How to Handle a Diversity Crisis

How to Handle a Diversity Crisis

by Davia B. Temin | Diversity Executive

 

A corporate crisis around a diversity issue can make company leaders feel like they have just been tossed a live hand grenade. This kind of crisis often comes seemingly from out of the blue and always exposes highly charged, highly sensitive issues and previously undisclosed biases of the parties involved.

 

And the stakes couldn't be higher: Allegations involving diversity "failings" not only can cost a company millions of dollars, but also cause a serious reputational black eye.

 

In 2000, Coca-Cola agreed to pay $156 million, plus $36 million in remediation, to settle a lawsuit brought by black employees who charged that the company routinely paid black workers less than their white colleagues. Deutsche Bank is facing a gender bias suit in U.S. federal court for allegedly "mommy-tracking" an employee after she decided to take maternity leave. And in 2010, Bank of America CEO Brian Moynihan was confronted outside his office by ABC News with information that a debt collection agency the bank hired was using racist language to intimidate consumers.

 

Huge payouts, and the loss of consumer, employee and shareholder goodwill, should be enough to scare corporate leaders into action. Companies that think they are immune need only look at the numbers: The EEOC reports it received a record number of discrimination charges in 2010 - nearly 100,000, up 7.1 percent from 2009.

 

Unfortunately, many companies are not prepared to handle this kind of crisis. While the C-suite may have appointed a "diversity czar" and incorporated official diverse hiring practices, these steps are not enough in the face of a corporate scandal.

 

To prevent or minimize a diversity crisis, companies must think more strategically about diversity goals and about how to communicate them to employees, stakeholders and shareholders alike, rather than simply checking the boxes.

 

Six Strategic Practices for Dealing With a Diversity Crisis

 

These practices should be discussed and implemented at the highest levels of the company - including the CEO and board. The chief diversity officer should certainly be involved, but ultimately it is those who hold final accountability who must make sure the plans are implemented.

 

1. Communicate diversity as a business imperative.

As Scott Page's book The Difference shows, there is unequivocal scientific proof that diverse groups make better decisions about complex problems. Diversity, therefore, is not an elective, but a business imperative. The clearer corporations are about this, the clearer the message to their managers, employees, suppliers and customers will be. While ambivalent messages set the stage for diversity crises, clarity does not.

 

2. Avoid denial.

Boards, CEOs, C-suite executives and senior management tend to downplay the possibility that a problem might even occur - and once it does, they downplay the possibility that it will escalate. This is a major miscalculation. In any crisis, vigilance beforehand can preclude a cascade of negative occurrences. From the board level down, companies must set forth a clear expectation of what behaviors are expected across the entire organization as well as what penalties will be levied when these rules are broken - even by the firm's best performers.

 

3. Enlist key allies.

Before a crisis happens, it's important to have built strong relationships with diversity groups within the organization as well as with outside groups who are potential critics - including regulators and legislators. Opening up a dialogue can be helpful, and they will often cut the company more slack in the event of a problem.

 

4. Watch for early warnings.

Listen to employees' criticisms, even if it is not comfortable or profitable to do so; they often know if trouble is brewing. Leaders can also monitor social media and company message boards. If they are alert to red flags and address issues pre-emptively, they may avoid the worst crises.

 

5. Keep lines of communication open.

Company leadership shouldn't suspend normal employee and public communications during a crisis. While there certainly will be some topics legally mandated to avoid - including confidential settlements - the company should resist lawyers' calls to cease communications totally. Rarely does the truth become clear in "quiet periods," and in a crisis every attempt to set the record straight can be valuable.

 

6. Take the crisis out of the "diversity bucket" if it does not belong there.

Litigants and their lawyers may try to turn an issue about real job performance into a case of discrimination, even when this claim is misplaced. Charging discrimination when there is none is a legal PR tactic that can bear fruitful results for plaintiffs, as companies often settle to make these claims go away.

 

To counter this tactic if indeed the claim is inaccurate, corporate communications executives in conjunction with the legal team must try to shift the debate back into more neutral ground that relies on the facts of the case. At the same time, they must still show sensitivity to the "wronged" parties, and not validate and perhaps escalate their claims with an improper response.

 

As discrimination claims continue to rise, companies must work to seriously and thoughtfully implement a crisis management plan around these issues. After the crisis hits is far too late - but there are ways to at least reduce the fallout. Looking at the potential consequences, diversity executives can build the business case for developing a crisis strategy and help reduce risk for their companies both immediately and down the road.

 

 

[About the Author: Davia Temin is founder and CEO of Temin & Co., a management consulting firm focusing on marketing and media strategy, crisis and reputation management and leadership communication coaching.]