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No. 6

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FedEx Ground
Versus UPS:
Two Worldviews

line Workplace Diversity:
Does It Work?

line Health Care and

line The Shrinking

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For 2005

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News on Personnel, Labor Relations and Benefits

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Human Resources and labor relations Workplace Diversity: Does It Work?
   Explaining "Myth Vs. Reality"

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Despite the seemingly universal acceptance of the value of diversity training and compliance, troubling issues persist.

We will examine the myth vs. reality on diversity in the workplace in hopes of stimulating a more interesting line of thought and giving this subject more than just the usual platitudes and generalities that are often glibly tossed around.

Employers spend billions of dollars on diversity programs, while laws mandate compliance in many cases. On the surface diversity "works" and we are on the right track... but what is going on underneath all this?

Diversity can enhance business performance, and maybe even make the world a better place.

However, if it is mismanaged or left to drift along without close attention, it is possible that it may produce unresolved conflict, miscommunication, higher turnover, or other unintended consequences. The causes of these problems are deep, and the solutions are not easy.

What we will discuss here is the difference between what works and what doesn't.

Unthinking stereotypes and generalities don't help this key issue, but digging for a deeper reality might create a foundation for improvement and understanding.

Diversity is part of our modern culture; it is necessary... and even desirable.

Lets find ways to deal with the reality of the situation and make the most of it by finding out what works - and eliminate what is just hype.

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Checkmark Graphic Why Do We Do It?

Companies state many reasons for their diversity training and programs. By reviewing them we hope to clarify the reality underling the motivation for them and set the stage for the issues and questions that follow.

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     - Recruiting and Retention

For the most part companies feel that putting forward a strong image of being "diversity conscious" is necessary to attract and retain good employees.

There is evidence that employees expect and ask for a strong diversity policy as a benchmark for the desirability of a working environment. To compete in recruitment and retention companies must act on this desire.

Ilse de Veer, a consultant in the office of Mercer Human Resource Consulting is quoted as saying: "Domestic-partner benefits is a trend that's grown steadily. It really took off during the tight labor market in the 1990's, to the point where in high tech and some other industries it's pretty much become the norm. Companies have had to add it for competitive reasons".

She notes that corporate recruiters have told her that recent college graduates - even if they are not actually gay or lesbian themselves - often ask about partner benefits and other related issues as sort of a litmus test of whether the company has a tolerant workplace. "I've had companies say that they lost applicants because they didn't have it," she said.

Other examples:

graphic In a 2000 survey by Hewitt Associates 22 percent of the nearly 600 companies surveyed said they provided partner benefits (aimed primarily at gay and lesbian minorities). Two thirds of those who did provide those benefits also said they do so primarily as a recruiting and retention tool, while only 6 percent said that they offered the benefits to be fair.

graphic Louis Thomas, an associate professor of management at the University of Pennsylvania's Wharton School, says that his research indicates that gay employees are likely to stay with an employer with gay-friendly policies, even if offered more money by a competitor.

graphic Cedant Corporation (a real estate services company) launched its diversity program as part of a broader "employer of choice" initiative.

Reality: Many organizations utilize diversity programs as a tool in recruitment and retention. Not necessarily because of their own merits, but because they are necessary as such.

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     - Litigation Avoidance

Compliance objectives and litigation avoidance stress the need to avoid costly discrimination lawsuits and the damage to reputation that occurs when companies are charged with illegal workplace practices.

Ryder System, Inc. is a logistics, supply-chain and transportation company with 30,000 employees. Their diversity program has an element in it that actively teaches litigation avoidance by describing scenarios and behaviors that put the company at risk of lawsuits and advise how to prevent them.

Part of the measurement of the return on their diversity program is in tracking litigation costs. Gerri Rocker, director of corporate diversity states, "Since the initiation of these programs, litigation costs have dropped dramatically".

Reality: Avoiding litigation costs and lawsuits is a powerful motivator for companies in providing diversity programs to meet compliance objectives. It is part of sound fiscal management.

