By Kelly Tanner

Recent changes within the Department of Labor have resulted in a new focus on compliance audits of existing workplace regulations by the OFCCP and EEOC. This initiative has caused corporations to shift additional resources toward ensuring minimum compliance to avoid potential hefty penalties.

However, an approach that only values ‘ticking boxes’ to avoid litigation results in companies that endure all of the hassles of implementation without enjoying any of the real benefits of a true culture of diversity, and the return on investment that an improved diverse workforce brings to the table.

The New Regulations

Regulations such as the Internet Applicant rule, effective in 2006, have made it possible for Department of Labor agencies to compile more detailed information regarding corporations’ hiring practices. With the appointment of Patricia Shiu under the Obama administration as OFCCP Director, the agency has vowed to collaborate with the EEOC to ensure compliance of all existing laws regarding pay equity, and discriminatory disparate impact in the workplace.

The 2003 ACM directive was rescinded, which allowed for “spot-check” desk audits of certain data that triggered a full on-site audit only if problems were discovered. This was replaced with the ACE strategy in January 2011, reflecting the move toward on-site, full audits as the new standard, and a new OFCCP involvement in individual discrimination complaints which were previously EEOC territory only.

Building a True Diversity Culture

Many companies have taken positive steps toward compliance, including internal pay equity audits, accurate applicant logs, and utilizing outside consultants or counsel to ensure standards are met. These are good steps toward evaluating the current standing of the corporation through a “snapshot” assessment.

However, that snapshot may not accurately reflect whether a corporation has a truly diverse culture that effectively leverages the strengths of its organization to best effect, and whether those benefits are being wasted rather than affecting the company’s bottom line.

Time and again, companies cite comprehensive diversity initiatives such as Morgan Stanley’s Women’s Initiative, or KPMG’s Diversity Advisory Board, as tools that have kept them competitive in an increasingly challenging marketplace. Kerrie Peraino, Chief Diversity Officer at American Express, states:

“There are four key elements to which we attribute the success of the diversity initiatives at American Express: engagement from the top and an executive team willing to lead by example; clear, measureable goals that align with business objectives to imbed the program in all aspects of the company; a program that is compelling to all employees; and aggressive efforts to communicate that program throughout the organization.”

These are the keys to a true culture of inclusion and diversity, which will result not just in more effective recruitment, but retention, as well as better and more multifaceted management, career development, and improved customer service. These benefits are seen by companies who have embraced them as indispensible, despite the growing pains that can be experienced at the outset as new policies and ways of doing business are challenged to encourage and make room for a truly diverse organization.

Why Companies Need to Get it Right

The consequences of getting it wrong, however, can be staggeringly high.

Companies focused on ticking boxes to meet compliance standards are doing so out of fear of litigation costs and fees, both of which can be a drain on expenses and manpower, and can drag out for years. Companies without a well-established history of inclusion, and without the top-level support for diversity initiatives, frequently meet resistance from coworkers and managers unable to see the personal benefits of such an approach. Instead, organizations may find themselves exactly where they hoped to avoid: facing a lawsuit, this time under accusations of “reverse discrimination” or tokenism.

Additionally, the half-measures will not work. Turnover will remain high, as workers from historically marginalized groups will be initially brought on board only to resign as they find no true path to advancement or a hostile work environment, seeking true opportunity elsewhere. The costs of constant turnover and related expenses may make those entities believe that diversity initiatives are not working for them, without understanding that a more thorough committed approach to diversity initiatives would have affected the bottom line in a meaningful way.

The renewed focus on labor audits is disconcerting for many corporations large and small, as many scramble to ensure that they are in full compliance before the Department of Labor comes knocking at their door.

However, the organizations with established cultures of inclusiveness for their diverse organizations have been successfully recruiting for years by promoting a company with true opportunity, one that benefits measurably from diverse perspective and leverages its multifaceted employee talent as fully as possible. Companies who take the opportunity to follow their lead may find the initial challenges of change to have been well worth the effort to the bottom-line.