Managing the diverse workforce chapter 11

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Managing the Diverse Workforce “e pluribus unum”

Learning Objectives

After studying Chapter 11, you will be able to:

1. Describe how changes in the U.S. workforce make diversity a critical organizational and managerial issue. p. 384 2. Distinguish between affirmative action and managing diversity. p. 394 3. Explain how diversity, if well managed, can give organizations a competitive edge. p. 395 4. Identify challenges associated with managing a diverse workforce. p. 398 5. Define monolithic, pluralistic, and multicultural organizations. p. 400 6. List steps managers and their organizations can take to cultivate diversity. p. 402

Chapter Outline

Diversity: A Brief History Diversity Today

The Size of the Workforce The Workers of the Future The Age of the Workforce

Managing Diversity versus Affirmative Action Competitive Advantage through Diversity and Inclusion Challenges of Diversity and Inclusion

Multicultural Organizations How Organizations Can Cultivate a Diverse Workforce

Top Management’s Leadership and Commitment Organizational Assessment Attracting Employees Training Employees Retaining Employees

Management Close­Up: Can Jimmie Paschall Uphold Marriott International’s Legacy of Diversity?

Marriott International traces its origins to a root­beer stand opened in 1927 by J. Willard Marriott and his wife Alice in Washington, DC. Even then, the Marriotts were focused on providing hospitality. Today, Marriott International is one of the world’s leading lodging companies, with 300,000 associates and nearly 3,000 properties in the United States and 67 other countries and territories. How did the Marriotts achieve such success?

Then as now, the Marriotts believed that taking care of the customer begins with taking care of their associates. As the Marriott empire grew, top managers recognized that embracing the fundamental differences in their workers would be important to building broad­based customer service tailored to all of their customers—what the company calls “culturally competent” customer service. To help associates understand and appreciate cultural differences, Marriott established the company’s diversity program in 1989. Today, three of every five Marriott associates are members of a minority group. Women make up 55 percent of the workforce.

By making diversity a central feature in the company’s operations, Marriott International has set the standard—and created a competitive advantage—in the hospitality industry. As you read this chapter, consider what managers need to know to work with employees of highly diverse backgrounds. What special challenges face global diversity officer Jimmie Walton Paschall as she moves Marriott to the next level?

Diversity training is mandated for all new Marriott employees. Aside from race and ethnicity, the program includes training in generational diversity. Offered monthly, the program is widely regarded and duplicated by other employers. To further support diversity in its workforce, Marriott sponsors 11 employee­resource groups. Each special­interest group has been operating for more than a decade and includes senior­executive champions who oversee the groups. The groups help the company recruit and retain associates from traditionally underrepresented population segments.

In an effort to extend Marriott’s U.S.­based diversity program throughout the organization, the company created the position of global diversity officer and named Jimmie Walton Paschall to the post. 1

In Chapter 10, we described the laws that require equal opportunity and fair treatment in the workplace. In this chapter, we discuss why a proactive approach to developing and managing a diverse workforce has become not only a legal or moral obligation, but a fundamental business requirement as well. Executives at Marriott International point to their company’s exemplary record on diversity as a key element in its success. Managers who lack the ability to work with and effectively manage men and women of different colors, cultures, ages, abilities, and backgrounds will be at a significant disadvantage in their careers. And organizations that do not take the issue of managing diversity seriously will leave their organizations not only open to legal challenge but also far less able to compete effectively, at home and abroad.

In the United States, as we shall see, the number of racial and ethnic minorities is increasing at a far faster rate than the growth in the white, nonminority population, and women make up a sizable share of the workforce. American workers, customers, and markets are already highly diverse and becoming even more so every day. In addition, as we discussed in Chapter 6, businesses are increasingly global. Managers need to be much more aware of, and sensitive to, cultural differences to succeed in a world economy. We have also discussed throughout this book how vital creativity and innovation have become for organization success. These qualities are fostered in an atmosphere where different perspectives and bright people from all walks of life are celebrated. Few societies have access to the range of talents available in the United States, with its immigrant tradition and racially and ethnically diverse population. Yet getting people from widely divergent backgrounds to work together effectively is not easy. For this reason, managing diversity is one of America’s biggest challenges—and opportunities.

Managing diversity involves, first, such basic activities as recruiting, training, promoting, and utilizing to full advantage individuals with different

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backgrounds, beliefs, capabilities, and cultures. But it means more than just hiring women and minorities and making sure they are treated equally and encouraged to succeed. It also means understanding and deeply valuing employee differences to build a more effective and profitable organization.

