4 Case Studies: Why Companies Rise & Fall in the DiversityInc Top 50

April 24, 2014 1:07 pm

By Barbara Frankel

Why Companies Rise and Fall in the DiversityInc Top 50The differences between companies with improving diversity results in an increasingly competitive environment—and those with declining results—is clear this year as we examine two companies in the pharma industry and two in the tech industry.

The companies that succeeded have a disciplined approach to diversity and inclusion and see it as vital to their business goals. They have visible CEO support and hold their executives accountable for well-defined results.

The companies that faltered consider diversity an afterthought. Their CEOs are not involved and their efforts are not clearly defined and not well communicated. Examining their results, in human capital and supplier diversity, shows why they are losing momentum.

On the 2014 list:

26 companies went up
15 companies went down
6 companies stayed flat
1 moved to the list from 25 Noteworthy
2 others earned spots on the list, including one first-time participant

Case Study No. 1: Pharmaceutical Company That Rose

The U.S. CEO of this company is a longtime diversity advocate. His consistent visible support and demand for improvements in the talent pipeline have led to double-digit improvements in management representation for women. He clearly articulates at all times how critical diverse leadership and representation are for the company’s business goals, especially clinical trials and product development.

With the help of DiversityInc, the company has developed a disciplined two-year plan, focusing on human-capital results and the most effective methods of improvement. Its major emphasis is on adding racial/ethnic talent, especially in management.

Although the company has strong employee resource groups, they have been used more for community outreach than talent development. The CEO, chief human resources officer and chief diversity officer are working together to improve use of employee resource groups to recruit, retain and engage talent. At every HR Leadership meeting, the topic of diversity is front and center.

What’s most impressive about this company is how seriously its leaders take diversity and inclusion. The CDO reports to the CHRO but has dotted-line reporting to the CEO and is in frequent communication with him.

This company also recently revamped its executive diversity council to have it establish diversity-and-inclusion goals that align with business goals—and to hold executives responsible through compensation for meeting those goals. The change is significant because the council members have gone from being merely advisory to actually being part of the solution.

Contributing Factors

• Strong, visible CEO commitment
• Alignment between CHRO and CDO
• Increased accountability for human-capital results

Recommendations for This Company

• Measure resource-group engagement, retention and promotions to assess what’s working
• Regularly expose high-potentials from underrepresented groups (especially resource-group leaders) to top execs

Case Study No. 2: Pharmaceutical Company That Fell

This company has a very clear issue that prevents it from becoming a diversity leader—there is no support from the top.

The first sign of this is the absolute lack of any visible diversity connection from its CEO and the minimal relevance of diversity on its external website.

There is no quote from the CEO on the value of diversity and inclusion to the business on the website. In fact, our review of the CEO’s speeches and other public comments for the past year shows no mention of diversity and inclusion anywhere. The company’s corporate website has few mentions of diversity and inclusion and even fewer images of people from underrepresented groups.

In addition, the corporate mission statement cites goals that include improved access to healthcare for people and innovation, but does not link those to diversity and inclusion anywhere.

Accountability factors also are lacking at this company. The CEO is not part of the executive diversity council, which does not link its goals to executive compensation.

The CEO also does not sign off on supplier-diversity metrics, a best practice followed by the majority of DiversityInc Top 50 CEOs. The lack of emphasis on supplier diversity is apparent. Direct contractor (Tier I) spend is very low with minority-owned and women-owned business enterprises, compared against an industry index and the DiversityInc Top 50. The company does not track its subcontractor (Tier II) spend and has not developed a plan to help its suppliers hire diverse suppliers.

Contributing Factors

• Lack of visible support from the top
• Leaders not accountable for diversity results
• Not tracking second-tier supplier diversity

Recommendations for This Company

• Raise leadership awareness of the competitive benefits of diversity; increase strategic communications/website presence
• Put more emphasis on supplier diversity, especially Tier II (subcontractors)

Case Study No. 3: Technology Company That Rose

This company, a longtime diversity leader, faces a challenge common to companies with a large technical workforce—a lack of available female talent at all levels, particularly in management and the pipeline to the top levels.

To address this concern, the company has aggressively improved its mentoring program and worked with DiversityInc to understand innovative solutions at other companies.

It started with a hard look at what was keeping women from moving into the most senior positions. While retention never has been an issue at this company, a number of women seemed stymied and reluctant to move to more demanding levels.

The company dramatically improved its mentoring program—quadrupling the percentage of managers in mentoring over the last three years. While racial/ethnic management representation has improved significantly, female representation is beginning to show benefits of more mentoring as well. The top three levels of the organization are involved as mentors, and the company pays significant attention to measuring what is working.

The company does not yet have formal sponsorship (political advocacy) but is considering ways to implement it without legislating whom its leaders should support.

This tech company, working with a very committed Chief Diversity Officer, has talked to many women at all levels about what makes them stay—and move up. It is now having formal conversations with women early in their careers about the life decisions they will face, such as the need to relocate if they want field-operations experience.

Contributing Factors

• Recognition that an industry issue (lack of women) is not an excuse
• Benchmarking, being open to innovative solutions
• Emphasis on mentoring

Recommendations for This Company

• Require senior executives to be cross-cultural sponsors; expose them to high-potentials with choice of whom to pick
• Use resource groups to understand barriers to women in particular segments—sales, operations, etc.

Case Study No. 4: Technology Company That Fell

This company, which fell off the list this year, has a major challenge— racial/ethnic diversity at almost every level is below its industry and the DiversityInc Top 50.

This company has refused to publicly release its EEO-1 numbers despite several media inquiries. The reasons are clear: Its racial/ethnic representation for some groups is so low that you have to wonder if any effort is being made.

In two key areas that build community support—and can also be sources of recruiting talent—the company doesn’t seem to be particularly engaged with many racial/ethnic nonprofits. While the company is quite philanthropic, the long list of multicultural organizations with which it partners includes several LGBT and disability organizations but no prominent groups focused on racial/ethnic communities.

In addition, the company has very low Tier I (direct contractor) supplier-diversity spend with minority-owned business enterprises and does not report its Tier II (subcontractor) supplier-diversity spend.

Supplier-diversity initiatives are not incorporated into overall corporate business-planning goals, and corporate communications is not involved with supplier diversity (and doesn’t communicate success internally and externally). The company also doesn’t mentor or offer training to its diverse suppliers.

Almost every member of the DiversityInc Top 50 does all of these best practices, which are critical means of communicating to current and potential employees—and customers—how serious the company is about building community wealth and support.

Contributing Factors

• Lack of initiatives focused on attracting, retaining, promoting underrepresented groups
• No communications on supplier diversity, philanthropy to multicultural organizations
• Poor supplier-diversity spend with MBEs

Recommendations for This Company

• Rethink overall talent emphasis and diversity goals to put major focus on relationships with racial/ethnic communities
• Use employee resource groups to understand best ways to attract, retain and promote talent from underrepresented groups
• Reassess supplier-diversity program, benchmark against the Top 50, and understand how to build community support