Diversity Watch

Two companies' diversity efforts are screened and evaluated by the experts

Last February, we published a special report, “Are Diversity Programs Benefiting African Americans?” The report revealed that while these programs are effective at removing the subtle barriers to advancement, they do so only when companies place diversity at the top of their organizational goals. In the year since, we’ve wanted to see what kind of progress corporate America has made. What we’ve found is that while there is headway, it’s not time to celebrate yet.

There has been a steady increase in the number of companies with diversity initiatives over the past year, according to Michelle Smead, vice president of executive search consulting at A.T. Kearney in Chicago. Author of a 1996 study by the search firm on corporate diversity efforts, Smead found 74% of Fortune 500 companies reported having a diversity program in place, with 62% of those programs having been developed in the previous five years.

“As diversity becomes a major strategic issue for companies, more managers are being compensated based on their support of those initiatives, including hiring goals.” Smead believes the increase in minority searches is evidence that senior managers are starting to take diversity seriously.

To wit, according to the Labor Department, blacks compiled 10.7% of the U.S. workforce, 7.1% of which were employed in executive, managerial and administrative positions 1996. By comparison, in 1997, those numbers increased slightly to 10.8% of the workforce and 7.4% of management positions.

Sadly, the good news appears to be confined to large companies. “While some smaller organizations can be pretty progressive, most of them don’t feel the same pressure (from shareholders or existing employees) to pursue diversity initiatives,” according to Michael Wheeler, author of the Conference Board report, “Corporate Practices in Diversity Measurement.”

Elsie Y. Cross, president of Philadelphia-based Elsie Y. Cross Associates Inc., agrees. “In general, larger companies understand that solid diversity initiatives cannot only help attract and retain talented employees, but help the company market its products to a diverse consumer base,” she explains. Some consultants believe the increase interest in diversity is due to a robust U.S. economy. But as the economy slows, so will diversity’s momentum. “When times are tight, diversity is out,” says Wheeler, “no matter how large the company is.”

To more closely examine the diversity work being done by corporations, BLACK ENTERPRISE asked Chicago-based Allstate Insurance Co., and the California utility, Pacific Gas & Electric Co., to submit detailed information about their diversity initiatives. These companies agreed to have their efforts analyzed by diversity experts as a means of gaining objective feedback about their programs’ strengths and weaknesses.

ALLSTATE INSURANCE CO. IS THE
nation’s second largest personal insurance carrier, insuring one of every eight homes and automobiles in the country. Of its 50,000 employees, 52.2% are women and 24.7% are minorities — 14.3% of whom are African American. Allstate boasts a minority representation among executives and managers of 21%, with 66% of that number being African American.

Allstate’s effort was officially launched in 1993 when its president and CEO backed diversity as a “strategic imperative.” The effort centers around two

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