Scramble for survival means funding for initiatives and employment practices are strained

by Julie Bird Contributing writer - Charlotte Business Journal

Diversity programs are among the victims of the recession at many companies, experts and advocates say.

Downturns generally require a focus on short-term goals directly linked to profitability, so training and development programs are among the first areas to be cut as companies trim spending.

Will Sparks, director of the graduate program in organization development at Queens University of Charlotte's McColl School of Business, says diversity programs likely are on hold at some companies.

"Any time you have some momentum and that momentum is stopped, there's a challenge in trying to restart," he says.

Joe Randolph, president of the Charlotte chapter of the National Black MBA Association, sees "pockets of opportunity" for job-seekers among his membership. But companies are hiring strategically and are not pushing for diverse candidates as aggressively as before the recession, he says.

The good news is that Charlotte companies have retained their chief diversity officers, says Joe Machicote, vice president of diversity and inclusion at Lance Inc. That's because diversity is part of many companies' DNA, he says.

Machicote chairs the board of advisers of The Diversity Forum, a local nonprofit that promotes diversity initiatives at businesses. He agrees with Sparks that diversity training has slowed or stopped at many cash-strapped companies. But that doesn't mean companies are abandoning such efforts.

"You may not buy new pants, but you're still going to put on a pair of pants every morning," he says.

It's unclear how much ground has been lost in work-force diversity. But the Equal Employment Opportunity Commission reports a significant upswing in complaints as recession-fueled layoffs swept the American work force.

The agency received 75,768 discrimination complaints in fiscal 2006. That jumped to 82,792 as the economy began to sour in fiscal 2007. Complaints topped out at 95,402 in fiscal 2008, which began just as banks began failing. The number of complaints dipped to 93,277 in fiscal 2009, which ended Sept. 30. (See related story, EEOC enforcement gains emphasis under Democrats.)

The complaints include charges of discrimination and of reverse discrimination. Because of possible legal liability, companies are reluctant to discuss the challenges of preserving diversity as they downsize and restructure.

The challenge, in a nutshell, is this: If work-force diversity has only recently been achieved, minority employees are disproportionately at risk in seniority-based layoffs. But if seniority is not the primary determining factor in layoffs, companies can be accused of reverse discrimination.

Layoffs also can damage internal affinity groups that can help keep diversity in the forefront at a company, says Kurt Ronn, an Atlanta-based human-resources specialist. Groups often form around race, gender, ethnicity and sexual orientation.

Bank of America Corp., for example, supports nine affinity groups among its employees. They range from black professionals to the disabled to Native Americans, says a spokeswoman.

Ronn, president and founder of HRworks, says affinity groups help a company stay sensitive to diversity issues. Groups often use their personal networks to help companies extend their recruiting base.

But the loss of active affinity-group members through downsizing can leave leadership less connected to diversity priorities, Ronn says. And members who survive layoffs may be so overwhelmed with work that they don't have time to advocate for their colleagues.

His advice: Make sure diversity is tied directly to a business objective Senior executives might not be keen on spending money on diversity initiatives in this economy, he says. But they're willing to commit resources to meet objectives such as expanding market reach that have a diversity component.

Ana Valdez, executive director of the Hispanic Association on Corporate Responsibility, agrees, saying executives want to see a return on investment. Fortune 500 companies are leading the way in diversity, she says. Locally, BofA recently ranked ninth this spring in DiversityInc.'s list of top 50 companies for diversity. Wells Fargo & Co. ranked No. 43.

Companies that neared collapse during the recession likely stepped away from focusing on diversity, Valdez says. "But those always committed to a diverse strategy are re-engaging," she says. "Over the next 18 months to three years, we'll see what happens."

Smart companies will see the recovery as an opportunity to diversify their work force, Ronn says. "You need to get it right now, because there is an incredible opportunity as the economy rebounds," he says.

But small and midsized employers that did not have active diversity programs before the recession are even less likely to find funding for such initiatives now, says labor and employment lawyer Bernard Tisdale.

"We see a lot of clients still very dedicated to diversity and diversifying their work force," says Tisdale, managing shareholder at Ogletree Deakins. "But in this economy, nothing gets pushed forward. If you're looking at funding, well, everything else is getting hurt too. Diversity is not getting singled out."

Despite the economy, companies are trying to do business with companies that emphasize diversity, he says. For example, potential clients increasingly quiz Ogletree Deakins about its diversity policies before agreeing to engage the law firm, he says.

"Diversity has become too important to everyone's business model," Tisdale says. "If you want to survive, you're going to have to make diversity a linchpin to your success."

Companies also are making concerted efforts to diversify their boards of directors, says Sparks at Queens. Activist shareholders are demanding it as a sign of accountability, he says.

Reynolds American Inc. in Winston-Salem is leading the way in North Carolina. Half its board members are women or minorities. The chief executive is a woman.

The boards of BofA, Family Dollar Stores Inc., Piedmont Natural Gas Co. Inc., SPX Corp., Goodrich Corp. and Polymer Group Inc. are at least 25% women and minorities, according to a recent study by UNC Chapel Hill's law school.

Sparks says it's hard to tell whether recovering companies will move on to other priorities. Sustainability, innovation, cross-training and international assignments are hot topics.

"Some organizations have been more progressive, and others are going through the motions but aren't committed to diversity," Sparks says.

The UNC study identified local companies without women and minority board members, including car dealer Sonic Automotive Inc., manufacturer EnPro Industries Inc. and women's apparel retailer Cato Corp.