Diversity: The Next Challenge — Holding People Accountable
How do you make diversity goals stick in your organization long after the diversity training is over and the certificates have been handed out?
Many human resource managers are asking this question after having little to show for years of diversity programs. And employers are looking for ways to make diversity an integral part of the organization’s culture. The answer for both usually comes down to holding managers accountable for diversity efforts at all levels.
Too often, when diversity training is finished, that’s the end of it. There is no follow up, no system put in place to ensure organizational commitment, and no way to hold people accountable for effective diversity management. But employers are starting to realize that you get what you pay for-and that if you pay for performance and hold people accountable for behavioral and business changes in the diversity arena, you will begin to build an organizational culture supportive of diversity. More importantly, you’ll build a culture that leverages diversity for competitive advantage.
“Put bluntly, we should get rid of, fix, or not hire leaders who cannot manage diversity,” noted Roger Wheeler, chief tax officer at General Motors Corp., at last year’s American Bar Association annual meeting. “We need to make diversity management a routine business practice, a pattern of behavior.
“The ability to manage diversity,” Wheeler adds, “should be a threshold issue.”
Realizing the need for competence and accountability with diversity issues is the easy part-the hard part is figuring out how to do it. As Wheeler says, “Clearly, it may at first be necessary to sponsor specific diversity courses. But eventually, diversity management should be incorporated into normal leadership training or mentoring programs.”
Wheeler says that although a company may initially put special accountability measures in place, eventually accountability should be built into the firm’s normal appraisal systems. “If a company is managing by results-as most seem to be doing nowadays-it may be advantageous to build diversity management into its mission statement, business objectives and strategies,” he says.
Tying bonuses to diversity
According to a study released recently by The Conference Board in New York, not only are more diversity initiatives in place, but accountability is becoming strongly enforced. The survey reveals a variety of sophisticated tools now used to create measurable accountability, the most common of which include:
- Equal employment opportunity and affirmative action metrics.
- Employee attitude surveys.
- Cultural audits.
- Focus groups.
- Customer surveys.
- Management and employee evaluations.
- Accountability and incentive assessments.
- Training and education evaluations.
“Companies want managers who are not only successful with profit margins, but who also create a positive environment that values, respects and leverages all employee talents while providing fair advancement for all employees,” explains Michael Wheeler, research associate for human resources and organizational effectiveness at the Conference Board. Findings indicate that meeting diversity objectives now account for 20 percent to 25 percent of all management bonuses and incentives.
The Society for Human Resource Management found different results when it recently polled its members at Fortune 500 companies and at smaller, randomly selected companies. More than half (58 percent) of participants from Fortune 500 companies and 79 percent of respondents from the random sample said they did not tie compensation and performance to diversity efforts. One-quarter of Fortune 500 companies link both compensation and performance to diversity goals, while 10 percent link only performance and 6 percent link only compensation. For the random sample, the share was 10 percent, 5 percent and 1 percent, respectively.
At the Fortune 500 level, slightly more than half (54 percent) measure the impact of their diversity programs, whereas 38 percent do so at the other companies. Of those who do, many measure it by surveying employees and reviewing affirmative action, retention, hiring and promotion statistics.
The diversity continuum
BankBoston Corp., a leader in measuring diversity competence, defines proficiency as “the ability to demonstrate a thorough understanding of how diversity [affects] the organization’s success,” according to Kim Cromwell, director of workforce effectiveness. The goal is to develop employees who “deal effectively with colleagues and customers from many different backgrounds; seek to learn about and optimize the unique contribution inherent in the culture of each individual; anticipate the impact of cultural biases on business relationships and processes; and seek to remove obstacles to equity and inclusion wherever possible.”
Diversity competence is rated “not effective,” “moderately effective” or “role model.” Each rating is defined in great detail, which gives individuals being measured ample opportunity to improve performance. Someone rated “not effective” may have difficulty dealing with people of different cultures and styles, exhibit disdain toward workplace diversity, exclude people of different cultural backgrounds from personal networks, lack understanding of the impact of diversity on business relationships and discourage people of different styles and cultures from participating in the work environment.
