Three Companies Show Why They Are Best-in-Class for DiversityPublished: March 16, 2006 in Knowledge@Wharton
Shoppers browsing through Nordstrom department stores around the country in February may have a decidedly museum-esque experience. Many will be met with images adorning the walls that illustrate life and culture as expressed through fashion. In honor of Black History Month, Seattle-based Nordstrom has teamed up with Kamoinge, a group of New York City-based African-American photographers, to exhibit their work in select Nordstrom stores. (Kamoinge is a Swahili word meaning "a group of people acting together.")
For the past four years, Nordstrom has recognized celebration months like Black History and Hispanic Heritage through artistic expression. "We show the work of 15 or 20 artists from around the country. When our customers come in, they have an opportunity to look at this beautiful art and see something that maybe they haven't had an opportunity to see before," says Deanna Talley, Nordstrom's corporate diversity affairs director. "We are in a retail business, so obviously we want to sell stuff. But we also know that it is important for customers to be connected to us on a lot of different levels."
That customer connection is at the heart of Nordstrom's 18-year commitment to corporate diversity. Since starting its diversity affairs division in 1988, the retailer, which has more than 51,000 staff members, now boasts a workforce that employs 40.5% people of color (up from 16% in 1988) and a management staff that comprises 30.3% people of color. Nordstrom has been repeatedly recognized among the top companies in the U.S. for corporate diversity in such magazines as Fortune, Black Enterprise and Hispanic Magazine. "Even before the word 'diversity' was at the forefront, it began with Nordstrom believing that we wanted to give the customer the best experience," explains Talley, who has been with the high-end department store chain for 23 years. "When you think about the customer, that is really a tapestry of everything. We recognized that we had to deal with, be prepared for and understand all the different issues that are going on in society because those are our customers. The people living outside our doors are the people who walk inside our doors."
Nordstrom's diversity training begins the first day an employee is hired and continues throughout his or her career with the company, notes Talley. Minority retention rates are a key factor in manager performance evaluations. Nordstrom has won particular accolades for its proactive efforts to increase business opportunities with minority-owned companies. Its diversity program is dedicated to working with women and minority vendors. "We have what is called a project preview," explains Talley. "Any time we are going into a new market, building a new store or doing a remodel or refit, we will go into that community 18 or 24 months earlier to meet with women and minority vendors to see how we can partner going forward." Nordstrom spends procurement dollars on items across the board.
While diversity may be a top-down imperative at Nordstrom, Talley adds, it is more importantly a regional commitment that helps keep the retailer in tune with the communities it serves. "We have regional diversity directors standing in front, one-on-one, right there," says Talley. "That's a lot of where the success has come in. People have someone they can look at. Diversity is not just something written on a piece of paper. Do we have a mission statement? Absolutely. But the meat of it is where you have that ongoing personal relationship with the community."
Outreach in the Community
A few years after Ray Hood joined Denny's in 1995 as chief diversity officer, she was asked to speak at a seminar on diversity. During the Q&A session, someone asked Hood how much Denny's spent on diversity. "I started to give them my line item budget for the diversity department, then I thought about training and I caught myself," explains Hood. "I started to give another number, then I thought about marketing and caught myself again, and then franchising. I did this about six times and a light bulb went off in my head right in front of all these people. Diversity had absolutely been institutionalized at Denny's. If they had asked me that question in 1995 I would have just given them my budget. It showed how far we had come. Everybody owns this thing at Denny's."
Some might argue that Hood's epiphany was long overdue. The Spartanburg, S.C.-based restaurant chain was nearly synonymous with racism in the early 1990s when some of the restaurants were accused of making blacks prepay, not serving them as quickly as whites and sometimes not serving blacks at all. The resulting class-action lawsuit was settled for $54.4 million in 1994.
That was then and this is now, says Hood, who points out that Denny's still tracks its image quarterly in the Hispanic, general and, in particular, the African-American communities. "When we started tracking in 1996, nearly half of all African Americans had a negative image of Denny's and associated us with discrimination," says Hood. "The latest statistic is 12%. Of course, 12% is still a significant proportion. There's always work to be done."
