The Business Case for Diversity – Training for Supervisors

Reviewed April 2013

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Introduction

“We have become not a melting pot but a beautiful mosaic. Different people, different beliefs, different yearnings, different hopes, different dreams.”

Jimmy Carter

Many employers are unaware of the benefits of and ways to achieve workplace diversity. This presentation provides this information as well as how to measure the impact of a diversity initiative.

This is a sample presentation intended for supervisors and other employees with management responsibilities. It is designed to be presented by an individual who is knowledgeable in diversity, metrics and business strategies and who is familiar with the company’s strategic business plan. This is a sample presentation that must be customized to include the company’s policies, culture and strategic objectives.

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Objectives

• At the end of this presentation, you will be able to:

> Define diversity.> Describe what a diversity initiative is.> Cite business reasons for initiating diversity programs.> Name the four primary steps in establishing a diversity initiative.> Explain how and what metrics are used to measure the impact of a

diversity initiative.

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What is Diversity?

Diversity in the employment context is defined as the collective mixture of differences and similarities that includes for example, individual and organizational characteristics, values, beliefs, experiences, backgrounds, preferences and behaviors.

Workplace diversity can be a significant positive force in assuring success by allowing each and every one of us to believe in ourselves and to contribute the best we have to offer.

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What is a Diversity Initiative?

A diversity initiative is a "comprehensive managerial process for developing an environment that

works for all employees.*" *Roosevelt Thomas, Beyond Race and Gender. (AMACOM, 1992).

Companies who recognize that they are only as good as their employees devote a great deal of time and resources to hiring the most talented individuals. By striving to build and maintain a diverse workforce, they have access to a larger pool of candidates thus improving the odds of hiring the best people. Employers who put people first, regardless of their race, religion, gender, age, or physical disability have an advantage over competitors.

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Group Discussion

• What is diversity?

• What is a diversity initiative?

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Business Reasons for Initiating Diversity Programs

• Increased sales revenue.

• More customers.

• Greater market share.

• Greater relative profits.

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Business Reasons for Initiating Diversity Programs (cont’d)

• Increased sales revenue> Minorities in the U.S. now represent the largest 25 sales growth

markets for some products. > Companies realize that increasing the amount of purchasing from

minority businesses may mean increased sales over the long term (Models of Organizational Change, Morgan, 1997).

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Business Reasons for Initiating Diversity Programs (cont’d)

• More customers> Just as the workforce is becoming more diverse, so is your market.> "Minorities" are now the majority in six out of the eight largest

metropolitan areas of the Unites States. > The combined African-American, Hispanic-American and Asian-

American buying power is more than $750 billion dollars. > Women are the primary investors in more than half of U.S.

households.

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Business Reasons for Initiating Diversity Programs (cont’d)

• Greater market share.> From 1990 to 2005, minority group market share and purchasing

power doubled. > The present and future monetary power of diverse markets is more

apparent each year.

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Business Reasons for Initiating Diversity Programs (cont’d)

• Greater relative profits.> According to a study by Cedric Herring, professor of sociology at

the University of Illinois at Chicago: • Average sales revenues of organizations with low racial diversity were

approximately $3.1 million, compared with $3.9 million for those with medium diversity and $5.7 million for those with high diversity*.

*Herring, Cedric. "Does Diversity Pay?: Racial Composition of Firms and the Business Case for Diversity" Paper presented at the annual meeting of the American Sociological Association, Montreal Convention Center, Montreal, Quebec, Canada, Aug 11, 2006

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Group Discussion

What are business reasons for initiating a diversity program?

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Steps in Establishing a Diversity Initiative

The four primary steps in establishing a diversity initiative are:

1. Accessing opportunity internally.

2. Reducing liability internally.

3. Accessing opportunity externally.

4. Reducing liability externally.

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Steps in Establishing a Diversity Initiative Step 1 - Accessing Opportunity Internally

Assessing opportunity internally focuses on building an inclusive work environment that attracts and retains talented people, encourages creativity and innovation and obtains commitment and top performance from employees.

> Are there disparities between groups in how they perceive they are treated (e.g., by seniority, race, age, gender, education, parental status, etc.)?

