The Diversity Advantage

MARK HAMSTRA

Next week the United States installs its first African American president, marking a milestone for diversity in American politics.

But would Barack Obama fit in as an executive in one of the nation's supermarket companies?

He might at Safeway, where the company's longstanding and far-reaching efforts to celebrate the differences among its employees have earned it SN's Champion of Diversity Award for 2009.

Larree Renda

“We like to think of it as being built into everything we do,” said Larree Renda, executive vice president and chief strategist and administrative officer, in an interview with SN. “We have done a lot of education to make sure that people really understand the value of diversity and diversity of thought, so that they will follow our mission of diversity.”

Renda, credited as one of Safeway's own champions of diversity within the company, launched her Safeway career at age 16 and has been with Safeway for 35 years.

“I think it is ironic that it has taken so long for women to kind of catch up in this industry, when our mainstream consumer is a woman,” she said. “Who better to understand that consumer than a woman? And I think diversity is one of the keys to understanding all the different kinds of customers that we have. It is one way to kind of get inside their buying habits, and it links completely and directly to our business.”

The concept of leveraging diversity of thought is so ingrained in the business culture at Safeway that it is incorporated into managers' performance reviews and the compensation plans of many key individuals at the company, Renda explained.

“We hold people accountable,” she said. “We have an assessment process we go through that is very formalized, and it is not just a once-a-year thing. People have to look at their ability to develop a diverse workforce on a regular basis, and then there is a corporate reporting process on a regular basis.

“We also hold people accountable in their annual bonus, which is something I don't think a lot of companies do,” she said. “We have pay for performance, and we have it in a number of people's bonus plans — the ones who can really move the numbers.”

Managers who go through the internal diversity assessments at Safeway often see them as a source of pride, according to Russ Jackson, senior vice president of human resources.

“People are pretty excited about their internal assessments, and are really proud to share their work and their successes,” he told SN. “That really comes out when they do their presentations, and then we can take their best practices and share them with the organization, so then the organization over time gets stronger and stronger.”

The internal assessment review for district managers, as an example, measures the subject's progress toward achieving diversity goals for the district and compares the makeup of the staff with census data. It also examines the manager's success at developing female and minority employees through mentoring, the inclusion of diversity as a topic in staff meetings, and other diversity goals and activities.

Safeway has long been known as a champion of diveristy.

Although observers pointed out that Safeway has long been one of the industry's better examples in the area of diversity, it really only blossomed into its current state in the last six or seven years.

“Safeway has always had good practices with its diversity initiatives, with regard to women and people of color, but over the last few years it has become much more of a formalized component of who they are,” said Jose Tamez, a Denver-based partner in Austin-Michael Executive Search, who recruits for Safeway. “In '02 and '03, they went through a bit of a metamorphosis about who they were as a company, and who they wanted to be going forward, from a competitive standpoint, from a personnel standpoint, and from just about every perspective that you could think of, to make them a more competitive company.

“From that metamorphosis they really ramped up a lot of initiatives, none more than diversity. As they ramped up these initiatives, they saw diversity as a competitive advantage, no different from a marketing advantage or a pricing advantage.”

He said Safeway began to think in a more holistic way about itself, rather than merely as a food retailer.

“That's where a lot of these initiatives like diversity really became woven into the fabric of the company,” he said. “Everybody owns it there at Safeway, right down to the district manager and the store manager.”

While some companies might still view diversity as something they need to deal with in order to avoid lawsuits and comply with Equal Employment Opportunity Commission requirements, Safeway has instead embraced diversity as something that contributes to improved performance, Tamez explained.

“Safeway left the compliance gate years ago,” he said.

Safeway has outlined the specific benefits the business derives from engendering a diverse workforce. Diversity of thought is seen as a tool that helps drive sales by injecting non-traditional thinking into the decision-making mix, and it also is seen as reducing costs because it improves Safeway's positioning as a desirable place to work, which drives higher retention and better recruiting.

Tamez, who has filled diversity positions for Safeway, said it is clear from those efforts that the company takes the concept of diversity very seriously.

Safeway in 2006 was recognized for its efforts to advance women in the industry when it received the Catalyst Award, considered one of the most prestigious honors in the area of expanding opportunities for women in the workplace.

“I am convinced that there is no supermarket company that is any better at the recruiting and advancing of women, and that is all part and parcel of their overall diversity effort,” said Tamez.

One recent search Tamez conducted for Safeway illustrated the company's thought process about having women in top positions, he explained. In his quest to find a vice president of consumer insights, he said Safeway wanted to interview a diverse pool of candidates that included women, “not because they were trying to meet a compliance issue, but because they were trying to get a woman's perspective,” he said.

