The 10 global companies trying to lead on diversity: Study

06 May The 10 global companies trying to lead on diversity: Study

This year has already included Silicon Valley’s highest-profile gender discrimination lawsuit and the uproar in Indiana over the Religious Freedom Restoration Act.
Inclusion in the corporate world is a priority today, and corporations try to avoid issues of diversity at their own peril.

But do companies really embrace it, even when they claim to make it a part of company culture and business operations? One way to judge is by external measures. The annual ranking of the 50 most diverse global corporations from DiversityInc is out today.
You can dismiss it as public relations, but the case for diversity as a leading indicator on stock performance has been made many times already, including the outperformance of the DiversityInc Top 50 group of stocks in past years.
Here are the 10 most diverse companies across the globe, according to DiversityInc’s annual ranking, and some recommendations from an outspoken diversity watchdog on what business leaders can—and can’t—learn from these specific examples in seeking to create a diverse and inclusive culture at their companies.

1. Novartis
2. Kaiser Permanente
3. PricewaterhouseCoopers
4. Ernst & Young
5. Sodexo
6. MasterCard
7. AT&T
8. Prudential
9. Johnson & Johnson
10. Procter & Gamble

What makes companies diverse

Across the companies that made the DiversityInc top 10 are some common themes:

1. Supplier diversity: Companies require suppliers to incorporate their own diversity values and even compensate supply-chain executives based on diversity goals. Procter & Gamble has an executive compensation plan that is tied to successful completion of staff and supplier diversity initiatives.

2. CEOs directly involved: While many companies have chief diversity officers, or a head of human resources who oversees diversity efforts, it’s the companies where the CEO is actively engaged in diversity efforts and either founded or heads diversity business groups that stand out. AT&T Chairman and CEO Randall Stephenson heads the company’s executive diversity council and founded it in 2008.

3. Technology as a diversity tool: Companies are using technology platforms to facilitate diversity and mentoring programs. Johnson & Johnson, for example, has a custom Web-enabled service called Mentoring Works!, along with the Johnson & Johnson Diversity University, an online resource to help employees build diversity into collaborative efforts.

4. Affinity groups: Companies create business resource groups for workers that fit into a variety of categories. Prudential has seven business resource groups, including Abled & Disabled Associates Partnering Together (ADAPT), Prudential Military Veterans Network (VETNET), Employee Association of Gay Men, Lesbians, Bisexual, Transgender & Allies (EAGLES), and the newest—Generations—which focuses on generational diversity.

5. Flexible working environment: While there has been a recent trend away from telecommuting as part of corporate culture—made most notable by Yahoo CEO Marissa Mayer’s decision to not allow Yahoo employees to work from home—most of the companies on the DiversityInc list have, and cite, flexible work policies as part of diversity efforts.

Where work is still needed

Diversity begins at the top, and that’s where even the companies judged to be the diversity leaders are still most obviously lacking, according to Julie Goodridge, CEO of NorthStar Asset Management, a socially responsible investing firm, who is an outspoken shareholder advocate for corporate diversity.

Goodridge provided Novartis as a prime example. While the company’s CEO is Hispanic, only two of the 11 members of its board of directors are women.

“I’m always looking for board diversity,” Goodridge said, adding, “How many women and people of color are running this company?” She ran the board diversity numbers for CNBC on the DiversityInc top 10.

Procter & Gamble’s board is 58 percent diverse and 41 percent women.
Prudential’s board is 54 percent diverse and 27 percent women.
AT&T’s board is 53 percent diverse and 26 percent women.
MasterCard’s board is 53 percent diverse and 23 percent women.
Johnson & Johnson’s board is 46 percent diverse and 23 percent women.
Novartis’s board is 27 percent diverse and 18 percent women.
The key, Goodridge said, is to not think that having one woman or one person of color on a board is progress—in fact, it’s likely to isolate that individual and make it difficult for them to confidently voice opinions. “Your job is twice as hard when you’re isolated,” she said. And she added that creating business resource groups for employees that fit into diversity buckets is no substitute for having a diverse board.
Next steps for business leaders

Here are some other keys for company leaders:

1. Do you know where your political dollars are going?

Larger corporations are big political donors, yet in many cases they are donating to politicians with social stands that go against stated company policies on diversity, in particular when it comes to same-sex marriage. It’s good if a CEO is personally overseeing diversity efforts, but if they are also responsible for donations to a politician who opposes same-sex marriage, what’s the point?

“If they are so worried about sourcing and supply chain, how come they are giving money to candidates who are divisive?” Goodridge asked. She said this is a problem for even the “best companies” when it comes to diversity aims.
2. The best at diversity still have a lot to learn.

Novartis, No. 1 on the DiversityInc list for 2015, is facing a gender discrimination lawsuit filed last month—not the first time it has faced a suit of this kind. AT&T is facing a $10 billion race discrimination lawsuit, filed last December by the National Association of African-American Owned Media, which alleges that AT&T refused to consider carriage agreements with black-owned companies. DirecTV was also named in the suit.
Goodridge said that lawsuits reference events that happened in the past, so they do not necessarily condemn companies in terms of diversity efforts; what matters is how companies are being responsive to them through new policies and procedures.

“A lawsuit is often a call to action and incentive to standardize or beef up procedures and training,” said Luke Visconti, CEO and founder of DiversityInc. “Senior executives realize that they can no longer assume good behavior; they need to codify it. This was the case for companies like Coke, Sodexo and Novartis—and they all came out the other side as even better companies.”

3. The newest diversity challenge: cross-generational transfer of knowledge and culture.

Many of the newer affinity groups created at these companies focus on mentoring between older and younger employees. As baby boomers stay in the workforce longer and the cultural difference between the generations increase, age diversity is both a challenge and a key to making sure a company’s culture stays in tact over time—especially for global companies.

“Younger workers are approaching jobs from a completely different perspective, and they have the capacity to gather info and synthesize it quickly,” Goodridge said. But that’s also potentially dangerous. “Issues around a moral code, ethics and company values need to be communicated and understood. There is a historical component to companies, and that’s important to me as an investor,” Goodridge said. “Younger employees run the risk of missing out on important structural aspects and values and procedures companies have engaged in around their image and brand.”

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