Diversity Strategy At General Mills

Stephen W. Sanger
Chairman and CEO of General Mills

Good morning. I’m pleased to be part of your program today, and I look forward to sharing some of General Mills’ experience in addressing diversity as it affects our business.

By way of definition, we operate with an inclusive view of diversity at General Mills that encompasses all the ways people may differ, including gender, race, nationality, education, religious or political viewpoint, and anything else that makes an individual unique. The challenge, for an organization like ours, is more than just to accept and be comfortable with individual differences — it is to capitalize on the uniqueness of individuals in such a way that the whole is greater than the sum of the parts.

Challenge of Diversity

Diversity is not unlike any other business challenge — the more you work on it the more you learn. One of the many things you learn is that your starting assumptions or hypotheses aren’t always right.

General Mills has been working on the diversity challenge for a long time. I remember the first time I heard our former chairman, Bruce Atwater, tell a group of General Mills managers that we needed more diversity in senior management. It was 1974 — the year I joined the company. So this subject has been on our agenda for at least that long, and we’ve learned a lot in that time.

Today I will share some of our learning with you — starting with what we thought … then what we learned that changed what we thought … and finally with what we’re doing with what we learned.

I share these things fully expecting that we will learn something else tomorrow, and the next day, that changes what we think yet again. We don’t claim to have the answers, but we do have a commitment to learning and making continuous progress.

Three Areas Where Diversity Affects Business Performance

There are three distinct areas where we consider diversity to be important to our business performance. Those areas are our workforce, our consumers, and our suppliers. Let me comment on each of these three.

First, our workforce. It’s very important to us to achieve a broad, diverse mix of backgrounds and viewpoints at all levels of management and across our 10,000 General Mills employees. It’s important for a lot of reasons, but perhaps the biggest one is that diverse viewpoints produce innovation. And innovation is the force that drives our business. I am absolutely convinced that a team of people encompassing different life experiences and different points of view will consistently out-innovate a very homogeneous team.

Addressing diversity is also critical in our own consuming public. We are a mass marketer. Our products are designed to have broad appeal. Now, if you’re selling Rolls Royces, perhaps you don’t need to worry about consumer diversity. You can succeed by making a very compelling case to a very small group of people.

We can’t do that. There is no one in America who is not a potential consumer of our products. In fact, within a few years we’ll be able to say there’s no one in the world who is not a potential consumer of our products. We have to be persuasive to people with vastly different backgrounds and viewpoints.

Finally, we care about diversity in our suppliers. And we care for the same reasons that we care about our own employees. In today’s interconnected workplace, your suppliers are almost an extension of your workforce. You work closely with them to develop their skills. You measure their performance and give feedback. You hope to achieve a long term relationship, just as you do with your employees. It would make no sense to demand innovation from your own organization, but not from your suppliers.

My comments today will cover our efforts to address diversity in these three critical areas: employees, consumers, and suppliers.

Diversity and the Workforce

On the subject of workforce diversity, what we originally thought was that this was a recruiting issue. It seems obvious that your workforce will look like the people you hire. Since our management is primarily people promoted from within our own ranks, they too will ultimately look like the people we recruit. So, if our senior management is all white guys from eastern schools, that’s because 20 years ago, when they joined the company, we mainly hired white guys from eastern schools. Therefore, we thought, if we just recruit diversity we’ll be fine.

That’s what we thought.

What we learned, is that workforce diversity is primarily a development issue. Diversity in recruiting is necessary, but that’s the easy part. Retaining and developing diversity in management is much more difficult. And, we once thought that the key to developing people equally was to treat them all the same. We even talked about being a color-blind, gender-blind organization. The assumption was that fairness required sameness. We learned that assumption was wrong — and it has led us to fundamentally alter our development process.

Let me use our marketing organization as an example.

Five years ago, our practice was to hire three people in the hope that one of them would advance to the manager level within a few years. The two who didn’t advance would typically leave. It was up or out, sink or swim.

Our approach was not so much to develop talent as to identify it — to pick the best and the brightest as they emerged in competition with their peers.

