclusive work environment for everyone,Larry D. Thompson, who is PepsiCos generalcounsel and happens to be black, is assigned toPepsiCos white male community.

These executives hold themselves accountable forunderstanding the workplace issues the diverseemployee populations face. They work to identifythe key talented individuals in the groups and oftenserve as their voice to the rest of the executivecommittee and the CEO. Every year all of theexecutives share with the rest of the committee thebiggest concerns of their groups, identify thesupport needed by the groups, and articulate theirplans to address the concerns faced by thesediverse groups.

Adds Amy George, vice president of diversity andinclusion at PepsiCo: This sort of executivecommitment and accountability ensures that nogroup of employees is left behind and that everyoneis being equally represented at the executive table.

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It is critical for our employees to speak the language of our customers, literally, Arroyo adds. If wesee certain functional segments that would benefit from employees knowing more than one language,we target our recruiting efforts to identify individuals who can speak more than one language for thoseroles.

The diversity office at Aetna also measures the companys community involvement and its impact on themarketplace. By helping to support diversity-related community programs, such as funding a culturalcompetency program at an Atlanta hospital, and having volunteers in key areas, Aetna maintains, the

company increases its presence and brand reputation in key markets, resulting in more businessopportunities. Now, when a sales representative is working with a potential client in a specific area, hecan leverage our positive diversity reputation in the community, and this helps our business, saysArroyo, who measures such marketplace items as part of Aetnas diversity scorecard.

Kimberly-Clark uses indexes and benchmarking data to determine its success in competing within itsindustry for top diverse talent. The index, produced and shared quarterly, allows Kimberly-Clark tocompare its demographic profile with competitors data on a number of levels, according to Garcia. Thedata are presented as a function of recruitment rates, promotion rates and attrition. The tool also showsthe distribution by gender and race through five broad bands of compensation.

Diversity Office Structure

How CDOs add value often depends on their diversity organizations structure.

A centralized diversity staff is critical for tracking diversity metrics, managing diversity vendors thatprovide training or recruiting, and communicating the diversity message. But a corporate structure withno connection to the business units does not help the diversity message permeate to the rest of theorganization, says Garcia. Thus, a matrixed structure seems to be the structure of choice for CDOs.

DaimlerChrysler, for example, has a small, centralized diversity staff. But the staff is also aligned withthe companys diversity council, made up of members of the organizations executive committee andrepresenting various business units, suppliers and dealers. Such a matrix approach helps with thealignment of DaimlerChrysler diversity programs with both internal and external stakeholders, Emersonsays, and facilitates communication among all groups.

Similarly, PepsiCo has a centralized diversity staff that develops an overarching diversity strategy; that

strategy is executed locally by each of its divisions. PepsiCos Diversity and Inclusion GovernanceCouncil, made up of executives from all divisions and functional areas, provides input into the diversitystrategy, raising the executives sense of ownership of the strategy. Our Diversity and Inclusion Councilalso provides a means for sharing best practices [in diversity efforts] and ensuring consistency, Georgesays.

A Crucial Ingredient

CDOs agree that business communicationis critical to an effective diversityprogram.

Garcia finds a market-segment approachbeneficial to communicating his diversityvision to others at Kimberly-Clark.

When I talk about diversity to ourfinance leaders, I focus on rates of returnfrom people investments, he explains.When I talk about diversity talent toengineers, I use [engineering] terms as ifdiversity were a reaction with inputs[recruitment] and outflows [attrition].With marketing, I talk about employmentbranding as a means to access anemerging market for diverse talent.

Similarly, Mendez helps to connect withconstituents at McDonalds by using

Top 5 Diversity Challenges

Diversity executives often operate in anenvironment full of obstacles. Their successdepends on their ability to overcome these fivechallenges:

Challenge 1: The difficulty of communicatingeffectively when diversity-related datainclude sensitive information such as age,gender, ethnicity, religion and sexualorientation.

Challenge 2: The slowness of change andprogress brought about through diversityinitiatives, which is especially difficult in fast-paced cultures that want to see immediateresults.

Challenge 3: Obstacles to ensuring theconsistent and rigorous implementation ofdiversity programs across large, dispersedorganizations.

