The goal of the DiversityInc Top 50 is to create an evolving and accurate database of successful diversity-management best practices and their ensuing results measured in human-capital and procurement demographics. The methodology of the DiversityInc Top 50 has always been transparent and publicly available on DiversityInc.com and DiversityIncBestPractices.com and in DiversityInc magazine.

There are more than 300 fact-based questions in four areas of diversity management: CEO Commitment, Human Capital, Corporate and Organizational Communications, and Supplier Diversity. There is no fee to participate, and all companies that complete the survey receive a free report card assessing their performance overall versus all competitors and in the four areas we measure. Companies do not receive any special treatment for doing business with DiversityInc.

To participate, a company must have at least 1,000 employees. We measure “participation” as starting the process to fill out the survey. Last year, we had 587 participants, up 11 percent from the previous year. We also had 12 percent more companies fill out the entire survey.

We do not publicize the names of companies that participate and don’t make the list as we have no desire to embarrass or coerce any company.

Why the Rankings Matter

Over the years, companies have told us repeatedly that a spot on the list helps them attract and retain top talent (from all groups, including white men) and demonstrate their diversity commitment to customers, suppliers and investors. Several companies, including Sodexo, Kraft Foods and all of the Big Four (PricewaterhouseCoopers, Ernst & Young, Deloitte and KPMG), have given us specific examples of sales they have made because of their known diversity leadership as the differentiating factor with their competition.

PricewaterhouseCoopers, the No. 1 company this year, has made the DiversityInc evaluation a key part of its diversity-management strategy for more than a decade. U.S. Chairman and Senior Partner Bob Moritz, who has spoken at our events and attended the last one during the day to take notes on other speakers, said this: “At PwC, we’re investing in inclusion so we can deliver quality, value and innovative solutions to the companies and stakeholders we serve and so we can create sustainable growth for our future.”

The support for the credibility of the list comes not only from “diversity professionals” but from senior line executives and CEOs at many of the companies on the list. More than 20 CEOs have spoken at our diversity events, all of them discussing the importance of diversity and the value of the DiversityInc Top 50 to their company’s success. This includes the CEOs of Procter & Gamble, AT&T, Sodexo, PricewaterhouseCoopers, Ernst & Young, Deloitte, KPMG, CSX, Prudential Financial, Novartis Pharmaceuticals Corporation, Marriott International, Aetna, Cox Communications and Rockwell Collins.

Here are some observations about the value of The DiversityInc Top 50 Companies for Diversity list:

1. The survey creates universal data-based definitions of diversity and inclusion best practices and a fact-based methodology for tracking and evaluating them. The metrics are analyzed each year to ensure they are current and that an increasing proportion of companies are using them. We also directly correlate data results (measured in human-capital demographics) with best practices to establish their relevance. David Casey, vice president, Workforce Strategies, and chief diversity officer of CVS Caremark, told us this: “What does the Top 50 really mean? It gives you a data point. It gives you a data set. It’s one thing to go into your board or to your CEO and say, ‘X percent of our workforce is people of color or women, and we’ve spent this much on supplier diversity,’ but unless you give them an anchor and some kind of relative sense of what that means, it doesn’t work, and that’s what DiversityInc provides.”
2. The many CEOs we’ve interviewed (including the CEOs of Wells Fargo, Eli Lilly, jcpenney, Toyota Financial Services, KeyCorp and Ameren) all refer to diversity and inclusion specifically as a business driver. They use the DiversityInc Top 50 as the method of quantifying those business goals. Randall Stephenson, chairman, CEO and president of AT&T, said this: “Diversity is a key success driver at AT&T. We work hard to build a strong talent pipeline that includes the rich mix of backgrounds and cultures that make up the communities we serve. When we do that, we’re more responsive, we’re more innovative, and our growth prospects are greatly improved.”
3. Our methodology has evolved, but the four areas we measure (CEO Commitment, Human Capital, Supplier Diversity and Communications) have been consistent for a decade, and we feel confident that the changes we make are evolutionary. The rankings can absolutely be trended. DiversityInc does have separate, fee-based benchmarking and consulting practices, but business conducted with our company does not factor into DiversityInc Top 50 rankings at all—it is an editorial process. Several companies in the DiversityInc Top 50 do no (or insignificant) business with us, and companies, such as Cummins and General Mills, actually went up in their rank. We do factor in the one survey we consider objective: the Human Rights Campaign’s Corporate Equality Index. No company can earn a spot in the DiversityInc Top 50 if they don’t offer same-sex domestic-partner health benefits. Companies that received less than an 80 percent CEI score last year had points deducted from their DiversityInc Top 50 score.
4. While DiversityInc does not disclose the exact weightings we give each question, we are transparent in which areas are important, and we also produce a detailed FAQ with the survey each year explaining exactly what each question means and how it is to be answered. Jim Norman, vice president of Diversity at Kraft Foods, said this: “I know there could be criticism around any survey, and people get confused about why they’re doing it or why they would be involved. We have strategic plans. They’re about creating a better organization. The survey, then, is a tool for me to mark progress against a journey I’m already committed to. It holds me accountable. It’s a very usable tool. It asks questions that are critical to driving the kind of deep, sustainable organization change that I need to drive.”
5. There have been questions raised about whether companies ranked on the list actually use the data-collection measures we cite. We do validate through spot checking the way the companies collect the data. For the past two years, DiversityInc has asked the chief diversity officer to sign off on the validity of the data and the data collection. Next year, the CEO, chief operating officer, chief legal officer or chief human-resources officer also will have to sign off on the data.
6. We have great volatility on the list, with new companies participating and making the list every year, including some that are new to this type of process. In 2012, two companies made the list for the first time: Lockheed Martin, a first-time participant, and Medtronic, which had participated before but hadn’t earned a spot previously.
7. The DiversityInc Top 50 was created and has been run for 12 years with the objectivity and transparency top of mind. When companies submit surveys, their data is checked for accuracy. After that point, they are placed into a computer database where their names are hidden so they may be evaluated based only on their responses, with no subjectivity involved.
8. The only people at DiversityInc who have access to the data are CEO Luke Visconti, Senior Vice President and Executive Editor Barbara Frankel, Associate Vice President of Benchmarking C. Craig Jackson, Director of Benchmarking Shane Nelson, and Data Analysis Director Amber Aboshihata. All are long-time employees of DiversityInc.
9. DiversityInc fully discloses the separation between its editorial products, including the DiversityInc Top 50 survey, and its fee-based products, including the benchmarking and consulting practices. DiversityInc events are editorial products. Company customers or event sponsors do not receive preferential treatment to speak. At our event last April, 12 corporate leaders spoke on panels. Of the 12, eight were not sponsors of the event.
10. As a private company, DiversityInc does not have a board of directors. Our books are fully audited, however, and we are willing to discuss our survey methodology with interested outside sources.
11. DiversityInc is fully transparent about its own demographics and data. For more information on that, please see www.DiversityInc.com/aboutus.
12. Criticisms of rankings will always exist, especially by those that don’t rank well. DiversityInc has endeavored to set the standard, be objective and empirical in all data collection, and be transparent about the methodology.