But the clear, unspoken expectation in that approach was that two-thirds of our new hires would fail. Bright, talented, well-educated, full of potential — two-thirds of them would fail in their first three years.

And, in too many cases, that two-thirds included a disproportionate number of the minority employees we had worked so hard to recruit. The diversity we had achieved at the entry level was not resulting in genuine diversity higher up in our organization.

We concluded that our approach was fundamentally wrong. So we changed it. Today, we hire fewer potential managers and screen them more carefully. We believe in carefully designed pre-employment testing to ensure that we’re getting people with the skills required to succeed. But once hired, we operate with the expectation that every one of them will succeed, that every one of them will reach the manager level. Now I can’t tell you that we’ve achieved that goal. We still have a ways to go. That expectation of 100 percent success may very well be unrealistic. But it causes us to behave in a very different way. It causes us to make a total commitment to develop each individual from the day he or she walks in our door.

We have instituted careful, Individual Development Planning for each employee based on a skills assessment conducted before that employee even starts work. Some of the elements, like leadership development, are part of every person’s development program. But most are tailored to the specific needs of the individual.

This represents a dramatic change for us. Where we once took pride in treating everyone the same, but in reality expected only a few to succeed, we now view every employee as unique, but expect all to advance, grow and contribute to our success.

Each individual’s needs are, of course, unique. But, as I mentioned, there are some issues we find are common to a particular group. Our female managers, for example, often need the flexibility to accommodate family pressures. That may mean a leave of absence. It may be a three- or four-day work week. It may mean telecommuting. The accommodation is almost always temporary, but it can be critical to retaining a valued employee long-term. In reality, our personal leave policies are equally available to men, but men have rarely made use of these options, though that could change as the next generation of dual career couples deal with these issues.

We’ve learned that mentoring is particularly important for our minority managers.

Actually mentoring is valuable for everyone, but we’ve learned we can’t rely on informal mentoring relationships to provide sufficient mentoring for our minority employees. So we developed a formal mentoring program, and we encourage and support various employee networks, like our Black Champions Network, which provides informal mentoring as well.

We take the individual development plans I spoke of very seriously. I personally review the development plan and progress of every current and potential minority manager in our company every three months. We believe this philosophy — treating every employee as a unique blend of talents and development needs, but maintaining the highest possible expectations for all — is the key to building and maintaining a diverse and competitively superior workforce.

Diversity and Consumers

The increasing diversity of our consumers is a subject we’ve been working on for a long time. We originally thought this was primarily a language issue. As I explained, we sell broad appeal products. Our cereals, we felt, are equally attractive to white kids, black kids, Asian kids, Hispanic kids — assuming, of course, that we can communicate with them. This led us to utilize Spanish language advertising in Southern California, Texas, and South Florida as early as 1981. We currently use two separate Hispanic-owned agencies to develop advertising and promotional programs targeting Hispanic consumers.

But again, we learned that while language is an issue, it isn’t the only issue.

The fact is, people respond to messages that appeal directly to them, that acknowledge their uniqueness and reach them where they live. If you show senior citizens in your advertising, what happens?

More senior citizens will buy your product. If you put the Green Bay Packers on your cereal box, what happens? You’ll sell a whole lot more cereal in Wisconsin. This may be niche marketing, but even broad appeal products need to compete niche by niche.

We have instituted special efforts to tailor our advertising messages to black viewers in recent years. We work with two African American agencies — Don Coleman Associates and Geo Segment Marketing— to develop advertising and promotion programs that are uniquely effective with black consumers. And it’s definitely paying off. We recently began airing a Honey Nut Cheerios commercial, for example, developed by one of those agencies, that increased sales by over 50 percent among African American consumers in Chicago alone.

The same focus also works for in-store promotion activity. In Detroit, we recently assigned a high-potential African American sales manager to handle Farmer Jack Stores, a chain of 19 supermarkets serving a primarily African American clientele. In the past year, this manager has put together several major promotions with Farmer Jack, including one event centered on Wheaties packages featuring Negro League baseball greats, a heart-healthy Cheerios promotion recognizing the fact that heart disease is a major health concern for African Americans, and a Bisquick promotion tapping into the strong traditions of African American families. The result? Our business with Farmer Jack is up more than 41percent in the past year.

