If you're reading this article, you want your company's diversity council to be relevant to your business goals.

Diversity councils often are used at companies on The DiversityInc Top 50 Companies for Diversity list to set diversity goals and plans of action to implement them. They frequently are used as an oversight group to check the progress of senior leaders in reaching those goals.

Two types of councils are most common: external and internal. Internal councils are comprised of senior executives within the company and, in the best cases, are led by the CEO. Sometimes they include members of employee-resource groups. External councils function like a board of directors, with prominent outsiders from corporate America, government, academia or the diversity industry. Occasionally, companies have councils that have combinations of the two types.

DiversityInc examined The Coca-Cola Co.'s external diversity task force and interviewed Eastman Kodak, Wells Fargo and Pepsi Bottling Group (PBG). Coca-Cola is No. 6, Kodak is No. 44, Wells Fargo is No. 40 and PBG is No. 14 on The DiversityInc Top 50 Companies for Diversity list
 
The Outside View

External councils may be put together voluntarily by the company, as was the case for Eastman Kodak. They can be proactive when provided the authority to check the diversity accomplishments of a company's senior officials. External councils also may be court-appointed as part of a settlement agreement in a discrimination case, as was the case with The Coca-Cola Co. in 2001.

Atlanta-based Coca-Cola was required by a court to create an external diversity task force and pay $192 million to settle a class-action discrimination case brought by black employees. The seven-member task force was to convene for four years to evaluate Coca-Cola's human-resources policies and practices, recommend any necessary improvements to those policies and practices, monitor the company's practices for four years, investigate complaints, and provide written reports on Coca-Cola's progress.

All that oversight and outside meddling sounds stressful, laborious and cumbersome. But Coca-Cola reaped a reward from being educated on the benefits of diversity management and found the accountability and related measurement of goals effective.

Coca-Cola CEO Neville Isdell in November 2004 asked a federal court to extend the advisory panel's work by a year, carrying it through 2006. That unprecedented request proves he saw the company benefiting from its external diversity task force and, by extension, its new understanding of diversity-management principles. In its second year on The DiversityInc Top 50 Companies for Diversity list in 2005, Coca-Cola posted strong work-force numbers with blacks and Latinos. Blacks, for example, made up 20 percent of the work force and 10 percent of the company's highest-paid executives.

In a recent speech, Isdell said: "The discrimination lawsuit The Coca-Cola Co. settled in 2000 was an embarrassment ... an embarrassment to me looking in from the outside and to everyone who loves our company. It was also indicative of a much more substantial breakdown: the failure of Coca-Cola shareowners to receive the full benefit of our unrivaled global reach. As much as we'd like to, we clearly cannot change history. However, we have made substantial progress in moving from just compliance to commitment and in making diversity a competitive advantage for our organization."

The same year Coca-Cola was forced to form its external diversity task force, Kodak voluntarily formed its external diversity-advisory panel. It was chaired by Eric Holder, a former U.S. deputy attorney general. The panel conducted a two-year review of the Rochester, N.Y.-based company's diversity and inclusion efforts. The panel suggested Kodak focus on global diversity, leadership involvement in diversity recruiting, retention, and education initiatives. 

"As a result of [the external diversity advisory panel's] recommendations, we are tracking our diversity progress in certain areas," says Essie Calhoun, chief diversity officer, director of community affairs, and a Kodak vice president.

External diversity councils still are relatively rare--only 10 percent of The 2005 DiversityInc Top 50 Companies for Diversity have them. Ensuring that overall business strategies encompass all aspects of diversity-management principles is precisely what a diversity council is supposed to do. But its membership must be well respected by the company's officers because they will be carrying out its suggestions. Of The 2005 DiversityInc Top 50 Companies for Diversity list, 40 percent have councils that are chaired by the CEO.

It Starts at the Top

Diversity councils at Kodak, Wells Fargo and Pepsi Bottling Group all feature senior-leader involvement; they have the authority to set the company's diversity agenda and act as monitors. In addition, membership on their councils is a form of positive recognition and their diversity councils act as parent councils, spawning business-unit councils. As a result, those diversity councils are able to develop corporate cultures that are conscientious of and attentive to diversity business principles.

But it starts with leadership. Because diversity councils at the companies on The DiversityInc Top 50 Companies for Diversity list focus the attention of their leaders on diversity, employees focus their attention on diversity. "The [diversity council] shapes the way PBG thinks about diversity ... they defined our four planks: training, staffing, developing and selling," says John L. Berisford, senior vice president of human resources at PBG. 

