programs for months. The company was facing lawsuits claiming
links to deaths from the use of
Vioxx. And then Merck’s CEO
Raymond Gilmartin resigned.
Considering the severity of the
Vioxx issue, one could forgive Clark
if diversity wasn’t on his agenda
when he first addressed employees
as CEO. But it was.
“He hadn’t even been CEO for 24
hours and in his first employee meeting, Webcast worldwide, he made
clear that diversity is an important
part of Merck’s strategy,” says Dagit.
Words, however, have to be supported by deeds. The racial and
gender breakdown of Clark’s 10
direct reports includes three black
executives, three female executives,
one Korean-American executive and
three executives born outside of the
country. That communicates a clear
message that people who are not
white men are welcomed and
expected to be part of the company’s leadership. Besides that, Clark
is planning in 2006 to enhance the
portion of executive compensation
tied to accomplishment of diversity-management goals. Linking diversity goals to compensation is an
important method by which CEOs
demonstrate the seriousness of their
CEO Compensation Tied to Diversity
90% of Top 10 companies link
management compensation to
20% 30% 40%
50% 60% 70% 80% 90%
*Companies Ranked 91 and Higher on the Top 50 Survey
A common trait of the six companies interviewed is that they link
executive compensation to diversity.
This focuses managers on diversity-management practices—developing
a diverse talent pool and developing
leaders to succeed current executives. Diverse leadership will
respond better to a diverse consumer market.
“It has forced managers to be
more proactive in how they fill positions and how they source prospects
for new positions,” says Sandy
VanGilder, senior vice president,
diversity at JPMorgan Chase.
VanGilder adds that “something
in the neighborhood of 20 percent
of compensation” is tied to diversity
and other people-management goals
at JPMorgan Chase, which is No.
25 on The 2005 DiversityInc Top
50 Companies for Diversity list. A
survey of Top 50 companies by
DiversityInc found their average
range at 15 percent.
Besides linking executive compensation to diversity goals, Top 50
CEOs make diversity management
a leadership issue through reviews.
At JPMorgan Chase, Jamie Dimon,
the president, COO and director—
who became the company’s CEO
this year—requires that all
of his direct reports, the leaders
of the six core businesses, create
diversity plans for their business
units. Those plans are submitted
to the management committee at
the end of the year.
In 2004, JPMorgan Chase
merged with BankOne. Often fol-
lowing a merger, redundant positions are eliminated. And at less
diversity-focused companies, diversity has been cut because it’s considered “soft” and expendable.
Following the merger, however, the
diversity department brought
together both budgets and employees under one roof. Dimon, along
with current Chairman and CEO
Bill Harrison Jr., brought more
discipline in the company’s talent-management-development process
by being hands on, says VanGilder.
The two sit down with their direct
reports and assess the succession
plans for the top 300 employees.
CEOs set the course and their
“Because that exercise happened
with the CEO and COO, those business leaders then repeat that exercise
in their lines of business,” says
VanGilder. “This is the first year
we’ve done this, but there’s been close
to 2,000 employees assessed in about
a three-month time period.”
Focusing leaders on their diver-