As our international business grows, we’re also learning to adapt our marketing to people who span a range of cultural backgrounds far more diverse than anything we encounter in the United States. We’re continuing to learn every day.

Diversity and Suppliers

The third area where diversity is important to us is our suppliers. We count on our suppliers for quality products at required service levels and competitive prices. But we also look to our suppliers for something more – we look to suppliers for ideas. We look for innovations that increase our product quality, or improve our service levels, or drive down our costs. And, if you believe diversity drives innovation, then you’d better make sure your suppliers are diverse.

I’ve already given one example where supplier diversity is helping our business — the African American ad agencies. Here’s another. Some of you may have seen the Jackie Robinson commemorative boxes of Wheaties, Frosted Wheaties and Crispy Wheats ‘n Raisins. They were all designed by Slater Publishing in Eden Prairie, whose president, Stephen Slater, is a black entrepreneur. This comes on the heels of a Wheaties design Slater did last year commemorating the Negro League stars. That assignment grew out of our supplier diversity office, which introduced Stephen Slater to our graphics design department.

These designs have been great for our business. They’ve also been great for Slater Publishing, giving them much greater visibility. They are about to double their staff to keep up with demand. As Stephen Slater says, when potential clients see his portfolio with the Wheaties box designs, they don’t ask whether he can do the job — they ask when he can start.

I hope this gives you a flavor of what we’ve done and continue to do to address diversity in our three key areas. I’d like to close with a couple of observations.

First is the importance of concrete goals. We are a company that likes to set goals and measure our progress against them. Now, when you’re addressing diversity, some people shy away from goals. Some people call them quotas. We don’t. We believe clear goals are a critical part of any serious initiative.

We set goals for workforce representation of minorities and women. We recruit at graduate business schools where student bodies are collectively about 6 percent minority. Our goal is to recruit at least 20 percent minorities from these schools and we have done so for the last decade. In recent years, we’re running 25 percent.

Our goal is to have 25 percent of our domestic sales from African American and Hispanic consumers by the year 2000, up from 18 percent today.

Our goal is to double our purchases from minority-owned business from $30 million in 1995 to $60 million in 1997, then to double it again by the year 2000. So far, we’re right on track. We have similar goals for women-owned businesses. We believe setting clear, ambitious goals has been critical to our progress in addressing diversity.

My final observation is that good diversity practices tend to be good business practices. Period. The Individual Development Planning I mentioned earlier, which is so important to the progress of our minority and women associates, is actually helping everybody develop and grow. Effective marketing to Hispanics and African Americans is not a diversity initiative — it’s a business building initiative. Our supplier diversity efforts are strengthening our overall supplier base. Good diversity management is good management.

The flip side of that is also true. Good business practices often advance the cause of diversity. One great example of this is our citizenship program. Citizenship is one of the core values of General Mills. This includes the $17 million we give each year to our communities through the General Mills Foundation. More importantly, it also includes our volunteer efforts, where the great majority of our employees give countless hours in service back to their communities. In fact, more than 75 percent of all General Mills employees volunteered in the last year.

We do this to strengthen the communities in which we live and work. But we’ve learned there’s another important benefit. Many of our volunteer efforts involve agencies and populations of great diversity. Our employee volunteers find themselves working with people whose backgrounds, lifestyles and viewpoints are very different from their own, or from most of their co-workers. And they learn to appreciate those differences and value them. Volunteer experiences are very developmental for our people and contribute greatly to our climate of diversity.

These are some of the things we’ve learned in our twenty-plus years of working on diversity at General Mills. Our progress has not always been as steady as we like. But I can feel us gaining momentum every day. And we must — because it’s important to our business.

I wish you all the best as you pursue diversity goals in your own organization. Thank you.

Stephen W. Sanger is Chairman and CEO of General Mills, Incorporated. This speech was given at the 9^th Annual Multi-cultural Forum in Minneapolis. MCCR was a Corporate Sponsor for this event.

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