By most accounts Denny's is doing what needs to be done with diversity -- and doing it well. Most call it a genuine turnaround story that started with the company rolling out a racial sensitivity training program for all its employees. The company has made great strides in the past 10 years. Denny's board of directors is now 53% women and minorities, its senior management committee is 50% minorities and women, and its overall workforce is 50% minority. The company has spent almost $1 billion since 1995 on doing business with minority firms. In 2001, Denny's was chosen by Fortune magazine as the "Best Company for Minorities" and has remained near the top of Fortune's list ever since.
The impressive numbers of minorities and women in management and operations have been maintained since 1998, says Hood, who notes that she was the first person in the country to hold the position of corporate diversity officer. "When we reached these numbers, we decided that the next frontier for us would be the social arena. If we are a leader in this area, we need to take it beyond the four walls and do outreach in the community." In 2000, Denny's launched its three-year "Reignite the Dream" program, raising a total of $4 million to support human and civil rights. The money was used for an expansion of the National Civil Rights Museum in Memphis, Tenn., the design of a community service program in cooperation with the King Center in Atlanta, Ga., and the development of a nonviolent youth curriculum to help students understand Martin Luther King's philosophy of nonviolence. Subsequent projects have raised money to support youth HeadStart after school programs.
Hood says Denny's plans to keep doing what it's doing. "You need to maintain the stats but you also need to be deliberate and intentional and make financial investments in many areas. That requires vigilance and diligence to be sure that people are properly trained and educated, to make sure your champions are rewarded, and to know what the customer is always thinking."
Diversity beyond Race and Gender
Xerox calls itself a pioneer in practicing diversity excellence. The Stamford, Conn., document technology and services company has often been cited as among the best companies in the U.S. for diversity, and in 2004 CEO Anne M. Mulcahy received the Diversity Best Practices CEO Leadership Award.
So why, then, did a group of current and former sales representatives bring a still ongoing class-action lawsuit against the company in 2001 alleging that Xerox had refused them promotions, denied them commissions and otherwise discriminated against black members of its sales force? "I'm a parent of three and I know that even being the best parent that you can be, is there any month out of the year that all your children are happy and pleased about what you do and the decisions you are making for them?" asks Ernest Hicks, manager of Xerox's Corporate Diversity office. "When something like that occurs, people are very quick to pass judgment. We have, on average, about 50 external company requests for benchmarks annually, either companies asking to come up to talk with us or wanting to learn about our diversity program. During that period of time [when the lawsuit was filed], the number of requests we were getting from other companies never dropped."
Xerox has vehemently denied any wrongdoing related to the discrimination lawsuit. Instead, it continues to stay the course, releasing numbers that reflect an ongoing commitment to diversity practices. For example, at the end of 2004, Xerox's U.S. work force was 14.8% African-American, 8.4% Hispanic, 5.4% Asian and 0.8% Native American. Women made up 31% of the total U.S. work force of 32,100. About 43% of Xerox senior executives are women or people of color or both. Since 1985, Xerox has purchased more than $5 billion in goods and services from minority-, women- and veteran-owned businesses in the U.S.
"You need a balanced workforce, you need the training, you need senior management buying in, and you need employees buying. You need to look at your benefits to reflect diversity in your organization. To do one excellently -- and not do any of the others -- is for naught," says Hicks, who has been with Xerox for 33 years and in the diversity office for nine. "Our diversity efforts go far beyond the race and gender aspects. It is holistic; we define diversity as all of those things in the environment and in our employees that turn around an outcome that make the business profitable."
Caucus groups -- independent groups of Xerox employees dating from the 1960s -- help illustrate Xerox's deep and long-standing interest in diversity. The six caucuses, similar to networking and mentoring groups, advocate openness, opportunity and inclusion for the entire Xerox community and work with management to achieve common business objectives. Says Hicks: "They help keep us honest." Caucuses exist for African-American, Hispanic, Asian, women, African-American women and gay/lesbian employees.