This chapter examines the meaning of diversity and the management skills and organizational processes involved in managing the diverse workforce effectively. We also explore the social and demographic changes and economic and employment shifts that are creating this changing U.S. workforce.

Diversity: A Brief History Managing diversity is not a new management issue. From the late 1800s to the early 1900s, most of the groups that immigrated to the United States were from Italy, Poland, Ireland, and Russia. Members of those groups were considered outsiders because most did not speak English and had different customs and work styles. They struggled, often violently, to gain acceptance in industries such as steel, coal, automobile manufacturing, insurance, and finance. In the 1800s, it was considered poor business practice for white Protestant–dominated insurance companies to hire Irish, Italians, Catholics, or Jews. As late as the 1940s, and in some cases even later than that, colleges routinely discriminated against immigrants, Catholics, and Jews, establishing strict quotas that limited their number, if any were admitted at all. The employment prospects of these groups were severely diminished by this kind of discrimination, and it wasn’t until the 1960s that the struggle for acceptance by the various white ethnic and religious groups had on the whole succeeded.

Women’s struggle for acceptance in the workplace was in some ways even more difficult. When the Women’s Rights Movement was launched in Seneca Falls in 1848, most occupations were off­limits to women, and colleges and professional schools were totally closed to them. Women could not vote and lost all property rights once they were married. In the first part of the 20th century, when women began to be accepted into professional schools, they were subject to severe quotas. There was also a widespread, persistent assumption that certain jobs were done only by men, and other jobs only by women. Even into the 1970s, less than 40 years ago, classified ad sections in newspapers listed different jobs by sex, with sections headed “Help Wanted—Males” and “Help Wanted—Females.” Women who wanted a bank loan needed a male cosigner, and married women were not issued credit cards in their own name.2 Only when the Civil Rights Act of 1964 (see Chapter 10) and other legislation began to be enforced was this kind of sex discrimination gradually eliminated. As we shall see, women are still underrepresented at the most senior levels of corporate life, and major disparities in other areas, like pay, still exist. But most jobs today once considered the exclusive province of men—including front­line military units as well as the executive suite—are now open to and occupied by increasing numbers of women.

Many of the rights all of us take for granted today—equal opportunity, fair treatment in housing, the illegality of religious, racial, and sex discrimination—received their greatest impetus from the Civil Rights Movement.

© Library of Congress, Prints and Photographs Division, LC­U9­10364­37.

The most difficult and wrenching struggle for equality involved America’s non­white minorities. Rigid racial segregation remained a fact of American life for 100 years after the end of the Civil War. Black voting rights, particularly in the South, were often viciously suppressed, and racial discrimination in education, employment, and housing throughout the United States was a harsh, daily reality. Years of difficult, courageous protest and struggle gradually began to eat away at both legal and social barriers to equality. Organizations like the NAACP, formed by a group of blacks and whites, began to use America’s court system and the Constitution to bring equality to African Americans and other people of color. The unanimous Brown v. Board of Education Supreme Court decision in 1954 declared segregation unconstitutional, setting the stage for other legislation we discussed in the last chapter, including the Civil Rights Act of 1964. The consequences of America’s bitter racial legacy are still with us; the struggle for equality is far from complete. But many of the rights all of us take for granted today—equal opportunity, fair treatment in housing, the illegality of religious, racial, and sex discrimination —received their greatest impetus from the Civil Rights Movement.

Today, nearly half of the U.S. workforce consists of women, 14 percent of U.S. workers identify themselves as Hispanic or Latino, and 11 percent are black. Two­thirds of all global migration is into the United States. One­third of all businesses in the United States are owned by women, employing about 20 percent of America’s workers.3

The traditional American image of diversity has been one of assimilation. The United States was considered the “melting pot” of the world, a country in which ethnic and racial differences were blended into an American purée. In real life, many ethnic and most racial groups retained their identities, but they did not express them at work. Employees often abandoned most of their ethnic and cultural distinctions while at work to keep their jobs and get ahead. Many Europeans came to the United States, Americanized their names, perfected their English, and tried to enter the mainstream as quickly as possible.

Today’s immigrants are willing to be part of an integrated team, but they no longer are willing to sacrifice their cultural identities to get ahead. Nor will they have to do so. Companies are recognizing that they should be more accommodating of differences, and that doing so pays off in business. Managers are also realizing that their customers have become increasingly diverse and that retaining a diversified workforce can provide a significant competitive advantage in the marketplace.

Diversity Today LO 1

Today diversity refers to far more than skin color and gender. It is a broad term used to refer to all kinds of differences, as summarized in Figure 11.1. These differences include religious affiliation, age, disability status, military experience, sexual orientation, economic class, educational level, and lifestyle in addition to gender, race, ethnicity, and nationality.

