50 Best Companies for Minorities In an ideal world the leading companies for minority employees would be tops for everyone. But this is not an ideal world, and some companies are still more successful at fostering diversity in their workplace than others. The good news: Corporate America is raising the bar, and the best keep on getting better. FORTUNE's list shows which 50 companies rank at the very top.
(FORTUNE Magazine) – I'm not the typical minority," says Jose de Lasa in a thick Caribbean accent. De Lasa thinks that because he was born and raised in a privileged family in Cuba that came to Miami when he was 20 years old, fleeing Castro after the Bay of Pigs. He went to Yale, picking up a BA and a law degree and is now EVP and general counsel at Abbott Laboratories, the pharmaceutical company that is No. 29 on our list. During a 45-minute phone conversation, Abbott's CEO, Miles White, drops by de Lasa's office three times. (Okay, that's probably not usual for anyone.)
But it does bring up the question, Is there such a thing as a typical minority?
The answer is, of course, no. Any grade-schooler will tell you everyone's different. Still, sometimes we adults need reminding that a one-size-fits-all approach to diversity doesn't work for companies either and that the issues of diversity these days are, perhaps, more complex than 20, ten, or even seven years ago, when we started this list. "It is not about getting in the door," says Bob Carr, head of strategic planning issues for the Society of Human Resources Management. "It is about leading the organization. It is about power and influence, and people want a greater share of both."
As FORTUNE's list of the 50 best companies for minorities shows, these are firms that make an effort not only to hire minorities but also to retain them and promote them through the ranks. They actively interact with outside minority communities and make management accountable for diversity efforts.
That level of diversity--the kind that has to do more with opportunity and promotion--speaks to a company's culture. And there is no easy formula for that. At the end of the day the best companies for minorities are really those in which people of color feel that they belong--at all levels--every day. "Consistency is more important to me than any new initiatives," says Ming Wong, senior regional manager of Washington Mutual (No. 19). "Every major corporation has diversity programs. But you have to watch how people behave. It is how they live their lives that shows their true colors." At WaMu, he gives credit to CEO Kerry Kilinger for setting a good example. At J.P. Morgan Chase (No. 43), members of its executive team are assigned to nine company diversity task forces to ensure that the needs of those communities are heard by top brass.
In fact, involvement in diversity efforts at the top of an organization is key. That's how company culture is shaped. "The situation of corporate America today," says Harvard Business School's David Thomas, "is for senior management to push beyond the status quo." The 50 companies on FORTUNE's list understand that. They match a diverse workforce with diversity in their management ranks and on the board. And they keep raising the bar. During the seven-year life of this survey, company boards, for example, have become more diverse. People of color made up almost 21% of boardrooms in 2003, compared with 19% the year before and 11% in 2001.
"There is a definite correlation between diversity at the board level and CEOs who are serious about diversity," says Charles Tribbett, head of corporate board searches for executive search firm Russell Reynolds. "There are still plenty of boards with just one minority member or none. But when it gets past the one stage, there is usually a passion behind it that filters to the rest of the company."
Unfortunately, the best--and this list contains just (the top) 50--are also, well, a minority. As Gertrude Stein once said, "History takes time."
We contacted the FORTUNE 1,000 and the 200 largest privately held U.S companies to help compile this list. The rankings are derived from a model that weights data-driven information like the number of minorities in the workforce and on the board, the rate at which minority employees are hired (and fired), plus if and how managers are made accountable for hiring, promotion, and retention. Our team of reporters then talked to employees to gain an additional perspective. Here are the results.
Rank 2004 (2003) Company 2003 revenues (billions)
1 (1) McDonald's Oak Brook, Ill. $17.1
Fast-food king McDonald's holds on to its first-place crown by having the highest minority employee-retention rate on our list and making a concerted effort to purchase from minorities, who now represent half of its vendors. It also added a third minority to its 16-person board of directors, which oversees a workforce that's 53% minority.
2 (2) Fannie Mae Washington, D.C. $53.8
When it comes to diversity in the very upper echelons of the corporate tree, this mortgage finance giant takes the title, with 15 minorities among its 50 best-paid employees (including CEO Franklin Raines). The key? Employees say Fannie Mae focuses less on race and more on developing effective leaders.
3 (5) Sempra Energy San Diego $7.9
Half of Sempra Energy's workforce are minorities, and through a partnership with Howard University, this San Diego--based utility is guaranteed a steady influx of MBAs and engineers. Employees celebrate differences for a week each quarter; the March celebration included Chinese New Year, Black History Month, and St. Patrick's Day.
4 (4) Union Bank of Calif.  San Francisco $2.4
This West Coast bank added five minorities to its 50 top-paid last year, and most got their dough the old-fashioned way--in commissions. Frank Robinson, a black VP in San Diego, says that while his peers at other banks bemoan their lack of mentors, "I know ten African-American senior vice presidents I can call."
