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As the demographic profile of the United States shifts rapidly, more companies are using a diverse workforce to reach customers. One critical way companies in The 2011 DiversityInc Top 50 Companies for Diversity accomplish those goals is through the innovative use of their employee-resource groups.
A panel of diversity executives—Jim Norman, vice president, talent acquisition, diversity and inclusion, Kraft Foods; Tim Stiles, partner, tax, KPMG; and Manny Fernandez, director of diversity, JCPenney (retired)—told an audience of senior executives at a DiversityInc event in Washington, D.C., that companies that fully utilize their ERGs as a resource to help identify gaps and opportunities in their organization, market and community will emerge with a competitive advantage, especially as the economy starts to recover.
"Our focus as far as diversity and inclusion is concerned is three-fold. It's about our associates making sure that every associate has a voice and an opportunity to be heard, valued and engaged, that we truly understand who our customer is … and then it's about performance," said Fernandez. "We all understand that if we don't grow, we're not going to be here very long."
What are some innovative ways companies in the DiversityInc Top 50 are using their ERGs?
To tap into underserved but potentially lucrative markets
Stiles said constructing teams that reflect demographics of the client base improves customer loyalty because those clients feel more comfortable doing business with people who understand them.
"When we go out into the public, the only thing we really have to sell is our people. What becomes very critical is how our people look to our client base out there. If we send out a group of over-50, white, straight guys—no offense to the over-50, white, straight guys in the audience—and the clients we are pitching are comprised of people from different ethnic groups or subgroups and a wide variety of genders, we don't look so good and we don't look so smart. One of the things that we are implementing to drive our ERGs when we go out and talk to clients is [considering] 'What does that team look like? How are we composing our teams so that they match the individuals we will be interacting with on a day-to-day basis?'"
Stiles also said KPMG used its ERGs to help increase its percentage of spend with diverse suppliers, particularly people with disabilities and in the LGBT community.
Fernandez said ERGs are playing an increasingly important role in helping companies connect with a diverse customer base. For example, when JCPenney was preparing to open a store in a location where nearly 65 percent of the population was Asian, the company's ERGs and field councils were instrumental in providing the retailer with access to better consumer insights because they understood the cultural nuances firsthand.
"For Asian consumers, it's very important from a respect perspective that you count the money back," Fernandez said. "How many times have you purchased something and someone says, 'Here is your change'? But from an Asian perspective, if you are really going to respect that customer and treat them the way they want to be treated, it's very important that you count the money back," he said.
To assist in successfully onboarding new hires
ERG members can help new employees get comfortable during the onboarding process, a critical period of adjustment for people from traditionally underrepresented groups. Studies show that the first 60 to 90 days of employment are a critical time for a new hire and can determine whether an employee is going to stay for the long run or leave the company before the year is out.
Norman said that Kraft tapped its ERGs to help acclimate new employees and engender a sense of loyalty and belonging after it acquired British candy-maker Cadbury in January 2010.
"One of the places where we found our ERGs to be effective is following our acquisition … as an enticement for employees to hang on," Norman said. "Cadbury did not have ERGs, so we used our ERGs to reach out to Cadbury employees, to share a little bit about the culture, our environment, and let them know that help was on the way."
To provide skill-based training, career development and mentoring
"When we work with employee-resource groups, we're working in partnerships to help identify gaps and opportunities in the organization to support development and advancement," Norman said.
Norman said the first program Kraft initiated nine years ago was called Jump Start. "We had a five percentage point higher turnover rate for people of color than for the general population and so [we did] some training to help people of color in the organization build strategies and deal with headwinds and tailwinds in the organization and to reach their career objectives," he said.
Kraft also uses its ERGs to help with its peer coaching program, which impacts three critical points where employees can slip in their leadership development—movement from the field office to corporate headquarters; succession planning over the next two to three years; and managers who need to be more effective in dealing with traditionally underrepresented groups. Peer coaches are nominated and receive two full days of customized training. They meet quarterly to share skills and observations.
To help with leadership development
Kraft launched its Employee Council Leadership Academy in 2010 with ERG leaders in mind.
The academy runs for two and half days and involves bringing together the national leadership teams for all the company's ERGs together "to focus on the team process, results, relationships and their alignment to the business and diversity strategy," Norman said.
"Our ERGs have evolved over the 20-year period and we know the people come with passion. We know they come with skills from their various backgrounds and professions, but often they come to a leadership role in an ERG and we don't support the team appropriately," Norman said. "If this was any other business initiative and we were bringing a team together to go after a significant business opportunity, we typically would invest resources in the leader of the team and in the team itself to make sure it's a high-performing team. So if this concept holds true in business, we thought, why not for our ERGs, which are doing significant work on behalf of the organization."