Figure 11.1 Components of a Diversified Workforce

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Although members of different groups (white males, people born during the Depression, homosexuals, Iraq war veterans, Hispanics, Asians, women, blacks, etc.) share within their groups many common values, attitudes, and perceptions, much diversity also exists within each of these categories. Every group is made up of individuals who are unique in personality, education, and life experiences. There may be more differences among, say, three Asians from Thailand, Hong Kong, and Korea than among a white, an African American, and an Asian all born in Chicago. And not all white males share the same personal or professional goals and values or behave alike.

Thus, managing diversity may seem a contradiction within itself. It means being acutely aware of characteristics common to a group of employees, while also managing these employees as individuals. Managing diversity means not just tolerating or accommodating all sorts of differences, but supporting, nurturing, and utilizing these differences to the organization’s advantage. Borders Books, for example, tries to match up the demographics of its workforce with the demographics of the communities in which its stores operate. Top managers at the company say that sales are better as a result. U.S. businesses will not have a choice of whether to have a diverse workforce; if they want to survive, they must learn to manage a diverse workforce sooner or better than their competitors do.

As Figure 11.2 shows, a sizable number of HR executives say their companies need to or plan to expand their diversity training programs. Although many companies initially instituted diversity programs to prevent discrimination, more are beginning to see such programs as a crucial way to expand their customer bases both domestically and worldwide. In fact, two out of three companies said they had broadened their diversity programs because of increasing globalization, according to a survey of 1,780 HR and training executives by the Boston­based consulting firm Novations/J. Howard and Associates. A separate survey by Korn/Ferry International showed that approximately 85 percent of European recruiters, 88 percent of recruiters in Asia, and 95 percent of recruiters in Latin America either “strongly agreed” or “somewhat agreed” that being at least bilingual is critical to succeed in today’s business environment.

Figure 11.2 The Expansion of Diversity Programs in U.S. Companies

SOURCE: From Training, September 2004. “Time To Broaden Diversity,” by Gail Johnson. Copyright © 2004 by VNU BUS Publications USA Reproduced with permission of VNU BUS Publications via Copyright Clearance Center.

The Size of the Workforce

During most of its history, the United States experienced a surplus of workers. But that is now expected to change. Lower birthrates in the United States and other developed countries are resulting in a smaller labor force. An even more substantial slowdown in the pace of growth of the labor force is projected for the decade ending in 2016, as the baby­boom generation retires.4

Employers are likely to outsource some work to factories and firms in developing nations where birthrates are high and the labor supply is more plentiful. But they will have to compete for the best candidates from a relatively smaller and more diverse U.S. labor pool. Employers will need to know who these new workers are—and must be prepared to meet their needs.

“Human diversity makes tolerance more than a virtue; it makes it a requirement for survival.”

Rene Dubos

The Workers of the Future

Until recently, white American­born males dominated the U.S. workforce. Businesses catered to their needs. However, while this group still constitutes the largest percentage of workers—about 80 percent of U.S. workers are white, and more than half of them are male—its share of the labor force is declining. Although the number of white male workers is expected to continue growing, the number of women and the numbers of Asian American, black, and Hispanic workers are expected to grow faster.5 This significant change in the workforce parallels trends in the overall U.S. population. Recently, the Census Bureau announced that, for the first time, about one in three residents of the United States is a racial or ethnic minority—a unique milestone in the nation’s history. The largest and fastest­growing minority group is Hispanics, closely followed by African Americans. In several states—California, Hawaii, New Mexico, and Texas—and the District of Columbia, these minority groups plus Asians, Native Americans, and Pacific Islanders combine to make a population that is “majority minority.”6 These population trends affect not only the nature of the workforce but also the varied customers and

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markets managers must attract.

Gender Issues

One of the most important developments in the U.S. labor market has been the growing number of women working outside the home. Social changes during the 1960s and 1970s coupled with financial necessity caused women to enter the workforce and redefine their roles. Consider this:

Women make up about 47 percent of the workforce. The overall labor force participation rate of women rose throughout the 1970s through the 1990s and is now holding steady even as the participation rate of men gradually declines. Almost 60 percent of marriages are dual­earner marriages. One of every four married women in two­income households earns more than her husband does.7

Irene Rosenfeld has broken through the glass ceiling as CEO of Kraft Foods, overseeing the company with revenues upwards of $30 billion.

© AP Photo/Thibault Camus.

