Diverse Employees Lure Diverse Customers

A lack of employee diversity may be preventing your company from reaching a broader range of customers.

By Stephenie Overman

Every business needs customers. A company can have cutting-edge, high-quality products, but, unless customers buy those gadgets or services, the organization can’t get off the ground. Even established companies must find new ways to effectively serve and expand their customer base if they want to grow. One way to attract more customers is to hire a diverse workforce.

Having a diverse workforce is critical from a business standpoint because it enables companies to get in touch with the wants and needs of a broad range of customers by drawing on the expertise of employees with whom those customers and potential customers identify, says Mitzi Adwell, vice president of strategic solutions for The Newman Group, a Los Angeles-based Futurestep Company that provides talent management strategy services and solutions.

Companies looking to expand their customer base need to do more than push products and services to customers, she says. They need to "pull" customers in by finding out what influences what they buy and where they buy. A diverse employee population can help provide that information.

For example, diverse employees at an adult beverage company may have insights on consumption habits in different market segments, Adwell explains, which helps marketing and sales staff determine where to place products to attract new customers. "It’s that level of understanding that sets your go-to-market strategy," she says.

Having a diverse workforce can also help a company reach its existing customers by providing them with better service. "When someone older goes into a consumer electronics store, they’re sometimes made to feel clueless by the young staff," says Bruce Tulgan, founder of RainmakerThinking Inc., a management training firm based in New Haven, Conn. But that more-mature customer may have a better experience if he or she can talk to a more-mature salesperson who is in tune with the customer’s needs and concerns.

A number of companies recognize the need to find a better balance among their employees, according to Tulgan, an expert on young people in the workplace. "I visit between 50 and 100 organizations a year, and I find that a lot of organizations in the retail and restaurant business want to balance out the natural trend of having a young workforce," he says. As a result, these companies are always on the lookout for candidates "who are a little older and more experienced" to better reflect the diverse ages of their clientele.

Recognizing the business case for diversity is just the first step. You then need to set goals, build a good sourcing pipeline and demonstrate the company’s commitment.

Where to Focus

Creating a more-diverse workforce isn’t about filling quotas; it’s about expanding your efforts to reach untapped pools of appropriate candidates. The first step is to examine your workforce using an internal audit, which can identify areas where diversity is lacking and help your company better direct its search.

"Do a good internal check," says Dolores Scotto, an HR consultant in Woodbridge, N.J., who focuses on strategic staffing and recruitment. "The results sometimes do startle you."

At one company where Scotto was working, an audit revealed that the workforce was predominantly made up of people in their 30s and 40s. The company had a practice of hiring employees with MBAs, and these people tended to be in that age range—workers "who were still up-and-comers," she says. "That became the age group with the most cultural fit.

"The company wanted to open up to Baby Boomers and to [members of the] military. We wanted to work with hiring managers to bring in people who were a little older, who bring more to the table."

Scotto believes that even companies that want a diverse workforce and recognize its importance often become comfortable with the familiar. Committing to a diverse workforce means reaching beyond that comfort zone, she says. From there, compare all candidates, and if all things are equal, consider "which different mind-set might bring more to the table" to attract a wider pool of customers.

Two examples of companies that have focused on diversity recruiting efforts to better reach their customers are:

Last year, Minneapolis-based electronics retailer Best Buy announced a change in hiring strategy to create a workforce that is more representative of the changing demographics of its customers. For the last 20 years, "we have focused on males between the ages of 18 to 25," Lisa Martens, a senior analyst with Best Buy, told the Boston Herald in August 2008. Now "female spending is a huge piece of the pie in the consumer electronics world," so the company has stepped up its recruitment of women.
At Gallery Furniture in Houston, "We mirror and match the population," says founder and owner Jim McIngvale. "We hire roughly according to the percentage of customers who are females, males, African-Americans, Hispanics, Asians." As a result, "The staff knows the market. We rely heavily on the staff to know what the customer wants—what different customers want."
And McIngvale takes literally the old sales phrase "You have to speak their language."

"If someone who walks in speaks Spanish, we have a salesperson who is bilingual," he says.

Everyone’s a Teacher

While it pays to have a workforce that reflects the diversity of a company’s customer population, it doesn’t need to be a 1-1 ratio, says professor Stephen Brown, executive director of the Center for Services Leadership at the W.P. Carey School of Business at Arizona State University in Tempe.
Rather than saying “10 percent of our customers are Cuban-American, so 10 percent of front-line workers are Cuban-American,” Brown believes “you need to have your front-line employees coached” by other employees on the preferences of key ethnic groups. In that way, members of various groups can inform each other about areas that may be culturally sensitive.


