Case Analysis - Spencer Owens and Cityside Financials

MGT 9300: Group Case Analysis

Managing Diversity at Spencer Owens & Co./Managing Diversity at Cityside Financial Services
By: Adarsh Abraham, Nanyin Ayala, Wilson Cheong, Stephen Lam and Peter Scanlan

Spencer Owens & Co. - Peter

Spencer & Owens is an international consulting firm that specializes in economic development. They were
amongst the first in their industry to embark on an ambitious effort to increase diversity within their company.
Beginning in the mid-1980s, they sought to increase racial, gender, and ethnic diversity for all positions from
entry level to senior management. By incorporating and communicating this plan to its employees, Spencer &
Owens defined clear goals for their efforts to increase diversity. By 1995 the company had seen tremendous
success, as measured by the percentage of minorities holding positions at all levels of the company, including
senior executives. Many saw the culmination of these events in the hiring of Agnes Richards as the first female
director in 2000. Spencer & Owens enjoyed the reputation as one of the most progressive and diverse
companies operating in their sector, and many of their rivals strived to match their efforts.
Despite their incredible success in including a push for diversity in their companys mission, it soon became
clear to Richards that all was not well at Spencer & Owens. The company was extremely diverse from a
statistical standpoint, but racial tensions became abundantly clear following the firing of an African-American
human resources manager. This event had a polarizing effect on the company, with most employees feeling
very strongly either for or against the firing. Realizing that these tensions threatened the very core of Spencer
& Owens goal of diversity, Richards decided to bring in an independent consulting team to study race and
gender relations. The consultants findings have proven there was indeed much racial tension within the firm.
There are several reasons that Spencer & Owens are experiencing these problems. The core problem is best
illustrated by Thomas & Elys discrimination and fairness paradigm. (Thomas and Ely, Making Differences
Matter, October 1996) This paradigm suggests that progress in diversity is measured by how well the
company achieves its recruitment and retention goals rather than by the degree to which conditions in the

company allow employees to draw on their personal assets and perspectives to do their work more effectively.
In other words, Spencer & Owens has created a truly diverse workforce but not a diverse work output. They
have largely ignored the unique backgrounds and experiences that their minority employees can offer to the
workload, instead simply focusing on maintaining an employee roster that contains a sufficient percentage of
minorities.
In a similar vein, it could be argued that Spencer & Owens created and implemented a company wide
diversity plan but did not do the adequate upkeep. Creating such a program is effective in increasing diversity,
but it requires a proactive approach to monitor and measure its continued success. Spencer & Owens have not
taken such an approach and have essentially been caught off guard by its subsequent decay.
The survey conducted by the consulting group was revealing in the senior managements lack of commitment
to its diversity program. Question 19 of the survey was especially telling, where only 63% of white senior
management and 71% of their minority counterparts agreed that This company has been very successful in
reaching its affirmative action goals. These numbers should be much higher in a company that has worked so
hard to include diversity as an organization wide goal. The fact that they are not higher suggests that senior
management has become disillusioned or doubtful of the effectiveness of their diversity efforts. Clearly this is
a serious issue, as most companies rely on a trickle down system of disseminating information from senior
management to the lower ranks. If an employees supervisor is not an advocate of such an integral mission,
they are not likely to buy into it.
Cityside Financial Services - Jenny
Cityside Financial Services
As the demographic pattern shifted in the local community, the change motivated Cityside Financial Services
to initiate diversity recruitment to better service their new client base. The diversity effort was considered a
success in the beginning. The bank reached an impressive level of minority employment which has helped in
their customer service. Cityside was recognized for being a high-functioning, multicultural organization and a
business model for diversity. The firm was able to incorporate a large number of minorities, especially in the
retail division. The retail bankers were largely from the local community, since they had the majority of

interaction with local clients. On the other side, white bankers were mostly hired to work in the external
division, which catered to the wealthy white clients. Such a high contrast setup between the two divisions
created segregation within the Sales Division. In addition, inefficiencies and the lack of coordination due to
organizational structure flaws exacerbated the racial tensions.
Cityside now had the culture with the mentality that black bankers could only be truly successful on the retail
side and white bankers on the external side. This one bank was essentially operating as two separate banks.
What explains the problems that Cityside is now encountering? What is the root cause (or causes)?
These are the problems we have found with Citysides approach to diversity at work:
1.

