Managing Diversity at Spencer Owens

The definition of diversity: The concept of diversity encompasses acceptance and respect. It means understanding that each individual is unique, and recognizing our individual differences. These can be along the dimensions of race, ethnicity, gender, sexual orientation, socio-economic status, age, physical abilities, religious beliefs, political beliefs, or other ideologies. It is the exploration of these differences in a safe, positive, and nurturing environment. It is about understanding each other and moving beyond simple tolerance to embracing and celebrating the rich dimensions of diversity contained within each individual.

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Two corporations who have implemented diversity efforts and have dealt with the benefits and challenges of these efforts are Spencer Owens & Co. and Cityside Financial Services. When examining both diversity efforts, it is important to understand how well each company has done with previous and present efforts, the problems the companies are facing now and the root causes of these problems. While these companies have implemented their own efforts to diversify their staff, it is important to examine the similarities and differences in managing diversity.

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Spencer Owens & Co.

How well has Spencer Owens done in its diversity efforts?

Spencer Owens’ recent past shows a great deal of effort put into diversifying their workforce. In the mid-1980’s, Spencer Owens & Co. initiated a strategy to diversify the company’s employees from entry-level to executive ranks. Prior to this start date, the company had an all-white executive male team. From the start of this initiative, Spencer Owens did very well on its diversity efforts to hire people “on their merits and for their capacities to do what is expected or required of them.

To implement the plan, the company set hiring goals, communicating them to all employees and creating accountability.” Over the next ten years, this in turn created opportunities for women and people of color to become part of the team and establish career paths for them to be future leaders in various departments of the company.

Following the start of this program (1985-1995), Spencer Owens was considered the most diverse staff in its industry accounting for 50% of the firm’s 150 managers and professionals were women, and 30% were people of color. Additionally, during this period, people of color that were hired into entry-level positions had been promoted and moved up into managerial positions. Four out of the12 member executive team were women and three were people of color. Extensive involvement in the efforts to attract, recruit and retain minorities and women in becoming managers, professional staff and directors were a key priority to the firm. Spencer Owens also knew that a key to internal diversity was to ensure the company’s policies and overall commitment to an equitable workplace by instituting affirmative action goals, along with, aggressive hiring and advancement practices that set high qualification and performance hurdles.

2 The team at Spencer Owens was proud of their company’s commitment to fairness and equality and to encourage the employees to be “colorblind” to gender and ethnic differences. Along with this strategy, the firm also initiated sensitivity training and held follow-up discussions. Multiple employees commented, “Everyone is the same and treated the same.” With feedback from these trainings and discussions, the firm went a step further to create networking groups for women and people of color.

How well are they doing now? Why is the firm now having trouble?

Recently, Spencer Owens diversity efforts have witnessed great changes while also encountering many issues and problems. In 2000, the firm hired Agnes Richards, their first woman executive in 45 years. Over the course of the next three years, Richards noticed that the diversity efforts were slowly unraveling and affecting the productivity of the company. For example, Richards noticed friction among race relations, people of color were bringing charges of racism against the white workers, and there were new complaints made by the two networking groups. One of the first steps that Richards and her leadership team took was to reinstate the sensitivity trainings. However, it was noticed that there was poor attendance among the racial and ethnic minorities. In addition to these issues, Richards fired an African-American female manager due to tardiness issues and for portraying a bad attitude. At that point, employees became angry and frustrated.

Due to the firm’s problems, Richards hired consultants to study the firm’s race and gender relations. The interviews revealed the following:

• Employees have concerns about the affirmative action initiative. • White employees feel that the diversity program is adversely affecting the quality of the firm’s work. • It is perceived that white male managers are opposed to new methods brought forth by newer employees. • People of color are critical of affirmative action program, including superficial results and feel that they are tolerated and not accepted. • People of color feel their ideas are easily dismissed. • Perception that the network groups defend the minorities of the company. • Overall feeling of retaliation and fear of being called a racist.

What is the root cause (or causes)?

