General Motors’ Diversity Philosophy in theory and practice

WHILE “exclusion” appears to be a low priority on the agenda of Tony Blair’s New Labour government, the Americans at government, institutional and corporate level, are steaming ahead with practical policies to advance equality of opportunity. In the first of a stimulating series, Robert Govender who last year visited Detroit, the legendary home of the automobile industry, to examine Diversity’s workings in situ, sets the stage for a more penetrating scrutiny.

THE British have always been haunted by the spectre of America’s race revolt of the 60s and the 70s, particularly the “burn baby burn syndrome.” The more cerebral of their political, media and sociological savants, fearing a reproduction of similar social disturbances in Britain, urged preventive legislative and social measures. Thus came into being successive race relations acts and central and local government equal opportunity programmes.

Even Britain’s relatively cautious legislation, has yet to be emulated by other West European countries with similar minority settlements.

While race is still a problematic in British society, there have been some notable gains, particularly in exposing and bringing to book discriminatory companies and institutions like the army and the police service. Also on the plus side is the growing success of race awareness training programmes which are being appreciated by such traditionalist bastions as the judiciary, the police, corporations and the civil service itself. Sections of the public, too, are beginning to recognise that discrimination is insensitive, hurtful, counterproductive and above all economically wasteful.

Black critics, are however, dismayed by the perceived failure of the British government to capitalise on its earlier gains and to translate theory into practice in job opportunity, promotion, education, housing and health. Jack Straw, the Home Secretary, sensitive to these complaints, has promised to consult closely with the ethnic minority in advancing equal opportunity programmes.

Straw’s advisers may well benefit from a closer study of America’s Diversity programme, which is not merely a theoretical statement, designed to appease critics and minority political leaders, but a concrete translation of the principles of gender, race and disability equality in the workplace, in the boardroom, in trade unions, in training programmes, and in research. Moreover, in the case of General Motors, Diversity, in the words of its Chief Executive Officer and President, John. F. Smith, Jr, “extends beyond the doors of our company,” and includes “our dealerships, our suppliers, and the many communities where we operate.”

John Smith leaves no one in doubt about his company’s attitude to Diversity, lucidly spelt out on June 15, 1995, in a message, Reaffirmation of Affirmative Action at GM:

“Concern is being voiced that the momentum for minorities and women and the nation’s commitment to affirmative action is diminishing. Let me stress - this is not so at General Motors. As important as this debate is, let me say bluntly, we do not see any advantages in simply keeping up with current attitudes or law.

“When it comes to affirmative action, we will continue to press the envelope, but at the same time we will be moving to a broader concept, that is, managing diversity. As a global company, we want to fully benefit from a diverse workforce. Our commitment to diversity extends beyond the door of our company. It includes our dealerships, our suppliers, and the many communities where we operate.

“In our industry, as in this nation, our diversity is our strength. (Our emphasis)

“This diversity is more than merely part of our national heritage; it is part of our national pride. Having people of widely different ethnic, racial and social backgrounds in our corporation has not slowed our pursuit of excellence - it has accelerated it.

We will continue to do everything possible to bring minority group members and women into General Motors and the mainstream of the economy. We cannot, we must not waste this talent.

Progress must continue. At General Motors, it will continue.”

US government legislation, a statesmanlike response to social disturbances and the growing strength of the women’s and minority movements and a recognition that if the Economic Superpower, challenged by Japan, (uncharacteristically in an economic downturn but feistily fighting its way back to its sprightly old self), was to maintain its pre-eminence, it neglected its rich and diverse human and material resources at its peril. US legislation against gender and minority discrimination is specific, tough, unambiguous and businesslike, leaving no one in doubt that it means what it says. Powerful corporations like GM, Ford and Chrysler, welcomed it because it also made good economic and social sense.

GM, not only endorsed Diversity, but appears to have given carte blanche to its own specialist team of consultants and in-house experts to devise sound strategies to enrich Diversity and ensure smooth and effective implementation.

As a South African with an undiminished interest in anti-discriminatory action, I was deeply moved and elated that some of the finest, most original and incisive personnel working in the sphere of Diversity were men and women from the minorities, especially African-Americans, operating harmoniously and assiduously with their equally committed and capable white colleagues to make Diversity a potent force in social, cultural, commercial and human relations. All were there on merit, highly qualified and with the aptitude, originality, sympathy and realism to effect what is proving to be a revolutionary new way of thinking, acting, behaving and achieving in the well being of individuals, families, corporations and society. They could turn the famous Churchillian phrase on its head and say: “You have given us the tools, we are doing the job.”

Also worth noting is the co-operation between the unions and the corporations in the Diversity sphere. White workers no longer see the minorities as a threat to their jobs, as indeed they did in the early part of this century with some dreadful consequences. Diversity makes sense to the whole workforce because it does not bestow special privileges on any group. GM works closely with the UAW (United Automobile Workers) in the development of anti-discriminatory policies.

GM says: “Our contract language further affirms our belief that all UAW-represented and salaried GM employees have the right to work in an environment that is non-discriminatory and free from sexual harassment that can interfere with work performance.”