For many women, as well as their spouses, balancing work life with family responsibilities and parenting presents an enormous challenge. Although men’s roles in our society have been changing, women still adopt the bulk of family responsibilities, including homemaking, child care, and care of elderly parents. Yet some companies may still expect their employees, particularly at the managerial level, to put in long hours and sacrifice their personal lives for the sake of their jobs, organizations, and careers. Not only may these expectations put many women at a disadvantage in the workplace, but they also may cause companies to lose valuable talent. Companies that offer their employees the opportunity to balance work and family commitments are better able to recruit and retain women. These companies are offering family­friendly benefits such as onsite child care, in­home care for elderly family members, and flexible work schedules, and they are taking advantage of newer technologies to permit more work from home. Still, weighing employees’ needs for flexibility against the organization’s need for productivity entails complex decisions that take into account different job requirements, as well as each employee’s contributions and motivation to meet goals under the flexible arrangement. Michele Coleman Mayes, senior vice president and general counsel of Pitney Bowes, agreed to let one attorney leave promptly at five o’clock each evening; the attorney works on her laptop at night as needed to meet her deadlines. But Mayes refused another employee’s request to work part­time because the person in that position needed to be available each day to handle requests for other departments. Mayes tells her employees that scheduling decisions “may not always be equal, but I will try to be fair.”8

The desire for flexible scheduling is often cited as a reason significant pay disparities still exist between men and women. The average full­time working woman earns about 80 percent as much as men in the same job (recall the discussion in Chapter 10 about equal pay and comparable worth). However, the gap has shrunk most years since the 1970s; women’s earnings were just 63 percent of men’s in 1979. Still, a recent study found that the gap between the earnings of college­educated men and women actually increased after they spent 10 years in the workforce. Some of the difference is explained by women tending to choose lower­paid occupations, work fewer hours, and devote time to bearing and raising children. But even when the researchers controlled for these and other known variables, one­quarter of the pay gap remained unexplained. One of the researchers, Catherine Hill, speculated, “Part of the wage difference . . . is employers’ assumptions of what people’s choices will be. . . . Employers assume that young women are going to leave the workforce when they have children, and, therefore, don’t promote them.”9

Another concern involving female workers is the low representation of women in top jobs. As women—along with minorities—move up the corporate ladder, they encounter a “glass ceiling.” The glass ceiling is an invisible barrier that makes it difficult for women and minorities to move beyond a certain level in the corporate hierarchy. For example, just 12 women are chief executives of Fortune 500 companies—that’s 12 out of 500. Looking at all corporate officers of those companies, 16 percent are women, and less than 2 percent are minority women.10 Still, one positive trend is that women’s leadership is beginning to be seen at a broader range of companies. Besides Andrea Jung at the helm of Avon and Irene Rosenfeld at Kraft Foods, the executive ranks now include the likes of Pat Woertz at Archer Daniels Midland and Ursula Burns at Xerox. Table 11.1. lists top women executives and the companies for which they work.

Table 11.1 The A­List: Top Women Executives

Rank Name Company Title 1 Indra Nooyi PepsiCo Chairman and CEO 2 Irene Rosenfeld Kraft Foods CEO 3 Pat Woertz Archer Daniels Midland President and CEO 4 Anne Mulcahy Xerox Chairman 5 Angela Braly Wellpoint President and CEO 6 Andrea Jung Avon Products Chairman and CEO 7 Susan Arnold Procter & Gamble Vice Chair, Beauty and

Health 8 Oprah Winfrey Harpo Chairman 9 Brenda Barnes Sara Lee Chairman and CEO 10 Ursula Burns Xerox CEO 11 Ann Livermore Hewlett­Packard Exec. VP, Technology

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Solutions Group 12 Anne Sweeney Disney Media Networks Co­Chair, and

President, Disney–ABC Television Group

13 Susan Desmond­ Hellmann

Genentech President, Product Development

14 Ginni Rometty IBM Sr. VP, Global Business Services

15 Ellen Kullman DuPont Exec. VP, Safety and Protection, Coating and Color

16 Safra Catz Oracle President 17 Heidi Miller J. P. Morgan Chase CEO, Treasury and

Securities Services 18 Judy McGrath Viacom Chairman and CEO,

MTV Networks 19 Carol Meyrowitz TJX President and CEO 20 Ann Moore Time Inc. Chairman and CEO 21 Christina Gold Western Union President and CEO 22 Amy Brinkley Bank of America Chief Risk Officer 23 Susan Ivey R. J. Reynolds Tobacco Chairman and CEO 24 Colleen Goggins Johnson & Johnson Worldwide Chairman,

Consumer and Personal Care Group

25 Susan Chambers Walmart Exec. VP

SOURCE: Top 25 from “50 Most Powerful Women in Business,” Fortune, October 13, 2008. © 2008 Time Inc. All rights reserved.