5 (3) Denny's Spartanburg, S.C. $0.94
Nearly half of Denny's 1,011 franchises are owned by minorities, 255 of them by Asian Indians, while one-third of restaurant managers and one-fifth of executives are also drawn from the diner chain's minority ranks. Still, Denny's slipped a little in our rankings, reflecting in part the loss of one minority from its board.
6 (11) U.S. Postal Service Washington, D.C. $68.5
With 59% of new hires minorities, the postal agency has managed to best its own highly rated efforts to ensure a diversified workforce from the get-go. And with 24% of its 50 top-paid positions occupied by minorities, it also has one of the better records for ensuring that diversity percolates all the way to the top.
7 (9) PepsiCo Purchase, N.Y. $27.0
Latinos are "coming out of the closet" at PepsiCo HQ, says the founder of a new networking group. Maybe those new guacamole-flavored chips had something to do with it (members of Texas-based Frito-Lay's Hispanic group helped develop them). Five of PepsiCo's 13 top officers are minorities--the highest percentage on our list.
8 (6) Southern Calif. Edison  Rosemead, Calif. $12.1
The utility provider emphasizes operational goals as well as diversity strategies to remain competitive and ties bonuses to both. A small decline in the proportion of minorities on the board and among its 50 top-paid employees explains its slight dip in our rankings, but SCE's efforts still earn it a top ten slot.
9 (8) Freddie Mac  McLean, Va. $46.3
Freddie Mac was rocked by a 2003 accounting scandal that swept out much of top management, including some high-ranking minorities. But most minorities (a third of the workforce and almost 30% of managers) are staying put. The mortgage giant dedicated all $49.8 million of its charitable donations to groups that benefit minorities.
10 (10) PNM Resources Albuquerque $1.5
Since it's based in New Mexico, perhaps it's little surprise that this power company has a 41% Hispanic workforce. Its Native American employees (4.5% of its total) are gearing up to start their own affinity group, and for the past three years PNM has sponsored the NAACP job fair in the state.
11 (23) PG&E Corp. San Francisco $10.4
This San Francisco--based power company is aiming to mirror its broad spectrum of clients--51% of whom are minorities (mostly Asian and Latino)--in its offices. Minorities now constitute 20% of top execs (powering a 12-spot leap in our list) and an impressive 44% of its board--the best in our top 50.
12 (7) SBC Communications San Antonio $40.8
SBC, based in San Antonio, is the highest-ranking telecom company on our list, with minorities making up 38% of its workforce. Although purchasing from minority-owned businesses fell in 2003, SBC's manager performance reviews take into account their success in fostering diversity.
13 (20) Hilton Hotels Beverly Hills $3.9
The hotel empire boasts 61% of new hires who are minorities, and its diversity efforts mean making sure those minorities climb the company ladder. Nonwhites make up one-third of employees enrolled in succession plans, and 44% of managers must make diversity a priority--their compensation is tied to it.
14 (24) Verizon Communications New York $67.8
The phone giant jumped an impressive ten spots this year, with improvements from top to bottom: Minorities now make up 25% of the board and nearly one-third of the workforce. Oscar Gomez, VP of diversity, says, "Our diversity efforts are not a program of the month. They are here for the long haul, a bottom-line imperative."
15 (35) Yum Brands Louisville $8.4
At this fast-food conglomerate that owns Pizza Hut, KFC, and Taco Bell, 43% of managers are minorities, proportionately the highest share of nonwhite managers on our list. Not only that, CEO David C. Novak is adding more minorities to his top tier of executives and highest-paid employees.
16 (16) Colgate-Palmolive New York $9.9
Chris Rector, an African-American senior product manager, says Colgate's diversity commitment isn't just for show--it focuses on "what you have in common, not what makes you different." About 27% of the U.S. workforce and one-fifth of senior management at the global consumer-products maker are nonwhite.
17 (13) Xerox Stamford, Conn. $15.7
Despite a class-action lawsuit alleging discrimination, the copy-machine maker continues to win praise for its diversity from groups ranging from the Small Business Administration to Diversity Best Practices. A fifth of its 50 top-paid employees are minorities--a slight dip from last year, but still among the top on our list.
18 (18) Hyatt Chicago $3.3
At this hotelier, new hires on the management path are called "corporate trainees"--the program claims 49% minority intake. Diversity training was down 50% for the year, but management hopes a new scorecard system, established in 2003 to force attention on diversity, will help improve diversity efforts.
19 (30) Washington Mutual Seattle $18.6
WaMu is diversifying its pipeline at the ground floor--last year 43% of new hires and almost 47% of interns were minorities. The fast-growing bank also added two Asians and one Hispanic to its 50 best-paid employees, for a total of nine. Taken together, WaMu's diversity efforts helped push it up 11 spots on the list.
