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Companies Are Raising Diversity Bar Higher Each Day
Part one of this series, published in the Oct. 8 issue of Grand Rapids Business Journal, ended with the question of whether the business community’s endeavor to address diversity would promulgate awareness in the general community.
Keller: I believe we’re trying to do the right thing. But the right thing for us is what we have control over within our own businesses, and that will have an impact on the community. I think we believe that. I don’t think it’s our job, at this point, or our desire, to directly take this to the community. If the community wants to take it up… I think what we can learn … there are environments where we can feel safe to talk about issues of diversity. And those environments are really cool. It’s wonderful to have them. And we need to create more. And businesses can be an area where that is the case. They traditionally have not been, necessarily. But we want them to take a bigger role. That’s something we can influence. Now if the community, at the same time, has places where we can have safe dialogue — and I think there are places doing work in that area — that’s really beneficial. We want to be able to have more of those opportunities.
BJ: Is it more beneficial for businesses in the community to stop talking about it? Is it more beneficial if the media stops talking about it?
Brown: I think media works both ends, which is to build contrasts. Contrast creates a story. Contrast can be positive or negative.
Hackett: In the end, what will make us a community is if we work together to solve this. Not who has the louder voice. Scott Peck writes a great deal on what makes a community evolve out of the norms of churches and schools and the square dance, and in a corny way, the farm. Now, because we aren’t spending any time in these places, we’re spending the time in businesses, so burdens fall on us because that’s where people are. And, you’ve got to build a sense of community in your business. It’s real simple. You want trust to abound and then things can happen.
There’s a second dynamic, which is organizational design, to flatten where people have to work across domains and so trust naturally enhances that. And so these things actually kind of feed each other in terms of a better sense of community.
It’s interesting; if we talk about the community here in Grand Rapids it’s a basis for how people get along inside Grand Rapids. What kind of trust, what kind of information is shared back and forth, and so on and so forth. And all I can do is tell you that, from a business perspective, we’ll only move quickly to the degree we can cross those domains inside our company faster across the world. So there’s a base interest there for me to get this right, because I have to make an organization feel that it can trust its respected colleagues so that things can get done.
Personally I think it’s sociologically the right thing to do. The counter-picture is a quite ugly one. I can’t imagine a world where we’re more divisive, more separate, being sustainable. It doesn’t make sense.
If I may, there is one point I’d like to make. There is a uniqueness to Grand Rapids which is a positive, but which makes the challenges greater. I’m just thinking about a local law firm that was trying to benchmark its firm together with the kind of community that is Grand Rapids. So they set about the task of finding Grand Rapids two, and Grand Rapids three, and Grand Rapids four in the United States. And they invested a fair amount of resources in doing this. And, really much to their shock, they couldn’t find another place like Grand Rapids. The reason for it is when you look at the intensity of the manufacturing environment that you have here. It’s top 10 in the country in terms of the resources, the employment level devoted…dedicated…to manufacturing. And you have, of the 20 federal standard industrial classifications for manufacturing, you have 19 of them in this area. It’s the only metropolitan area in the United States that has 19. If you get into the teens you have a diverse economic base.
The reason I think that’s significant is that you were asking the question, should the Business Journal, should the media, talk about this, or should we stop taking about it and let things have their way for a period of time. I guess my sense of it is that you don’t have one or two driving industries in an area that, so long as they’re moving in a particular direction, all things economically and socially will move in that direction. Not here. Because you’ve got six, now building a seventh, major cluster in this area, you have 19 standard industrial classifications. In order to spread the word across a broad spectrum of people in businesses, you’ve really got to have a communication vehicle to do that. So I think part of it is the media.
And obviously you’re asking the question, ‘why was the Chamber the entity for healing racism?’ That’s because if you made it part of the furniture industry or you made it part of the automobile industry you’d only be touching a component of Grand Rapids. You wouldn’t be touching it all. And so, we do have some uniqueness which serves us very well in times of economic stress and challenge that diversity, but at the same time moving socially across a broad front. You really have to reach wide to get everyone in.