Diversity is not just concerned with race and gender, but embraces colour, religion, age, national origin and disability. It also gives a place in the sun to a people we all assume mainstream America has forgotten, the Native American, whose description by GM authors of Diversity is an illuminating insight into the sociology of the original owners of American soil: “An American Indian, Eskimo, Aleut or Native Hawaiian, and regarded as such by the community of which the person claims to be part. Native Americans must be documented members of a North American Tribe, band or otherwise organised group of Native people who are indigenous to the Continental United States. Proof must be provided through Native American Blood Degree Certificate.”

TOMORROW: Robert Govender focuses on GM’s Minority Dealership programme.

In the second instalment of his reports on Diversity in America, Robert Govender focuses on General Motors’ minority development dealer development programme.

IN 1973, I wrote a stirring editorial in the Westindian World, Britain’s first professionally produced newspaper, calling for greater African-Caribbean participation in commerce. We argued that this was the most effective way to assert our consumer sovereignty, while at the same time getting a useful return on our considerable consumer buying power. This would mean hands-on business experience, creating jobs for the bright men and women with commercial aspirations, making a profit, and fostering an ethical and culturally sympathetic ambience with a distinctly Caribbean flavour for a community generally ill at ease in a perceived alien and frosty marketplace.

We stressed the not so obvious advantages: first we would provide our young with role models, second we could nurture, train and develop managerial and possibly executive potential, and most important of all, have a modest economic, like the more successful Asian community. This would enable us to pressure a largely colour conscious service, industrial and corporate sector into mending its ways.

We did not know it then, but what we were unwittingly doing, was anticipating in an embryonic and emotional form some of the cultural, ethical, economic and social components, and the rationale, of what is now known in America as Diversity.

The theoretical assumptions, values, criteria and logic which underpin what I would regard without exaggeration as the philosophy of Diversity cannot be faulted, dictated as it is by social, but even more fundamentally, the imperatives of the market. In this American attempt at humanisation of an economically deterministic and narrow market, which even its greatest philosophical theoretician and advocate, Adam Smith, said had major social limitations because of its obsession with profit, we discern the interventionist hands of government and the large corporations, principally General Motors (GM), in the interests of society and the market.

It is probably anathema to critics of the market, especially the rigid, dogmatic and doctrinaire right wing monetarists in this country, who have taken up the selfish Thatcher cry that “there is no such thing as society”, that GM and other enlightened corporations in America, and indeed the US government itself, have an enlightened approach, influenced more by Adam Smith than Freedman, the monetarist zealot. General Motors seems to me to be suggesting, through their interpretation and implementation of Diversity, that the market and society are not mutually exclusive.

How does this translate into practice. Let us take a specific area - minority dealerships for instance. These were, given the sad previous history of prejudice and irrationality, once exclusively in the hands of the white population, as is largely the case in Britain today.

In America this has changed dramatically. According to Leon M. McDaniel, the heavyweight African-American intellectual, and General Director of GM’s Minority Dealer Development Department, up to March, 1997, 270 (3%) out of 8,234 dealerships nation-wide were minority-owned. This is a 47.1 increase over 1992. The expertly informed and crisply articulate Leon McDaniel stresses that minorities are not just restricted to the African-American communities: “You may perhaps like to know that 39 percent of the minority dealers are African-American, including an encouraging number of dealerships owned by women. This is a 42.7 increase over 1992.”

Mr McDaniel effortlessly reels off some revealing figures which reinforce the commercial logic behind Diversity. In 1996, GM’s minority dealers turned in sales of $6.6 billion. “As of December 31, 1996, 32 minority dealers were members of GM’s Million Dollar Club. Million Dollar dealers have generated a gross profit of $1m or more. Half of these minority dealers began with financial support from GM’s Motors Holding Group, while the other half began with independent financing.”

Given the resolve and the will, the expertise, the professionalism and an understanding of cultural diversity, it is astonishing what can be achieved in a relatively short time span. Leon M. McDaniel states quietly, but with an evident sense of satisfaction: “From 1972 to 1990, GM’s minority dealership population increased from zero to 200. Today we are proud to include 270 minority dealers in its ranks, 65 percent of whom own 100 percent of their dealerships. No other manufacturer has that high rate of full ownership which is a strong indication of the success of the programme.”

GM says it has created a system to identify, train and provide financial assistance to ensure the successful launch of minority-owned dealerships. GM does not abandon the dealers to their own fate, intervening at critical moments to maintain them and sustain their businesses over the long term.

Obviously, those seeking dealerships must show aptitude and promise. Apart from being a member of a designated minority group, each aspiring dealer must have $85,000 in “unencumbered funds, have appropriate work experience, preferably in retail automotive management, and must successfully complete the Minority Development organisation’s selection process.”

Minority dealers are also backed up by the unrivalled advertising and public relations skills of GM, with many of the personnel in this area drawn from the minorities themselves. In contrast to British advertising agencies, many of whose representatives are antediluvian, insensitive and narrowly Eurocentric, are often unaware of, or indifferent, to the large spending power of minorities, and ignore the latter’s media, the Americans live in the real world. For instance, GM advertising and public relations executives place regular advertisements backing their minority suppliers in the minority media, especially influential publications like the prestigious EBONY magazine.

