Diversity and Inclusion are Critical to Stay Relevant

If you are not ahead of the curve, your company might find itself playing catch-up to become relevant.

By Earsa Jackson, CFE

Will your brand still be relevant 10 years from now?  How will your customer base look in 10 years?  These are questions every franchise system should ponder.

The Situation

During a board meeting recently, one participant made a comment about the need to cast a wider net for customers. This led to an interesting discussion from which franchise systems might take note of their strategic planning process and diversity efforts.  One member kicked off the discussion by explaining why the organization thought it was imperative to attract a more diverse population.  She said it is no longer acceptable to only market services and products only to the sector we’ve targeted since the organization was founded.  If we continue to do so, she added, we will be marketing to a shrinking demographic.  Others will seize the opportunity to market to the growing population we’ve overlooked. Another member added that organizations are not wise to neglect efforts to market to the fastest growing demographic for ages 25 to 35.  Of this sector, she estimated that 65 percent are Hispanic in the local market for this segment.  The demographics are very different from 30 years ago when the organization was formed.  While there are many aspects of diversity which deserve attention, this article is primarily composed of a discussion of minorities and women. With the changing demographics in the United States, it’s unsound business sense to put diversity at the bottom of the company’s priority list; it should be at the top.  Today’s minority is tomorrow’s majority.  Effective diversity and inclusion programs must come from the top down.

Where do we go from here?

Some companies have gotten the memo while others are still at Ground Zero trying to figure out what to do next.  McDonald’s, which has been a leader and innovator in the franchise industry, is also a leader in the quick service industry and the country on how to develop a diverse group of franchisees.  McDonald’s starts at the top by creating a culture of inclusion for employees and customers.  Seventy percent of its U.S. employees are women/minority.  More than 25 percent of its leadership is comprised of women/minorities.  McDonald’s touts more than 5 billion in diverse vendor spend.  Forty-five percent of its franchisees are women/minority.  McDonald’s even has a Global Women’s Initiative designed to ensure a solid pipeline of women being groomed for leadership in the company.

Could you be unintentionally killing your diversity efforts?

Some companies have done a great job of expanding their reach while others have lagged behind.  It leaves one asking why there is not more diversity in franchising.  Lack of education, money, experience and exposure by women and minorities could explain some of the disparity, but we should not assume these are the only explanations for the disparity.  One diversity consultant strongly emphasizes unintentional bias as one explanation.  She puts biases into essentially three categories:  stereotype, confirmation and status quo bias.  Merely being cognizant that biases may exist actually helps to recognize (and dispel) bias. To assess whether you might fall in the category of stereotype bias, watch for instances where you are surprised about something when you are talking to a minority candidate, employee or member of a leadership team.  This bias may have nothing to do with a racial bias, but ask yourself why you were surprised.  At the root of the surprise might be a bias you never knew existed, all of which is unintentional. To assess whether confirmation bias might be at work, ask yourself whether you have some preconceived notions about productivity and success.  Jot those down and assess each one.  Be sure you have a rational basis for the criteria you set as even your ideal candidate may just be a replica of those you already have in the system. This could lead to not giving proper consideration to someone you have excluded, based on preconceived notions about those who are the most productive franchisees or candidates.  This bias causes one to only focus on traits which affirm established beliefs while ignoring important factors which contradict established beliefs. Status quo bias shows up in the form of the position that “We’ve always done it this way and it works for us” or “If it ain't broke, don’t fix it.”  This bias can be deadly to a system.  A business must change over time to remain relevant.

Perspective of 2014 Ronald E. Harrison Diversity Award Recipient

Diversity is a very important issue for the International Franchise Association, and each year, the IFA awards the Ronald E. Harrison Diversity Award during its annual convention.  The 2014 award recipient is John C. Draper, president of operations for V&J Holding Companies, which operates more than 100 restaurants under his direction.  The brands include Pizza Hut, Burger King, Auntie Anne’s, Cinnabon Bakeries, Coffee Beanery and Haagen-Dazs spanning four states.  He oversees more than 3,100 team members.  V&J Holdings Companies is owned by Dr. Valerie Daniels-Carter and is the largest female franchisee operation in the United States. When asked about challenges and opportunities for more diversity in franchising, Draper described a challenge related to the way franchise systems determine whether a candidate has the requisite experience to bring to the table.  Often the criteria used to “qualify” franchisees may be too limited.  Not all experience needs to come from the industry according to Draper.  Candidates with military experience often bring great training to the table.  A candidate’s prior job duties might qualify him while the title he was given (and for which he was paid) may not match up.  Look beyond the surface. Where a candidate has many of the traits the franchise system desires as “ideal,” but lacks some operations experience, franchisors may consider ways to pair these candidates up with others with experience or offer training and classes on the operations side.  Some systems have been very successful with matching candidates with great operators.  Franchisors must realize this is not an effort in social duty, but an effort to increase their diversity intelligence.  Having a diverse group of franchises enhances the system and helps to broaden the customer base of the brand.

Next Steps toward Diversity and Inclusion

Franchise systems must increase their diversity IQ to stay relevant.  Where does your company stand on diversity today?  How does it measure up to your competitors?  Will you be left behind in five, 10 or 15 years because you failed to take a forward-looking approach to growth? Look within your own company and assess where you stand with diversity among your employees, customers, franchisees, leadership team and strategic alliance.  If you are not ahead of the curve, your company might find itself playing catch-up to become relevant. If you want to increase your diversity IQ and expand your search for diverse franchisees, consider doing one or more of the following:

1. Support the IFA’s Diversity Institute.  The purpose of the Diversity Institute is to promote and foster diversity and inclusion within the franchise community. The institute serves as the home for IFA and the Education Foundation’s diversity and inclusion programs – education, research, scholarships and liaisons with other national organizations. The institute provides information to assist IFA members in expanding their diversity recruitment and multi-cultural marketing efforts at all levels – franchisees, employees, suppliers and consumers.
2. Participate in the one-day seminars co-sponsored by the IFA conducted around the country that are designed to attract women and minorities interested in franchising.
3. Establish strategic alliances with organizations beyond the normal organizations you have aligned with in the past.  Consider participating in events and marketing opportunities with organizations whose members/subscribers may be good candidates for you.  Entities such as Black Enterprise can be great resources to help you cast a wider net.
4. Attend the New Market Summit during the 2015 IFA Convention to hear what others are doing to further their diversity and inclusion efforts.

Earsa Jackson, CFE, is a partner in the Dallas-based law firm Strasburger & Price, LLP and the first vice chairwoman of the International Franchise Association Educational Foundation’s Diversity Institute.  Find her at fransocial.franchise.org.