Spencer Owens’s discrimination-and-fairness paradigm, which measures progress in diversity “by how well the company achieves its recruitment and retention goals rather than by the degree to which conditions in the company allow employees to draw on their personal assets and perspectives to do their work more effectively, had created a cognitive blind spot. As a result, the company’s leadership could not frame the problem accurately or solve it effectively.10 Instead, the company needed a cultural shift – it needed to grasp what to do with its diversity once it had achieved the numbers. Because of senior managers’ resistance to a cultural transformation, Spencer Owens continues to struggle with the tensions rising from the diversity of its workforce.10

The root causes of these problems is that the employees need to feel that the ways they may be different are understood and accepted.3 With the de-emphasis of sensitivity trainings and follow-up discussions, the team became isolated in their views on diversity versus affirmative action goals. The misunderstandings became apparent with the original mission “to consider people on their merits and for their capacities to do what is expected or required of them.” Many minority employees say they gain a sense of belonging in the workplace when their employers create opportunities for workers with diverse backgrounds to interact with others and to become involved as apart of a group.

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The networks were a great idea for employees to feel connected to the company; however, the execution was not done properly. These diversity programs could have helped employees of different backgrounds by communicating feelings and experiences about climbing the corporate ladder or breaking through the glass celiling.3 However, these network groups became defenders for women and the other minorities due to the perception of treatment, opportunities, miscommunication between the minorities and the white employees.

Additional root causes for the present problems include employees wanting fair treatment, a sense of belonging, understanding and acceptance, and a feeling that they are contributing.

Cityside Financial Services

How well has Cityside Financial Services done in its diversity efforts?

Cityside Financial Services has done well in diversity efforts. In 1999, after 69 years of being in business, the company had become very much diversified with half of the employees in the company being females and 90% of the support staff was African American. In addition, 53% of middle managers, 42% of senior managers, and 25% executives were African American. Cityside operated as two units in their Sales Division: Retail Operations and External Deposits. The retail operations unit was filled with mostly African American employees. The external deposits unit was made up of mostly white college graduates. Nearly equal numbers of managerial positions existed in each unit, giving whites and blacks similar advancement opportunities. Bank employees agreed that, “If you did your job well, you’ll be recognized and promoted for it.” 4 As stated in the article, “Over the years, Cityside Bank developed a reputation for being a high-functioning, multicultural organization.”

While the bank itself was deemed to be a multicultural organization, the two sales units were founded on two separate and distinct models that it was described by one executive as “two different banks”. While the bank was diversified as a whole, these two units were very much specialized to their distinct client base. This separation of duties and ethnicities has led to some of the problems that the company presently is facing. While the External Deposit team was described as “white, smart, dedicated and loyal workaholics, it was also said that it’s not the perfect job for black staff that need a salary, may be hard-working, but not at that level.”

In addition, some of the other red flags to the present problems included wealthy individuals complaining about the limited services being offered to them, other clients in Retail Operations feeling overshadowed by wealthier clients in External Deposits (and were leaving the bank), and the lack of understanding (no clear guidelines) by Retail and External as the best way to handle the new market segment. This lack of coordination compromised the bank’s efficiency and created trust issues between these two departments as to the best way to help clients.

How well are they doing now? Why is the firm now having trouble?

While the company continues to maintain an overall diversified work staff, they are now encountering significant issues in their diversity efforts. One of the main causes of the problems that Cityside is now facing is that they have sectionalized the company with African American employees working in the Retail Operations department and the white employees working in the External Deposits department. Per the head of External Deposits, she commented that “the problem is what is expected of senior management here has a cultural bias towards whites. It’s not to say that African Americans aren’t also able to do all that. But because of historical racial issues, they have been limited.” According to one black officer in Retail, he commented that “white workers would not be able to handle the demands of the Retail unit.” He continued to say that “(whites) wouldn’t know what to do with people in this neighborhood.”

This bias ties into ethnocentrism, which represents the feelings that one’s cultural rules and norms are superior or more appropriate than the rules and norms of another culture.5 In addition, poor career planning shows another problem that African American’s have faced as potential candidates in the External Deposit unit.

When Ron Wilkens, one of the investors of the bank, wanted to learn more about how the black workforce viewed its career prospects, it was noted that the root problem was how they (African Americans) were perceived by the whites. Was he deemed as a decision maker and someone that understands the customer where his thoughts are taken seriously or is he someone that is viewed as good at operationally making things work? His black officer commented that he is respected by white colleagues, but questioned the value of his contribution to the firm seen by his white colleagues.

