VideoWalter Hill, Fannie Mae's director of credit management in corporate finance and an African-American, is one of them. The 35-year-old, who holds an MBA from the University of Maryland, was recruited in 1998 from the U.S. Export-Import Bank, where he ran a credit administration program. Among his priorities in seeking a new job: "Is it a good place to work — that's where diversity comes in — and will I be fairly compensated?" In November 1999, Hill got the post he was after: head of the credit-counterparty risk function in the finance department. Financial-reporting manager Cheryl De Florimonte, a native of Guyana, who has been with Fannie Mae for 18 years, has also assembled a "good blend" of workers — representing four different races — in her seven-person unit. She credits HR and Fannie Mae's active internal employee-referral service, called Helpful Employees Referring Others, or HERO, for identifying diverse candidates for jobs. But "in all honesty, I don't allow diversity initiatives to determine my hiring," she says, holding up a coffee cup imprinted with the words: "I hire outstanding performers."
Howard admits that minority hiring is marginally more expensive, with costs incurred because managers must "take longer to find the right pool before they cut off the search." He notes, too, that some Caucasian workers have been put off by the diversity push, and have left. The payoff, though, is that "the company is better off when fairness is a core value."
Cummins: Measuring Up
Cummins's involvement with diversity was forged in the 1960s by then-CEO J. Irwin Miller, a civil-rights activist who translated his personal commitment into minority hiring policies at the Columbus, Indiana, engine and power-generation products and services company. In less than a year under current CFO Tom Linebarger, though, the 26,000-employee concern is breaking new ground with elaborate scorekeeping, which it uses to reward managers and identify areas of relative weakness in its diversity program.
"We do a full-scale diversity audit on a rotating basis at every unit," says Linebarger, so inspectors visit each unit at least every three years. The basic measure for managers — used in computing bonuses — is a detailed evaluation that includes not only the ratio of minorities hired and retained, but also employee feedback on how the boss handles diversity issues. And Cummins is even tough on the universities from which it recruits: the company actually reduced the number of schools it visits, from 54 to 27 this year, concentrating on those with the best minority ratios and records of supplying diverse employees to the company.
Linebarger, an eight-year Cummins veteran, was drawn to the company because he'd been moved by a Stanford Business School course in managing diversity, and saw Cummins as a chance to develop special skills in that area. Within finance, Linebarger is currently focused on moving qualified minority employees up to middle management, where his charts have detected a dip. About 20 percent of the 60 people in the finance and IT areas reporting to Linebarger are people of color, and the company has done well in identifying the top performers in the pipeline for such jobs as controller, treasurer, and CFO. As CFO, Linebarger replaced Kiran Patel, a native of India who had risen through the Cummins finance organization. Last fall, Patel took a job as CFO of iMotors, a San Franciscobased direct seller of used cars.
Today, Linebarger asks white executives looking for middle managers "to expand their comfort zones and find places within the organization where diverse talent resides." He still finds a few managers who don't get the message. "If they bring me five white males [in a candidate list], I tell them, 'Wrong answer, go back and put together a better candidate pool.' " Cummins's treasurer, Donald Trapp, an African-American who has had both operations and finance jobs since joining the company in the mid-1970s, points out that "the secret of retaining workers is to recognize their need to move more to advance their careers." It's something that he takes personal responsibility for. His 11-person treasury staff has four minority members.
Overall, Linebarger believes the company is up to the challenge of keeping diversity on the front burner during the current down cycle. In the last big dip for diesel engines just over a decade ago, the company tried to keep the issue of diversity a high priority, but lost focus in the battle to restore profits. That won't happen now, according to Linebarger, thanks to the measurement techniques, and the inclusion of a diversity commitment in each unit's business plan. "Everything I do takes diversity into consideration, just as it would take profit into consideration, because at some level, they're inseparable."
Medtronic: Tale of Two Generations
Medtronic started developing a formal diversity strategy much later than Cummins. Indeed, a diversity task force was established at the fast-growing Minneapolis medical-devices manufacturer only a few months ago, after chairman William George had visited some far-flung sales locations and determined that the talents of minority sales personnel could be developed better. "Medtronic has always been serious about diversity," says CFO Ryan, "but this is a way we've found to identify high-potential individuals" and prepare them for more-senior roles.
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