<B>The ‘Age of Diversity’?</B>

José Luis Silvestre. Collaborator. Centre for Diversity. Instituto de Empresa

18 May 2005

Fourth in a series of inquiries into what companies are doing to promote diversity management.

Remember the TV ad for a well-known soft drink in which the company showed spectacular sales growth and claimed it had been achieved with no advertising investment? We wondered if we were witnessing the end of the marketing age.

But marketing is not limited to TV ads. A glance around us should convince even the most skeptical that marketing is in no danger of dying out.

Yet the example may contain a grain of truth. Examining the classic lifecycle of a product shows how the critical factors for success change from an initial phase (where the weight falls to production or operations) to factors related to marketing and sales as the product matures. The earlier elements do not lose their significance, but are no longer sufficient on their own. They offer no distinction, since they have become a sine qua non condition for competition and have changed from being ‘order winners’ to mere ‘qualifiers’.

In many industries the traditional parameters for competition are losing this capacity for distinction. Enterprises are striving to identify new competitive edges to help keep hold of their leadership.

This has led us into the current transition period we now know, where we’re shifting from a stable model toward another scenario where globalization, immigration, multicultural realities, incorporation of women in the job market, and demands for social responsibility are reconfiguring society and business.

From management’s point of view, challenges created by this transition are huge. Social changes are forcing firms to establish policies to adapt or die. Companies have been trying to assimilate these changes for decades. Let’s look at some of the strategies and practical improvements being used:

Diversity policies

These are both external and internal.
::External
Traditionally, diversity focuses from an external viewpoint, using image campaigns to improve the enterprise’s reputation as part of its Corporate Social Reputation (CSR), and in response to external stakeholder demands.

Consequently, firms have fought social agents like energy companies, which have developed this field further than most. Policies implemented include:

::Social action or cause marketing. In 1999, Philip Morris spent $75 million on contributions to charity and $100 million on a PR campaign to advertise it. America Online (AOL) created AOL@School, a customized, online educational tool to help U.S. students and teachers improve education. AOL has contributed to community development in a specialized and more effective way than through donations. It has also improved its long-term demand by spreading its services and how to use them among students.

::Report policies. Many multinationals issue reports on social responsibility with their financial reports. These describe actions on sustainability (environment, pollution, recycling), relations with stakeholders and diversity. Two models are being followed: the World Pact model and the Global Reporting Initiative (GRI). The Asociación Española de Contabilidad y Administración de Empresas (AECA) and British Petroleum are two firms that file account in accordance with the GRI.

These policies are well and good, but fail to use the potential for improving human capital provided by non-traditional groups.

::Internal: The objective of an enterprise’s internal policies is to change corporate culture and create an inclusive working environment. This is built around two points: assessment policies and human resources.

::Policies for getting to know staff. Demography, aspirations and job satisfaction. Ford issues an annual job satisfaction survey which includes a section on diversity.

::HR policies. Here, the objective is also twofold: to introduce diversity then develop an inclusive environment where everyone can contribute to the full.

::Incorporating diversity. Importance here lies with policies of non-discrimination, recruitment or professional development. The aim is to incorporate diversity into the company, remove formal and informal barriers that prevent its development and establish a pipeline for it to climb the hierarchical ladder. Caja Madrid has developed a program for recruitment of local employees in countries with higher levels of immigration into Spain, e.g. Morocco. Other companies, such as JPMorgan Chase, establish support programs, mentoring or coaching to define professional development of employees belonging to underrepresented groups.

::Reconciliation and flexibility: These seek to provide flexibility to keep employees satisfied and ensure they remain with the company (especially women), by trying to make professional and private lives compatible. Novartis’ ‘clover project’ , provides employees with ‘clover’ hours and a ‘clover day’ to ‘reflect on the balance between work and life’. The Generalitat de Catalunya offers workers the possibility of reducing their working day by one-third or half, with 80 percent or 69 percent of their salary, or the chance to increase maternity leave from 16 to 38 weeks for both women and men, as well as for parents of adopted children.

::Diversity development policies: Aimed at establishing diversity in the enterprise’s fundamental values, its strategy and action. They range from declarations of support for management to backing creation of employee groups. Johnson & Johnson has employee groups for Afro-American, Asian, gay and lesbian workers, as well as for female executives.

It would seem that diversity is linked to business strategy as a tool for improving human capital and getting the most from employees. Everyone agrees it’s better to work with the best, but reality continues to show us that barriers exist which prevent certain groups from contributing fully.

Despite all these initiatives, results are not very effective. Throughout these four articles, we have looked at the underrepresentation and occasionally flagrant discrimination that still affects women and minorities - not to mention women in minorities - particularly higher up the ladder. The corporate world is implementing a good number and range of policies and actions. Diversity committees, diversity managers and plans for increasing the presence of women are multiplying, but on many occasions, results are not as expected and on many others, they go no farther than a simple (albeit important and necessary) image campaign.

The conclusion seems apparent: we have not yet learned to manage diversity and intelligent action by decisionmakers is required. Too many challenges remain for efficient diversity management.

Can diversity really improve human capital and provide the organization with a new outlook and dynamism?

Our environment is riddled with uncertainty. It is increasingly competitive and competitive edges quickly grow obsolete. Will human capital, its management and leadership, initiatives and innovation be the new critical factors for success? Are we witnessing the beginning of ‘the age of diversity’?

IE’s Centre for Diversity was established to promote management of gender, culture, age and competence diversity as a competitive advantage in the corporate world through reflection, knowledge creation and the diffusion of knowhow.

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