For example, a company may wonder if Hispanic customers want to be spoken to in Spanish or English. In a focus group, Brown says, “women with Hispanic surnames said too often the company assumes that [they] want to be spoken to in Spanish.” If you have Hispanics in your workforce, these employees would be able to coach other workers on customer preferences, Brown explains. They could tell other employees to give a customer with a Hispanic-appearing name the option of speaking Spanish but not to assume it’s the preferred language.

Members of a diverse workforce also can coach each other about the level of formality that different customers may prefer. For example, “Anglos tend to be informal,” according to Brown, as do younger people.



Diversity Pool

There are simple ways to find a good pool of diverse candidates:

Hire your customers. Sporting goods giant Cabela’s believes that hiring shoppers is the best way to make sure its sales staff represents its customer base. To make it convenient for customers to apply for jobs, the company has set up employment kiosks in its stores. (For more on Cabela’s hiring strategy, see "Luring Shoppers as Employees" in the July-September 2007 issue of Staffing Management.)

Get the most from your employee referral program. Make sure your employee referral program can help accomplish your goal of diversity. Referrals often come from the same small group of employees, says Scotto. To increase participation and receive referrals for more-diverse candidates, provide plenty of publicity for the referral program so that all employees are aware it exists and know how it works, she advises. Incentives can help, too.

If your workforce is homogenous, however, an employee referral program can backfire, leading to a "like-me" phenomenon that hinders any diversity efforts, Scotto warns.

Tie in with affinity or focus groups. Sometimes finding a diverse pool of job candidates "takes a little digging," Scotto says. Search the Internet to find different types of affinity organizations, such as the National Society of Black Engineers and the Association of Latinos in Finance and Accounting, she suggests. "Look not only at local colleges but maybe to historically black colleges. … Think outside your own little radius."

Appearance Matters

Companies committed to hiring a diverse workforce must walk the talk to be attractive to candidates. Adwell stresses that credibility is key.

Candidates "should see a workforce that is reflective of what you’re saying. They should be able to see a true testament that [they] can grow with the organization," she says. Make sure the employee photographs on your company web site present the right image. And during the interview process, introduce potential hires to employees who can share their own stories of diversity.

If your company hasn’t had a good track record, Adwell recommends letting candidates know that your company is working to change that. Tell them that while your workforce may not look diverse today, you "have set the business case and communicate the importance of diversity from the top down. Everything is in alignment" to make improvements

SHRM LINE: Job Market Recovery Will Be Slow

11/6/2009

By Theresa Minton-Eversole

Though the U.S. unemployment rate likely will continue to climb for the next few months, HR professionals in the manufacturing and service sectors expect hiring in November 2009 to surpass levels reached one year ago, according to the Society for Human Resource Management’s (SHRM) latest Leading Indicators of National Employment (LINE) survey.

Hiring is still not widespread, though November 2009 marks the fifth straight month that job additions were expected to outpace layoffs in manufacturing and services. But because the recession has been so long, “any improvements we see now are only improvements on what was already a weak job market one year ago,” cautions Jennifer Schramm, SHRM’s manager of workplace trends and forecasting.

The SHRM LINE data are collected through a monthly survey of human resource executives at more than 500 manufacturing and 500 service-sector firms and focus on four key areas: employers’ hiring expectations, new-hire compensation, difficulty in recruiting top-level talent and job vacancies. The net increasing index is calculated as the percentage increasing minus the percentage decreasing.

Employment Expectations	Manufacturing	Service
Hiring will surpass layoffs in November 2009 in manufacturing and services; the activity is also ahead of the November 2008 pace.	+15.3	+5.9
Recruiting Difficulty	Manufacturing	Service
In October 2009, both sectors reported increased recruiting difficulty during the same month for the first time since January 2007.	+2.8	+13.0
New-Hire Compensation	Manufacturing	Service
For the 13th straight month in October 2009, the rate of increase for new-hire compensation dropped in both sectors.	-3.0	-4.2

Source: SHRM Leading Indicators of National Employment (LINE), www.shrm.org/line.

Employment Expectations, Recruiting Difficulty

November 2009 is the first time that LINE data show that year-over-year hiring has increased in services since February 2008 and in manufacturing since August 2007. Still, says Schramm, “Net expectations are fairly low, indicating that any improvements are developing slowly.”

In the manufacturing sector, a net total of 17.8 percent of respondents reported they will add jobs in November 2009 (32.0 percent adding jobs vs. 14.2 percent eliminating jobs). In the service sector, a net total of 15.8 percent of companies will add jobs in November 2009 (26.1 percent hiring versus 10.3 percent cutting jobs)—the seventh straight month that the hiring rate will surpass the layoff rate in that sector.

