Principles & Best Practices

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1 Principles & Best Practices For Diversity and Inclusion In Advertising Agencies Published by AMERICAN ASSOCIATION of ADVERTISING AGENCIES As part of Operation Success A Diversity Initiative for Advertising Agencies May 5, 2005

2 OPERATION SUCCESS A Diversity Initiative for Advertising Agencies 2

3 THE BUSINESS CASE FOR DIVERSITY According to the United States Census Bureau, African Americans and Hispanics comprise nearly 30 percent of the U.S. population. Recognizing these changing demographics, corporations have responded with policies and practices to embrace and manage the growing diversity in the workforce and consumer market. Corporate diversity initiatives have proven to be successful, as seen by higher earnings and stronger corporate reputations for those companies with effective systems. In a competitive global economy, diversity is a business imperative with clear implications for the bottom line. Numerous studies cite the relationship between diversity management and business success. 1 Companies with a diverse workforce have been better able to market their products and services to an increasingly diverse market and have seen other benefits, including: increased financial performance, increased productivity, increased job satisfaction and employee morale, reduced turnover, and decreased exposure to legal challenges. Many leading companies have developed initiatives to address the full range of diversity issues from the ethnic composition of boards of directors to the utilization of minority businesses as contractors. Companies are partnering with minority-owned firms to form joint ventures, outsourcing business services and developing minority supplier programs. And many companies are developing stronger, more competitive, minority partners through mentoring programs, technical assistance, and financial support initiatives. At the same time, media coverage of diversity issues has grown considerably, focusing on both negative and positive consequences of corporate behavior. Punitive damages for corporate discrimination, loss of confidence among investors and consumers all have made diversity management a compelling corporate issue. A number of organizations have been established to help companies manage the growing importance of diversity in business. 2 And leading publications are regularly recognizing exemplary diversity performance by companies and corporate leaders. 3 As one component of a comprehensive approach to good corporate citizenship, diversity management has become an essential function for any organization seeking to establish and maintain a competitive edge. Today, virtually every company on the Fortune 500 list has some form of diversity management in place. 1 See Business for Social Responsibility, Also, 43 of the top 50 companies on the Diversity Inc 2005 list outperformed the S&P 500 by 12 percent over a 10-year period. 2 For example, the American Institute for Managing Diversity, the Hispanic Association for Corporate Responsibility, the Society for Human Resource Management, and the National Urban League, are leading organizations on diversity management. 3 Diversity Inc has become the leading source for rating the diversity performance of major corporations. 3

4 DIVERSITY IN THE ADVERTISING INDUSTRY The AMERICAN ASSOCIATION of ADVERTISING AGENCIES (AAAA) believes it is important to renew and refresh its efforts to improve diversity in advertising agencies. In 1973, we launched the Minority Advertising Intern Program to encourage students from diverse ethnic and racial backgrounds to consider careers in advertising via summer internships at AAAA member agencies. Now known as the AAAA Multicultural Advertising Internship Program, MAIP has grown to be one of AAAA s most important initiatives. More recently, the AAAA Foundation via Operation Jumpstart I and Operation Jumpstart II has awarded scholarships to scores of African American, Hispanic and Asian American young professionals entering the advertising industry in both creative, media, and account management positions. 4 While proud of these successful efforts, we recognize that our industry can do more to ensure that it better reflects the great diversity of America. Our commitment to diversity extends not only to those entering advertising agencies, but also to professionals in the business who can benefit from additional support, training and mentoring. We recognize that our industry will be even stronger if agencies reflect diversity at all levels, from the boardroom to the mailroom. And we recognize that we can increase our pool of suppliers and vendors to include minority-owned businesses that can provide valuable and much needed services to our companies and our clients. These aspirations provide the foundation for Operation Success and underlie our commitment to strengthening the levels of diversity and inclusion within our industry. OPERATION SUCCESS Operation Success was launched in September 2004, with the endorsement of CEOs of each major advertising holding company. Building on previous initiatives, Operation Success has the following mission: 1. To help advertising agencies improve and manage diversity in the following areas: Employee recruitment and retention Education, training and development Vendor and supplier relationships. 2. To engage industry leaders, outside experts and other resources to help agencies develop and implement best practices to effect diversity. 4 To date, there have been nearly 1,800 students participating in the MAIP internship program and more than $1.7 million in scholarships provided through the AAAA. 4

5 3. To build a process that is inclusive of key organizations and individuals that impact local advertising communities. The overall direction of Operation Success has been developed by senior executives from the advertising industry, with critical advice from a distinguished group of outside experts. These two bodies were organized into the Operation Success Steering Committee and the Diversity Advisory Board. ADOPTING THE PRINCIPLES AND BEST PRACTICES The Principles and Best Practices for Diversity and Inclusion in Advertising Agencies represent a range of best practices that can be utilized by advertising agencies. Broadly structured, they represent a voluntary, self-regulatory approach to diversity management. We appreciate that advertising agencies differ in size, revenue, scope, culture and location, and not every recommendation will apply to every agency. 5 We encourage all agencies to adopt the Principles and Best Practices, and to incorporate them into their own corporate strategic plans, as applicable. Agencies are encouraged to obtain the assistance of diversity experts in developing diversity management systems. And we strongly encourage agencies to increase their utilization of minority business enterprises (MBEs) as vendors, suppliers and contractors. Taking these basic steps, we believe, will help advertising agencies in their efforts to strengthen diversity and inclusion. As the national trade association for the advertising agency business, The AMERICAN ASSOCIATION OF ADVERTISING AGENCIES stands ready to assist our members to meet the challenges and opportunities presented by today s diversity mandate. O. Burtch Drake President & CEO AMERICAN ASSOCIATION of ADVERTISING AGENCIES 5 There are several basic strategies that appear to be essential for successful diversity management. These include: (1) Defining diversity and identifying it as one of the company s core values; (2) Making diversity a visible concern of senior leadership; (3) Training board, management and staff on diversity issues; (4) Incorporating diversity goals into the strategic planning process; (5) Linking diversity performance to the manager s evaluation and compensation review; (6) Encouraging employee participation through affinity groups and other bodies; and (7) Identifying obstacles and taking affirmative initiatives to support and reinforce diversity. 5

