Strategies to Leverage Diversity in the Workplace and the Marketplace

Author(s):

Dawn Hodson, MA.
Dawn Hodson, MA. President, Hodson & Associates, Ventura, CA 93006 805/644-3268.

83rd Annual International Conference Proceedings - 1998 

Abstract. The increasing diversity of the workforce offers multiple opportunities for leaders to leverage differences both within the workplace and in the marketplace. The various skills and perspectives which employees bring to their jobs can be a resource if leaders know how to use these differences to best advantage. In this presentation, attendees will learn what other leading organizations are doing to leverage diversity within the workplace and how they are using diversity to better serve their customers and expand their businesses.

Introduction. The American workforce and marketplace has become more diverse over the past thirty years. In addition, as the American economy has become integrated into the larger global economy, more American companies are finding that the success of their international ventures depends on their understanding and capitalizing on cultural differences. Together these two trends are driving the interest in diversity. They also explain why 50% of all employees and 74% of all Fortune 500 employees have participated in some type of diversity program.

Changing Workforce Demographics in the United States. Diversity has many dimensions to it. The following demographic changes are the ones having the greatest impact on the American workforce and marketplace.

Racial/Ethnic Changes. Over the past thirty years the workforce has become more racially and ethnically heterogeneous and this trend will continue. In l995 the makeup of the workforce was: White 76%; Black 11%; Hispanic 9%; and Asian 4%. By the year 2020, it is estimated to be: White 68%; Black 11%; Hispanic 14%; and Asian 6%. The US Census Bureau also projects that by the year 2050 half of the population of the US will be composed of people from different ethnic/racial groups. The greatest degree of racial/ethnic diversity will be in California, Florida, New York, Texas, and the Southwest.

Gender Diversity. One of the biggest changes to the workforce has been the growing number of women working outside the home. In l994, women made up 46% of the workforce and they are expected to make up almost half the workforce within another ten years.

Women are also starting their own businesses in record numbers and women owned businesses now employ more workers than the Fortune 500. Minority women alone employ some 1.7 million workers and generate more than $184 billion in annual sales.

Another change related to gender is the number of gays and lesbians in the workplace. While they have always been there, more of them are now "coming out" and expecting equal treatment and benefits for their partners. While less than 8% of employers offer such benefits, many larger companies provide them in order to attract and retain valuable employees. Such firms include Apple Computer, Disney, Bank of America, Ziff-David Publishing, IBM, and Lotus Development Corporation.

The Graying of the Workforce. A demographic change which is often overlooked is the aging of the baby boomer generation. Within a decade there will be 75 to 79 million of them between the ages of 45 and 65 and forty percent of them will be over 45 years of age. Since many may be unable to retire as early as their parents did, they may be working well into their 60's, 70's, and even 80's. Companies will need to retain many of these people not only because of their skills but because the pool of available workers will actually shrink in the future.

Economics and Diversity. Aside from the make up of the workforce, the marketplace is changing and new demographic groups have more economic power. Money Magazine estimates the current purchasing power of certain groups as follows: Asian Americans $100 billion; Hispanics $193 billion; African Americans $284 billion; and Gays/Lesbians $500 billion. By the year 2000 it's estimated that ethnic minority spending will constitute 30% of all spending in the United States.

Summary. In summary, the US workforce has become more heterogeneous. It has become older, more female, and more racially/ethnically mixed. The marketplace is also more diverse and companies are finding it an advantage to have a diverse group of employees who can create links between what the organization offers and what customers want. For all these different reasons, then, companies have found it to their advantage to build diversity into their business planning and operations.

Leveraging Diversity in the Workplace. Organizations do have choices about diversity. One is to merely accept the changes occurring in the workforce. The other option is to find ways to put diversity to work and to leverage its value. Organizations which have chosen the latter course are using an array of approaches to fully use the abilities of a diverse workforce, to create workplaces which attract the best and the brightest from a diverse labor pool, and to use diversity to better serve and expand their markets. The following are examples of what companies are doing in these three interrelated areas.

Teaming Up. Many companies have realized that a variety of perspectives can be a strength in problem solving, in the development of new products or services, and in establishing international business operations. Companies such as chemical giant Hoechst Celanese, Core States Financial Corporation, and Du Pont all use a cross-section of employees on every project team to gain their input on business initiatives. Just such an approach paid off for Du Pont when one of its multicultural teams gained the company $45 million in new business worldwide just by changing the way Du Pont develops and markets decorating materials. Du Pont was also able to open up promising new markets among black farmers as a result of the work of its African American employees.

Attracting the Best Workers. Competition for the best workers from a diverse labor pool will intensify in the coming years. Employers will need to be able to offer worksites, compensation, and benefits which are attractive to a wide variety of people.

At Virtual Solutions Inc., for example, forty percent of its workforce is recruited internationally. In order to make its employees feel more at home in the US, the high technology company assigns these employees a mentor to help them adapt to American culture, it assists them with their visa and greencard paperwork, it also arranges company social events, and it allows them additional vacation time so they can visit their home countries.