PBG calls its diversity council a Diversity Advisory Board (DAB). It was formed in 1999 and is chaired by Chief Operating Officer Eric Foss and Berisford. The DAB sets PBG's diversity agenda by shaping policy and ensuring that diversity business principles are integrated into the company's business plans.
 
Internal councils are common among national diversity leaders. Of the Top 50, 86 percent have these councils, and most meet at least every quarter, with a third meeting every month.

Kodak, following the recommendation of its external council, established the company's internal council in 2004, namely its Senior Executive Diversity and Inclusion Council (SEDIC). Kodak CEO, President and Chairman Antonio M. Perez chairs the council and is a permanent member with Calhoun.
 
Kodak's senior leaders answer to SEDIC. Every quarter, the council tracks whether leaders achieved their employment and succession-planning goals, which were set by the council. The council also tracks each leader's supplier-diversity goals, as well as integration of Kodak's overall diversity principles and priorities.

"We assess the diversity and inclusion-leadership behaviors of our senior leaders, how are they leading and behaving to achieve their [diversity] goals," says Calhoun.
 
SEDIC's primary tasks included providing guidance and direction to Kodak's Global Diversity Leadership Team, a group of about 30 mid-level managers who developed, communicated and implemented the company's overall diversity strategy.

An example of SEDIC's leadership is seen in Kodak's supplier-diversity accomplishments. Kodak set a goal to spend at least 10 percent of total purchasing with businesses owned by women and people of color by 2006. SEDIC's vigilance and oversight helped Kodak reach that goal by the end of 2004.

Over the past five years, Kodak reduced its work force by 10,000 employees. SEDIC emphasized the need for Kodak to retain its representation of women and employees of color, which it did, says Calhoun.

Size and Scope

How many members is optimum for a diversity council? The answer depends on a company's needs. In addition to the CEO or COO, companies with diversity councils on The DiversityInc Top 50 Companies for Diversity list also have the heads of the business units sit on the council.

Formed in 1998 following Wells Fargo's merger with Norwest, Wells Fargo's diversity council now is comprised of 30 company leaders who hail from every corporate group and all business lines, says Linda McConley, diversity manager for the San Francisco-based company. "It is important to have representation from every part of the company," says McConley.

The council does not have an official chair but McConley coordinates its activities. The council meets six times a year and twice a year before Wells Fargo's executive management team to deliver a progress report, which is based on the company's business principles:

1) The CEO and executive management team take responsibility for diversity; 2) There are people from diverse backgrounds in all levels of management; 3) The company is establishing long-term relationships with communities of color; 4) Leaders are focusing on supplier-diversity goals; 5) Diversity is part of all corporate internal and external communications; and 6) Vendors and candidates are getting the messages.

"The most important thing is to set goals," says McConley. "Start with a few and then build up." Members of Wells Fargo's corporate diversity council serve three-year terms, while at PBG, its 14-member board rotates two to three people every year. Kodak's SEDIC, which meets quarterly, features three rotating seats occupied by representatives from Kodak business units and functions that represent large numbers of employees.

"These are folks who are our top workers," says Berisford. "One way we select [the DAB members] is to make sure they're contributing on a high level and are influential members of their teams."

Business Unit Councils

Kodak, besides its SEDIC, has several sub-councils. Kodak features a Global Diversity and Inclusion Council, business-unit diversity councils and an employee-resource-group network council

Why so many councils at one company? To facilitate the integration and connectivity of diversity business principles throughout each level of Kodak, says Calhoun.

"Councils are one of the best ways to get integration," Calhoun says. "You're trying to make [diversity-management principles] part of the organization, and you want ambassadors and advocates out there."

While SEDIC sets and monitors overall policy, the Global Diversity and Inclusion Council is comprised of clusters of executives from all regions of Kodak's business, such as European, Asian and Latin American countries. Clusters define what diversity means in their part of the world. The group is developing Kodak's global-diversity plan through 2008, says Calhoun.

Berisford says his company's DAB had great success streamlining the way PBG executives report diversity accomplishments. That motivated the company to create business-unit DABs. When company executives share their annual operating plans each August, they also share their annual diversity-management plans. 

Berisford adds: "If a company is willing to say diversity is a business imperative, then a diversity advisory board [or diversity council] is a terrific way to make that a reality ... But if diversity is three layers deep in an organization, the diversity council may get frustrated. But if diversity is a business imperative, then a diversity council can provide tremendous value."