> What is the demographic makeup of your workforce by level and how does that compare to the surrounding labor force? Who are you not having access to in recruiting and promoting?

> What are your projected recruitment needs in terms of skills and positions? > What are the statistics in the labor market relative to your needs?> Where are there untapped resources of talent within the organization such

as overqualified, underutilized or undeveloped employees? > What obstacles are recruiters finding? > What are your organization's critical needs for creativity and innovation?

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Steps in Establishing a Diversity Initiative Step 2 - Reducing Liability Internally

Reducing internal liability involves minimizing risk and cutting the

cost of problems that result when diversity is mismanaged.

> What are the statistics around grievances, complaints and lawsuits in your organization that demonstrate vulnerability or unaddressed problems?

> How much has your organization spent on legal fees and settlements for discrimination and/or wrongful termination lawsuits?

> Which departments, divisions, or groups are experiencing low morale, diminished performance or conflict?

> What are the statistics regarding absenteeism? > What is the rate of turnover and what is the cost to the organization

of replacing those who leave? > What do exit interviews tell you about why people leave?

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Steps in Establishing a Diversity InitiativeStep 3 - Accessing Opportunity Externally

Accessing opportunity externally requires focusing on a growing and changing marketplace. The demographic changes in a customer base mean opportunities for growth in new and different products and services.

> What are the demographics of your existing and projected customer base?

> How do the demographics of your workforce compare to those of your customer (client or patient) base?

> In how many countries do you do business? > How many languages and cultures are represented in your

marketplace? > How many of these languages and cultures are represented in your

workforce? > What are your customers' or clients' perceptions of your workforce? > What do customer satisfaction surveys tell you about missed

opportunities and needed improvements in products or services?

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Steps in Establishing a Diversity InitiativeStep 4 - Reducing Liability Externally

Reducing liability externally pertains to limiting negative perceptions about your organization in the marketplace. A damaged image because of diversity-related insensitivity is costly in lost customers and markets.

> What customer complaints have you received?> What (if any) discrimination lawsuits have been brought against

your organization by external entities? > What is the rate of repeat business or customer loss? How does

that rate compare to others in your industry? > Are there any instances of negative publicity for your organization

(e.g., bad press, boycotts, protests)? > Where are there negative perceptions about your organization by

external entities?

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Group Discussion

• What are the four steps in establishing a diversity initiative?

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Diversity Metrics

Meaningful metrics promote support for dedicating resources for diversity initiatives and help link diversity initiatives to organizational strategic goals and objectives.

• Examples of meaningful data:> Level of participation in the firm’s diversity vision formulation.> Number of diverse employees in formal mentoring programs who

get promoted.> Percentage of diversity objectives aligned with key strategic

business objectives that are tied to bonus and compensation systems.

> Representative mix on the board of directors.> Overall organizational climate and culture ratings and their effects

on all represented groups.

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Diversity Metrics (cont’d)

The return on investment (ROI) of a diversity initiative is measurable. Follow these five steps to establish monetary values:

1. Identify a unit of measure that represents a unit of improvement.

2. Determine the value of each unit.

3. Calculate the change in performance data.

4. Determine an annual amount for the change.

5. Calculate the total value of the improvement.

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Group Discussion

• What are the five steps in assigning monetary value to intangibles?

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Summary

• Diversity is defined as the collective mixture of differences and similarities that includes for example, individual and organizational characteristics, values, beliefs, experiences, backgrounds, preferences and behaviors.

• A diversity initiative is a "comprehensive managerial process for developing an environment that works for all employees.”

• The four steps in establishing a diversity initiative are assessing opportunity internally, reducing liability internally, accessing opportunity externally and reducing liability externally.

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Summary (cont’d)

• Business reasons for initiating diversity program are increased sales revenue, more customers, greater market share and greater relative profits.

• Meaningful diversity metrics promote support for dedicating resources for diversity initiatives and help link diversity initiatives to organizational strategic goals and objectives.

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Evaluation

• Please be sure to complete and leave the evaluation sheet you received with your handouts.

• Thank you for your attention and interest!