Diversity Councils: Setting Goals

January 1, 2011 12:00 am

Diversity councils, especially those comprised of executives at the highest level of the organization, used to be almost entirely advisory boards. In the last two years, however, several of the most progressive companies have used these councils to set demographic goals and hold senior executives, including council members, responsible for those goals being met.

How do they do it? What type of compensation is best and what criteria should be used to evaluate it? Should council members have company-wide goals, business-unit goals or individual goals? We have spoken with more than 15 companies on this topic; here is a compilation of the best responses and best practices on this subject.

Diversity councils increasingly are chaired by the CEO and are comprised of his or her direct reports. With the senior members of the company on board, companies increasingly link their compensation, usually in the form of bonuses, to diversity goals.

The trend at the most progressive companies is to link executive compensation in three ways: for overall demographic goals, business-unit demographic goals and individual goals. The overall company-wide and business-unit demographic goals usually include recruitment, retention and promotion of people from traditionally underrepresented groups.

In some companies, there is more emphasis on talent development at the most senior levels, where the greatest gaps occur. Supplier-diversity goals, for the company and the business unit, also are included. An individual could be assessed on such metrics as his or her sponsorship of an employee-resource group and that group’s results in driving the business forward, percentage of managers in his or her domain who participated in cross-cultural mentoring, and percentage of employees in his or her domain who participated in diversity training.

Here is how some of the DiversityInc Top 50 companies are making this happen:

At Northrop Grumman, Sylvester Mendoza, director of workforce diversity and EEO, tells us that each of the five business units has their own diversity council but there is an enterprise diversity and leadership council comprised of senior executives and co-chaired by CEO and President Wes Bush. According to Mendoza: “They set strategy, goals and objectives for the entire corporation, and we have a pretty sophisticated accountability measure where 50 percent of the results need to be driven by the business units and 50 percent by the entire enterprise. So if an organization (business unit) fails to meet their goals, another organization may be able to make it up for the entire enterprise. Business executives are driven by goals, objectives, numbers and data … that’s how they pay attention to diversity and inclusion in our company.”

At Aetna, Chairman and CEO Ronald A. Williams and President and next CEO Mark Bertolini lead the council. Chief Diversity Officer Raymond Arroyo tells us the council has four focus areas: workforce demographics, workplace (Is the environment and culture good for everyone?), supplier diversity and marketplace diversity (Is the company meeting the needs of Blacks, Latinos, Asians and American Indians, women, LGBT people and people with disabilities?). The Diversity Scorecard is used to assess how these goals are met and it impacts individual performance goals. Of the CEO’s 20 direct reports, 8 percent of bonuses are tied to diversity goals, representing 50 percent of their compensation.

At Sodexo, the council holds executives responsible through the Diversity Scorecard, which measures demographics in hiring, promotions and retention and has metrics on supplier diversity, engagement and involvement. Executives are evaluated on whether they sponsor employee groups and have been speakers or panelists at external organizations relating to diversity, or have hosted or participated in training.

At Marriott International, the council sets specific goals and metrics annually, which are aligned with business objectives relating to the five key areas of the U.S. strategy. The company says they may vary “but may include, as an example, specific objectives around the percentage of spending with diverse-owned businesses, the utilization of language programs throughout the region, or mentoring and engaging new talent and future leadership. Progress is reported quarterly and captured regionally.”

The council has an appointed chairperson for each of the company’s three regions (East, West and South) who oversees the implementation of specific programs to support the diversity goals. The chair is held accountable by senior leadership to define expectations and communicate progress in meetings and quarterly reviews.

At Rockwell Collins, Chairman, President and CEO Clay Jones chairs the council. Every quarter, his direct reports discuss their scorecard performance with him. At the end of each year, he asks them to write their own report about their personal leadership and performance. Based on the information they submit, he makes his decision. They each have to seriously consider how they have personally led and what, if any, changes may have been brought about as a result. Jones spoke and accepted an award as DiversityInc’s Top Company for Community Development at our Nov. 8, 2010, dinner.