Developing Diversity Scorecard: The Case of Larsen & Toubro, India.
| Date | 01 October 2020 |
| Author | Sarkar, Anita |
Introduction
Successfully managing a diverse workforce is a cherished desire but one of the important challenges faced by business world today. It is worth taking up this challenge since a wellmanaged diversity confers an organization competitive edge (Cox& Blake, 1991; Robinson& Dechant, 1997), by (a) enabling to attract different types of customers, employees, suppliers, and other relevant stakeholders, (b) reducing turnover intentions of employees and (c) ensuring much needed organizational flexibility. Overall, managing diversity is also connected to employer branding.
Conceptualization of diversity varied across studies (Thomas, 1992; Lau, & Murnighan, 1998). 'Diversity' in the Diversity Scorecard (DSC) mentioned here includes following four interconnected and often overlapped areas as mentioned by Hubbard (2008): (a) workforce diversity (e.g., gender, age, socio-economic background etc.), (b) behavioral diversity (e.g., learning styles, aspirations, values etc.), (c) structural diversity (e.g., organizational hierarchy, connections between different functional areas, and relationship between different businesses alliances etc.), and (d) business and global diversity (e.g., varied environments, both within domestic and global fronts within which organizations operate). Hubbard (2008) 's DSC is aligned with balanced scorecard concept of Kaplan and Nortan (1992). While some organizations take a defensive approach and the primary reason for incorporating diversity initiatives became ensuring regulatory compliance by accommodating some minority members through affirmative action programs, others adopt a more proactive approach where diversity management is initiated to meet business objectives (Thomas& Ely, 2001; Ely & Thomas, 2001). The diversity initiative taken by Larsen and Toubro (L& T), Vizag as described in this paper gravitates towards the latter proactive approach, while keeping the eye on evolving regulatory environment.
Only very few academic researches have been done in the domain of DSC development. Bensimon (2004) reported that a DSC was developed in an educational institution based on Kaplan and Nortan's (1992) balanced scorecard. Knouse and Stewart (2003) quoted a few critical areas of diversity measures pursued by companies like Ford, Xerox, DuPont, IBM, Motorola, Procter & Gamble, Eastman Kodak, Price water house Coopers (PwC), and American Express, etc. The challenges involved in the experience of DSC development had hardly been reported. The present paper studies a particular case to highlight the experiences of developing a DSC.
What is Diversity Scorecard?
DSC focuses on carefully selected set of objectives and measures connected to an organization'sdiversity management. DSC, as proposed by Hubbard (2008) tries to measure and monitor diversity management practices under six critical dimensions: (a) Workforce Climate/ Culture, (b) Workforce Profile, (c) Diversity Leadership Commitment, (d) Learning and Growth, (e) Diverse Customer/ Community Partnership, and (f) Financial Impact. Measures selected in the above six dimensions are an aid for leaders to communicate to customers, employees, suppliers and other key stakeholders the diversity objective and progress towards diversity management. Each organization, based on their unique situations, has complete flexibility to highlight only select dimensions of the DSC. Both qualitative and quantitative parameters need to be developed by organizations to measure and monitor the progress in the field of diversity management. Given the importance of diversity management, DSC becomes a vital tool to systematically monitor the progress of diversity management in critical controllable areas. This article shares the processes followed and the challenges faced while developing DSC for an Indian origin MNC, Larsen & Toubro (L& T). Taking it as a pilot project, in one of their units at Vizag, L& T aimed to implement the learnings of the DSC initiative across all their units in future.
Brief background of Larsen & Toubro, India
Larsen & Toubro (L& T) was founded as a partnership firm in 1938 and later incorporated as a private limited company in 1946 and listed in Bombay Stock Exchange in 1948. It is a major Indian conglomerate with global presence and has diverse business verticals or independent companies (ICs) in the domain of manufacturing, engineering, construction, technology, financial services, defence, aerospace etc. The company is a market leader in most of its operational domains and among the largest and most respected corporations in India. A thrust on internationalization, particularly in Middle East, Africa and South East Asia, has seen its business grow in spite of challenges faced by the Indian economy. The DSC development process as described in this article took place at L& T Vizag that undertakes complex mission-critical projects with a focus on modular design and construction of Naval Platforms. L& T's strengths in this domain includes: (a) inhouse design centers for warships and submarines, equipped with Industry 4.0 practices for digital design, simulation including a virtual reality studio, (b) design and development track record in indigenous development of platform-specific equipment and systems, (c) multi-location project management skills, and (d) financial stability.
