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Competitive Diversity Intelligence

Competitive diversity intelligence (CDI) is an especially valuable tool in the workforce competitive intelligence suite. It can be defined as the systematic and focused study of the diversity strategies and results of your direct competitors and your labor market competitors. CDI provides top management with an early warning of potential problems as well as new ideas and best practices to improve diversity results.

Benefiting from our increasingly diverse population

Diversity once was viewed by many senior managers as a stylish, politically-correct, "feel good" type of activity. No longer. Diversity isn't a compliance issue, it is a bottom line issue of strategic importance.

Reason: The American population, workforce and consuming public is becoming less white, less male, and less English-speaking at a stunning annual rate. Businesses whose supervisory, managerial and executive ranks do not yet reflect this new reality run an increasing risk of groupthink, loss of relevance and declining customer loyalty.

Let's quickly review two classic diversity cases.

Perhaps Wal-Mart didn't know about CDI

On June 22, 2004, a federal judge in San Francisco ruled that a 2001 lawsuit claiming Wal-Mart systematically denied equal pay and promotion to female employees could proceed.

Making this the largest class-action suit in history, 1.6 million women who have worked at Wal-Mart since December 1998 are bringing the class action. The suit alleges, according to The Financial Times, that "while two-thirds of hourly paid employees are female, only a third of management employees are women, and that competitors have a much higher proportion of women in senior positions." (Italics ours.)

Clearly, senior management was not very sensitive to the issue of gender diversity and equality at Wal-Mart. Why this was the case is hard to know from the outside. But we wonder, might Wal-Mart have been more alert to the dangers they were courting if they'd been conducting competitive intelligence on the HR practices and policies of their competitors?

No doubt any number of sharp people in Wal-Mart's management realized they had a problem. Had a formal intelligence process been in place, these observations about the external landscape would have been collected, analyzed and presented to top management. Specifically, a dedicated competitive diversity intelligence program — a systematic and focused study of competitors' diversity policies and results — would have shown Wal-Mart management the growing discrepancy between their own HR practices and those of their competitors.

This information probably would have been a real eye opener for Wal-Mart management. And it might have ended up saving the stockholders billions of dollars by the time this case either settles or goes to jury.

Denny's gets an accurate picture

This story from a well-known case of a company correcting acute diversity shortcomings is taken from the June 21, 2004 Wall Street Journal article, 'Casting a Wider Net: Diversity in the boardroom is gaining as a way to improve governance — and business decisions," by Andrew Blackman.

The background is that Denny's Corporation had suffered serious harm to its reputation from a series of lawsuits on behalf of minorities who charged that they had been mistreated at Denny's restaurants. The company has since made a concerted effort to diversify its management and board, and has won awards from Fortune Magazine as a result.

James Adamson, the former Denny's CEO who championed the diversity effort, was quoted as saying, "Much more important than diversity of race or religion or background is diversity of ideas."

Adamson tells a story in the article that shows how five years ago, Raul Tapia, the only Hispanic member of Denny's board, prevented a major marketing plan failure at the company's El Pollo Loco chicken restaurants. Advertisements were presented to the board, which was ready to sign off on them. The WSJ reports:

"But Mr. Tapia asked why the ads featured only white meat. The reason was that most consumers prefer white meat, he was told. But Mr. Tapia pointed out that most Hispanic consumers prefer dark meat, and that El Pollo Loco, which was founded in Mexico and offers many Mexican dishes, depended heavily on Hispanic customers. The ad campaign was swiftly modified to emphasize dark meat instead."

The ad agency and internal creative staff plus the other members of Denny's board "didn't know what they didn't know." Fortunately for Denny's stockholders, the board was cultivating a diversity of ideas and knowledge and was learning to listen to contrary opinion.

Take a global view

Diversifying the workforce at all levels is rapidly becoming seen as not only inevitable but desirable. And the companies that diversify intelligently and enthusiastically will be the leaders in the global economy in the 21st century.
Competitive diversity intelligence can help you explore, understand and profit from diversity.

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