BJ: In regard to minority suppliers and community businesses: Have you been able see increases there? Or does it mirror what are you finding in hiring and with retaining minority employees? Is that a difficulty as well?
Hackett: I speak as a person making it happen. I can tell you the company is dramatically better than it was eight years ago. The numbers are very significant.
BJ: In terms of your providers?
Hackett: Minority suppliers as a percentage of our supply chain. And the success rate’s higher because of the mentoring program and the learning group. We’re now going back through a process of re-certifying all of our suppliers for performance. This is a never-ending process, to find the standard for performance for a supplier, it tends to keep shifting in terms of cost and quality and speed. Automotive, I don’t want to speak for those companies, but they’ve made it clear they have to get certain cost concessions. Chrysler’s one who’s made it obvious. And so the suppliers have to make a choice whether they want to play or go somewhere else. I think in the furniture industry we’re just staring to see a broader supply base starting to develop. So that’s good news because it also creates a field for more minority suppliers to play within.
Keller: Frankly, I don’t think we’re doing a good enough job in the minority supplier side in the automotive supplier area. It’s a pretty intense environment as well. But West Michigan is making progress.
Harris: The typical buyer/supplier conversation is, ‘Hey, I’ve got this to offer. Do you need this service?’ And the buyer says, ‘If you’re competitive you get it, if you’re not, you don’t.’ And if you’re in the business of making widgets and that customer needs a widget but it has a little extra thing on it, the customer is not necessarily going to make a commitment to you that if you put that extra feature on your widget he’s necessarily going to buy it from you long enough to make your investment back. That’s typical engagement. Partnership is where there’s an understanding, there’s a mutual value, mutual respect, mutual vision. And that’s kind of laid out. Commitments can still be broken. I mean it’s not a contract that you’re signing. But it’s much more than the casual, ‘If you build it they will come’ sort of thing. And so strategic plans can be made and collaborated with banks and government agencies, and land can be purchased, rates be established. It’s a whole strategic plan you can put around a partnership. It’s a commitment. And everybody knows there’s going to be exit clauses and so forth, but there’s enough there.
There’s not a lot of that around this area. There’s not a lot of strategic relationships at the right levels between minority suppliers and the majority consumers. And there may not be enough minority suppliers with the wherewithal to initially even engage at that kind of level. And so the risks therefore become higher, which makes it less attractive for the buyer to want to even think about having a conversation with someone. But that’s matured over years, over in the automotive industry, in order to put more minority suppliers in business. Chrysler had put all these suppliers in business.
Hackett: We have, too. Several years ago we had some experiences with that. And unfortunately they didn’t turn out as well. Some didn’t, some did. Some bailed. And I know some in the automotive industry did, too. When Ignatio Lopez disaggregated GM’s supply chain in the beginning of the ’90s, it was a huge bomb on our region here in terms of how supply chains were going to work. That affected automobiles, it didn’t affect furniture as much as you would now see today. Today there’s now a disaggregation of the supply chain in furniture. And no one is further along than Steelcase is.
I see that sociologically as an enhancement for the minority opportunity. You won’t need a huge amount of capital and track record to get into that. As Fred said, they tend to tier relationships so they hold someone accountable. At the macro level, the macro owner can sub out assemblies and pieces to smaller businesses. The Japanese are quite adept at this. It spreads the risk; it spreads the entrepreneurial spirit. If somebody really wants to get after it they can make a good life for themselves. It’s a great system.
The other innovation is the Internet. It lets them all act as one network. We didn’t have that before. I see that as a real positive.
Harris: There’s progress being made, but still there’s a huge disparity. If you look at the Michigan Minority Business Development Council, one of the largest certifying bodies for minority businesses, their rosters of affiliate members, that is minority businesses, is something like 4,000. In the West Michigan area code 616, 231 they have only about 120 registered. So the other 3,000 are all in eastern Michigan. Total revenues of these affiliates is something like $8.5 billion. And the total revenues of these 120 minority businesses in West Michigan is something like $150 million. Now, some of this has to do with how MMBDs are signed up with them.
BJ: I hear so many complaints about the certification process: The cost; the number of small businesses that are just not going to have the time to go through certification; that it’s real limiting and really ought not be the measure. Should there be something that augments that?