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     - Market Purchasing Power of Minorities

Market share objectives of more companies are targeting the growing purchasing power of female and minority consumer groups, which many believe can be tapped only through an employee population that matches the customer base.

Though only one small segment of the minority market, the 15 million gay men and lesbians in the U.S. comprise a $583 billion market, according to the consumer-market researcher Packaged Facts and marketing firm Witeck-Combs Comunications.

MarketResearch.com, in Rockville Maryland, estimates the gay consumer market to number more than 14 million consumers and is projected to be worth more than $607 billion in purchasing power by 2007.

Eastman Kodak Co. executives have been reported to believe that providing equitable treatment toward gay employees makes Kodak products more appealing to domestic gay consumers, who tend to be brand-loyal.

IBM spokesman Jim Sinocchi says that outreach to the gay market segment achieves the dual strategic goal of recruitment and the marketing of its products. "The nature of the gay community is strong networks, based on personal contacts, that extend through peer companies and customers," he says. "What we're trying to do is crate a buzz, to make people want to spend their money with IBM - or to work here".

Demographic changes confirm explosive increases in minority populations in the United States.

Reality: Companies are aware that demographics reflect a rapid increase in minority populations. This equates to increased purchasing power and a larger impact on potential job pool candidates. It is a fact that businesses ignore at their own peril.

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     - Demographic Changes in Society

Diversity is an inevitable result of the demographic changes taking place in our society today. Most companies are aware of that and react accordingly.

Here are some statistics based on the results of the 2000 U.S. Census:
(Note, the terms used here are those provided by the Census report, not ours.)

"Nationally, the country's white population increased 7.3 percent between 1990 and 1999 to 224.6 million. Blacks remained the country's largest minority group, experiencing a 13.8 percent rise during the same period to 34.8 million, while the American Indian and Alaska Native population increased 15.5 percent to 2.3 million".

"Between July 1, 1990 and July 1, 1999, the nation's Asian and Pacific Islander population grew 43.0 percent to 10.8 million, and the Hispanic population grew 38.8 percent to 31.3 million, the Census estimates show".

Here is a recap:

    Total U.S. population 272.7 million

    White: 224.6 million
    Black: 34.8 million
    Hispanic: 31.3 million
    Asian and Pacific Islander: 10.8 million
    American Indian and Alaska Native: 2.3 million

    Gay and Lesbian: (estimated at) 15 million.

    Here are the percentage of increases in the various populations
    between 1990 and 1999:

    Increase in White population: 7.3 percent
    Increase in Black population: 13.8 percent
    Increase in Hispanic population: 38.8 percent
    Increase in Asian and Pacific Islander population: 43.0 percent
    Increase in American Indian and Alaska Native population: 15.5 percent

These figures should speak for themselves.

Reality: To ignore diversity in the workplace is to ignore the reality of the changing demographics of the current workforce and the resulting consumer base brought about by these changes.

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     - Because It's "Right"

According to a 2003 Gallup study referenced in the Congressional Record, 88 percent of Americans believe that gays and lesbians should have equal rights in the workplace.

Certainly we should hope that this same percentage would apply to all minority groups.

As indicated in the poll quoted above most Americans believe in equal rights, and hence in the inherent value of diversity.

Many companies have diversity policies and programs because those working there believe that it is inherently right. They believe that equal rights are at the very foundation of our country and our way of life.

However, the sociological or moral implications of this question are usually considered outside the scope of the business or policy aspects of this issue.

Reality: Most Americans believe in equal rights and diversity. Though this is a factor in diversity programs and policies, it should be noted that often this does not drive the decision making involved in creating or maintaining a diversity program.

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Checkmark Graphic Does It Work?

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     - Lack of Measurable Evidence

Thomas Kochan is a professor of management at MIT's Sloan School of Management. In 2003 he completed a five-year study of the impact of diversity on business results. The investigation involved a detailed examination of large firms with strong reputations for their long-standing commitment to building a diverse workforce and managing diversity effectively.

