2012
Case Study #2
Consumer-Packaged-Goods Company That Fell
Why
Companies
Rise and Fall
in the
DiversityInc
Top 50
results that we see in several of its industry competitors, especially in
recent years. Almost all of the top CPG companies on the DiversityInc
Top 50 list have their CEO chairing the executive diversity council, and
they increasingly link executive compensation to company-wide goals that
the council sets. Often, those goals are tied to increasing representational
diversity, especially at the top levels.
At Company B, the diversity council is chaired by the head of diversity,
who is only at the director level. The council does not link executive compensation to its goals.
INVESTING IN MARKETPLACE CONNECTIONS
For consumer-facing companies, understanding an increasingly multicultural marketplace is vital to sustainable business success, especially when
it comes to product development and placement. While all of the other
leading CPG companies have multicultural-marketing departments, this
company does not.
Increasingly, top CPGs use their resource groups for market research and
to take advantage of diverse views to create innovative solutions to reaching customers. Company B’s percentage of employees participating in its
resource groups is one-third of what it was last year, while its competitors
have dramatically increased their percentages. Our data shows direct correlations between resource-group participation and human-capital results,
with companies with lower participation having less diversity in promotions
into management, promotions within management, and demographics of
the senior levels of management.
In addition, the company has a very low percentage of supplier-diversity spend with businesses owned by Blacks, Latinos, Asians,
American Indians, women, LGBT people and people with disabilities.
Even in an industry not known for its high supplier diversity, this
company’s supplier diversity is significantly lower, indicating it is not
reaching vendors and community leaders of underrepresented groups.
When looking at this company’s philanthropy to multicultural organizations, it appears to be on par with the other top CPGs. However, this
company has less than half the amount of top-tier executives (levels 1–3)
sitting on boards of multicultural nonprofits as the average of the top
CPGs. So the donations are the same, but the actual involvement, which
builds relationships and community support, is much lower.
Company B’s
percentage
of employees
participating
in its resource
groups is
one-third of
what it was
last year,
while its
competitors
have
dramatically
increased
their
percentages.
Change diversity-council model to one chaired by CEO, with all direct
reports involved. Have council set company-wide human-capital goals
linked to senior executive compensation.
RECOMMENDATIONS FOR THIS COMPANY
Aggressively increase participation in and utilization of resource groups.
Document benefits of taking on leadership roles (increased engagement,
promotion). Offer groups recognition/rewards for customer-based
solutions, including finding diverse suppliers.
Connect participation in cross-cultural mentoring to compensation/
performance reviews. Increase emphasis on networking, sponsorship and
access to senior leaders for high potentials from underrepresented groups.
