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The Forgotten Affinity Group... Stockholders

by Vincent Cramer

Who's the Boss?

It comes as a surprise to some people when they learn that the CEO has a boss,

just as the rest of us do. In the case of the CEO, he or she has a multitude of them. They are the shareholders in the company, which means that they are the owners. Diversity Councils must be aware of and responsive to the needs and objectives of the stockholders. Since they are the owners, they will evaluate the economic performance of the company. Diversity can make significant contributions to the corporate performance, but it is important to look at performance through the eyes of the stockholders.

What is meant by "performance" as a stockholder sees it? The easiest answer is... the stock price; hopefully it is a value that is greater than the price that the stock was purchased at.

There are many factors that influence the price of a company's stock. Stockholders are pragmatic and only hold the company responsible for those factors that are within the company's ability to impact and influence. Factors such as profit, expenses, investments, and productivity are such items. However, these performance factors usually are the result of other factors and measures, such as products, R&D, marketing strategies, competition, revenue per employee, and market share. Not only do these items have an affect on the stock price, they are items that every person in the corporation has the ability to influence and impact.

The Stockholder's Network

Just imagine that Stockholders were identified by the Diversity Council as a potential Affinity Group, with the same stature and importance as The Women's Network or the Black Employees Network. These historical groups had been formed to have an impact and they operate with a business objective. Their objectives are usually twofold. First, the group will strive to improve the position and potential of its members, secondly, it will strive to improve the position of the company.

The uniqueness of a Stockholders Network is the fact that improving their members' position and the company's position is one and the same. Improve the company and you will improve the stockholders. If such an Affinity Group actually existed there would be plenty of dialogue within the Diversity Council to understand the priorities and objectives of the group. This would be quite revealing because all diversity members would have a clearer understanding of that group and would be able to "put a face" to the corporate bottom line.

The Stockholder's Network will be different from the other Affinity Groups in some ways but there is one area in which the difference is dramatic. The Diversity Council and corporate management will not be the only groups to measure its performance, progress and impact. Others will pass critical judgment and there is no escape from the harsh light of unacceptable performance. Wall St. will be casting its votes every hour of every day.
By definition, the Stockholders, in the context of an Affinity Group cannot judge themselves as having been successful unless the corporation has been judged to be successful.

Affinity Groups and Academy Awards

There might be a substantial benefit for Diversity Councils if they were to create The Stockholder's Network and gave it equal status will all other Affinity Groups. It would ensure that all groups are aware of the needs and objectives of this group. It also insures that all members, in all groups, are aware of the corporate objectives and are focusing their attention and expertise on the bottom line. This will provide a balance between internal assessments and external judgments. For example, insiders, such as fellow actors, directors or screenwriters, judge movies. They award each other with Oscars at the annual Academy Awards presentation. Television...the small-screen operates in the same manner. The insiders get together every year and present one another with an Emmy.

The judgment and assessment of those casting votes is to be solely based on the performance in a particular category, irrespective of the commercial success of the material. Everyone would hope that the two would be closely linked, but it need not be. In the view of some people, the voters that really count are those that go to the theaters, rent the videos and turn on the TV show. There is substance to this point of view because these "voters" are casting the ballots of personal time and personal finances. As the saying goes...they have "skin in the game". Stockholders are in the same category.

Diversity: The Next Generation

Diversity Programs have made great progress. They have had dramatic and progressively greater impact on its members as well as the corporations. Now might be the time for these programs to move to the next plateau. Diversity Programs can follow the path that Quality Programs traveled over the past twenty years. In its formative days, quality evolved from an academic discipline, to a program, to a competitive differentiator to a critical asset. Quality is now woven into the operational fabric of all major corporations and is indispensable to corporate performance. However, Quality Programs did not reach this level until it was understood that it had a significant impact on the corporation's bottom line. It was no longer an expense; it was an asset.

If Diversity leaders follow this example, they will have a greater understanding of the link between Diversity and the Bottom Line. In due course, diversity will transition from a program to a critical asset that can be leveraged to impact financial performance, which in turn will impact the stock price and the stockholders.

About the Author: Vincent Cramer is the author of Cramer's Cube. He is also the founder of Winchester Consulting Group, an Organizational Development and Training Company specializing in the principles of Cramer's Cube and its application to Diversity Asset Management™