In 2000, Safeway launched an initiative called Championing Change for Women, an ongoing effort that seeks to increase the number of women among Safeway's management ranks. It outlines a broad range of initiatives that have become a template for the overall diversity program, including mentoring and diversity training.

“It's a huge part of who we are and what we do,” Renda said. “We concentrate on all kinds of diversity — it's something we were able to formalize and talk about in relation to women, but in how it has evolved, it applies to all types of diversity.”

Since 2000, Safeway has had a 62% increase in women in the store manager ranks, she said, noting that that increase came on top of what she described as a strong base already.

“And it's not just white women,” Renda added. “We had huge increases in women of color; we had huge increases in people of color.”

Safeway's gains can in part be attributed to strong mentoring programs, she explained. In its stores, managers are expected to identify women and minorities who can be developed as potential managers themselves, and mentoring is an important component of the corporate-level diversity efforts as well.

Among the key elements of Safeway's diversity infrastructure are its diversity advisory boards. The company has one overarching diversity advisory board in its headquarters and one in each division and corporate office, which seek to generate ideas and make recommendations in the area of diversity that strengthen Safeway's overall business.

Those boards have evolved over time to encompass smaller, more focused, advisory boards, or “networking groups,” for women, Hispanics, African Americans, Asian Americans and, most recently, gays and lesbians. Each of the networking groups has its own officers.

All five networking groups are represented at the corporate office, and many are represented in each division as well. The groups also communicate with each other to improve the overall diversity effort at Safeway, Jackson explained.

“They are not just silos,” he said. “The groups work together — they look at the best practices, and they share with each other so they keep on getting stronger as a group.”

Forming the gay and lesbian group, which also includes transgender and bisexual individuals, proved challenging, Renda explained, in part because of a reluctance by some employees to “come out” about their sexual orientation.

“Certainly in our industry, that was a brave step forward to have a board for gays and lesbians,” she said. “It wasn't without its risks, because some parts of the workforce aren't exactly standing up on their chairs excited about it, but it was absolutely the right thing to do because it has opened up a whole new cultural experience for Safeway anyway.”

Now, after almost two years of having the board, Renda said it has become “almost the most vibrant and successful group we have, after the women's group.”

The networking groups often host speakers and events that are open to anyone in the company — and the presentations are available for employees to watch on their desktop computers. The presentations often fill the 350-seat auditorium at Safeway headquarters.

The gay and lesbian group, for example, recently hosted a speaker who was a former Major League Baseball umpire, who talked about the difficulties of being gay in the masculine world of professional baseball.

Those types of presentations have helped the workforce in general become more understanding of these individuals, Renda and Jackson said.

“People learn after they go though these presentations that they have more in common than not,” said Jackson.

The presentations are part of a comprehensive communication program Safeway deploys in order to keep diversity front and center at the company.

“We have a number of ways we communicate the topic of diversity — we have diversity newsletters, we have websites — we make sure it is a living, breathing topic, and that it is always generating new news.”

Safeway uses its captive satellite stations to broadcast to all of its stores, offices and other facilities, and it often includes diversity messages in its programming, such as profiles of women executives or minority executives of color, or descriptions of diversity-related events that Safeway participates in.

In fact, Renda said one of the key elements in the success of Safeway's diversity initiative has been the development of role models.

“I didn't have any female role models in the company when I started out 35 years ago,” Renda said. “Now there are a lot of women executives who are great role models, who are mentoring other women, and we have people of color at all levels.”

Supplier diversity is also considered a strength at Safeway, and the company has been recognized in the past for its efforts to develop minority-owned vendors. It has a process that helps small suppliers that are owned by women or minorities get through the red tape that is involved in securing shelf space at the chain.

“For a long time we have been seen as a model for supplier diversity,” said Brain Dowling, a Safeway spokesman. “We have a very good system built into the organization for taking smaller firms and getting them started with Safeway.”

Renda noted that working with suppliers on diversity issues is also a “two-way street.”

“We look for suppliers that are women- or minority-owned to do business with us, but we also use some of our suppliers as examples as well,” she said. “If you look at our industry, we have some of the best examples of companies that have women in top roles, like Indra Nooyi at Pepsi, Irene Rosenfeld at Kraft, Brenda Barnes at Sara Lee or Denise Morrison at Campbell.”

Looking ahead, Renda said she thinks the food industry will continue to make strides in diversifying its workforce and leveraging that diversity to its advantage.

“I think the outlook is very bright,” she said. “There has been an increase in women and people of color not just in retail, but in the supplier community, so I think it is starting to take hold. It is starting to accelerate the number of women and people of color in this industry, and I think it is only going to get better.”