By Luke Visconti and Barbara Frankel
The survey, now in its 14th year, is entirely based on factual information submitted by participants in the four areas measured: CEO Commitment, Human Capital, Corporate and Organizational Communications, and Supplier Diversity. It is an editorially driven process (participation is free), and companies doing business with DiversityInc receive no favorable treatment.
The DiversityInc Top 50’s reputation as the most credible evaluation of diversity-management progress is demonstrated by the increased participation rate. To participate, an organization must have a minimum of 1,000 employees. Participation has increased steadily each year and last year jumped from 587 to 893. We attribute the major upsurge to an increased interest in the subject; our efforts to reach the C-suite of companies with our magazine; and an effective marketing plan.
The financial performance of companies that have inclusive workplaces is demonstrated by the DiversityInc Top 50 Stock Index. While diversity is not the sole factor driving market performance, it is an indication of superior corporate governance. Analysis of the publicly traded companies in the DiversityInc Top 50 by Samuel A. Ramirez & Company, Inc., showed they outperformed (total annualized return) the S&P 500 by 29 percent over one year and 80 percent over 10 years, and outperformed the Dow Jones Industrial Average by 20 percent over one year and 50 percent over 10 years.
Impact on Workforce
- Recruitment: All of the DiversityInc Top 50 companies use their websites to brand themselves as inclusive leaders, and more than half feature the DiversityInc Top 50 logo prominently. “The very survival of the company depends on our ability to attract better, more capable people than the next guy. And that means that you have to have an environment where what matters is talent and that people from different perspectives, cultures, genders, races, religious backgrounds feel attracted to the organization,” says Ron Glover, Vice President, Diversity & Workforce Policy, IBM (No. 24 in the DiversityInc Top 50).
- Retention: All of the DiversityInc Top 50 companies have effective resource groups used to increase engagement and retention of employees. Studies by Sodexo and Aetna (Nos. 1 and 19, respectively) show that resource-group members are more than 10 percent more engaged than nonmembers.
- Talent Development: All of the DiversityInc Top 50 companies use their resource groups for talent development and all have cross-cultural mentoring. At Kraft Foods (No. 18), a resource group was started to help women in sales succeed. The group convened annually with 80 women leaders, and Kraft reported increases of 39 percent in the promotions of women in sales.
Impact on Marketplace
- More than 80 percent of the DiversityInc Top 50 use their resource groups for marketplace outreach. At Ernst & Young (No. 4), an important client who was a gay man said he believed the company’s strong LGBTA group made him feel much more connected to the firm. Novartis Pharmaceuticals Corporation (No. 6) used its ethnic resource groups to improve diversity of patients in clinical trials, leading to more than $2 million in savings on market research.
- All of the DiversityInc Top 50 have developed supplier-diversity programs, most with Tier II (subcontractor) supplier diversity as well. At Marriott International(No. 16), partnerships with women- and minority-owned businesses have increased community recognition, leading to increased local business and support.
- In an interview with DiversityInc CEO Luke Visconti, SEC Commissioner Luis Aguilar said that studies indicate a strong correlation between board diversity and corporate performance. “Companies with better performance seem to have more diverse boards,” Aguilar said. “I am convinced that if you’re searching broadly for good candidates, you’re going to find a lot of capable women, Latinos, African-Americans, Asians, Native Americans.”
Evolving Public Perceptions
- The changing demographics of the voter electorate were apparent in President Obama’s reelection last year. Blacks voted at a higher rate than whites; Asian voting participation tripled; and 80 percent of Black, Latino and Asian votes went to President Obama. Sixty percent of younger people (ages 1829), who are substantially more racially diverse, voted for President Obama.
- LGBT rights have been expanding dramatically as public perceptions shift rapidly. The repeal of the military’s Don’t Ask, Don’t Tell policy was a watershed moment, and as the Supreme Court and states increasingly move toward legalization of same-gender marriage, corporate support is growing.