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April 27, 2004
The Diversity of Diversity Best Performance Rankings
    by William Baue

A comparison of the DiversityInc list of the top 50 companies for diversity and a report from Diversity Best Practice and Business Women's Network that reviews 45 such lists.

The proliferation of diversity "best performance" lists increases the availability of metrics by which to measure corporate diversity performance on such issues as board diversity, sexual orientation non-discrimination policies, and supplier diversity practices.

For in-depth analysis, consult the fourth annual DiversityInc "Top 50 Companies for Diversity" list, released just last week. DiversityInc, a magazine and website publisher, added 72 questions to its questionnaire this year, bringing the total to 122--compare this to the Fortune Magazine "50 Best Companies for Minorities" list, which bases its assessment on 15 questions.

For breadth, consult the Best of the Best: Corporate Awards for Diversity & Women report recently released by Diversity Best Practice (DBP) and Business Women's Network (BWN), which reviews 45 awards pertaining to diversity and women.

"Being on a list of 'Best Companies' [for diversity] is an honor that is sought after by many organizations because being named to any of these lists has an impact on corporate results," states the Best of the Best report. "Reputation and stock price are impacted based on the studies and analyses Diversity Best Practices has made to date."

"Some companies have experienced [stock price] increases of up to 5 points simply by being named to a 'best' or 'most admired' list of companies for minorities and other 'best' lists," the report continues.

Unsurprisingly, there is some overlap between the Best of the Best report and the DiversityInc list.

For example, Verizon (ticker: VZ) placed first in the report for being named on 17 "best" lists, such as the Girlfriends Magazine "Best Lesbian Places to Work" list and the CAREERS and the disABLED "Top 50 Companies" list. DiversityInc recognized the breadth of Verizon's diversity excellence by placing it fourth on its "Top 50" list as well as on its top 10 lists for subcategories such as Latinos, Asian Americans, African Americans, and recruitment and retention. Ford (F), SBC Communications (SBC), and Xerox (XRX), also placed in the top 10 on both the DiversityInc and the Best of the Best lists.

There is discrepancy between the lists as well.

The Best of the Best top 10 includes four companies that fell off the DiversityInc top 10 list from last year to this, when the analysis became much more stringent. These companies include Fannie Mae (FNM--from 2 to 26), IBM (IBM--from 5 to 29), Eastman Kodak (EK--from 8 to 35), and Bank of America (BAC--from 9 to 23).

DiversityInc changed this year's ranking process in many ways. In addition to more than doubling the number of questions on its questionnaire, it replaced open-ended questions that required subjective analysis with check-off items that allowed for objective analysis.

DiversityInc also eliminated its panel of experts and its readers' poll, which accounted for 20 and 10 percent of last year's rankings, respectively.

"We found that the reader poll was too easily manipulated," state Barbara Frankel and Yoji Cole of DiversityInc. "One company in 2003 had hundreds of its employees vote for it, thereby 'stuffing the ballot.'"

Another potential source of differentiation between the DiversityInc rankings and the Best of the Best collective rankings is the former's emphasis on specific aspects of diversity performance. For example, DiversityInc considers CEO commitment to diversity "among the most critical aspects to corporate diversity success," and places extra weight on the CEO commitment category.

It should come as no surprise, then, that the top ranking company on the DiversityInc list, Pitney Bowes (PBI), performed particularly well in this category.

"The involvement of CEO Michael Critelli has ensured that Pitney Bowes has made a consistent, strong effort to make hiring, promoting and retaining workers of color a high priority," states Ms. Frankel. "Critelli, who also is chairman of the National Urban League, keeps a close personal eye on the status of diversity initiatives at the business-technology company, based in Stamford, Connecticut.

"He signs off on executive compensation tied to diversity (bonuses, raises and stock options), and personally reviews the progress of diversity metrics and progress," she concludes.


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