David Casey of CVS Caremark summed it up: “Before the DiversityInc Top 50, there were not a lot of robust, true surveys or measurement tools for diversity management. There was just a lot of affirmative action and EEO recognitions and awards. DiversityInc’s Top 50 is by far the most robust analysis of what a company does in diversity management.”

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Diversity management at Sodexo, which centers on metrics-driven diversity goals, has brought the company significant results in human-capital diversity and, most importantly, market share. The company’s secret for success? The all-important communication and accountability between the CEO and the chief diversity officer.

Sodexo’s President and CEO George Chavel and Senior Vice President and Global Chief Diversity Officer Dr. Rohini Anand spoke with DiversityInc Senior Vice President and Executive Editor Barbara Frankel at a DiversityInc event. They discussed the strong professional relationship they have and why their collaboration is vital to business success. The company is No. 2 in the DiversityInc Top 50 for its second year (and was No. 1 in 2010).

Chavel says trust is the integral component to building a successful CEO/CDO relationship. “If you have the ability to create rapport, you can talk about all the struggles and have a strong debate.”

This open dialogue is essential with clients as well, especially in terms of Sodexo’s past. The company’s strong focus on diversity was jumpstarted by a discrimination lawsuit in 2002. “It was a painful time in our history but the opportunity to transform our company and culture,” says Chavel.

The story resonated with clients, and Sodexo began helping its clients with their own diversity goals. “In doing that, our brand became synonymous with diversity leadership as an enabler of business growth and helped us move from where we were and to sustain it in the organization,” he explains.

Anand describes this story as a business marriage. “All CDOs are ambitious about our mission and vision to change culture, but it has to be married to a business reality,” she says. “My job is to convince George. It’s a fine line. We all want to do as much as we can, and we get impatient. At the end of the day, it’s about using the strategy to grow the business.”

Their strategy includes three best practices, all tied to bottom-line results:

Commitment to Metrics

Sodexo set its diversity metrics one year into its journey. It measures everything with a robust scorecard—promotion, retention of women and Blacks, Latinos and Asians, resource-group engagement, results and mentoring promotions, retention, engagement, etc. Sodexo’s mentoring program has been featured on DiversityIncBestPractices.com and in our  Mentoring Web Seminar, with Jodi Davidson, director, diversity and inclusion initiatives, Sodexo.  For more on diversity metrics, watch the Diversity Metrics Web Seminar to learn which diversity metrics are most valuable to companies.

Sodexo keeps a very focused scorecard to measure virtually everything diversity related. For example, for every dollar spent on mentoring, Sodexo gets two dollars back. “It’s very much of a story culture,” Anand says. “It’s important to marry those metrics with case studies and vignettes. You need both to demonstrate the value.”

