Case Studies: 3 Effective Diversity Council Structures

October 22, 2012 8:28 pm

By Barbara Frankel 

What are the two greatest hindrances to executive diversity councils’ creating sustainable organizational change? From our observations of hundreds of companies, we see two factors: councils that are not comprised of the most senior executives in the company and therefore lack clout, and councils that are strategic advisory boards but do not hold implementers responsible for producing results.

To study effective diversity councils, we selected three companies—Sodexo, Ernst & Young and AT&T, Nos. 1, 4 and 13, respectively, on The 2013 DiversityInc Top 50 Companies for Diversity list—that have councils chaired by their CEOs, with metrics-driven goals that have produced demonstrable human-capital results. All of these companies also have a trickle-down effect: lower-level councils that effectively report to the executive council and are more tactical.

Case Study No. 1: AT&T

In place since 2007, AT&T’s executive council is chaired by Chairman and CEO Randall Stephenson. He personally signs off on companywide goals for human-capital demographics set by the council, as well as on other goals (mentoring and resource-group participation), and he emphasizes the importance of this council to his direct reports and all employees through companywide communications.

“It … sends a strong message about his commitment—and it means the goals are non-negotiable,” says Debbie Storey, AT&T’s senior vice president of talent development and chief diversity officer.

The other council members are Stephenson’s 11 direct reports. Storey meets with the group once a quarter to review goals and metrics. Goals include workforce demographics, hiring, promotions from non-management to management and promotions within management, participation in resource groups, number of executives meeting with resource groups, and mentoring metrics. Other metrics examined include multicultural philanthropy, marketing, supplier diversity and communications.

Corporate Structure

AT&T is a large corporation, with 236,000 U.S. employees and a vast infrastructure. The diversity efforts are clearly organized. Directly under the executive council are 11 business-unit diversity councils. Each of the direct reports to Stephenson is a champion of his or her business-unit diversity council. Business-unit diversity councils are chaired by an officer in that unit, such as the general manager. His or her role is to develop and oversee such matters as the internal diversity website, newsletters, lunch and learns, and volunteer activities.

They focus more on driving, rather than setting, the agenda, notes Storey. They set their own goals for employee engagement, resource group and mentoring that are rolled up into the executive council’s goals.

AT&T also has a Chief Diversity Officer Forum, which creates linkage across the business-unit councils. Each business unit has a chief of staff. These chiefs of staff come together with lower-level officers to comprise this forum. They meet quarterly, sharing best practices and monitoring progress against scorecard measures. They are, notes Storey, “the ones actually doing the work.”

As an example, there was a consensus that more of the general managers needed to be involved in D&I work, so the CDO forum proposed a Champions of Diversity award for that level. The idea was handed off to the diversity staff, which sought nominations and a means of recognizing the individuals internally.

AT&T also has a Joint Diversity Council, consisting of all the resource-group leaders and chaired by a staff member of the diversity department, which updates the Chief Diversity Officer Forum on activities, goals and metrics. And the company has started a Women’s Leadership Council, where women at all levels of management across business units meet monthly to identify areas that are obstacles to women advancing.

How does AT&T keep track of these council activities? Every business unit has its own diversity scorecard, and all are rolled up to the executive diversity council level. This includes such information as how many employees participate in resource groups, how many executives are resource-group sponsors and how many employees completed D&I training.

Case Study No. 2: Ernst & Young 

For the Americas region, which includes the United States, professional-services firm Ernst & Young has an executive council called the Inclusiveness Advisory Council. This council is co-chaired by Steve Howe, area managing partner – Americas, and Karyn Twaronite, partner and America’s inclusiveness officer.

This is a top-level steering committee that is consultative to the most senior governing body in the firm, the Global Executive Council. It consults and sets D&I strategy for the Americas geographic units. The council meets in person twice a year and virtually another three to four times a year. Members, all client-serving partners or principals, are selected to represent the diversity of job functions plus all dimensions of inclusiveness.

“They represent the constituencies of the practices. Their diversity is geographic and cross-functional,” says Nadine Mirchandani, partner and Americas transaction advisory leader, Financial Services Organization, who sits on the Inclusiveness Advisory Council.

What’s Driving the Agenda?

At their meeting, council members focus on the key areas behind their strategy. For example, Mirchandani says, a current them in formal sponsorship, in which senior executives actively advocate for more junior people, often from underrepresented groups.

“How are we actually going to drive that thinking into our progress through consultative measures, actions, programs, communications? If this is the effort, how are we going to take this and roll it up in the practice?”asks Mirchandani, noting that all council members are given full access to relevant data and hold subordinates accountable for measurable progress.

Like AT&T, Ernst & Young uses formal groups to filter the strategy throughout the organization. Each business unit has a steering committee that takes the firm’s D&I strategy and makes sure it is consistent overall, while allowing for some customization.

“What we decide is communicated by executive leadership [Howe and Twaronite] to the partners in the Americas practice,” Mirchandani notes.

Case Study No. 3: Sodexo 

Sodexo has been a longtime model of strong support and a demand for accountability from the top of the organization. CEO and President George Chavel chairs the executive council, which is comprised of senior executives. Up to 25 percent of executive compensation is tied directly to diversity goals, and that bonus is the only one always paid, regardless of the company’s financial performance.

“Ultimately, George holds the council accountable for aligning diversity results with the North American strategy,” says Jodi Davidson, director of diversity & inclusion initiatives.

Sodexo used to have several lower councils reporting to the executive council on D&I, but that structure is being realigned as of Jan. 1. “We had too many people cooking in the kitchen,” says Davidson.

Next year, there will be two councils—a marketplace council and a workplace council—under the executive diversity council, and both will be run by the diversity department. Each of these councils will be chaired by a senior executive (a direct report to Chavel).

The workplace council will report on such internal metrics as mentoring (including number of pairings), employee satisfaction/engagement, number of promotions of supervisors to managers and of hourly workers to supervisors, and success of on-boarding efforts.

Sodexo also will replace its annual national diversity summit with two regional summits, one on the West Coast and one in the central part of the United States.