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Diversity 101: The Changing Face of Business
By David Dibble
It is no secret that business isn’t what it used to be. Not just because of the temporary economic downturn, or the technology-driven shift in business practice. Rather, business has become radically global in scope, and with this change, the very face of business has altered.
No longer exclusively the domain of white men of privilege, business today is conducted by and caters to men and women of every conceivable background and culture.
Early efforts to foster a multi-racial workforce had mixed results. Often, companies attempted to force “diversity” down the throats of their existing employees by aggressive recruiting followed by educational programming. This practice often resulted in resentment and suspicion of the employers’ motives, or worse, a resentment of the new hires.
Workers of every ethnicity were sometimes further alienated by mandated “diversity workshops,” which attempted to teach them how to get along with their co-workers. In total, these were brute force approaches to mandating diversity and, though sometimes successful in engendering a more representative workforce, did little to convey the true benefits of diversity either to employees or to the companies’ customer bases. Therefore, truly lasting change has been slow to come.
It is no secret that managing change can be difficult. However, with change comes opportunity, and this is the key principle of effective businesses – possessing the skill and agility to take advantage of polymorphic business climates. Businesses today have come to realize the many benefits of a diverse approach, which is facilitated by a diverse workforce. “Our country needs a variety of different backgrounds and skills to compete in today’s global market. We don’t have a talented person to waste,” believes Roberts T. Jones, president and CEO of the National Alliance of Business. “Developing the full potential of our labor force requires that everyone be given fair access to the best possible education.”
Although it remains true that there is very little such diversity at the highest levels of the corporate strata, much progress has been made in recent years. A 2000 survey of foundations and corporate giving programs conducted by the Council on Foundations found that minority CEOs (more than one-half of whom are women) head 5.9 percent of the responding organizations, and nearly 20 percent of all professional staff are minority members. Corporate grantmaking programs are more diverse, with 17.8 percent having a minority CEO, while over 34 percent of program officers were minorities. Eleven percent of all companies have minority CEOs.
Diverse Advantages
There are many reasons for the rise of minorities and women within the business world. In an increasingly global marketplace, cultural sensitivity that comes from an awareness of cultural distinctions can make or break a company’s success in a given market. McCombs School senior lecturer Bill Carner recalls his experience working for Bank of America in East Los Angeles. The Lincoln Heights office catered to large populations of Italian, Hispanic, Chinese, Korean, and Japanese immigrants. “Those people who were bilingual were much more effective in conducting day-to-day business,” said Carner. “As the only employee who didn’t speak another language, I often just had to get out of the way.”
Or consider Chevrolet’s disastrous roll-out of the Nova in Latin America, where “no va” means “doesn’t go” in Spanish. Anxious to avoid this and other notorious, if apocryphal, examples of cultural blindness, companies today are eager to hire employees who are personally familiar with specific cultures or who are able to relate to and understand cultural differences in general.
Further, as the international and domestic consumer base expands, the need for a diverse corporate workforce that reflects its customers grows more acute. Those companies that are best positioned to understand and market to these increasingly affluent groups will have a considerable advantage. Ideally, a global business is one that sees value in cultural uniqueness and a variety of global markets, not one that attempts to render culture differences insignificant or trivial. The ability of companies to respect and respond to difference may prove to be a competitive advantage over slower, single-solution companies.
Companies, then, are eager to hire employees who are able to negotiate the many varieties of the wider world of cultural difference. “Verizon’s large and diverse customer base demands that we also employ individuals who interact effectively with people of different backgrounds,” says Lou Laste, Director of Community Relations for Verizon Information Services. More specifically, he notes, “We have needs for employees who can speak more than one language, who understand and can be sensitive to differences in societies and customers, who are able to manage a diverse workforce, and who can work collaboratively in multicultural teams.”
Verizon is not alone in its commitment to the value and advantages of diversity. Leading companies in every industry have strong statements supporting their commitment to diversity in hiring, education, and management. Clearly, companies value diversity because it produces value for them. The tangible benefits of a diverse workforce underpin and validate the widely-held social benefits. The principles of economics are largely color-blind, and American companies know they must not remain isolated by distance, time, or cultural misunderstandings.
Begin at the Beginning
Since producing future business leaders with a strong set of business skills is what business schools traditionally do best, how are schools prepared to meet the growing need for a diverse workforce with sensitivity to cultural difference?
A recent survey by the Business Higher Education Forum (BHEF), a collaboration between the American Council on Education (ACE) and the National Alliance of Business (NAB), found that a majority of Americans believe that workplace and educational diversity is important and even vital to the success of our future economy. Fully three-quarters felt that universities and businesses should be allowed to take actions to ensure that student bodies and workforces will be diverse.
