October 13, 2010

Major League Baseball's Strategic Approach to Diversity

The players battling for Major League Baseball's coveted pennants this month represent a microcosm of America. More than 40% of the league's players are people of color, and most of those are people of Latin descent, according to data in the annual Lapchick Racial and Gender Report Card. Another 9% are African-American, and two of the original eight playoff teams, or 25%, have black managers.

Laudable stuff, when you compare it to corporate America. Minorities represent about 34% of the nation's private sector employees, but they make up just 14% of the directors on Fortune 500 corporate boards and 10% of top executives, according to a recent survey by U.S. Senator Robert Menendez (D-NJ).

Baseball understands what corporate America typically doesn't. Diversity in business is a strategic advantage. That's why even beyond the field of play, Major League Baseball (as well as the NFL and NBA, for that matter) is proving a model for inclusion. In baseball, five people of color, or 17%, lead teams as general managers — the people who make all of the important personnel and financial baseball decisions for a major league squad. The percentage of people of color holding professional administrative positions is 31%, and women hold 46% of professional administrative jobs, which are not support staff, but managers, coordinators and supervisors in areas such as marketing and promotions. "Sports like baseball have caught up and surpassed corporate America," Dr. Richard Lapchick, who leads the report card effort, told me. "Sports has set a standard and will continue to do that."

These leagues aren't perfect, of course. They all have an embarrassingly low number of women in executive roles. But professional athletic teams are working hard to train and mentor minority executives and engage minority businesses. A new executive development program, for example, helps clubs in less diverse cities identify and mold high potential executives of color. Anywhere from four to six candidates go through 18 months of exposure to baseball operations and then get jobs with specific clubs, says the league's chief diversity officer Wendy Lewis. At the annual "Civil Rights Game," taking place in Atlanta in May, the league will host a first-ever trade fair where minority-owned businesses can register their companies in the league's supply chain portal.

Baseball outdoes the other major American sports in supplier diversity. In 2009, all of the teams and the central office combined to spend over $700 million with thousands of minority- and women-owned businesses. The Chicago White Sox, one of the league leaders in diversity spending, shelled out more than $3 million in such areas as cleaning services, uniforms, office supplies and food vendors.

For a wealthy middle-aged white man, White Sox owner Jerry Reinsdorf has a pleasingly healthy attitude toward race. Remember that Reinsdorf, who also owns the NBA's Chicago Bulls, hired the first black general manager in Chicago sports history, Ken Williams (who was the third black GM in major league baseball history). The on-field manager of Reinsdorf's White Sox is Ozzie Guillen from Venezuela. And more than 26% of the White Sox business staff is made up of people of color.

But Reinsdorf is not hiring executives of color because it's the politically correct thing to do. "I don't believe in set-asides," he told me, adding that they are an insult to the many qualified minorities out there. For Reinsdorf, it's really a simple business equation. "When it comes to hiring if you open it up to the whole world you are going to get more qualified people, if you limit hiring to white males you shrink the pool of people," he explains.

Even if other executives in other industries have the same inclusive philosophy, it's difficult for some employers to find people outside their network. Many mainstream businesses don't hire a lot of minorities or do much business with them because they rarely associate with minorities. The White Sox were no different. In the early 90s, minorities comprised only about 5% of the team's employees. Every year, the club received hundreds of applications for jobs, far more than it had spots for. The HR staff saw no reason to look beyond what seemed a rich pool of applicants. But few of those applicants were people of color, Reinsdorf says. "My people never thought anything of it," he recalls. "We had to reach out, and once we did we started getting [even better] people."

Don't get me wrong. I realize that some in corporate America do an extraordinary job in minority recruiting, development, and supplier spending. McDonald's, PepsiCo, and American Express come to mind. Each of those giant companies alone probably spends as much with minority suppliers as baseball does collectively. But outside of a few exceptions, companies can learn from the collaborative approach to diversity and the accountability that exist in pro sports.

Ever since 1999, when Commissioner Bud Selig mandated that teams must interview a person of color for managerial openings, diversity has been kept on the "front burner," says MLB CFO Jonathan Mariner. The league has a diversity committee made up of 10 team owners and commissioner Selig. They meet at least four times a year for more than an hour to talk exclusively about diversity and dig into the numbers. Each owner sees the performance of every other team. If one team is slacking, the other owners share best practices to help that team improve. "Our lead dogs encourage other owners," Mariner says. And in an environment as competitive as sports, "It has helped these clubs to focus on what they are not doing."

But as Reinsdorf reminds me, the sports business model is different than in most of corporate America. The teams compete fiercely, but much of their revenue — from television and games, for example — is jointly derived. Unlike other industries, they naturally cooperate on any concept that drives more revenue. It didn't happen overnight, but the owners have come to realize that it's not only the players on the field that bring in fans, but a more inclusive workforce and supplier network gets attention too, making fans more likely to buy tickets. So while "we're trying to beat each others brains out on the court or field we have to work jointly," he says. "That is why we come together" on issues such as diversity.

This is sure to make some people cringe, but corporate America needs something akin to diversity regulators, or perhaps to use a more palatable term, a diversity standards group. The goal would be to boost revenue and fatten the collective bottom line. Just as the tech industry has groups that develop standards for silicon chip manufacturing or wireless communications protocol, there ought to be industry groups that meet to agree on diversity standards — what does meaningful representation look like, what are the hiring, promotion and partnership benchmarks — for generating optimal business returns. The key would be to make sure that every one of an industry's important companies were represented by a dedicated, senior official.

Those officials could help make diversity pay off in the workplace, as it has on the baseball diamond.

Roger Crockett is an award-winning business writer, thought leader and speaker. A former deputy bureau chief for BusinessWeek magazine, he focuses on the intersection of business, leadership and diversity.

No comments:

Post a Comment