20 (49) TIAA-CREF New York $26.0
A major reorganization cut senior management ranks from 21 to 12, but the proportion of minorities grew as the retirement-fund manager made strides in "closing the gap" in minority representation at high levels. It now makes all managers accountable for diversity goals and sets diverse slates of candidates for senior jobs.
21 (14) Applied Materials Santa Clara, Calif. $4.5
The No. 1 Asian employer on our list focuses on diversity at the grassroots level, funding a San Jose charter school that seeks to get Latino students into college. Minorities still make up 17% of executive managers, even after some departures, but the chipmaker has no minorities on its board.
22 (29) Consolidated Edison New York $9.8
New York City--based Con Edison powers up its tri-state area--as well as empowering minority employees. The utility jumps seven spots by swelling the minority ranks of its top 50 highest-paid staff and by making sure half of new hires are minorities. Nonwhites also hold 15% of top management spots and a quarter of board positions.
23 (26) United Parcel Service Atlanta $33.5
With minorities representing 36% of the total workforce and nearly half of all new hires, UPS's diversity record speaks for itself. Gary Wheeler, its corporate workforce compliance and diversity manager, says that to achieve a closer ratio between management and workers, the company is focusing attention on promoting minorities.
24 (27) DTE Energy Detroit $7.0
The Detroit-based electric provider embraces diversity from top to bottom. Minorities occupy almost a quarter of its board and executive spots, and 29% of its workforce. They also secure one out of three job openings. Key to continuing success? "Never thinking diversity efforts are over with," says S. Martin Taylor, SVP of HR and corporate affairs.
25 (36) BellSouth Atlanta $22.6
Having settled a discrimination case with the EEOC in October, the Atlanta-based Baby Bell cracks the top 25 this year. Where previously only one of every ten employees participated in diversity training, today it's 42%. Management is more accountable too--35% of managers have reviews tied to diversity goals.
26 (25) Coca-Cola Atlanta $21.0
The beverage giant added two Hispanics to its board last year and for the first time made all managers accountable for diversity goals. Still, a court-ordered task force expressed concern over the company's diversity record at senior levels, and Coke wound up losing three of its top-paid minority execs last year.
27 (33) Nordstrom Seattle $6.5
Minority retention rates are a key factor in manager performance evaluations at this high-end department store chain, and in the past year it has seen a sevenfold increase in the number of minorities enrolled in an expanded succession program. It also has an outreach program to involve minority-owned firms in new store construction.
28 (46) Avon Products New York $6.9
The only FORTUNE 500 company led by a woman, Andrea Jung, who is also a minority, Avon powers up 18 spots on our list. It did so with the same attention to detail that has boosted its bottom line, growing Avon's use of minority suppliers and charitable giving, and doubling minorities in its management-tracking program.
29 (48) Abbott Laboratories Abbott Park, Ill. $19.7
The drugmaker has gone all out in its diversity efforts, and that shows--minorities now constitute 33% of new hires, 23% of the board of directors, and 20% of employees in career-tracking efforts as well as 11 of the 50 top-paid. New employee-affinity groups include separate ones for Chinese, Bayanihans, and Ibero-Americans.
30 (*) Knight-Ridder San Jose $2.9
The newspaper chain has doubled the number of minorities in top editor jobs since 2002--it's now 21%--reflecting the priority it places on diversity as it strives to make newsrooms more reflective of communities they report on. Knight-Ridder also grooms future employees by funding college tuition for 20 minority students a year.
31 (*) Golden West Financial Oakland $3.8
The parent of World Savings makes its debut on our list, thanks in part to the efforts of its workers. Half of all new hires are referred by current employees, and last year 46% of those were people of color. And more are moving up through the ranks--around a third of new managers last year were Hispanic.
32 (*) Starwood Hotels White Plains, N.Y. $4.6
Got a probing question for the boss? Starwood's intranet solicits anonymous comments on diversity issues and relays them to management. The company's Office of Diversity and Inclusion counsels management on diversity too. Fifty-eight percent of new hires and 32% of management are minorities.
33 (28) Darden Restaurants Orlando $4.7
At the Olive Garden and Red Lobster chains, diversity efforts are encouraged from "boardroom to dining room," says CEO Joe Lee. Minorities are well represented in key decision-making positions--totaling 36% of the board and 19% of management. ¿No habla ingles? Training and benefits materials (and menus) come in Spanish.
34 (19) Safeway Pleasanton, Calif. $35.6
Despite the grocery-labor dispute in California, Safeway wasn't distracted from its focus on diversity last year, with an increased number of new minority hires and job reviews for managers based on diversity efforts. The departure of a couple of top minority executives is partly to blame for the supermarket chain's fall in our rankings.