At the other end of the scale, a role model is not only familiar with and able to address diverse market opportunities and the needs of diverse internal and external customers, but actively participates in creating an environment where various styles are welcome and initiates personal development related to diversity, among other positive attributes.
Minneapolis-based American Express Financial Advisors (AEFA) also measures diversity proficiency along a scale. Leaders are judged in four areas: thought, results, relationships and change, each with its own dimensions, according to Sandra Johnson, internal diversity consultant at AEFA. One dimension of the relationships category is “valuing and integrating diversity,” defined as “integrating diversity into all work processes and business decisions by valuing individual characteristics, i.e., age, education, gender, physical and mental ability, race, religion, sexual orientation, style, etc. It’s a broad, holistic definition that recognizes the potential contributions of all employees.”
Ameriprise Financial, Inc. is an American diversified financial services company. Ameriprise Financial engages in business through its subsidiaries, providing financial planning, products and services, including wealth management, asset management, insurance, annuities and estate planning.
Ameriprise Financial, Inc., the holding company, is incorporated in Delaware. The company’s headquarters are in Minneapolis, Minnesota. James Cracchiolo is the chairman and chief executive officer. The company’s primary subsidiaries include Ameriprise Financial Services, Inc., Columbia Management Investment Advisers, LLC, and RiverSource Life Insurance Company. Threadneedle Asset Management is Ameriprise Financial’s international asset manager, and a provider of investments to institutional and retail clients.
Ratings range from “more expected” to “distinguished,” consistent with the company’s overall rating process.
Real-life examples
Developing real-life examples of diversity performance evaluations is still a young science in HR, but some guidance is available. “My experience is that few people have cracked the code and do this successfully,” says Johnson. “I’m very pleased that our company is one of the few that includes diversity competency in its leadership evaluations. In fact, our new vice president was hired with responsibility for worldwide diversity.”
Efforts to develop and use performance evaluations that measure diversity competencies reflect the commitment to diversity as a business benefit. “This is not a societal concern or issue-it’s a business issue,” Johnson says.
To assess how they are fulfilling their diversity competencies, Johnson and her staff receive midyear and end-of-year reviews. They also are expected to do their own self-assessments and survey clients and peers about their success, she says. “This is not according to a job description, but based on skills and competencies such as communications skills, meeting client needs and delivering services.”
Among other approaches to measuring diversity accountability and competency are these examples, gathered by the Women Employed Institute in Chicago:
- At Motorola Inc., tracking reports show the representation of women and minorities within each senior manager’s area of responsibility. The company reviews progress twice a year and holds managers accountable for developing and retaining women and minorities. The CEO has diversity, equal employment opportunity and affirmative action goals in his bonus formula, reviewed annually by the board of directors. Executives are expected to lead in this effort and a portion of their bonus compensation is tied to effectiveness in those three areas.Roberta Gutman, vice president for corporate diversity strategy at Motorola in Schaumburg, Ill., doesn’t think diversity belongs in HR, nor is it a training or communications concern. “Diversity is business-a strategic business issue-so our diversity initiatives are run by the top six vice presidents,” she says. “Unless you understand diversity as a business strategy, you get nothing but cute little pins for your efforts.”In 1989, Motorola had two women vice presidents; it now has 43, Gutman says. The company had six minorities at the vice-president level nine years ago; now it has 41.
- At Procter & Gamble Co. in Cincinnati, the senior vice president of HR personally oversees annual diversity reviews with the director of diversity and top management of each function and business sector to help develop their next generation of leaders. Accountability for diversity is incorporated in performance reviews at all levels of the organization. Employee performance reviews are based on a list of factors, including employees’ ability to respect and work effectively with diverse people. For supervisors, performance reviews also include assessments of their ability to develop people, including women and minorities.
- The Sara Lee Corp., based in Chicago, sets diversity goals for recruiting, hiring and advancement, and operating executives are held accountable for meeting short-term and long-term goals. The company ties executives’ bonuses to the objectives for the advancement of women and measures discrimination charges as part of assessing success in attaining diversity objectives.
- At Steelcase Inc., an office furniture manufacturer in Grand Rapids, Mich., managers are evaluated on their effectiveness in improving the race and gender composition of their workforces through hiring and promotional opportunities.