The percentage of female CEOs is expected to increase, but only slightly, reaching about 6 percent of Fortune 1000 CEOs by 2016.11

Some companies are helping women break through the glass ceiling. Accenture sponsors monthly networking events for its female employees and offers flexible schedules and part­time arrangements. Such efforts may be behind the results of a survey of managers in which 79 percent of female respondents said they could envision themselves holding a senior management post, compared with only 66 percent feeling that way at the start of their career.12 Table 11.2 shows the best companies for women executives according to the National Association of Female Executives.

Table 11.2 Top 30 Companies for Executive Women

Aetna, Hartford, CT Marriott International, Washington, DC Allstate Insurance, Northbrook, IL Merck & Co., Whitehouse Station, NJ American Electric Power (AEP), Columbus, OH

MetLife, New York, NY

American Express, New York, NY New York Times Co., New York, NY Bristol­Myers Squibb, New York, NY Office Depot, Delray Beach, FL Chubb & Son, Warren, NJ Patagonia, Ventura, CA Colgate­Palmolive, New York, NY Pfizer, New York, NY Federated Department Stores, Cincinnati, OH

Principal Financial Group, Des Moines, IA

Gannett Co., McLean, VA Procter & Gamble, Cincinnati, OH Gap Inc., San Francisco, CA Prudential Financial, Newark, NJ General Mills, Minneapolis, MN Rodale, Emmaus, PA Hewlett­Packard, Palo Alto, CA Sallie Mae, Reston, VA IBM Corporation, Armonk, NY Texas Instruments, Dallas, TX Kraft Foods, Northfield, IL Walmart Stores, Bentonville, AR Liz Claiborne Inc., North Bergen, NJ Xerox Corporation, Stamford, CT

SOURCE: Re printed courtesy of NAFE (www.nafe.com) and Inkstoneditorial (www.inkstoneditorial.com).

As women have gained more presence and power in the workforce, some have drawn attention to the problem of sexual harassment, which is unwelcome sexual conduct that is a term or condition of employment. Sexual harassment falls into two different categories. The first, quid pro quo harassment, occurs when “submission to or rejection of sexual conduct is used as a basis for employment decisions.” The second type of harassment, hostile environment, occurs when unwelcome sexual conduct “has the purpose or effect of unreasonably interfering with job performance or creating an intimidating, hostile, or offensive working environment.” Behaviors that can cause a hostile work environment include persistent or pervasive displays of pornography, lewd or suggestive remarks, or demeaning taunts or jokes. Both categories of harassment violate Title VII of the Civil Rights Act of 1964, regardless of the sex of the harasser and the victim; in a recent year, more than 15 percent of complaints filed with the federal government came from males. If an employee files a complaint of sexual harassment with the Equal Employment Opportunity Commission (EEOC), the commission may investigate and, if it finds evidence for the complaint, may request mediation, seek a settlement, or file a lawsuit with the potential for stiff fines—and negative publicity that may damage the company’s ability to recruit the best employees in the future.

Harassment by creation of a hostile work environment is now more typical than quid pro quo harassment. But because it may involve more subjective standards of behavior, it puts an extra burden on managers to maintain an appropriate work environment by ensuring that all employees know what conduct is and is not appropriate and that there are serious consequences for this behavior. In fact, even when managers do not themselves engage in harassment, if they fail to prevent it or to take appropriate action after receiving legitimate complaints about it, they may still be held liable, along with their companies, if a lawsuit is filed. It is also important for managers to know that the “hostile work environment” standard applies to same­sex harassment, as well as to non­gender­related cases, such as a pattern of racial or ethnic slurs. Teenaged workers are a particularly vulnerable population, because they

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are inexperienced, tend to hold lower­status jobs, and often feel hesitant or embarrassed to speak up. The federal EEOC has made this concern a priority and launched a teen­focused page called “Youth at Work” on its Web site (at http://www.youth.eeoc.gov). The National Restaurant Association and National Retail Federation also have stepped up efforts to protect teens from harassment.13

One way managers can help their companies prevent harassment from arising, or avoid punitive damages if a lawsuit is filed, is to make sure their organizations have an effective and comprehensive policy on harassment in place. Table 11.3 shows the basic components of such a policy. Companies such as Avon, Corning, and Metro­Goldwyn­Mayer have found that a strong commitment to diversity leads to fewer problems with sexual harassment.14

Table 11.3 Basic Components of an Effective Sexual Harassment Policy

1. Develop a comprehensive organizationwide policy on sexual harassment and present it to all current and new employees. Stress that sexual harassment will not be tolerated under any circumstances. Emphasis is best achieved when the policy is publicized and supported by top management.

