Reaping the rewards of a diverse company: there's no doubt that a company's tone is set at the top

Chief Executive, The, July, 2005 by Jennifer Pellet

For Wally Parker, a recent conversation with a job candidate underscored the growing importance of his company's longstanding diversity program. "She shared with me that when she interviews, she looks at the company's management to see if there are players at the senior level who are African-American women, said the CEO of KeySpan Services. "She asks herself, 'Can I look up and see someone I can go to for advice, counsel and mentoring?'"

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Driving diversity has been a guiding principle at KeySpan since well before the company was formed in a merger in 1998. Yet the question from the job candidate drove home for Parker the role of diversity in recruiting and retention. "When CEOs think about diversity, we think about serving a diverse group of customers and about doing the right thing," he told participants gathered for a roundtable on diversity held in partnership with Russell Reynolds Associates. "But do enough of our diverse groups of employees see role models above them that they can aspire to? Or do they look up and, seeing none, assume there's a glass ceiling?"

Over the past 15 years the corporate perspective on diversity has evolved from mere lip service to a strategic directive with clear business benefits. Both demographic shifts in the American marketplace and globalization have led to recognition of diversity initiatives as not only the right thing to do ethically and culturally, but also a competitive imperative. Companies with successful diversity programs cite benefits ranging from access to a wider variety of perspectives and more effective multicultural marketing efforts to better employee morale and reduced turnover.

Despite this growing awareness of the issue's importance, many U.S. corporations continually struggle to deliver on diversity's promise. "All of our clients are grappling with this issue," said Andrea Redmond, co-leader of the CEO and Board Services Practice of Russell Reynolds Associates and author of Business Evolves, Leadership Endures. "It's moved from a discussion of whether we should be paying attention to diversity to looking at the numbers and trying to assess the culture."

But the desire to foster an inclusive corporate culture and a diverse work force is just the first of many steps necessary to achieving diversity goals. Rather than racism or sexism, factors like corporate tradition, resistance to change and ingrained misconceptions are often the biggest hurdles multicultural initiatives must overcome. "There are major corporations today whose market is very diverse and companies whose client base is predominantly women and minorities where the companies themselves have no women or minorities driving the company," noted Charles Tribbett III, co-leader of the CEO and Corporate Board Services Practice of Russell Reynolds and co-author of the book. "It's one thing to sit around the table and be passionate and excited about diversity, but it's another to actually roll up your sleeves and execute it."

For some, the barrier continues to be instilling diversity into the corporate culture. "We're not a consumer-facing business, so we have a difficult time convincing our people that diversity is good business," noted William Murdy, CEO of Comfort Systems USA. "We also have a large number of Hispanic workers, and lifting them into leadership is something we want to do. But it's been very difficult. We've thought about the idea of making our work force coincide with the population in terms of percentage of minorities. It's a goal that I think we can't achieve."

Several CEOs reported difficulty recruiting minorities and women, particularly for management positions and board seats. "I've watched managers at my previous company recruit on campus and hire in their own image," noted Mark Rose, who recently took the CEO helm at Grubb and Ellis. "They didn't know any better, and they were uncomfortable hiring outside of that image.

"I don't think there's a CEO who isn't passionate about this subject," he added. "But it's all about execution, and some of us need a handbook to help. And I don't think that handbook's been completely written."

Further complicating matters, diversity means different things to different people. "We sit around the table and talk about diversity, but it may not mean the same thing to each of us here," notes Redia Anderson, chief diversity officer at Deloitte & Touche. "We assume that because we're all saying the same word, and we all mean the same thing. But we don't. So there's a need to go back and define, refine and fine-tune until we get clarity."

Many diversity programs focus exclusively on race, gender and sexual orientation. But some CEOs see a broader definition. "Diversity has to be looked at in its broadest sense," says KeySpan's Parker. "To me, it's all about recognizing, respecting and supporting individuals regardless of what makes up that individuality. So, yes, that's race, gender and sexual orientation, but it's also introverted and extroverted, ethnic backgrounds, cultural upbringing--all of those things."