Kochan said the following about his results: "The diversity industry is built on sand. The business case rhetoric for diversity is simply naÏve and overdone. There are no strong positive or negative effects of gender or racial diversity on business performance".

Kochan's team of researchers was supported by Business Opportunities for Leadership Diversity and the Society for Human Resource Management. They struggled to find companies willing to participate in their diversity study.

Of the 20 large corporations with well-established diversity programs that Kochan initially contacted for his study, none had ever conducted a systematic examination of the effects of their diversity efforts on bottom-line performance measures.

"Diversity has been promoted on the basis of a very weak construction of the business case and on grounds of social justice, but to be successful, programs must be built on scientific evidence," said Kochan.

"Meaningful discussions and analyses do not occur because companies are concerned about legal issues and because people simply want to believe that diversity works. There is a great deal of defensiveness. Even when diversity is managed well, the results are still mixed", Kochan concludes.

Michael C. Hyter is president and CEO of J. Howard & Associates, a large diversity consultancy in Boston. He points out that, "Some companies have completed limited studies at a divisional level, but there are no formal reports with valid and scientifically determined numbers".

Reality: According to the American Society for Training and Development's 2002 state of the training industry report, only one in 10 companies attempts to create results-based evaluations of its training programs.

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     - Problems in Measurement and Tracking

Quantifying performance results and objectives resulting from diversity programs can be problematic. Most data needed for significant measuring of results cannot be pulled from existing human resources data.

MIT's Thomas Kochan touches on this key point when he said: "To create the needed data and analysis, human resources executives must run experiments within their organizations. They must invest in efforts to train departments in group processes, and then follow their performance over time, comparing the performance of groups that have been trained with that of groups that have not, using hard performance measurements based on the goals of the unit".

Many companies track the success of their diversity efforts in terms of what they DO, not necessarily what leads to RESULTS. Or in another words, they measure what they put out, not what results they achieve in terms of either profit or savings.

For example, Ryder System, Inc. uses a scorecard for each business unit that includes a diversity component, with specific targets for hiring and promoting women and minorities. (Senior leadership bonuses are tied to meeting these targets.)

In this case success in diversity seems to be measured in numbers of minorities hired etc, not necessarily in the business results that those hires achieve.

Cedant Corporation's vice president of human resources Kathy Andreasen states: "The return on the resources dedicated to this effort (diversity) is measured in number of hires, the volume of our services that are provided by minority suppliers, the volume of business generated by our multicultural marketing initiatives, the number of minority franchisees, and other measures".

Reality: Companies often resort to simple "head counts" in measuring diversity efforts because the issues surrounding measurement and tracking of other aspects can be too complex.

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     - Reluctance of Companies to Measure or Report

Given the complexity of measuring, tracking and reporting results in ways other than simple "head counts" for diversity goals, it is no wonder most companies would rather fall back on simple assumptions that diversity is working rather than devote the resources needed to verify results in any significant way.

The paradox of this is that the "diversity industry" in corporate America is already a multibillion-dollar industry (some estimates put it at 8 billion dollars a year). Unlike most other business practices, in many cases the money goes in to diversity programs without any meaningful valuation on the return on investment of these resources.

Some examples of this:

graphic Manager of communications and public relations at Eastman Kodak Co. David Kassnoff is quoted as saying that his company had eliminated waste and improved productivity in manufacturing and finance through their diversity programs. However, he declined to provide statistics or specifics because of "competitive reasons".

graphic New York Life Insurance vice president of human resources Angela Coleman said: "It's hard to quantify financial results. We don't approach diversity in terms of a dollar return on investment".

Michael Hyter of J. Howard & Associates said: "Organizations like having the flexibility of not being put in a box about whether this does or doesn't work. Too often, they are given a lot of credit for their efforts anyway".

Reality: Success is usually reported, but often only in vague generalities rather than significant measurable or verifiable results.

