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Tracking the Value of Diversity Programs

Toyota's VP says "nobody is doing an outstanding job in diversity."

September 18, 2003
The shortage of documented financial or performance results for diversityprograms makes it difficult to determine what works and what doesn’t. Arethere any models for companies to follow? Not yet, says Guillermo Hysaw, vicepresident of diversity for Toyota Motor Sales, USA.

    Hysaw, who is managing his company’s newly announced 10-year, $7.8 billiondiversity initiative, freely admits that he’s not sure whom to benchmarkagainst. "Nobody is doing an outstanding job in diversity," he says. Here’sa brief look at how five companies--all among the largest and most successfulin their industries--structure and evaluate their diversity programs.

    Ryder System, Inc. Ryder, a logistics, supply-chain, and transportationgiant, runs an extensive diversity program for its 30,000 employees. Rydermeasures the return on its program by tracking litigation costs and the numberof women and members of minority groups hired and promoted in key jobsthroughout the company. "Since the initiation of these programs, litigationcosts have dropped dramatically," says Gerri Rocker, director of corporatediversity for the Miami-based company. The company uses a scorecard for eachbusiness unit that includes a diversity component, with specific targets forhiring and promoting women and people of color. Senior leadership bonuses aretied to meeting these targets.

    Ryder requires diversity training for all employees that "focuses onrespecting and valuing all aspects of employees’ beliefs and backgrounds, notonly differences of race, gender, ethnicity, and sexual orientation, but alsoindividual talents, ideas, and experiences," says Rocker. "Differences areseen as working assets, which enhance Ryder’s credibility, businessoperations, and customer service." An additional round of training for allmanagers and supervisors promotes skills for managing differences withinheterogeneous groups and pushing employees toward quality performance. Theprogram also teaches litigation avoidance by describing scenarios and behaviorsthat put the company at risk of lawsuits and advising how to prevent them.

    Goldman Sachs Group. "Our senior executives have said that diversity is astrategic imperative," says Laura Liswood, senior adviser for diversity at theNew York-based investment banking firm. "At Goldman, it’s assumed thatdiversity is a good business practice, and we put a lot of resources into it."Goldman Sachs’ diversity program includes a centralized staff of half a dozenpeople, plus senior leaders within each division. The company relies on itsin-house staff and rarely calls in consultants. "It takes a lot of lookingwithin an organization’s diversity program to find the challenges, and mostconsultants can’t get under the skin of an organization to that level,"Liswood says. "It has to be a largely internal process." Goldman includes adiversity component in performance evaluations and assessments of corporateleaders, with results reflected in their compensation.

    PricewaterhouseCoopers. The world’s largest accounting firm, withheadquarters in New York City and 125,000 employees, sees diversity as amarketing imperative. "We find that more and more of our clients are demandingthat our partners and staff--involved in securing new business as well asdelivering the work--reflect the diversity within their organizations," saysToni Riccardi, chief diversity officer. "It is as much a part of the price ofadmission for winning and sustaining new business as other core differentiatingfactors. We measure our return on investment against very specific metricsfocused on recruiting, retention of our top performers, and employeesatisfaction."

    New York Life Insurance. New York Life, the largest mutual life insurancecompany in the United States, runs an extensive diversity program focused onrecruitment and retention of minority candidates. "The human resourcesdepartment establishes annual diversity goals in each department and, with thehelp of diversity officers in each unit, monitors a department’s hiring andpromotional activity," says Angela Coleman, vice president of human resources.An executive management committee tracks diversity objectives by reviewingmonthly and quarterly reports for each unit. Diversityis one of 15 components in performance evaluations for managers. "It’shard to quantify financial results," Coleman says. "We don’t approach diversity in terms of adollar return on investment."

    Cendant Corporation. Cendant, a vast real estate services company, launchedits diversity program as part of a broader "employer of choice" initiative. The companyappointed a diversity committee commissioned by the CEO, and then named a vicepresident for diversity in 2002. "Each of our business units has at least onerepresentative who is responsible for diversity initiatives," says KathyAndreasen, vice president of human resources for the New York City-basedcompany. "The return on the resources dedicated to this effort is measured innumber of hires, the volume of our services that are provided by minoritysuppliers, the volume of business generated by our multicultural marketinginitiatives, the number of minority franchisees, and other measures."

Workforce, April 2003, p. 31 -- Subscribe Now!