Wal-Mart Puts Money Behind Diversity Initiative
By George Anderson
Wal-Mart wants the world to know it is serious about promoting diversity within it ranks.
In a filing made with the Securities and Exchange Commission (SEC), Wal-Mart said it was linking executive compensation to the company’s diversity goals.
Wal-Mart has established the practice as a way “to motivate officers to achieve diversity initiatives, while adhering to the company’s commitment to select the most qualified individual for each position,” according to the filing with the SEC.
Executives participating in the program but failing to meet the goals established could lose up to 15 percent in associated bonuses, reports MarketWatch. The 15 percent figure marks an increase from the 7.5 percent bonus approved by the company’s board in 2004.
Wal-Mart’s filing is seen as the latest attempt by the company to deal with criticism over its treatment of employees. The world’s largest retailer is currently facing an $11 billion class-action discrimination suit.
In its defense, Wal-Mart points to internal efforts such as its Women in Leadership and Minorities in Leadership programs intended to ensure women and minorities are well represented at all levels within the organization. The company claims its retention rate for female and minority participants in these programs is more than 96 percent.
Moderator’s Comment: Are companies with more diverse workforces stronger than those that are more homogeneous? Are there specific diversity initiatives
either within or outside the retail industry that you believe are worthy of emulation by other companies? –
George Anderson – Moderator
Great companies take the lemons they’re handed and make lemonade. When Home Depot had discrimination legal problems, they reacted by automating much of their hiring and promotion procedures. The software is designed to minimize bias. It’s good business to recruit, hire, train, and promote based solely on achievement. If hiring and advancement is biased, the company can’t maximize its potential. Too bad Wal-Mart, Home Depot, and many other retailers need to get sued to behave appropriately. In the meantime, their achievement-based competitors have an edge.
In my view, reaching for diversity is the right thing to do only because diversity is a sign that, theoretically, staff are being treated respectfully.
But our studies show that achieving a diverse workplace has, in actual practice, no statistical correlation with how organizations treat their staff. In other words, we have seen just as many diverse organizations with very low scores on staff treatment as diverse organizations with high scores.
We have found that trying to create truly respectful treatment of staff by instituting diversity programs is like trying to get people to be less violent by limiting access to guns: it doesn’t really change the underlying problem.
And the negative to diversity programs then begins to show up: we have measured a significant backlash in organizations to diversity programs because the underlying causes of poor treatment are not addressed, and it now seems that some people receive preferential treatment.
Our data shows that addressing the fundamental causes of poor treatment of all staff in an organization is a far more productive approach. It isn’t that diversity programs are bad, it’s just that they are ineffective, and distracting, and provide a way for the organization to not have to face its more fundamental problems.
Carol really went out on a limb in her comments. Relocating her business to Northwest Arkansas and eloquently defending Wal-Mart’s diversity initiative. Nothing wrong with a little positive thinking.
Positive thinking, though, evidently wasn’t enough for WM to meet the randomly-defined, murky diversity demands of “them.” My hat is off to WM for even trying to hit this moving target, and hopefully they understand that they’ll never satisfy everybody – or even most of “them.” And, they approached it in the right way, with financial incentives – or disincentives – for top management. I wonder, though, how executive financial penalties will roll downhill to subordinates if they fail to meet their individual diversity goals.
This is one of your more poorly conceived questions, that is guaranteed to not stimulate thinking as everybody “knee-jerk” responds by saying yes…I mean who is going to say No?!
Are we trying to ferret out the racist store managers, maybe by getting a response like …”I think an all white male management team would produce better results because of….”?
I think a more thoughtful question would be involved with examining different methods of achieving diversity or probing what people thought of linking goals to bonuses or hearing peoples thoughts on making diversity work and melding together various cultures.
Claro que si (but of course)… Wal-Mart has had some recent diversity faux pas, but they are trying to do the right thing. This is a step in the right direction. It should also be noted that they are one of the few corporations with a Latino at the helm in Eduardo Castro Wright. Diversity of thinking drives innovation and innovation drives growth.
Wal-Mart’s efforts, regardless of motive, are to be applauded and should be easier than ever to execute. I just returned from Northwest Arkansas to put the finishing touches on a full relocation of my firm to the area and was astounded at the diversity explosion that has occurred just in the past year. California-based real estate investors are snatching up property in droves and businesspeople of all races, creeds, and preferences are flocking. NWA isn’t the risky, backward move it was even a couple of years ago which will make it easier than ever for Wal-Mart to grab the best and brightest and offer them a great standard of living. As with all companies that espouse diversity, the challenge for Wal-Mart will be to incorporate the new ideas and perspectives that these folks bring rather than maintaining a rigid culture that threatens to leach out any benefit.
I have been defending Wal-Mart on many issues and this is the exception. Having been at the Wal-Mart headquarter many times, I really have not seen too many minorities at the upper management level, even at the buyers or category managers level.