2. Hold training sessions with supervisors to explain Title VII requirements, their role in providing an environment free of sexual harassment, and proper investigative procedures when charges occur.

3. Establish a formal complaint procedure in which employees can discuss problems without fear of retaliation. The complaint procedure should spell out how charges will be investigated and resolved.

4. Act immediately when employees complain of sexual harassment. Communicate widely that investigations will be conducted objectively and with appreciation for the sensitivity of the issue.

5. When an investigation supports employee charges, discipline the offender at once. For extremely serious offenses, discipline should include penalties up to and including discharge. Discipline should be applied consistently across similar cases and among managers and hourly employees alike.

6. Follow up on all cases to ensure a satisfactory resolution of the problem.

SOURCE: From George Bohlander, Scott Snell, and Arthur Sherman, Managing Human Resources, 12th ed. Copyright © 2001. Reprinted by permission of South­Western, a division of Thomson Learning, www.thomsonrights.com. Fax 800 732­2215.

Before moving on, it is important to note that gender issues and the changing nature of work do not apply just to women. In some ways, the changing status of women has given men the opportunity to redefine their roles, expectations, and lifestyles. Some men are deciding that there is more to life than corporate success and are choosing to scale back work hours and commitments to spend time with their families. Worker values are shifting toward personal time, quality of life, self­fulfillment, and family. Workers today, both men and women, are looking to achieve a balance between career and family.

Minorities and Immigrants

In addition to gender issues, the importance and scope of diversity are evident in the growth of racial minorities and immigrants in the workforce. Consider these facts:

Black, Asian, and Hispanic workers hold more than one of every four jobs in the United States. Asian and Hispanic workforces are growing the fastest in the United States, followed by the African American workforce. Three in 10 college enrollees are people of color. By 2020, most of California’s entry­level workers will be Hispanic. English has become the second language for much of the population in California, Texas, and Florida. Foreign­born workers make up more than 15 percent of the U.S. civilian labor force. About half of these workers are Hispanic, and 22 percent are Asian. The younger Americans are, the more likely they are to be persons of color. One in 40 people in the United States identifies himself or herself as multiracial, and the number could soar to 1 in 5 by 2050.15

These numbers indicate that the term minority, as it is used typically, may soon become outdated. Particularly in urban areas where white males do not predominate, managing diversity means more than eliminating discrimination; it means capitalizing on the wide variety of skills available in the labor market. Organizations that do not take full advantage of the skills and capabilities of minorities and immigrants are severely limiting their potential talent pool and their ability to understand and capture minority markets. Those markets are growing rapidly. As the minority share of the population expands, so does their share of purchasing power. And if you sell to businesses, you are likely to deal with some minority­owned companies, because the number of businesses started by Asian American, African American, and Hispanic entrepreneurs is growing much faster than the overall growth in new companies in the United States. For example, more than half of the companies that started in California’s high­tech Silicon Valley were founded by immigrants, and in a recent year, one­fourth of patent applications in the United States identified an immigrant as the inventor or a co­inventor.16

In many urban areas with large Asian, Hispanic, or African American populations, banks have deliberately increased the diversity of their managers and tellers to reflect the population mix in the community and attract additional business. If they did not, customers would readily notice and switch to other banks in the area where they would feel more welcome and comfortable. Such diversity—and collaboration among employees—permits increased customer service, helping banks maintain their competitiveness. For example, tellers approached by new immigrants who do not yet speak English immediately call on their bilingual colleagues for help. The bilingual colleagues are also in a better position to assist the bank customers with special problems, such as income transfers from abroad.

Even so, the evidence shows some troubling disparities in employment and earnings. Unemployment rates are higher for black and Hispanic workers than for whites—twice as high in the case of black men. Earnings of black and Hispanic workers have consistently trailed those of white workers; recent figures put the median earnings for African American employees at 77 percent of median earnings for white workers and the median earnings of

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Hispanics at just 70 percent. African Americans and Hispanic Americans are also underrepresented in management and professional occupations.17 This underrepresentation may itself help perpetuate the problem, as it can leave many aspiring young minorities with fewer role models or mentors that are so helpful in an executive career.