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BHEF project consultant 2Rene Redwood believes, “These findings show that diversity is as American as apple pie and the Fourth of July, and is a core value held by a clear majority of the public.” Accordingly, ACE is actively involved in developing K-12 programs that provide equal opportunities and emphasize the skills needed to compete in the global economy.
Such K-12 initiatives are the first step toward increasing the participation of minorities in higher education in general. This ‘supply-side’ approach to building the pipeline of students entering college is one key to generating increased numbers of potential graduate students. Once students are in college and exposed to the benefits of higher education, the value of graduate study will become clear, resulting in a larger pool of minority students for MBA programs. In turn, these students will join the managerial and executive ranks of American companies.
Currently, however, there is fierce competition for qualified minority candidates, especially at the graduate level. In states such as Texas and California, where legislative and legal action has restricted or eliminated preferential admissions for minority students, admissions figures are discouraging. [For a perspective on the impact of this competition on student body diversity at the McCombs School of Business, see the sidebar commentary from Bob May, Dean of the McCombs School and outgoing Chairman of the Consortium for Graduate Study in Management.]
At UCLA-Berkeley today, minorities make up only 4 percent of the Haas School of Business MBA class and at the McCombs School, only 5 percent. Private business schools and public schools unburdened with such legal restraints can boast higher populations of minority students: 18 percent at Virginia’s Darden School, 19 percent at Harvard, and a remarkable 20 percent at Duke University’s Fuqua School. These top-ranked schools and their students have the inside track with corporate recruiters who are desperate to hire students with an understanding of how to manage diversity.
Especially at schools like McCombs, where minority enrollments have fallen precipitously since the Hopwood v. Texas decision in 1996, there is a high value placed on having a diverse class of students. Victor Huerta del Cid, MBA 99, was president of the Hispanic Graduate Business Association while in school. Currently the president of the Austin chapter of the National Society of Hispanic MBAs, Mr. Del Cid remarks, “Having a diverse class makes the program a very rich experience.”
While in graduate school Del Cid admired the very large and active BBA-student group, the Hispanic Business Student Association, recently voted “Best Overall Organization” in a campus-wide competition. BBA minority enrollment at Texas was initially hard hit following Hopwood, but has climbed back to 11.3 percent Hispanic and 3.4 percent Black thanks in part to the “top-10 percent” admissions rule, which substitutes a kind of geographic diversity for a more proactive admissions policy.
Work to Be Done
Still, in spite of efforts to encourage diversity at every level of academic achievement, accomplishing a true shift in managerial makeup has been a long time in coming. Although Blacks and Hispanics make up 10.8 and 9.8 percent of the total set of employed civilians, they represent only 7.3 and 5 percent, respectively, of workers considered “managerial and professional specialty” (Department of Labor, 1997 data). This does represent a significant jump from 1983, when in the same sub-category, Blacks and Hispanics accounted for only 5.6 and 2.6 percent, respectively.
Of still greater concern, however, is that only 14 percent of all Hispanics were in managerial or professional occupations, compared with 33.2 percent of all non-Hispanic Whites, according to the 2000 U.S. Census. African-Americans fare slightly better, with 25 percent of women and 18 percent of men holding managerial or professional jobs.
For the many individuals concerned about diversity, a satisfactory result will be full representation of all minorities at the highest levels of business in numbers similar to their overall percentage of the work force. For example, with Hispanics and African Americans each making up 12 percent of the total U.S. population (1 in 8 people can claim Hispanic origin) and growing, it is vitally important to have managers who can capitalize on the strategic strengths of a diverse workforce.
At a recent workshop entitled “Best Practices in Diversity,” R. Roosevelt Thomas, president of the American Institute for Managing Diversity Inc, said, “There are all kinds of diversity mixtures in addition to racial/ethnic diversity, including age, generational, gender and religious diversity. There is even diversity in homogeneous groups. Diversity encompasses differences plus similarities.”
“When we talk about diversity, we often mean ‘affirmative action’ and ‘understanding difference’,” Thomas said. But he proposed another term, ‘managing diversity,’ that presents a way to maximize the contributions of each member of the workforce. “The goal of managing diversity is to access the talents of 100 percent of the people in an organization.”
For information on specific programs at the McCombs School, consult our contacts page. For media information, contact the Communications Director by phone at 512-471-3314 or by email at CommunicationsDirector@mccombs.utexas.edu.