Compensation Incentives

Diversity metrics are then linked to 10 percent of managers’ bonus compensation, with Chavel and his team at 25 percent. The diversity fund is held apart from the financial performance of the company and is always paid to those who reach their goals. Sodexo was one of three companies featured in DiversityInc magazine as a case study on executive compensation tied to diversity.

“For our culture, it’s important to have a cause and effect, with us and with our heavily based metrics,” says Chavel. “We are trying to drive change. We’re not just pointing to those metrics but using them.”

Leveraging Qualities

Learning how to become a part of a diverse team is the key to driving innovation. With four generations working side by side, Sodexo recognizes the need to optimize each group’s unique talents and differences. “Mixing that together, that diversity and innovation, that is where we are heading,” Chavel says.

Anand notes, however, that there still are roadblocks to improvement, citing middle management as a key target for buy-in initiatives. Although Chavel is the U.S. CEO, the French-based global company is in more than 80 countries with more than 400,000 employees worldwide and is tailoring its diversity programs across the globe to incorporate local cultures. For corporate best practices to create inclusive workforces, and data points from DiversityInc’s  new global research, read 4 Ways to Overcome Global Diversity Challenges.

“In Asian countries, we are moving very rapidly. The women are hungry for initiatives and the leaders have jumped on board,” says Anand. “We have a strategy for North America and a clearly different strategy outside of the United States. We have to go almost country by country to understand the issues and tailor the initiatives.”

The post Diversity Management: The Chief Diversity Officer’s No. 1 Advantage appeared first on DiversityInc.

Read more about these best practices in our event coverage, 4 Ways CSX Increased Its Diversity-Management Progress.

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I was invited to speak at Empire Blue Cross and Blue Shield, a division of WellPoint, No. 34 on The 2012 DiversityInc Top 50 Companies for Diversity list. After I spoke, their President and CEO Mark Wagar talked about his business, specifically about the company’s customers and employees, and consistently and emotionally used the words “us,” “our” and “we.” There was no mention of “those people” or “them.” Mr. Wagar sees people as his brothers and sisters. Watch Wagar’s keynote at our DiversityInc Top 50 event.

He also spoke, with deep respect, of his community’s diversity and the need to focus on it—in the context of service.

Earlier in the year, I was invited to speak to the Wells Fargo Advisors (whose parent company, Wells Fargo & Co., is No. 33 in the DiversityInc Top 50). Their president and CEO, Danny Ludeman, closed out the event. Speaking to the audience of roughly 200 senior leaders, he asked how many of the (mostly white) men had attended an resource-group meeting; about one-third of the hands went up. Mr. Ludeman said: “The next time we meet, it had better be all of you.”

Point made. I’ll bet it will be.

Ten years ago, I did not see the consistency of switched-on leadership that I see today. More than half of Fortune 500 companies had no diversity efforts; today, I’d estimate that more than half do (even if a significant number of those company’s diversity efforts are little more than having tacos in the cafeteria on May 5). 

Recently, I was asked an interesting question. A senior executive of a firm at the top of our list asked me if I felt that the questions we ask on our survey end up directing the reality we measure. In other words, if we focus on management techniques like mentoring and employee-resource groups, isn’t that what we end up seeing in our numbers?

No doubt there is a trailing effect of those questions on decisions being made by companies just starting out on the path of managing diversity, but there’s a definite path.

The DiversityInc Top 50 survey has evolved over the past 12 years, but it is an evolution based on cause and effect. Our ability to measure outcome as expressed in human capital (there are other measurements of the outcome of corporate culture, but none as accurately and consistently measured by every company as human capital) has allowed us to ask questions about best practices. Given our enormous base of 587 participants, it enables us to see, by correlation, what works.

Management best practices, such as diversity councils, resource groups, structured mentoring, goal-setting and, most importantly,accountability, have statistically valid correlations to equitable outcome in accomplishment.

In other words, we’re not making this stuff up—we’re reporting data-driven results.

Our ability to accumulate the data—and disseminate it through our publication, events and our benchmarking service—has certainly encouraged a direct path to the most rapid improvement for hundreds of companies. In turn, they have asked their suppliers for their diversity questions on RFPs and by tracking Tier II (subcontractor) supplier diversity.

So yes, there is a connection between the questions we ask and the reality we measure, but it is one created by the companies themselves. For example, the percentage of managers in mentoring and people in employee-resource groups has more than doubled in the past five years. Yes, we’re measuring both, but our measurement of those programs wouldn’t continue if there weren’t corresponding benefits. 

In my opinion, the most important best practice we measure is the percentage of CEO direct reports’ bonuses that is tied to diversity-management results. This has gone from 5 percent to 12.3 percent in the past five years. It’s not logical to think that this level of reward is because of our competition—it has increased because smart CEOs want to make sure they’re putting the spurs to their diversity efforts.

It is the personal commitment of those at the top of organizations that makes the success or failure of managing diversity.

–Luke Visconti

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