While there is diversity in the company as a whole, there needs to be more diversity in each division to ensure that each employee is given an equal chance to grow and that customers are offered the best goods and services as possible.

What do these cases have in common?

There are some significant similarities between the two cases. First, both companies originally had an all-white staff. Both companies instituted programs to diversify their teams. For example, Spencer Owens adopted an affirmative action plan while Cityside initiated an aggressive minority program. After these programs were implemented, both companies had double-digit percentages of their workforce made up of women and African Americans. It was noted in both cases that these companies were recognized in their industries as greatly achieving a multicultural organization. With that, both firms committed to a fair approach for advancing all employees.

It was also noted that as the diverse programs were in action, both companies began to experience compromised efficiency as the staff began to have problems working together. At Spencer Owens, the affirmative action movement left some employees feeling alienated and unappreciated. The article states, "Many non-white professionals reported having their ideas routinely disregarded." Furthermore, a Latino programmer staffer explained, "Until white people discover an idea, until they express it with their own words in their style, it’s as if it doesn’t exist.”

This comment is similar to the quote made by one employee at Cityside who stated, "When a white man disagrees, he's being strong. He's taken with respect. When a black man disagrees, he's being negative and whiny, militant and kind of like Malcolm X." Both quotes show that while the companies made strides as far as diversifying their employee base, there is still a great difference in the way the ideas and contributions of white and minority employees are perceived.

With this comparison summary, in both cases, the working environment involves how employees perceive one another. This is labeled as social cognition and social information processing. Social cognition is the study of how people make sense of other people and themselves. The perception process influences a host of managerial activities, organizational processes, and quality of life issues.

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Additionally, stereotyping employees is also seen in both these case studies. At Cityside, African-American employees in the Retail Operations unit are deemed to be able to better relate to the “local community”, which is predominately African American. At Spencer Owens, there is a stereotype threat in which white managers are in fear of supervising people of color in that “any constructive feedback could be perceived as being criticized and subsequently being called a racist.” Lastly, both companies conducted interviews and developed surveys to better understand the opinions of the staff in order to get to the root cause(s) of why tensions were on the rise.

What differences do these two cases have?

The main difference in the two cases is the approach the companies took to diversity. As previously stated, Spencer Owens used the discrimination and fairness paradigm, which has a “focus on equal opportunity, fair treatment, recruitment, and compliance with federal Equal Employment Opportunity requirements.” 10 This approach can make employees feel equal, but it can also lead to feelings of alienation and a loss of identity to the employees. This may be what led to the elimination of sensitivity training. In a sense, if we are all equal and are basically the same type of person, then there is no need to be sensitive to our differences, since this approach aims to eliminate the differences entirely. This approach is what led to the problems now being seen in Spencer Owens.

Cityside used an approach called the Access and Legitimacy Paradigm. Supporters of this approach believed that you need “access to - and legitimacy with-a more diverse clientele by matching the demographics of the organization to those of critical consumer or constituent groups.” 10 Cityside put African-American employees in retail because they would be dealing with mostly clients of the same race and culture and this would give the company legitimacy in the community and increase sales. Where this approach went wrong is that it alienated African-American employees and clients. While the discrimination-and-fairness paradigm used by Spencer Owens aims to make all employees equal and the same, access-and-legitimacy, takes the opposite approach and separates employees by race, not allowing the two to work together or grow in their roles in the company.

What approach to diversity might have been more effective in each of these cases?

Diversity and Affirmative Action: Difference

Affirmative action is selective in mandating changes that benefit previously disadvantaged groups. It is an outgrowth of Equal Employment Opportunity legislation.5 Diversity is inclusive, encompassing everyone in the workplace. It seeks to create a working environment in which everyone and every group fits, feels accepted, has value, and contributes.6 Managing diversity, while based on cultural change, is a pragmatic business strategy that focuses on maximizing the productivity, creativity and commitment of the workforce while meeting the needs of diverse groups.

