Executive Summary

Workforce Diversity: Strategy Not Mere Compliance

James J. Howard
Chairman & CEO of Northern States Power Company

February 1992

Managing diversity is a long-term business strategy that can be directly connected to overall business plans and quality initiatives.

Diversity means valuing people's differences. The things that make us different enrich all of us and contribute to the financial success of our companies. Many think of workforce diversity in terms of examining equal opportunity and affirmative action numbers within companies, something we must do because the law requires it.

But diversity is more than that. Truly embracing diversity means wanting to support quality efforts within the workforce and provide the means for all employees to reach their maximum potential.

From a personal standpoint, I believe--without reservation-that implementing strong diversity efforts is the right thing to do. From a business standpoint, I believe it is the economically sensible thing to do. It affects the bottom line.

When employees do not feel valued, performance suffers. Absenteeism, decreased productivity and turnover can be costly. Whenever a company loses an exempt employee it costs 1.5 times his or her annual salary to hire a replacement. Non-exempt turnover costs are estimated at three-fourths the annual salary of the position to be filled. Without strong diversity efforts, companies also face the risk of employee lawsuits, which have an economic impact and also cost in terms of management time and potential adverse public perception.

When businesses celebrate, rather than merely tolerate diversity, the benefits are apparent. Demographics indicate that organizations are already competing for a shrinking number of workers, many of whom are women, people of color, immigrants, or disabled. On a regional basis, racial and ethnic diversity is increasing. In the 1980s, the African-American, Asian-Pacific, Hispanic, and Native-American communities in the seven-county, Minneapolis-St. Paul area nearly doubled their populations.

Diversity is customer-focused. Customers are diverse even if the workplace is not. The organizations that will best understand and anticipate their customers' needs will be those that demographically resemble their customer base.

Implementing strategies is the key to accomplishing diversity in the workplace. At NSP, our strategy consists of:

• Making diversity a part of every business plan

• Creating a company culture that supports diversity

• Linking diversity to rewards

• Investing in training so diversity flourishes

• Delivering diversity-focused community programs

• Communicating shared values

I believe diversity is a solid investment in our employees, business, and community. In order to succeed in the competitive global economy of the future, we need to rely upon the unique skills, abilities and perceptions each employee brings to the workplace. By celebrating and valuing our differences, employees can foster an environment where all can realize and use their full potential.

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