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February 06, 2006
More HR Online Sites Continue to Miss The Mark on Diversity
Posted at February 6, 2006 02:30 PM in Race Relations .
Just a week after an online news site for The Society for Human Resource Management used a confounding Gallup poll (See also: No Way to Measure
Diversity's Value? Mainstream Article Ignores the Hard Facts and Dabbling in Diversity
Surveys Is Dangerous [subscription required]) focused mostly on workplace discrimination to describe how "measuring diversity's value remains an elusive task," another mainstream HR Web site has made the same mistake.
Workforce Management's Dear Workforce e-newsletter, which allows "experts" chosen by the editors to answer readers' questions, recently received a query about diversity's return on investment (ROI). The reader asked, "What problems might I expect to encounter related to championing diversity in the workplace? Also, what is a good tool to measure the return on investment of having a diverse work force? I've heard varying accounts of whether diversity is a useful tool or merely a politically correct buzzword."
The staff of Workforce, one of Detroit-based Crain Communications' more than 30 business and trade publications, forwarded the question to two of its several dozen "experts", Richard Hadden and Bill Catlette.
The two white men, self-described "workplace experts" who co-wrote the 1997 book Contented Cows Give Better Milk, which they describe on their Web site as a "hard-hitting business book that makes the connection between people and profits," missed the mark in their response. Since they are not knowledgeable about diversity management, that may be understandable. But why they were chosen as "experts" to answer this particular question is not.
Although they made clear that diversity is important (they noted that "organizations that get maximum productivity from a wide variety of people tend to perform better than those organizations that don't"), Hadden and Catlette also said that "no reliable method has been developed" to measure the business value in managing a diverse work force.
Listed on the duo's client list are major companies such as Pfizer, Hewlett-Packard and Boeing. A search for "diversity" on their Web site yields three results: one essay that mentions the importance of good diversity training, an answer to a reader question that mentions well-known diversity consultant Roosevelt Thomas as a resource for books on managing diversity, and a list of media mentions.
On the Web site, the men promise that they can help with leadership, employee morale, recruiting, retention, being an employer of choice and empowerment. Diversity is not mentioned.
The data collected in The DiversityInc Top 50 Companies for Diversity survey has proved that the better the diversity management in the four areas measured-human capital, CEO commitment, corporate communications and supplier diversity-the higher its rate of unbiased employee retention among all groups.
Bias in retention demonstrates a bias in critical relationships with employers, customers, suppliers and investors. If you lose women and people of color at a disproportionate rate, you lose more qualified people. And since household income of people color has been rising at more than twice the rate of white people in the past 15 years, according to U.S. Census Bureau data, the gap in relationships is a significant competitive factor in the marketplace.
A link between performance in the DiversityInc Top 50 survey and stock price is found in The DiversityInc Top 50 Stock Index. Launched in late 2004 and calculated by Standard & Poor's, the index shows that strong diversity management is a cornerstone of superior corporate governance, which returns value to shareholders. The index yields a 23.5 percent higher return than the Standard & Poor's 500 over a 10-year period with dividends reinvested.
The financial repercussions go both ways. Over the last 10 years, according to data compiled by DiversityInc, major race- and gender-discrimination lawsuits cost U.S. corporations $974 million in settlements alone—and that's without attorney fees, decreased market capitalization and other costs.
The "Dear Workforce" piece comes about a week after the publication of an HR News story that relied on the Gallup Organization's Dec. 8 survey on workplace discrimination, which included seven questions on workplace-diversity programs, plus interviews with "diversity consultants," one of whom said data and research into the value of workplace-diversity programs is "sadly lacking and mostly anecdotal."
This isn't the first time Workforce has suggested that it doesn't take diversity as seriously as it should. In 2003, Workforce ran a feature story with the headline, "Diversity's Business Case Doesn't Add Up." The story cited a 2002 study by a group of almost all-white researchers led by a white, male MIT professor. "The business case rhetoric for diversity is simply naive and overdone," Thomas A. Kochan, professor of management at MIT's Sloan School of Management, was quoted as saying in Workforce magazine a year after his study was released. "There are no strong positive or negative effects of gender or racial diversity on business performance."
But Kochan's team studied just four unnamed companies after contacting only 20 (and the study took five years to complete). The researchers also granted companies anonymity, therefore not holding them accountable.
Source: DiversityInc