9-405-048
REV: APRIL 17, 2006
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Professor Robin Ely and Senior Researcher Ingrid Vargas prepared this case. This case was developed from published sources. HBS cases are
developed solely as the basis for class discussion. Certain details have been disguised. Cases are not intended to serve as endorsements, sources
of primary data, or illustrations of effective or ineffective management.
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ROBIN ELY
Managing Diversity at Spencer Owens & Co.
In 2000, following a careful national search, Spencer Owens & Co., a forty-five year old
international consulting firm focusing on foreign and domestic economic development, recruited its
first female executive director. Agnes Richards, a white woman in her mid-50s, welcomed the
opportunity to lead this successful firm widely recognized for its achievements, including those in
the area of diversity. She believed Spencer Owens offered a unique working environment uncommon
to the industry.
Hiring Richards was the culmination of an effort, initiated in the mid-1980s by Spencer Owens’
then all-white-male executive team, to increase racial, ethnic, and gender diversity throughout the
company, from entry-level positions to executive ranks. The new affirmative action plan read,
“Spencer Owens will consider people on their merits and for their capacities to do what is expected
or required of them.” To implement the plan, they set hiring goals, communicating them to all
employees and creating accountability. Over the next decade, numerous women and people of color
were hired and placed on career paths toward becoming project managers and leaders in the firm.
The company’s two-hundred-member staff was divided between operations and program
services. Operations included general management, community relations and special programs. The
company’s areas of expertise, or programs, spanned criminal justice, economic justice, youth support,
humanitarian assistance, immigration and conflict prevention.
Initial Success
By 1995 Spencer Owens boasted the most diverse staff in the industry at all levels of the company
and was considered a model of successful diversity efforts. About 50% of the firm’s 150 managers
and professionals were women, and 30% were people of color. Many qualified entry-level employees
of color had been promoted into managerial positions over time. A third of the company’s 12-person
executive team was women and a quarter was people of color; the associate director was an AfricanAmerican man. Exceedingly competent, the firm’s staff was built through aggressive hiring and
advancement practices that set high qualification and performance hurdles in addition to affirmative
action goals.
Spencer Owens’ leadership and much of the staff were proud of the company’s achievements. As
one Latina project manager stated, “A significant number of people of color is a sign of something
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405-048 Managing Diversity at Spencer Owens & Co.
2
good about the organization.” The firm’s commitment to fairness and equality encouraged people to
ignore gender or ethnic differences. Typical comments from employees across the board included “I
don’t see people in color,” “Everyone is the same and is treated the same,” and “We are all human
beings here.” A white manager described the firm as having “made tremendous progress in its
commitment to build both a just society inside, as well as a just society outside the organization.” He
continued:
I think the organization has committed itself to restructuring its personnel makeup in order
to right some of the wrongs caused by racism and sexism in our society. People of color have
enriched the organization; they have helped us live up to our ideals of equality and justice.
To complement its affirmative action program, Spencer Owens undertook several other initiatives.
The firm required that every staff member attend “sensitivity training” sessions. Coupled with follow
up discussions, the training was intended to raise people’s awareness of individual prejudices and
institutional racism, sexism, and homophobia. In addition, top management embraced employees’
efforts to form networking groups for women employees and for employees of color. The two groups
aimed to ensure the development and advancement of women and of non-white staff at Spencer
Owens as well as to leverage their perspectives on work produced by the firm.
Tensions on the Rise
Since assuming her directorial duties, Richards had noted growing friction around race relations.
It seemed that employees of color were quick to bring charges of racism against whites in the
organization. Also Richards was disturbed by the frequency of complaints brought by the two
networking groups. Three years into her tenure at the firm, amid concerns that the firm had not done
enough to deal with prejudice in the organization, Richards and her leadership team reinstituted
sensitivity training for all staff, but the attendance was poor, especially among racial and ethnic
minorities. Recently, a few high-potential employees of color had resigned.
Racial tensions escalated when Richards fired Sahara Johnson, an African-American manager in
Human Resources who had a history of lateness and what her superiors called “an attitude problem.”
The incident was like the breaking of a dam, and everyone’s anger and frustration came pouring
forth. During 10 years at the firm, Johnson had worked her way up to a managerial position, and
many people, particularly women of color, had looked up to her as a role model. Her firing divided
the firm into those who considered her dismissal abrupt and unjust and those who felt it was long
overdue.
In the aftermath of Johnson’s removal, Richards turned to her executive team to discuss the
undercurrents at the firm. Together, they decided to hire consultants to undertake a systematic study
of the firm’s race and gender relations and to help formulate a corrective strategy. The race- and
gender-diverse consulting team engaged for the task, led by an African American man, interviewed a
cross-section of employees, including executives and managers, program staff, and support staff from
the operational and program areas in the firm.
Despite success with the number of hires, the interviews revealed numerous concerns about the
affirmative action initiative. White staff acknowledged that the firm was successful in reaching its
affirmative action goals, but some maintained that the diversity program was adversely affecting the
quality of work put out by the firm. White male managers complained that the newer employees
were undermining Spencer Owens’ traditional strength in hard-core quantitative analysis by
advocating for incorporation of interviewing and observation into data-gathering methods. Minority
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Managing Diversity at Spencer Owens & Co. 405-048
3
project leaders had also challenged standard practice by suggesting that Spencer Owens’ program
staff seek input from middle managers and the rank and file at client organizations, instead of
focusing exclusively on senior managers. Long-term employees, especially white program staff,
feared these ideas were pulling the organization away from its original mission and values, which
were grounded in rigorous analysis of economic development strategies.