Keller: I’m not sure where that comes from. I mean our cost, we’re on a $15 million job, right, and our cost is $750.
The certification process is, pardon me, a bit of an affront, but it’s not a harsh investment.
Harris: I’m with you. It gets into affidavits and yada-yada-yada… Right now you’ve got to assert that to prove that you are.
Hackett: It’s indignant both ways. That’s the part that bothers me.
Harris: It’s necessary at this point.
This is the issue. The one of the bridge piling. How do you build dignity back into people. It’s the biggest gap. I don’t want to jump off supply-chain development. I want to come back to what you were talking about. On the shop floor this is the biggest problem. Having people treat each other with dignity. They misunderstand it. They misunderstand the responses. They’re indignant; not racist, not insensitive. People want to try and maintain their dignity about them. Why they truly are. Why they come to work. They don’t want to be talked out of that.
BJ: Is that a bigger problem now than it was before…
Hackett: Well, it’s a socialization that says: ‘Why would we get upset about the Bugs Bunny cartoons. It’s just a cartoon.’ Well, it’s understanding you’re taking away someone’s dignity with that. They probably didn’t think of it that way. Brian said it, Fred said it. A lot of good people don’t realize, you know, what that undertow does.
Harris: The theater you folks started there, the diversity theater. Some of the programs that go on at Steelcase and other companies like that expose people to the diversity and treating each other with respect. Those forums, those venues, are very different than the Institutes for Healing Racism. That session, when people come away, you ask the question what’s the difference, Jim, between what you’re doing, and what the Chamber’s doing. There’s no question there’s an epiphany for most, of some sort, during one of these sessions. When you go through a diversity theater, you see what’s wrong, you see where the offense occurs, but you don’t understand the background behind it. There’s no real depth to the part. There’s a reactionary part. Hot is bad. If it’s too hot or cold, it’s bad. Why is it too hot? Why is it too cold? You get that in the Institutes for Healing Racism because it’s not a five-minute conversation. It’s not a program, a training exercise. It’s an experience. And it’s hard to mass-produce effectively and efficiently, in a corporate environment, the quality, if you will, the depth of the experience you get at the Institute. It’s just flat-out the way it is. I don’t know how you’d change that. I don’t think you can.
Keller: To implement it. We think of it as a continuum, with exposure to kind of the absolutes within the organization. We don’t tolerate intolerance. We’ve let people know that up front. This is the place people are treated with dignity and respect at all times. And if you don’t there are consequences. So that’s phase one. Phase two is we go through what we call beyond gender and culture…a.k.a. diversity theater. And we expose people to what the offensive looks like. And we talk from gender issues to racism, sexism, all the “-isms,” and show people what that looks like. And how it feels.
Having said that, we also talk about the idea of people individually going through a process. The short form is: ‘You don’t know what you don’t know,’ and then as you become aware of that, you’re aware of your own incompetence. And you want to then move from being incompetent in these relationships to being competent. As so eventually you go from being…
Brown: Unconsciously incompetent…
Keller: Unconsciously incompetent is the first step. Very good. Second step is consciously incompetent. The third step being consciously competent. And the fourth step is unconsciously competent. And as you move through that process, do we ever get to the fourth stage? I don’t think so. Maybe some people do. Some people are just unconsciously very good at this.
Hackett: You add the bellows to this that makes it worse. In businesses there’s this command and control system. So many people would have to move in one direction at times that we confuse command and leadership, with ‘OK, you can be indignant.’ No. You can’t use that kind of leverage to get people to move. And why has that crept into the methods, and it’s around the world I see this by the way, not just in America. It’s about control. And it’s a very difficult thing to learn how to handle the kind of leverage you have to move people. And do it in a way that makes them want to follow you, and not cross all these really insensitive places. That’s why I think it’s the number one thing. You have to start back. You’ve already given lots of people lots of control and they haven’t had the training Fred talks about. That means kind of every day you’re running red lights and you don’t even know it. So the socialization is trying to help them, but as Fred said, there’s a more intense experience we’ve got to go through. So we’re sending all the executives through the Healing Racism course. Not with each other, either. And then we’re going to kind of systematically go down the ladder. Try to get our top management through the process. And I can already tell you that it has had a big impact.
