May 27, 2003

What Kind Of Waste Are They Managing?

By Joe Guzzardi

It must be a record: Maury Myers, Chairman, CEO and President of Waste Management Inc., which calls itself “the leading provider of comprehensive waste management services,” used the word “diversity” or “diverse” seventeen times in a 1,000 word essay in his March 2003 “CEO Update.” [Not online, alas!]

Myers called for “inclusion” five times and insisted three times that diversity is not only “the right thing to do” but is “vital” for the future of the company.

By “promoting diversity and inclusion,” Waste Management will become a better company and better positioned to “appeal to customers,” theorizes Myers.

Newly appointed Vice President of Business Diversity Carlton Yearwood has been recruited to lead efforts to make sure that Waste Management will

“…. appeal to customers, attract and retain talented people, ensure compliance and gain recognition that Waste Management is highly sought after as a work place for all people.”

Waste Management employees are encouraged to “promote” and “enjoy” diversity.

Mercifully, Myers did not insist that they “celebrate” diversity.

To help Waste Management attain the apex of all things diverse, Myers announced that within the next three years, the company will provide:

“….diversity and inclusion training for all the 50,000-plus Waste Management employees….We will introduce development and succession planning programs that encourage a diverse pipeline of talent….We will build alliances with community, minority and workplace organizations….Most important, it is the right thing to do because it is good for our business….”

After reading the “CEO Update,” I think Myers needs a good editor more than diversity training. Talk about hammering people over the head!

Actually what Myers should do is read the new study authored by Massachusetts Institute of Technology Sloan School of Management Professor Thomas A Kochan. It found that neither a diverse workforce nor repeated diversity training sessions do anything to improve corporate performance, or to create a more harmonious work force. [The Effects of Diversity on Business Performance: Report of the Diversity Research Network PDF]

The five-year study noted that diversity is an $8 billion industry for the consulting firms that cater to it. Nice work if you can get it!

But the lingering question is “Can diversity be taken seriously as a tool for enhanced profits and a more productive working environment?”

MIT Sloan Management Review published the study in its Spring issue. [The Paradoxical effects of Diversity, pay archive] And an article titled “Diversity’s Business Case Doesn’t Add Up” by Fay Hansen about Professor Kochan’s research is available online at www.workforce.com.

Professor Kochan’s group, the Diversity Research Network, contacted 20 Fortune 500 companies over a five-year period. All have outstanding reputations in the business world for their commitment to diversity.

But Kochan was not impressed. He said:

"The diversity industry is built on sand. The business case rhetoric for diversity is simply naïve and overdone. There are no strong positive or negative effects of gender or racial diversity on business performance."

Kochan observed that class-action and racial discrimination lawsuits are up fivefold at the E.E.O.C. in the last decade despite the proliferation of diversity programs at corporations large and small throughout the U.S. He comments:

“Organizations appoint diversity officers. They hire diversity consultants, coaches, and trainers. They adopt diversity scorecards, benchmarks, and best practices, and send executives to diversity conferences and leadership academies.”

To what end, wonders Kochan?

“One item is in very short supply: hard metrics for measuring performance results or the return on diversity spending.”

In fact, none (0) of the twenty companies had ever done a comprehensive study on how or if diversity impacts profits.

Noted Michael C. Hyter, president and CEO of J. Howard & Associates, a Boston-based diversity consultancy:

"Organizations like having the flexibility of not being put in a box about whether this does or doesn’t work. Too often, they are given a lot of credit for their efforts anyway."

But ironically, the bigger the company and the more spent on diversity training, the harder they have been hit in court.

Coca-Cola, Ford Motor, and Hertz have been involved in a series of racial discrimination suits over the last several years.

Wal-Mart, ranked number one on the Fortune Magazine 2003 “America’s Most Admired Companies”, is fighting the largest sex-discrimination suit in history with more than 500,000 plaintiffs.

Xerox began its diversity program 40 years ago. More than 30% of its work force is minority. Chairman and CEO Ann Mulchey once said, “Somehow, diversity breeds creativity.”

But some Xerox employees didn’t get the true meaning of Mulcahey’s message. When some disgruntled employees (who no doubt received diversity training) created a workplace display of African-American dolls with nooses around their necks, dozens of lawsuits were filed.

MIT’s Kochan said that many companies see diversity training as a public relations maneuver or as a shield against lawsuits--although Coca-Cola, Ford, Hertz, Wal-Mart and Xerox weren’t spared.

But to just chatter about diversity for diversity’s sake is nonsense, asserts Kochan:

“… there is virtually no evidence to support the simple assertion that diversity is inevitably good or bad for business."

In fact, dwelling on diversity excessively—as was the case with Xerox--- is asking for trouble.

Fay Hansen noted in her workforce.com article that

“The empirical studies indicate that racial and ethnic diversity may, in fact, have a negative impact on business performance unless specific forms of analysis, training, and monitoring are in place. If left unattended or mismanaged, diversity is likely to produce miscommunication, unresolved conflict, higher turnover, and lower performance.”

Kochan suggests (and VDARE.COM is in complete agreement) that the best way to handle future diversity training would be to encourage the diversity of ideas.

[Contact Waste Management if you have a diverse idea.]