Background of the Affirmative Action Programs in India
Before L& T took up the DSC development initiative, at its Vizag unit in 2018, several amendments had been made to the Indian legislation. As a result, it was mandatory for every organization to institute affirmative action programs, particularly focusing on the areas of gender and disability-related issues. For gender-related diversity, Securities and Exchange Board of India (SEBI) had issued guidelines in February 2015 asking companies to appoint at least one-woman director on their boards (SEBI website). The larger idea behind SEBI guideline was promoting inclusion of women across all levels of the organizations including leadership positions. The Maternity Benefit (Amendment) Act, 2017 was promulgated to encourage career continuity for women in the workplace (Ministry of Labor & Welfare, Government of India, 2019). For disability-related issues, Rights of Persons with Disabilities Act, 2016 was enacted, to encourage private sector organisations to include 5% disabled members in their workforce (Ministry of Social Justice and Empowerment, Government of India). Confederation of Indian Industries (CII), a business association in India had urged its member organizations to maintain at least 1% disabled employees in their entire employee base (Sarkar, 2016). With the scrapping of Section 377 of the Indian Constitution (Economic Times, Sep 07, 2018) which had criminalized same-sex relationships, the LGBTQ community was hopeful that now organizations would take proactive actions in the diversity management field. Some of the MNCs operating in India had already made policy changes to accommodate members of LGBT community.
Phases of DSC Development at L& T
The step-wise process followed by L& T, Vizag for developing the DSC is shown in Fig. 1 with each step further explained below.
Step 1--Identification of DSC Team: The unit leadership at L& T, Vizag, was well aware of the importance of diversity management. While the concept of generating DSC also came from the leadership, it was pursued and implemented by the Location HR Lead--a woman executive, pursuing MBA program at a leading management institute in India. The implementation was guided and supported by the Business Leadership, Heads of Departments and employees of the Unit. The unit also received support from Head HR and Head Office. One of the professors from the management institute was engaged in to guiding the entire journey of DSC development. Initially, a four members DSC team was constituted with three internal members and one expert from outside with a fixed three months' deadline to come up with a draft DSC. Except the unit head, all the other three members were Human Resource (HR) professionals.
Step 2--Development of Business Case for Diversity Management: The team debated and documented the business needs for diversity management at L& T. There were multiple reasons for L& T's systematic focus on diversity management. First, L& T's management initiated sustainability goals pan L& T, which encouraged the organization to look beyond immediate profits. Under the sustainability objective (Sustainability Report, L& T, 2017), L& T identified the need for making the organization beyond just gender-inclusive. Secondly, given the significant changes in the Indian context, L& T, like any other responsible organizations in India, needed to align itself with affirmative goals that were mentioned earlier. Thirdly, though L& T Vizag primarily serves Indian Navy, variety of skills, attitude and knowledge are required to become end-to-end solution provider to the single customer. This entailed measuring diverse skill sets, processes and systems. In the years to come, L& T Vizag is likely to venture into new markets, both in India and abroad calling for different and new range of skillsets. Finally, in western countries, many organizations have undertaken diversity initiatives with utmost seriousness, thus creating a distinct image for themselves in the field of diversity management. In this context, L& T has come forward as this has huge scope for furthering diversity initiatives.
Step 3--Analysis of Strengths, Weakness, Opportunities, and Threats (SWOT) of the Organization: With the inputs taken from few seniors, the DSC team developed a draft SWOT analysis for the Vizag unit. This SWOT analysis was further fine-tuned at a later stage when focus group discussions (FGD) happened by taking inputs from different hierarchical levels.
Step 4--Data Gathering: Two types of data were gathered by the team. One was the secondary data on age, gender...
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