- At US West Inc., a telecommunications company in Englewood, Colo., officers are evaluated every six months on their quantitative and qualitative efforts to develop and promote women and minorities.
- Northbrook, Ill.-based Allstate Corp.’s measurement process includes diversity and affirmative action measures on par with other key financial results, with senior leadership sharing accountability for improving results, linked to compensation through the performance management process.
- Bonuses for senior managers at First Chicago NBD Corp. are affected by their performance in diversity; all managers must include diversity activities in performance reviews.
- At Texaco Inc., which suffered embarrassing publicity from tapes made secretly of top executives scoffing at its diversity efforts, compensation for executives is now linked to attaining both inclusive workforce goals and annual employee survey results relating to respect for the individual. Success is tied to compensation and performance reviews for all managers. The company now has an expanded 360 Degree feedback program that provides managers with annual reviews by their bosses, peers and direct reports.
Texaco, Inc. (“The Texas Company”) is an American oil subsidiary of Chevron Corporation. Its flagship product is its fuel “Texaco with Techron”. It also owns the Havoline motor oil brand. Texaco was an independent company until its refining operations merged into Chevron Corporation in 2001, at which time most of its station franchises were divested to the Shell Oil Company. It began as the Texas Fuel Company, founded in 1901 in Beaumont, Texas, by Joseph S. Cullinan, Thomas J. Donoghue, Walter Benona Sharp, and Arnold Schlaet upon the discovery of oil at Spindletop.
For many years, Texaco was the only company selling gasoline under the same brand name in all 50 US states, as well as Canada, making it the most truly national brand among its competitors. It was also one of the Seven Sisters that dominated the global petroleum industry from the mid-1940s to the 1970s. Its current logo features a white star in a red circle (a reference to the lone star of Texas), leading to the long-running advertising jingles “You can trust your car to the man who wears the star” and “Star of the American Road.” The company was headquartered in Harrison, New York, near White Plains, prior to the merger with Chevron.
Texaco gasoline comes with Techron, an additive developed by Chevron, as of 2005, replacing the previous CleanSystem3. The Texaco brand is strong in the U.S., Latin America and West Africa. It has a presence in Europe as well; for example, it is a well-known retail brand in the UK, with around 1,100 Texaco-branded service stations.
- Ultimate accountability for diversity initiatives at Chicago-based Northern Trust Corp. rests with its chairman and CEO, who chairs its diversity council of employees from all business units. All business unit heads share responsibility for meeting diversity goals and are charged with developing and measuring specific goals for their units. Middle and first-line managers are asked for their involvement and commitment and are accountable for meeting diversity expectations developed for their areas. Senior HR and diversity managers provide vision and direction for all business units, but staff also is accountable.
Performance expectations address the employees’ role in valuing and working successfully in a company that has diversity as a key workplace objective.What you can do
Unless HR professionals can help define what success looks like and develop systems for defining and measuring diversity in their organizations, employees will remain confused about what’s being asked of them. And diversity initiatives will remain superficial to the business imperatives of the company.
The first question is, “What does diversity competency look like in your company?” Once diversity competency has been defined for your organization, measurement instruments must look at the responsibilities that all professionals have for diversity management. The instruments must consider the kinds of awareness and skills-based training that employees receive and the behavioral modifications expected, and measure how the organization’s performance evaluation system supports diversity once training is completed.
The instruments must also hold people accountable for diversity work, whether through evaluations, bonuses, incentives or promotions, and ensure that lessons and knowledge derived from the diversity work are embedded in the organizational culture at all levels.
Developing both clear-cut competencies and tools to measure them may require ongoing commitment and effort, but will be well worth the investment. Colleagues seeking ways to improve how they measure diversity competency must network and share methods, failures and successes, according to Johnson. “We are clearly on a diversity journey with no easy answer, but we’ll all be wiser for it if we share information,” she says.
Patricia Digh’s firm, RealWork of Washington, D.C., focuses on globalization, ethics/values and diversity in the workplace. Her upcoming book, coauthored with Robert Rosen, focuses on global leadership