35 (12) Wyndham International  Dallas $1.5
Wyndham CEO Fred Kleisner chairs the recently founded multicultural advisory board of the American Hotel & Lodging Association, underlining minorities' importance at this hotel chain; they make up 61% of the total workforce, 64% of new hires (the highest on our list), and 18% of top corporate executives.
36 (38) Levi Strauss San Francisco $4.1
Levi Strauss's domestic workforce continues to shrink, with the jeansmaker deciding recently to shutter its last U.S. factory. Even so, it has maintained its commitment to diversity: Last year almost half of its employees here were minorities, as were 18% of its 50 highest earners, and 28% of managers.
37 (*) Pepco Holdings Washington, D.C. $7.3
Pepco, a D.C.-based energy-services holding company, debuts at No. 37 on our list, thanks in part to CEO Dennis Wraase, who maintains a diverse top team with eight minorities among its 51 top earners. Employees competed for a Bahamas trip by answering trivia questions about the company's diversity efforts.
38 (42) Citigroup New York $94.7
Small adjustments at a company the size of Citigroup can start big waves. Take its intern program: Weighting it toward minorities in 2003 by an extra ten percentage points created nearly 1,000 more places for minority students. The banking giant is also including more minorities in its mentoring and succession programs.
39 (47) Prudential Financial Newark $27.9
Though it lost more than a third of its workforce when it divested two businesses, the Rock's commitment to diversity remained, well, solid, as minority retention improved. Encouraged by the company's top female exec, a trio of black women launched a program to help participants get more out of mentoring relationships.
40 (*) Schering-Plough Kenilworth, N.J. $8.3
In 2003, Pakistan-born Fred Hassan was named CEO of the pharmaceutical company, which has written itself an effective diversity prescription: Half of its eight division presidents are minorities, as are a quarter of its board of directors. In the past year tracking of minority candidates for management positions nearly doubled.
41 (*) American Express New York $25.9
Having an African-American CEO doesn't make you a shoo-in for this list--just ask Ken Chenault, whose company returns after a year away. In the interim the financial services firm boosted diversity from top to bottom: In 2003, almost 46% of new employees were people of color, well above 2002 levels.
42 (31) MGM Mirage Las Vegas $4.1
The Vegas hotel and casino company takes commitment to diversity seriously: A new purchasing council of 20 buyers meets monthly to collaborate on finding minority-owned vendors to improve its purchasing record. MGM Mirage boosted minority intake in its intern program, but suffered turnover of minorities at the top.
43 (15) J.P. Morgan Chase  New York $44.4
Why don't women of color progress at the same rate as white women? That's one of the tough questions this big bank is tackling in new task forces. Though solid, its diversity numbers have only inched up since the 2000 J.P. Morgan-Chase merger, but the task forces are looking to gain traction.
44 (*) Pitney Bowes Stamford, Conn. $4.6
The postage-machine manufacturer says its challenge this year has been reorganizing its "aligned, but not alike" diversity policy to match a restructured corporate management. CEO Mike Critelli, besides chairing the National Urban League, added another top-level minority executive and two to the top-paid strata.
45 (39) Procter & Gamble Cincinnati $43.4
CEO A.G. Lafley says top-to-bottom diversity will make P&G the "most in-touch company in the world." That's why 800 employees attended the 50 Exploring and Managing Inclusion workshops held this year to discuss race and discrimination. Several top minority execs retired, but four minorities were promoted to VP in their place.
46 (*) General Motors  Detroit $195.6
Two of the automaker's ten board directors are minorities, and 13% of senior management. At the other end of the scale, minorities account for almost a third of new hires. While the automaker doesn't require diversity training for all managers, last year it held a first-ever Diversity Immersion Day, attended by 300 high-ranking executives.
47 (34) Eastman Kodak Rochester, N.Y. $13.3
While the photographic giant remains admirably diverse, with one-fifth of senior management and a third of its board minorities, restructuring and downsizing over the past year did scale back minority representation. CEO Daniel Carp and COO Antonio Perez will jump-start an internal global-diversity panel to mix it up this summer.
48 (*) Merck Whitehouse Station, N.J. $22.5
Last summer the drug giant spun off its huge Medco business, leaving a workforce that's less diverse overall--from 26% to 21% minority--but more so at the top (a total of ten people of color among the 50 best-paid, up from six in 2002). Merck also improved tracking of minorities from internships to succession planning.
49 (45) AT&T Bedminster, N.J. $34.5
Downsizing has strained AT&T's corporate diversity programs, but under a new chairman, the company says, it is diversifying its workforce with renewed vigor. A revamped recruitment program resulted in minorities' making up half of new hires last year and a third of employees on a management fast track.
50 (44) Bank of America Charlotte $48.1
A 25-member executive diversity advisory committee oversees this big bank's 40 diversity councils across its national operations and ensures that top management, whose pay incentives are tied to progress, sets targets to increase diversity in hiring.