Diversity in dispute: companies that fail to address diversity-related risks today may be forced to pay the price tomorrow

Risk & Insurance, Nov, 2003 by Dennis McCafferty

Another high-risk factor is a company in post-merger/acquisition stage. Take this scenario, in which a merger sparks a corporate culture clash: Company A is proud of its proactive diversity policy. Executives fly to faraway minority focused recruitment conferences. And, to demonstrate compassion and acceptance of all employees' sexual preferences, it recognizes domestic partners as part of its health benefits package.

The merger partner, however, Company B, is frankly a bit behind the times: The diversity policy amounts to a couple sentences in the company handbook, and managers there ignore it with a smirk anyway. Diversity in recruitment amounts to the very seldom-seen presence of a minority in a job interview. As for domestic partner coverage? Not likely. The president is more likely to make a crack about gays during a company golf outing than even consider such an idea.

That this could be a recipe for disaster is no surprise. But it could also be a recipe for Success.

"Sure, things could get very bad and uncomfortable, and then the lawsuits start flying," says Weldon Latham, of Washington, a leading national authority on corporate diversity and a race relations consultant for five U.S. presidential administrations, most recently with President Clinton. "You'd have people in Company A with the core values clashing with the people over at Company B who just don't get it. But we do see sometimes that it actually makes a positive impression upon Company B. That they see the business-benefit sense to implementing the best practices of Company A, and that makes the entire picture work. If the CEO is a top-shelf executive, he or she will get it. It may be a learned process. But it will happen. Or it will fail." Latham says a diversity diagnosis is every bit as critical as analyzing the two companies' financial operations or tech infrastructure. "A merger is the opportunity to find the best practices of both companies and review their different approaches," he says. "Then, adopt the very best from the two, to gel the best of both worlds."

Businesses also need to stay on top of their dealings with minority vendors. For starters, it just makes good business sense to hire vendors who represent the surrounding community. It bridges gaps with consumers. And companies reduce their risk by making minority vendors feel included in the process of bidding, even if they don't always get the project. "You don't want minority vendors to feel excluded from the purchasing process when procurement practices do not represent the diversity of the community," says Charlene J. Reynolds a risk management consultant and CEO of Richmond-based Creative Insurance Concepts. "You can avoid this simply by being pro-active and reaching out to them with all-inclusive supplier diversity programs. Set up exhibits at the trade shows and vendor fairs. Allow the small-business vendors to exhibit their services to you. Set up receptions in your company with your buyers, so you connect the two parties and cultivate opportunities. Then register these minority vendors in your databases, so if you are accused of shutting them out, you can demonstrate that you've been actively pursuing relationships with them." Companies such as Food Lion and Sun Trust Bank have strong programs in place to foster these relationships, Reynolds says.