As Shakespeare would have said there are more things in Diversity than are dreamed of in heaven or earth!

TOMORROW: Robert Govender on “a billion dollars of goods from minority suppliers.”

A billion dollars of goods from minority suppliers!

In the penultimate part of his thoughtful series on Diversity in America, Robert Govender again draws attention to the eminently sound commercial logic behind the General Motors principle that “the more dollars we spend with minority companies, the better we enable them to purchase our products.”

THE principle of Diversity is embraced with varying degrees of enthusiasm by the Big Three, General Motors, Ford and Chrysler. While all three companies are driven to some extent by social responsibility, they are unsentimental, for at the end of the day their aim is profit.

As the level-headed Harold R. Kutner, Vice President, GM Worldwide Purchasing, puts it: “On a social level, we believe it is important to do what we can to help minority groups reach economic equality. An effective means of doing this is to seek out qualified minority-owned suppliers and buy from them.”

This business version of Realpolitik is unassailable for a do-gooding industrial philosophy will fail because it is seen by the dominant racial group as a gesture at its expense, and is perceived by the minorities as a sop to liberalism and an appeasement of race-based agitprop politics. Moreover, at a practical level, someone has to pick up the tabs and not even philanthropists in the Super Rich category can sustain that kind of haemorrhage.

While there was an appreciation of the factual approach to my earlier reports on the workings of diversity, there were also some cynical reactions, the most popular of which, from both black and white readers, was: “Well charity begins at home - do GM’s employment policies square up with their high profile diversity doctrines ?”

GM employs a total of 323,766 men and women in the US. This includes 69,228 minorities, 21. 39 percent of the total workforce. The company is the largest employer of African-Americans in the US, with 57,321 African-American employees, 17.7 percent of the total workforce. When it is considered that the minorities make up 29 percent of the total population, with African-Americans accounting for 12 percent, you wonder why the west European countries with substantial minorities are so far behind. Not just in the motor industry, but in every other sphere.

Also instructive is that nearly 10 percent, 294 of GM’s executives and senior management, are minorities. Compared with 15 other leading companies, GM ranked third overall in respect of minorities in executive positions.

GM’s Minority Supplier Development Programme, created in 1986, was specifically designed to help minorities achieve economic equality by placing appropriate orders with minority suppliers. From modest beginnings, this programme, which left little to chance, and was governed by strict ground rules to ensure that there was no “passing off” by impostors as “minority businesses,” appears to have achieved its aims while still building on the gains. Over the past nine years GM has annually bought a billion dollars worth of goods and services from minority suppliers.

Every minority company wishing to do business with GM has to satisfy a number of rules, after which a qualifying certificate is issued by a local office of the National Minority Supplier Development Corporation (NMSDC). The names of the successful businesses are entered into the corporate supplier data base.

Where merited, financial assistance is provided by GM’s Motor Enterprises Inc. (MEI) a specialised small business investment company. A business consortium fund provides short term low interest loans to certified minority businesses.

A minority company recognised by GM’s National Minority Supplier Development Council (NMSDC) is defined as at least 51% minority owned and controlled. Managerial and supervisory positions in the company must be filled by minority personnel. The minority principals must control the daily business operations and management decisions, and must be US citizens.

GM forecasts an allocation of a total of 5 percent of all outside purchases to minority suppliers, about $2.5 bn. a year by 2001. The 623 minority vendors are a quarter of GM’s 2,557 suppliers.

In the late 70s and early 80s, the late and lamented Greater London Council and a few Labour-controlled councils, inspired by the diversity example set by American companies like General Motors, experimented with some plans of their own, one of which was vaguely called “compliance agreements”, in terms of which suppliers to these councils had to show proof of multi-cultural employment.

The Tory Press was unhappy, charging that the “lefties” were “discriminating in reverse.” Mrs Thatcher, she of the “cultural swamping” syndrome, exploded with anger. It was, as far as she was concerned, one more nail in the coffin of the GLC.

How times have changed. Today the more affable and composed William Hague not only invites black people to join the Conservative Party, but has come down strongly in favour of a multicultural society. New Labour, too, stung by critics over its conspicuous failure to appoint a single senior black or Asian minister, and alarmed by the prevalence and persistence of race discrimination in executive positions in the public and private sectors, says it will not engage in cosmetic exercises. It promises to seriously address the problems that hinder the development of a classless, sexless and colourless meritocracy.

I said at the commencement of these articles that the Blair government should send some of its able Young Turks (white and black) to look at American Diversity in theory and practice. If they are serious about creating and maintaining a fair society they have an excellent model to borrow from. William Hague, too, should do likewise, in preparation for the day when power passes into his hands.

TOMORROW: Robert Govender concludes his series with the emphasis on the global relevance of Diversity, and a reminder not just to Europe, but also to Asia and Africa, of Hugh Gaitskell’s statesmanlike observation that a civilised country is judged by the way in which it treats its minorities.