This could due to a few factors. One of them could be minorities do not feel comfortable living in Bentonville or Rogers, or reluctant to move there. On the local store level, there is diversity, like check-out cashiers, cart pushers, greeters, shelf stockers etc. We have to address the upper or upper middle management diversity, not the bottom level. One assuring factor is look at the demographic of the latest census for Bentonville and Rogers and see what is the percentage of minority in those communities and then what kind of jobs they hold will truly tell the story.
I wonder how many managers at Wal-Mart received their diversity bonus this year? If diversity efforts mean more than hiring a diverse population in part-time and/or entry level positions, then the companies I’ve seen embracing diversity are quite successful. Getting diverse points of view into the management level where decisions are made is important. Since customer demand is increasingly important, having a group of managers who better reflect the diversity in the population is a good thing. Having people with different life experiences work together making decision for the company is an important tool for increasing creativity.
The simple answer to the question is yes. Having a diverse workforce ensures that companies have varied sets of thoughts and ideas that can be used to improve the company’s products and services. With customers being ever more diverse, a company’s employee base needs to stay current with the changing times as well.
There is also a direct link between an employee’s perception of the diversity of an organization and their level of engagement to that same organization. If an employee feels that the organization treats all employees with respect and appreciation, that differences among employees are both respected and valued, that employees feel safe from fear, intimidation and harassment, and ultimately feel valued as an employee, their likelihood to act in ways that benefit the company are greatly enhanced.
Companies should promote a diverse workforce because it’s the right thing to do, and just like any other internal or external metric, should make senior leaders accountable for the results. Whether companies improve their diversity because they want to or like the folks at Denny’s because they feel they have to, employees, customers, and the communities in which they serve all benefit.
Perhaps in the USA and Canada it is in the best interest of companies to be more diverse. Our country has a long history of diversity and that is probably why we have the greatest economic show on earth. However in other countries such as Japan, just the opposite has worked out quite well for them. In Japan you generally will not see Anglos, Hispanics, etc. working their way to the top. I think Japan is the exception to the rule.
A good diversity initiative requires getting qualified people in responsible positions and not just warm bodies put in make-work jobs that do not contribute to the a company’s bottom line. Most of the large companies I have worked for reserved VP positions for women and minorities for such jobs as VP of Diversity, Communications, Community Relations or editor of the company newsletter. Basically jobs that put their faces in the spotlight but don’t bring in cash.
I am skeptical of the Wal-Mart program. I have a gut feeling that they have already met some watered down goals they want to achieve and that no executive will lose a bonus. Wal-Mart is not going to set itself up for failure.
Wal-Mart is positioned in the “big middle” of the marketplace, where it must draw from the broadest possible base of customers and employees. This makes the need for workforce diversity a given at the store employee level.
Moving higher up the organization, it takes some active attention to maintain those values and put them into practice. In this regard, Wal-Mart is no different from any other large firm, in that it must take affirmative steps and establish fair policies. Tying bonus compensation to diversity goals is one way to foster good organizational values.
In an ideal world, only merit would matter. But merit is much harder to measure than melanin. So in large organizations especially, we accept that ethnic balance is one important indicator of fairness in hiring and promotion practice.
Wal-Mart may be acting out of self-interest when it announces its incentive policy to the financial markets. But it is acting rightly here.
Getting diversity into upper management should be a “no brainer” for the reasons already mentioned. Why then is it so hard for so many companies to get it right? The old all white, all male ranks of management in these companies like to associate themselves with the people that they feel most comfortable with. People that they can trust to make the same kinds of decisions that they make. They want to do what is right for their company, employees and consumers but feel personally threatened by anyone that doesn’t look and think exactly like them. Which is why the government has had to force companies to change in this area. Most are better managed companies as a result even though it is a shame that they couldn’t have done better without government intervention. None of us like big government meddling in our lives but we can’t always make the best decisions on our own.
This is a great topic that many (esp. white males) generally tend to tiptoe around for fear of being labeled racist should they question the basic premise/definition of diversity. In our company the term is supposed to mean diversity of thought and experience vs. numbers or “quotas” of non-white males (females are all counted as female…i.e., a non-white female does not get “double counted” as a minority). A fundamental issue seems to be how we’re defining and measuring diversity. For example, we have dozens of non-white managers…but their backgrounds are so similar to their white peers that it would be hard to find much diversity of experience or thought beyond how it feels to grow up non-white vs. white: i.e., often they attended the same schools, grew up in the same or similar neighborhoods, hold the same family values, etc. With this kind of “sameness,” where does the diversity of thought/experience come from? It is limited. So instead of focusing on skin color or sex, we have embarked on truly identifying people who can add value via diverse thinking and experience based on where they grew up (US or abroad), major life experiences, morale values, etc. By pursuing these goals, we naturally end up with a certain percentage of females & minorities in our company. Our office functions are fun (especially the food!), our disagreements very spirited, and our cohesiveness is tremendous. I think major reason is because everyone feels that we hire only the best people…period. In fact, a few years ago, several minority team members expressed how pleased they were to know that we weren’t hiring because we had a “quota” or number goal based on sex or skin color. All companies should think about how to define better what diversity truly means. Only then will everyone support it.