LINE’s recruiting difficulty index measures how difficult it is for firms to recruit candidates to fill the positions of greatest strategic importance to their companies. Interestingly, despite the large number of people unemployed, members of both sectors report having slightly more difficulty in landing top-level talent compared with 2008.

For the eighth consecutive month of 2009, LINE recorded single-digit response levels for those reporting increased difficulty with recruiting. The low response totals can likely be attributed to two factors: fewer HR professionals being engaged in recruiting now and HR professionals’ heightened selection standards attributable to the large number of people looking for work.

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'Any improvements we see now are only improvements
on what was already a weak job market one year ago.’
— Jennifer Schramm, SHRM’s manager of workplace trends and forecasting
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However, the net total in both sectors showed a rise in recruiting difficulty compared with October 2008. In the manufacturing sector, a net of 6.8 percent of companies reported less difficulty with recruiting during October 2009. Still, it is the first time recruiting difficulty has increased on a year-over-year basis in manufacturing since October 2007. In the service sector, a net of 7.8 percent of companies had less difficulty recruiting in October 2009. This marks the first time that recruiting difficulty has increased on a year-over-year basis in the service sector since February 2008.

The results do not indicate a major reversal in recruiting difficulty but do reflect the notion that labor market conditions may be improving slightly from a year ago.

New-Hire Compensation

The rate of increase for new-hire compensation has been falling for more than a year, according to the LINE report, and employers reported that they continued to keep wages and benefits packages in check for new hires in October 2009. The continuing high rate of unemployment and large pool of jobseekers have given many companies the option to reduce the wages and benefits they are offering new hires in a continuing effort to control costs.

In the manufacturing sector, a net total of 0.1 percent of respondents said they would decrease new-hire compensation in October 2009 (2.4 percent increased, 2.5 percent decreased). That is the lowest October response total in five years for manufacturers reporting increases to new-hire compensation.

In the service sector, more companies actually raised new-hire compensation than reduced it in October 2009. A net total of 2.2 percent of companies increased wages and benefits packages for new hires (6.9 percent increased, 1.3 percent decreased). Still, it was a drop of 4.2 percentage points from October 2008, and perhaps an indication that those landing new jobs in October 2009 continue to accept lower wages and benefits during challenging economic times.

“The rate of increase for new-hire compensation continues to fall as it has for over a year,” said Schramm. “Employers are still able to find many willing job applicants even as they keep wages and benefits packages low—a sign that, despite some improvements, the job market overall remains weak.”

Exempt, Non-Exempt Vacancies

But indications that hiring conditions are improving slowly can be found in LINE’s vacancy data. Vacancies, defined as open positions that employers are trying to fill, increased from the previous year in October 2009 in all four job categories for manufacturing and services. Changes in the number of job vacancies can be one of the earliest indicators of a shift in the balance between labor supply and demand.

In the manufacturing sector, a net total of 6.2 percent of respondents reported increases in exempt vacancies in October 2009 (15.9 percent reported increases, 9.7 percent reported decreases). This is an increase of 4.1 percentage points from October 2008. In the service sector, a net total of 1.9 percent of respondents reported increases in exempt vacancies in October 2009 (11.9 percent reported increases, 10.0 percent reported decreases). This is the third consecutive month that exempt vacancies have risen in both the manufacturing and service sectors from the previous year.

Vacancies for hourly jobs also rose in both sectors in October 2009. A net total of 4.1 percent of manufacturing respondents reported that nonexempt vacancies increased in October 2009 (18.0 percent increased, 13.9 percent decreased). This increase of 3.9 percentage points from October 2008 suggests that work is being ramped up slowly at some companies. In addition, the Federal Reserve reported that industrial production rose 5.2 percent during the third quarter of 2009, the largest gain since the first quarter of 2005.

For nonexempt service positions, a net total of 15.6 percent reported increased vacancies in October 2009 (27.7 percent increased, 12.1 percent decreased). This marked a significant increase (17.5 percent) from October 2008, when a net total of 1.9 percent of service companies reported decreases in nonexempt vacancies.

“Wide-scale layoffs across the economy were just beginning to hit at around this time last year, so it is not necessarily surprising that compared to last October, vacancies are now increasing in all four job categories for manufacturing and services,” said Schramm. “However, this could be another indication that employment conditions may be slowly starting to improve.”

The responses in the LINE survey are weighted using the proportion of total employment represented by the respondent’s industry. These weights are calculated using the annual