The Access-and-Legitimacy Paradigm:

Several problems were found with Citysides approach to diversity at work. Similar to the Spencer Owens

case study, Cityside created a diversified work environment but not a diversified work output. The aggressive
hiring of minorities to match the banks customers perfectly reflects the Access-and-Legitimacy paradigm. This
strategy was undoubtedly an important one for the bank as more African-American middle class families moved
into the neighborhood. The bank needed to offer the similar-to-me environment in order to attract and retain
customers.
The disadvantage with this paradigm is that an employees true potential could easily be overlooked. Their
similar-to-me effect supersedes other possible interests or talents. This was the case at Cityside. If a black
banker was successful in the external division, he/she would be offered a higher position on the retail side. The
schism within the Sales Division prevented the bankers to pursue his/her talents. As a result, Cityside could not
benefit from its diversified employees. Furthermore, resentments towards white bankers grew among the
minority bankers and left them feeling exploited.
2.

Stereotyping within the organization

Secondly,At Cityside, white bankers openly expressed their biased perception on why black bankers should

be kept in the retail division. White bankers perceived black bankers as unmotivated and as only wanting to
work a 9-to-5 job; surmising their ability to perform was limited due to historical racial issues. White bankers
were presumed to be more driven, more intelligent and more suited for blue-collar jobs, especially dealing with

wealthy white clients. The racial background of a banker determined his/her career path at Cityside and not of
their interest or skills.
3.

Prejudice against the customers

In addition to the racial divide between the retail and the external divisions, customers were also being

labeled. Local customers were assumed to be ineligible for certain banking products. This stereotyping became
obvious to customers who were mislabeled thus causing Cityside to lose some of its customers.
4.

Lack of integration
The lack of integration compounded the Ffrictions between the two divisions intensified when they both tried

to service and sell to the corporate clients. The retail division argued that the local businesses were within their
client category while the external bankers believed that the wealthy investors should be theirs. This problem
stemmed from Citysides practice of labeling customers by their address instead of their relationship with the
bank. The internal rivalry increased the rift between the two divisions.
5.

Complacency
Lastly, poor maintenance and the managements complacency was also a cause for the deterioration of the

diversity effort. Once the diversity level reached Citysides goal, the management did not make further
improvements or maintenance to the program. The bank simply brought in the minority bankers and was
satisfied with the effort. Trainings or information sessions regarding diversity at the work place were not
provided. Employees were unaware of how to embrace or appreciate the value of diversity. Rather than seeing
and understanding the advantages of a diversified work environment, diversity was seen as a necessity for the
bank to survive in the community.

What do these cases have in common? Stephen

In both cases, the organization wanted to be recognized as the pioneer of corporate diversification in their
respective industry. The ambitious effort set forth by both organizations would require innovative strategies.
With limited guidelines and views, both organizations believe the implementation of diversity initiatives through
the use of an aggressive minority hiring program would lead to corporate diversification. Despite their well

intentions, another commonality, both organizations suffer major setbacks from their failure to recognize the
importance of long term upkeep procedures and management commitment.
Management at both organizations mistakenly decided to use data-oriented measurements as a way to
measure their successes. The appearance of initial success from these unreliable data deprives management
from further engagements. Management at both organizations was pleased with their initial success and began
throttling down their efforts in establishing a diverse corporate environment. The countless misconceptions at
both organization would eventually lead to the staff gets diversified but the work does not phenomenon. It
would be too late when Cityside and Spencer Owens had realized their success was only superficial. The many
missed opportunities to strengthen its diversification efforts contributed to an underlying build-up of tensions at
Spencer Owen and eventually divided Cityside Financial Services into fragments.