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     - Anecdotal Evidence

Since there is a distinct lack of reported evidence on the success or failure of diversity programs, most often what is presented is simply anecdotal evidence.

Here is an example -

Laura Brooks was a former regional manager for logistics with Eastman Kodak Co. and used all of the considerable resources available to her from her company's diversity program after seeing a "culture audit" of her warehouse that indicated that gay employees were possibly experiencing some degree of harassment.

After the whole process of training and other programs "informal follow up surveys" provided her with "a cautiously optimistic sense that things are getting better". She said, "We've also had three people in leadership position come out and begin functioning as out-of-the-closet leaders in our community. They clearly are in a different place than they were before we started our GLBT (gay lesbian bisexual transgender) education journey as an organization".

"Cautiously optimistic" after "informal follow up surveys". This may indicate the potentially positive value of a diversity effort, but it is hardly what one would call solid evidence.

This type of anecdotal evidence is what is often provided as "proof" of positive results in diversity programs.

Reality: Where there is a lack of verifiable measurements and results, anecdotal evidence abounds.

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Checkmark Graphic Conclusion

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     - Attitudes Vs. Behaviors

It seems there is a difference between "valuing diversity" and having the appropriate skills to know how to work effectively in a group of diverse people.

Empathy and understanding are good foundations to begin with but do little towards actually working positively with people on a day-to-day basis to achieve measurable results. Much of diversity training may be wasted because it focuses on programs for awareness and attitudes that do not give people the skills they need in dealing with the reality of a diverse workforce.

Training programs aimed at "valuing diversity" and addressing "attitudes" usually do not lead to long-term changes in behaviors. Instead, group members and leaders should be trained to deal with group process issues and focus on communicating and problem solving in diverse teams.

R. Roosevelt Thomas Jr., CEO of R. Thomas Consulting and Training, Inc, points out that companies may succeed in "building a pipeline of people with all kinds of demographic characteristics" but then fail at dealing with different behaviors. His point is a good one.

MIT's Kochan aptly noted that, "Diversity can enhance business performance, but only if the proper training is in place and the climate and culture support it. If companies can't do this, they will lose the opportunity that diversity represents. There could be backward movement, and the negative consequences of diversity could predominate".

Diversity programs should look carefully at how they train people and what they train them in, and assure that this training is effective and meaningful in a measurable way. Training should focus on behavior skills and empathy for example, not "valuing diversity" or "experiencing an inclusion breakthrough".

Reality: Behavioral skill sets that are needed to deal with a diverse workforce are often neglected or overlooked while focusing on surrounding attitudes about diversity. This may be counterproductive, short sighted, and self-defeating.

For more information about ways to find a proper mix for diversity in your workplace, please contact us at Braun Consulting Group.

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     - Mandatory Compliance?

Based on the demographic reality of our American society the expanding role and importance of diversity in the workplace is inevitable. Is it possible that mandatory compliance with diversity initiatives is the only way to effectively bring about the necessary change?

People's long-held biases cannot be easily weeded out or changed with a few quick courses on "valuing diversity". A one-day workshop will not change lifelong habits of discrimination often learned from childhood on.

Mandatory compliance with diversity programs and goals may be the most effective way to move ahead on this issue.

The reality of the situation is that there should be no option to participate or not where diversity is an issue, and a "zero-tolerance" attitude should be encouraged regarding any acts of discrimination in the workplace.

"Lapel pins and slogans on the wall may encourage people to think that diversity is just the special of the week," says Laura Liswood, senior adviser to Goldman Sachs on diversity issues and a senior scholar at the University of Maryland's Academy of Leadership. "Diversity requires real mind-set and cultural change".

Reality: Stereotypes change very slowly and simply putting people of different groups together does little or nothing to lower intolerance. What can make a difference is a sustained camaraderie and daily efforts toward a common goal by people of different backgrounds.

Note: references have been used in this article from various articles offered by workforce.com.
We would like to thank them for their ongoing contribution of these valuable articles in the field of human resources.

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