This disparity may exist even for similar jobs. There is also considerable evidence that discrimination may account for at least some of the disparities in employment and earnings. For example, in one recent study fictitious résumés were used to respond to help­wanted ads in Boston and Chicago newspapers. Each résumé used either African American names like Lakisha and Jamal or white­sounding names like Emily and Greg. The résumés with white­sounding names were 50 percent more likely to get a callback for an interview than the same résumés with African American names. Despite equivalence in credentials, the often unconscious assumptions about different racial groups are very difficult to overcome.18

Nevertheless, significant progress has been made. As you can see from the examples in Table 11.4, talented members of minority groups are among the executives running companies and their divisions in a wide variety of industries. And some individuals and groups are highly successful. Average pay and unemployment rates for Asian Americans actually exceed those for white workers.

Table 11.4 Executives of Color: Selected Examples

Name Company Title Alvin Aviles New York City Health and

Hospitals Corp. President and CEO

Harvey Brownlee KFC Chief Operating Officer Mei­Mei Chan Seattle Times Co. Vice President, Advertising Kenneth I. Chenault American Express Chairman and CEO Karen Clark Horizon NJ Health President and Chief

Operating Officer Richard Cordova Children’s Hospital Los

Angeles President and CEO

Lorenzo Creighton MGM Mirage President and Chief Operating Officer, New York–New York Hotel & Casino

Digby A. Solomon Diez Daily Press, Newport News, VA

President, Publisher, and CEO

Ann Fudge Young & Rubicam Brands Chairwoman and CEO Darryl B. Hazel Ford Motor Co. Senior Vice President,

Ford; President, Customer Service

Douglas V. Holloway NBC Universal President, Cable Investments

Margaret Jenkins Denny’s Chief Marketing Officer Cleve Killingsworth Blue Cross and Blue Shield

of Massachusetts President and CEO

William Lamar Jr. McDonald’s USA Chief Marketing Officer David Lopez Harris County Hospital

District President and CEO

Sam Odle Methodist Hospital and Indiana University Hospital

President and CEO

Clarence Otis Jr. Darden Restaurants Chairman and CEO Carol Terakawa Yahoo! Regional Vice President–

Southwest Don Thompson McDonald’s USA Executive Vice President

and Chief Operating Officer John Thompson Symantec Chairman and CEO Ronald Williams Aetna President and CEO

SOURCE: Sonia Alleyne, “The 40 Best Companies for Diversity,” Black Enterprise, July 2006, downloaded from Business & Company Resource Center, http://galenet.galegroup.com; Nicole Voges, “Diversity in the Executive Suite,” Modern Healthcare, April 10, 2006, http://galenet.galegroup.com; and National Association of Minority Media Executives, “Board of Directors,” NAMME Web site, http://www.namme.org, accessed May 21, 2007.

In addition, virtually every large organization today has policies and programs dedicated to increasing minority representation—including compensation systems that reward managers for increasing the diversity of their operations. Major companies such as FedEx, Xerox, Morgan Stanley Shell, and Sun Microsystems have corporate diversity officers who assist organization managers in their efforts to attract, retain, and promote minority and women executives. Many organizations are also working to ensure a continuing supply of minority candidates by supporting minority internships and MBA programs. Dun and Bradstreet, for example, sponsors summer internship programs for minority MBA students. Lockheed Martin has partnered with the American Management Association’s Operation Enterprise to establish two­week paid summer internship programs for high school and college students. These internship programs help students and organizations learn about one another and, ideally, turn into full­time employment opportunities. Table 11.5 shows the top 10 companies for diversity according to DiversityInc.com. For all these companies, developing, hiring, and retaining minority executives is critical for their ability to manage an ever­more­diverse workforce and to serve an increasing number of clients and customers with varied backgrounds.

Table 11.5 Top 10 Companies for Diversity Recruitment and Retention

  1. Bank of America 2. Pepsi Bottling Group 3. AT&T

4. Coca­Cola Company

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4. Coca­Cola Company 5. Ford Motor Company 6. Verizon Communications 7. Xerox 8. Consolidated Edison Company of New York 9. J. P. Morgan Chase 10. PepsiCo

SOURCE: “The 2007 DiversityInc Top 50 Companies for Diversity,” Copyright © 2007, DiversityInc.com. Reproduced with permission.

Mentally and Physically Disabled People

The largest unemployed minority population in the United States is people with disabilities. It is composed of people of all ethnic backgrounds, cultures, and ages. The share of the population with a disability is growing as the average worker gets older and heavier.19 According to the U.S. Census Bureau, 18 percent of the population reports having some degree of disability, and 6 percent of the working­age population say they have a disability that makes it hard for them to get and keep a job.20 Still, more than half of people with a disability held jobs during the year in which they were surveyed. And among those who are unemployed, many would like to find work.

In a recent magazine ranking based on companies’ representation of African Americans in four key areas—procurement, corporate board, senior management, and total workforce—Denny’s stood out as making the most improvement following their discrimination lawsuits several years back.