Other companies are tailoring their benefits to match their workforce and its needs. Dana Corporation, an auto parts giant, lured older workers back to part-time jobs by providing a prorated benefit plan. Patagonia and Kinko's furnish onsite childcare for their employees. Some firms provide "cafeteria style" benefit plans so employees can move their benefit dollars into services which most fit their lifestyle. Others offer flexible job hours, tele-commuting, and job sharing.

Organizations also are experimenting with different methods to enlarge the pool of candidates they have to choose from including using recruitment firms with a reputation for referring a diverse selection of qualified applicants; advertising in publications which reach a diverse audience; offering bonuses to employees who refer good applicants; recruiting from universities with diverse student bodies; and seeking job candidates from a cross-section of professional groups.

Some companies are also underwriting activities which prime their hiring pumps. For example, Hoechst Celanese bestows scholarships on colleges with diverse student bodies, makes donations to these colleges, and hires their students for summer jobs. Another firm, Merrill Lynch, helped develop a training program for Jersey City high school students on how to use personal computers and financial services software. Top students earn a summer internship at Merrill Lynch.

Reward Managing Diversity. Many companies are experimenting with ways to ensure that diversity is implemented throughout their organizations. One method used by big firms is to directly link up to 25% of a manager's bonus and incentive compensation to his/her ability to meet company diversity initiatives. Companies using this approach include Hoechst Celanese, Marriott International, Tenneco Inc. and Deloitte Touche. Hoechst Celanese also uses a computerized succession plan to warn management if high potential individuals are not included in the pool of candidates whenever a promotional opportunity opens up.

Marketing and Customer Services. To better serve diverse customers and expand their markets, companies are designing products and services for emerging demographic groups by paying attention to language and cultural differences.

Most hospitals, for example, subscribe to the AT&T Language Line which provides over-the-phone interpreters in more than 140 languages. Carrying this a step further, a local hospital in Torrance, California, has opened an Asian wing to better serve the many Asians living and working in Torrance which is the US headquarters for Honda and Toyota. The wing has Japanese and Chinese speaking staff plus it offers traditional Asian foods and other amenities to make Asian patients feel at home. Kaiser Permanente, a healthcare giant in California, conducts special nutrition classes for its Hispanic members to reduce their chance of contracting diabetes, a disease they are 2 to 4 times more likely to get than Whites.

Other companies have been able to expand their profits by tailoring their products to new groups. In l990, for example, Maybelline launched a mass-market cosmetics line for women with darker hues. It now has 35% of the $100 million a year ethnic cosmetics market. Fast food restaurants like Carl's Jr. have gained millions of new customers as they have added traditional Mexican foods to their menus. Book publishers are finding a new niche for large print books for the ever-growing population of senior citizens.

Advertising in multiple languages has become a big business as well and last year companies spent $721 million advertising to Hispanic customers alone. One soft drink leader, Pepsi Cola, was able to increase its sales 22% due, in part, to its incorporating ethnic marketing into its overall advertising plans. Targeted advertising also saved one small bank from extinction. The bank was losing many of its accounts to large interstate banks. In response, it hired staff who were bi-lingual and began running radio ads in Spanish to appeal to the many new Hispanic residents in the community. As a result, it gained hundreds of new accounts.

Summary. In summary, organizations are finding it both necessary and advantageous to take diversity into account when conducting business. By tailoring services and products to the different needs and tastes of people both in the US and internationally, they retain and attract new customers. In addition, developing the ability to adapt to these differing needs builds in more organizational flexibility and responsiveness to change.

Implementing Diversity. Implementing a diversity initiative is a matter of analyzing your marketplace and your workforce and taking steps which tie in with your business goals. The specifics of a diversity program vary from organization to organization but different activities might include: recruiting from as wide a pool of applicants as possible; hiring bi-lingual and cross-cultural employees; designing benefits, compensation packages, and workplaces which appeal to a variety of employees; ensuring that all employees have access to mentoring, coaching, and promotional opportunities; training employees in how to work with diverse customers and employees; fully using the different abilities that all employees bring to the job; cross-teaming employees; and designing services/products which are tailored to different customers. Since no two organizations are alike, how you implement your diversity program should be based on your own particular needs and goals.

Summary. In summary, organizations are interested in diversity because the marketplace and the workplace have become more cosmopolitan. The labor pool is more diverse but it is also more international in the sense that the pool increasingly includes employees from all over the world. In such an environment, the ability to attract and rapidly integrate diverse employees into the workplace, the flexibility to customize products and services to different needs, and the capability to rapidly respond to change - all of these are the benefits of having a good diversity program.

So is diversity an important business issue? Organizations that are looking to the future think so. As the CEO of IBM has stated, "The company that can demonstrate that it is blind to color, gender, age, and culture will have the greatest success and appeal to the broadest population." Your organization will be more successful as well if you build diversity into your business planning.

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