BJ: How many companies do you think are doing that in Grand Rapids?
Hackett: All of our collective hero is (D&W Food Centers Chairman) Bob Woodrick, because I think he sends a lot of his people through the program.
Harris: In the room there’s Spartan people, and people from Meijer, Steelcase, Cascade Engineering, St. Mary’s also.
Keller: We must keep telling ourselves this is a prospective thing that we’re doing. To look back does absolutely nothing. It’s enlightening, but it doesn’t change a thing. And we need to be remembering that there’s nothing in our past that is a shining light to doing it better than what we’re doing today.
And that should give us encouragement. And we are on the continuous improvement path. And the continuous improvement path says basically wherever you are today is a given. It’s probably, maybe not OK, but at least it’s a given. Our objective is to make the bar a little higher tomorrow. That’s all we can do in the process. It’s a long process. It’s not going to be overnight. But we sure have to make sure we don’t slip back.
Harris: You didn’t intend to separate business’s responsibility to help shape the community though. Did you?
Keller: Well, I find myself arguing, and strangely enough I do believe that business has the opportunity to…to influence the community. But I don’t think that we have been thinking about doing this to shape the community. We’re doing it to shape our businesses, because that’s where we have the influence.
BJ: But you are going to need the community because (employees) have to live there.
Keller: Yes, and I just gave a presentation, which I’m fresh from, which really talks about being an agent of the community. We cannot separate ourselves. We must be engaged. And we cannot be thinking in terms of a philanthropic model where we … ‘give back.’ That implies that there’s a separation between the community and business. And that we kind of ‘take’ from the community and are going to ‘give’ it back to them. And to give out of our excess. We can’t use that model anymore. The model we need to use is the model where we’re engaged in these intractable problems together. We want to be working together. But the fact is, in the area of developing understanding around diversity issues, diversity issues are beyond race. There’s no question. But there’s also a caveat to that where you can’t solve the diversity issue without solving the race issue. The issues around diversity are really connected to how we think about our businesses. We need to be aware that our businesses are in business for more than just building shareholder value. That if we are, in fact, focusing on shareholder value exclusively, that’s a pretty slippery slope. And we will soon forget that we’re engaged, and should be engaged, in our communities. And I would contend that’s the very unstable position to be balancing: the community and the business. It’s not something you can easily do with the stroke of a pen. It takes real leadership to balance this, to make decisions, delegate resources to keep both going at the same time. I would contend the organizations that do it well will be, what I would call, in the sustainability zone. Where you’re going to have long-term development of the community, and long-term development of the businesses, and be, in fact, very sustainable.
Hackett: There was a document I got from Dallas where they attempted to attack this issue of how business and the community blended. They actually formed a charter of why it was important for business and community to link. And I would say it was a very good motivational tool. Saying this is what our purpose is. And they tried to, if I go back to my hand diagram here, of this gap they’re trying to make up. Here are thing we’re going to set in place. We’re going to need the community to pave over the top of this. We’ll take the time, make the investment, call the meetings, hold the discussions to try and plant some things. Examples are: when we get young minorities into business, and in our communities who haven’t lived here, Margaret Sellers Walker has an orientation meeting for them, and we need to attend that. We need to come and let them know we’re glad they’re in our community, and here’s some things for you to know. I can talk to you about things outside the Steelcase system you may not know about if you do business with them. To create the informal links. That’s an example of a piling, the analogy for business.
You can make investments in the school system, which is something we’re trying to do big time. To try and make our public school system work in ways that people don’t see it as a drag on attraction. Pat (Newby, superintendent of Grand Rapids Public Schools) has been wonderful, engaging the business community on what we can do to help her. I’m trying to think of other examples. We started the socialization effort for smaller companies. Because the little companies don’t have the resources to put together what Fred and I can do. And so we said we’ll help and share with that. This is what was going on in Dallas, the footings, helping them with the footings. Hopefully then there are things to come from that. But there’s a long way to go.