© AP Photo/Advantica.

The Americans with Disabilities Act (ADA), mentioned in Chapter 10, defines a disability as a physical or mental impairment that substantially limits one or more major life activities. Examples of such physical or mental impairments include those resulting from conditions such as orthopedic, visual, speech, and hearing impairments; cerebral palsy; epilepsy; multiple sclerosis; HIV infections; cancer; heart disease; diabetes; mental retardation; psychological illness; specific learning disabilities; drug addiction; and alcoholism.21

New assistive technologies are making it easier for companies to comply with the ADA and for those with disabilities to be productive on the job. In many cases, state governments will pay for special equipment or other accommodations that workers need. Companies are discovering that making these accommodations can result in unanticipated fringe benefits, too. The National Industries for the Blind (NIB), a Wisconsin company that markets products under the Skilcraft brand name, is a case in point. Seventy­five percent of NIB employees are visually impaired. Because the company’s warehouse pickers have trouble reading instructions on paper, NIB installed a voice technology system that conveys instructions to workers through headsets. An added benefit is that the technology has raised the productivity of the entire operation. Accuracy has improved, and workers—both blind and sighted—are able to pick and ship orders faster using the headsets.

For most businesses, mentally and physically disabled people represent an unexplored but fruitful labor market. Frequently, employers have found that disabled employees are more dependable than other employees, miss fewer days of work, and exhibit lower turnover. Tax credits are also available to companies who hire disabled workers. In addition, managers who hire and support employees with disabilities are signaling to other employees and outside stakeholders their strong interest in creating an inclusive organization culture.

Education Levels

When the United States was primarily an industrial economy, many jobs required physical strength, stamina, and skill in a trade, rather than college and professional degrees. In today’s service and technology economy, more positions require a college education, and even a graduate or professional degree. Today’s prospective employees have responded by applying to college in record numbers. The proportion of the workforce with at least some college education has been growing steadily since the 1970s. The share of workers with a bachelor’s degree has more than doubled since 1970. At the same time, the share of workers with less than a high school diploma has tumbled from nearly 4 out of 10 in 1970 to below 1 out of 10 today. People with degrees in science and technology are in especially high demand. Employers often expand their search for scientists and computer professionals overseas, but visa requirements limit that supply. At the other end of the spectrum, in the current labor pool, 28 percent of foreign­born workers have not completed high school.22

The Age of the Workforce

The baby­boom generation (those born between 1946 and 1964) is aging. Today, almost 4 out of 10 workers are age 45 or older, and the median age of America’s workforce is rising as the number of older workers swells, while the number of young workers grows only slightly. Industries such as nursing and manufacturing are already facing a tremendous loss of expertise as a result of downsizing and a rapidly aging workforce. Other industries will soon be in similar straits.23 As a result of these trends, the Bureau of Labor Statistics projects that entry­level workers will be in short supply.

On the plus side, almost 70 percent of workers between the ages of 45 and 74 told researchers with AARP (formerly the America Association of Retired Persons) that they intend to work in retirement. Retirees often return to the workforce at the behest of their employers, who can’t afford to lose the knowledge accumulated by longtime employees, their willingness to work nontraditional shifts, and their reliable work habits, which have a positive effect on the entire work group.

For every young worker entering the workforce, two baby boomers are retiring.24

To prevent an exodus of talent, employers need strategies to help retain and attract skilled and knowledgeable older workers. Phased retirement plans

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that allow older employees to work fewer hours per week is one such strategy. Almost one­third of retiring faculty members at 16 University of North Carolina campuses take advantage of phased retirement, and the concept is catching on in many other public and private organizations. Other strategies include making workplace adaptations to help older workers cope with the physical problems they experience as they age, such as poorer vision, hearing, and mobility. This trend is a significant change from the practice in recent decades, when older workers were given incentives to leave to allow companies to reduce overhead and perhaps hire less­expensive replacements. Table 11.6 shows how creative companies are rethinking their retirement policies and solving their skilled­labor shortage by finding ways to attract and retain people over 55. These companies save on turnover and training costs and capitalize on the experience of their older employees.

Table 11.6 Top Five Approaches for More Fully Utilizing Older Employees

Approaches to More Fully Utilizing Older Employees

Approaches Considered Very or Moderately Effective

Businesses That Have Implemented the Approach

Benefit packages targeted toward older employees

68% 18%

Part­time work arrangements with continuation of benefits

64 30

Educating managers about ways to utilize older employees

60 25

Increased availability of part­time work for older employees (regardless of benefits)

55 36