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Approaches to diversity that might have been more effective in these cases:

Managing diversity entails recognition of the unique contribution every employee can make.5 Managing diversity also moves beyond valuing diversity in that it is a way in which to do business and should be aligned with other organizational strategic plans.6 Diverse employees offer an extraordinarily wide range of proficiencies for doing business in any marketplace. The following are different approaches that Wilkens and Richards could have taken to be more effective in their efforts (see footnote 8):

1. To attract young, new hires, college career fairs allow an employer to target people of color and women who may be good potential employees. 2. Employee referral programs: good employees typically associate with other good potential friends and associates. By implementing a program where employees refer other good candidates, employers can identify and reach out to others of the same race or background. 3. Recruitment: enlightened employers know that they need to take a hard look at their own tactics for generating diverse job candidates. These organizations take a serious look at their internal assessment around recruiting. With this, employers target key groups of employees and then mentor them so that they are able to navigate the system successfully.

4. Education/trainings: a successful diversity program will also educate all of a company’s employees to understand the business rationale behind their efforts. That way, the employees who don’t directly benefit from a company’s diversity efforts understand that they still have a stake in the program’s success. In addition, encouraging employees to participate in skills-based volunteer projects can help unleash targeted skills.5 5. Mentoring programs: It is important to understand that a company cannot expect to change in corporate culture unless you get your full employee base involved. Partnering lower level employees with senior level employees, including diverse and promising professionals of color mentor-mentee sponsorships, may help facilitate the understanding of working together.

6. Merit systems: performance standards should be based on a thorough job analysis. Standards should be periodically updated. It is also suggested that the standards not be based on traits and personality factors; focus should be on behavior or performance – what the employee does.9 7. Company philosophy: seeking out practices that emphasize equality and teamwork in compensation and decision-making.

What should Wilkens/Richards do to turn things around?

In addition to considering the above seven items, Wilkens and Richards should contemplate the following actions:

1. Reinstate sensitivity trainings: this needs to be mandatory for all employees to improve the negative relationships between the team’s diversity as a workgroup, to help with conflict management and interpersonal dynamics.5 This training will help to encourage collaborative behavior and improve communication efforts amongst the groups. a. Diversity should be understood as the varied perspectives and approaches to work that members of different identity groups bring.10

2. Take steps to reduce negative effects of unconscious stereotyping and increase the use of group goals in heterogeneous groups. Rewarding groups to accomplish group goals might encourage group members to focus on their common objectives rather than on demographic faultiness that are unrelated to performance. a. The leadership team must understand that a diverse workforce will embody different perspectives and approaches to work, and must truly value variety of opinion and insight.

3. The leadership team must recognize both the learning opportunities and the challenges that the expression of different perspectives presents for an organization.10

4. The organizational culture must create an expectation of high standards from everyone.10 5. The organizational culture must stimulate personal development.10 6. The organizational culture must encourage openness and make workers feel valued.10 7. The organization must have a well-articulated and widely understood mission.10

Conclusion:

Wilkens and Richards must realize that increasing demographic variation does not in itself increase organizational effectiveness. They need to realize that it is how a company defines diversity –and what it does with the experiences of being a diverse organization – that delivers on the promise.10

These companies should develop an outlook on diversity that enables them to incorporate employees’ perspectives into the main work of the organization and to enhance work by rethinking primary tasks and redefining markets, products, strategies, missions, business practices, and even cultures. By instituting this learning-and-effectiveness paradigm for managing diversity, Wilkens and Richards will tap into true diversity benefits.10

References:

1. http://gladstone.uoregon.edu/~asuomca/diversityinit/definition.html 2. Ely, Robin. (April 17, 2006). “Managing Diversity at Spencer Owens & Co.” 3. Grensing-Pophal, Lin, (May 2002). “Reaching for Diversity Efforts in the Workplace.” 4. Ely, Robin. (April 17, 2006). “Managing Diversity at Cityside Financial Services” 5. Kreitner, Robert & Knicki, Angelo. (9th Edition/2010). “Organizational Behavior” 6. Stonybrook University. “Diversity and Affirmative Action: Difference” 7. www.business-marketing.com/store/affirmvsdiv.html

8. www.boston.com/jobs/diversity. (May 9, 2004). “DiversityWorks: How all
Employees Benefit.” 9. Hodge, John. (June 1, 1993). “Relationship between managing diversity and merit-based systems.” 10. Thomas, David A. and Ely, Robin A. (September/October 1996). “Making Differences Matter: A New Paradigm for Managing Diversity.”