By contrast, people of color were critical of the affirmative action program for having achieved
merely superficial results. For example, one African-American project leader felt that the firm
tolerated minorities without fully accepting them. Another minority staffer confirmed “they say we
are just one big happy family, but there are some stepchildren in this organization.”
Many non-white professionals reported having their ideas routinely disregarded. A Latino
program staffer explained, “Until white people discover an idea, until they express it with their own
words in their own style, it’s as if it doesn’t exist.” An African-American project leader in charge of
Eastern Europe shared the following experience:
We were mapping out our strategy, and I tried to get people on the team to consider the idea
that actually these countries had more in common with certain parts of Africa and Latin America
than with Western Europe. I pointed out that the firm’s white, Eurocentric orientation might lead
us to assume—erroneously—that white countries have more in common with one another than
with nonwhite countries and that, as an African-American, I was probably less committed to that
view. But when I raised the idea that our race might influence how we saw things, they all
thought I was being racist.
These complaints were routinely brought to the attention of the networking groups, which
interjected themselves in defense of women and people of color whenever they deemed necessary.
Some whites complained that these groups had taken on a policing and advocacy function, and
several white project leaders believed the groups had “more leverage and more power than perhaps
they ought to have in decision making.” One manager complained, “They are sometimes allowed to
make interventions and judgments of certain programs based on their political clout rather than on
actual facts.”
When a person of color was fired, whites observed that “people [of color] are up in arms and
saying it’s racism.” A white manager complained that it had become “increasingly difficult for
supervisors to provide firm, fair, constructive supervision to people of color, who are prone to charge
racism if they are criticized.” In turn, many employees of color lamented the missed opportunities for
valuable feedback, and some resented what they perceived as white supervisors’ fear of
confrontation. “There’s a real sense on the part of some white people that whatever they’re going to
do they’re going to get in trouble,” a black woman had told one of the consultants. “Their biggest fear
is being called a racist.”
To gain a better understanding of how widespread these attitudes and perceptions were, the
consulting team administered a company-wide survey with questions based on the varied points of
view expressed in the interviews. Ninety-two percent of the employees responded to the survey (see
Exhibit 1).
The executive team was taken aback by the gravity of the problem exposed by the survey. Faced
with the results parsed by race and hierarchical level, Richards realized that she had to find a solution
and set a new course for the company. Sitting at a round table, she turned to her team and to the
consultants for ideas on how to steer the company out of this difficult situation.
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405-048 Managing Diversity at Spencer Owens & Co.
4
Exhibit 1 Responses on Sample of Survey Items
Note: This exhibit demonstrates the percentage of affirmative (“agree” and “strongly agree”)
responses.
Item Senior Management Program Staff Support Staff
Commitment to the Mission
1 I continue to work at this firm because I am committed to its mission.
Minority 88 87 50
White 94 89 77
2 I love this organization for what it stands for.
Minority 88 75 54
White 88 85 38
Quality of Race Relations
3 Whites have no problem dealing with competent minorities.
Minority 57 6 8
White 35 62 50
4 There is a lot of racial polarization in my department/division.
Minority 13 62 21
White 12 54 17
5 Many whites in this organization are intimidated by Black staff.
Minority 50 47 41
White 76 67 45
6 I feel comfortable confronting my white colleagues with negative feedback.
Minority 75 72 59
White 63 56 45
7 Minoritiesí are often overly confrontational when questioning the actions of whites.
Minority 63 11 30
White 35 58 31
8 I am hesitant to criticize minority coworkers because I donít want to be called a racist.
Minority 0 16 5
White 64 61 46
9 White males are often under attack in this organization.
Minority 25 5 19
White 38 52 33
10 For minority staff to get into management and stay there they cannot appear to challenge racism in the organization.
Minority 14 55 52
White 0 19 17
11 It seems no matter what management does, it cannot please some black staff.
Minority 71 11 44
White 64 54 50
12 Latinos are not sought out for their expertise on the broader social issues of Latin America and U.S. foreign policy.
Minority 29 65 26
White 20 18 18
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Managing Diversity at Spencer Owens & Co. 405-048
5
Item Senior Management Program Staff Support Staff
Discrimination and Prejudice
13 I am constantly confronted with racism against me in this organization.
Minority 13 30 25
White 0 20 0
14 Because of my race and/or gender people often ignore my suggestions about work-related matters.
Minority 14 45 44
White 14 11 36
15 Black employees are allowed to get away with things that white employees canít get away with.
Minority 25 5 11
White 35 48 15
16 Blacks in management are taken as seriously as their white counterparts.
Minority 57 16 28
White 63 65 58
17 I have to suppress much of who I am to be accepted and to do my work.
Minority 25 62 15
White 25 11 54
Attitudes Toward Diversity Policies
18 Hiring decisions should be made without regard to race.
Minority 43 32 88
White 59 46 64
19 This company has been very successful in reaching its affirmative action goals.
Minority 63 33 33
White 71 74 42
20 Our success at bringing in minorities has meant that weíve lost some good white men.
Minority 0 6 4
White 6 32 0
Source: Casewriter.
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