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business rationale. When he sets forth hisdiversity strategy with franchise owners,he reminds them of the impact thatdiversity can have on their consumermarketing opportunities. I frame theconversation around what diversitymeans in terms of increased breakfastsales or increased salad sales, he says.

PepsiCo uses a variety of communication methods to get its diversity message out to a large, dispersedorganization. This includes the companywide daily e-newsletter and executive speeches in addition to thetypical diversity celebration that highlights employees uniqueness, diversity speakers, and food andentertainment from around the world.

Aetnas diversity staff creates a detailed annual diversity report for employees and the public. The 24-page 2005 Aetna Diversity Annual Report includes a description of diversity programs; descriptions ofthe companys diversity affiliations, partnerships and philanthropic efforts; its diversity-relatedrecognitions; and information on its investments in funds managed by women and minority-groupmembers.

Arroyo at Aetna adds, Our annual report allows us to share our diversity story by highlighting ourdiversity-related successes in the marketplace, the community, our workplace and among our suppliers.

Current and Emerging Issues for CDOs

Diversity and inclusion are constantly changing and evolving, so diversity executives must stay on top ofcurrent trends and topics.

Today, CDOs are especially interested in demographic shifts, particularly the countrys growing Latinopopulation. Every week we get calls from top diversity executives at Fortune 500 firms who want tomore effectively recruit top Latino talent so their organizations can successfully tap into the $700 billionpurchasing power Latinos have in the United States, says Abe Tomas Hughes, CEO of the Chicago-based nonprofit organization Hispanic Alliance for Career Enhancement. (To learn more about Latinorecruitment programs, see Tapping the Hispanic Labor Pool in the April 2004 issue ofHR Magazine.)

CDOs also want their affinity groups to play a larger role in the business. Affinity groups atDaimlerChrysler, for example, help shape company strategies related to multicultural marketing anddiversity recruiting. The groups also provide translation services and help with professional developmentprograms.

George at PepsiCo adds: The diversity hot topics of today go beyond the visible diversity dimensions ofethnicity, age and gender. For example, faith and religion in the workplace is an emerging issue thatorganizations must address as part of their inclusion strategy.

A broader global perspective also will affect the CDO role. For example, diversity executives need to bewell versed on how immigration issues in the United States affect the domestic workforce, but they alsoneed to know other countries immigration issues and how those issues can impact the companys globaloperations.

The CDOs Future

A looming talent shortage, demographic shifts and an increasingly global workforce indicate that topdiversity executives will be in high demand. CDOs feel that in the future, as diversity becomes a biggerpart of an organizations business strategy, more of them will report directly to the CEO, instead of tothe HR director.

Diversity executives also believe that the alignment of diversity with business strategy will increasedemand for diversity executives who hold MBA degrees and have line experience. I anticipate well seea larger percentage of folks in top diversity roles coming from line positions like finance and marketing,Garcia says.

George, who has an MBA and spent eight years in sales and marketing roles, agrees. Diversity

executives need to be able to relate to the demands placed on line management so they can craft

Challenge 4: Diversity fatigue, whichoccurs when employees become desensitizedto the many diversity messages they receivethrough diversity training, recruitmentprograms and outreach projects.

Challenge 5: Keeping white males fromfeeling overlooked in diversity programs.

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winning diversity programs.

Whats more, Mendez says, diversity executives can expect to collaborate more with colleagues in alliedspecialties. The demand for diversity education and the desire to enhance career development ofhistorically underrepresented groups will most definitely cause us to partner more with the learning anddevelopment function, he says.

The enhanced role for CDOs promises to play a key part in the success of many organizations. But real

success requires diversity executives to convince every employee that he or she owns the commitmentto diversity.

The future journey for top diversity executives is still uncharted, Arroyo says, but its a journey thatwe must continue to make, for the continued success of our companies depends on it.

Robert Rodriguez, Ph.D., is a faculty chair in the School of Business & Technology at

Capella University and also serves as board chairman for the Hispanic Alliance for CareerEnhancement, a nonprofit that helps companies attract, develop and retain Latino talent.

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