What approach to diversity might have been more effective in each of these cases? - Wilson
In both cases, the respective organizations could have benefited from more pre-diversity preparation and
better execution of the integration. Diversity succeeds when upper management wholeheartedly buys-in equal
treatment, reward, and punishment for everyone regardless of an individuals differences. Thus, the first step
should have been to ensure the complete support of the upper management for diversity, as their acceptance is a
crucial element in determining the attitude of the entire organization. The top-bottom trickle in the organization
can be facilitated via mentoring of junior personnel by senior personnel, which will eventually ensure diversity a
place in the company norm.
Diversity performance should also be followed-up through the hiring process, by implementing a continuous
monitoring system that benchmarks diversity parameters, and can be assessed by feedback generating tools such
as an anonymous suggestion box. Knowledge and understanding of diversity can be sustained via periodic
training, and perhaps even cultural events aimed to stimulate understanding between everyones different
backgrounds. The combination of these two preparation steps should create an open environment that
encourages voicing of opinions and acceptance of different perspectives, which can help mitigate small
problems before they grow into bigger problems such as racial tension (as in Spencer & Owens) or a company

racial divide (as in Cityside Financials).

As a final note, the companies can hire outside expertise to facilitate and advise on diversity implementation.
Because it is possible that neither Spencer and Owens or Cityside Financials (especially) had started out with
great experience in successfully implementing diversity in the workplace, outside expertise could have better
prepared both firms for diversity contingencies.

In light of your analysis, what should Richards/Wilkens do to turn things around? - Abe
First lets examine the options both leaders have in common from this junction forward. They must clearly
define the code of conduct and diversity expectations within their respective firms. Encouraging oppenness is a
key factor in preventing future miscommunication. In both cases, it was the lack of proper communication that
led to increased bias, and bias that led to dissension. This oppenness will in turn incorporate employees
perspectives; showing all employees that they are valued and have truly equal opportunities company-wide, not
just in their respective divisions.
Second lets see what Richards can do at Spencer Owens & Co. Richards needs to reeducate the entire
company on the mission of the company at large and the affirmative action program. Because these problems
have grown unchecked, it is necessary to remind the employees of their incredible diversity and the companys
reasons for employing such a varied workforce. She has to incorporate clear practices regarding hiring,
promotion, and firing to avoid the problematic resentment that has been created in the current system. Many of
the discrepancies to the survey questions occurred at the program and support staff levels. Since many in the top
management team consisted of mixed gender and ethnicities, promoting a mentoring program for the minorities
may be helpful for those two levels of employees. A mentor could help sort out misperceptions experienced by
their staff.
Finally lets examine what Wilkins can implement at Cityside Financial Services. He should promote crossdivisional activities, both professional and personal, and encourage education across the board regarding the
important roles both divisions play. If he can show both sides how equally valuable the two divisions are, it will
help alleviate some of the tension. Wilkens also needs to educate his employees of the mission of the bank, and

inspire them to want to work together towards a common goal. Rather than labeling clients by their localities,
marketing towards customers should be based on their actual relationships with the bank. For example, offering
products based on a customers banking activities, account balances, or types of existing accounts held at
Cityside. The corporate banking problem could be resolved by creating a corporate banking division. Not only
will this clarify the division responsibilities, but it would also allow bankers with corporate interests and
specialties to grow and develop within the firm. With a rectified division structure, customers would be
categorized based on their needs and not on their race or addresses. The access-and-legitimacy paradigm will be
applied through-out the entire bank. Cityside will also benefit from the emerging paradigm by utilizing talents
and incorporating them in all aspects of the firm.
Pursuing these options will bring the firms one step closer to assimilation rather than differentiation.
Ultimately it will be the continuing processes of accountability within the ranks which ensure that diversity is
understood as the varied perspectives and approaches to work that members of different identity groups bring.
(Thomas & Ely, 1996, Diversity)