6 Principles and Best Practices For Diversity and Inclusion In Advertising Agencies 6

7 I. CEO COMMITMENT TO ACHIEVE DIVERSITY The commitment of the CEO and senior-level management is essential to the successful implementation of diversity and inclusion within advertising agencies. The CEO is primarily responsible for the success of diversity management by providing the visibility and resources necessary to reflect the company s commitment. The CEO can articulate the company s commitment to diversity and inclusion at every available opportunity, for example, in newsletters, policy statements, speeches, meetings, and Web sites. This sends a clear message of seriousness and business relevance to everyone inside and outside the organization. 1. Advertising agencies should communicate their commitment to diversity and inclusion in terms similar to the following: Our agency is committed to promoting diversity, inclusion, and fairness at every level of the organization from the board of directors to entry-level positions. 2. Advertising agencies should increase the number of minorities elected to their board of directors. 7

8 II. DIVERSITY AS PART OF THE AGENCY S STRATEGIC PLAN It is important to institutionalize diversity management into the agency s strategic planning efforts, looking beyond the short-term to long-term progress. This signals that diversity is not an add-on or afterthought, but an integral component of the agency s business. To be successful, diversity cannot be disconnected from the agency s core mission or business, but instead should be integrated into all of its corporate plans, policies and operations. 1. Agencies should utilize diversity experts and consultants to assist in the development and implementation of a comprehensive diversity plan. 2. Agencies should establish a timetable and strategy for diversity implementation over the next five years. The timetable should include goals for hiring senior-level, middle-level, and junior-level employees and targets for utilizing minority vendors and contractors. 8

9 III. LINKING PERFORMANCE TO PROGRESS ON DIVERSITY Diversity has been proven to contribute to enhanced productivity, innovation, and profit. Measuring the agency s commitment to promoting diversity and establishing accountability for its implementation are necessary for success. 1. Agencies should include diversity management as one of the criteria for personnel performance measurement. 2. The performance ratings and compensation of agency executives and senior managers should be tied to their progress and success in diversity management. 9

10 IV. RECRUITING DIVERSE EMPLOYEES AT AGENCIES Recruitment is the first step by which agencies can attract a supply of qualified, diverse applicants for employment. To obtain a deeper pool of minority job candidates, agencies can widen the scope of existing recruiting efforts and expand their hiring criteria. 1. Agencies should establish adaptable goals for increasing the number of minority employees at every level of the organization. 2. Agencies should expand their recruiting outreach to include Historically Black Colleges and Universities, Hispanic-serving institutions, women s colleges and schools with international programs. 3. Agencies should expand their hiring criteria to include transferable experience and skills from other professions. 4. Agencies should partner with minority institutions, organizations and professional groups to communicate their interest in recruiting minority employees. 5. Agencies should utilize minority executive recruiters and those who specialize in the recruitment of diverse candidates to identify minority prospects. 10

11 V. RETAINING DIVERSE EMPLOYEES AT AGENCIES Progress on diversity depends not only on the number of minority employees that are recruited, but also on the number of minority employees that remain and succeed at the agency. The creation of a sustainable environment that values and encourages diversity is essential to the successful retention and promotion of minority employees within the agency. 1. Agencies should develop organizational plans and frameworks for retaining and promoting minority employees, including professional development, career planning, and training components. 2. Agencies should develop mentoring programs to assist minority employees to understand and adjust to the agency culture and environment. 3. Agencies should encourage the establishment of affinity and networking groups that can provide social and business networking support. 4. Agencies should provide diversity training to help all employees understand the dynamics and business imperative of diversity and inclusion. 11

12 VI. INCREASING VENDOR AND SUPPLIER DIVERSITY Increasing the level of minority employees inside the agency is only half the equation for successful diversity management. Agencies must couple those efforts with a serious program to improve the quality and quantity of their relationships with outside minority business enterprises as vendors, suppliers and contractors for agency services. 1. Agencies should establish goals and timetables for increasing their level of business with diverse suppliers, vendors and contractors. 2. Agencies should look to the National Minority Supplier Development Council, regional Supplier Development Councils, and other organizations that can provide support and training on the utilization of minority business enterprises. 12

13 VII. MEASURING PROGRESS ON DIVERSITY Like any other business function, diversity management must have performance measurements and accountability standards to determine success. Quantitative and qualitative performance measures help organizations translate their diversity aspirations into reality. Best Practices 1. Agencies should benchmark their quantitative workforce data to measure linear progress on diversity. 2. Agencies should use interviews, surveys, focus groups and other methods to measure the success of diversity programs and their progress in achieving organizational goals. 3. Measurement is most effective when it is done by an objective third-party, and agencies should utilize minority firms, when possible, to perform these tasks. 4. Agencies should report their findings to AAAA annually. 13

14 VIII. EXTERNAL ASSESSMENT, ASSISTANCE AND OUTREACH Agencies can improve diversity management by establishing relationships with outside individuals, organizations, and groups that focus on diversity and inclusion. 1. Agencies should organize their own external diversity advisory board(s) that can provide independent, objective advice to their organization, and assist in outreach, recruiting and mentoring efforts. 2. Agencies should collaborate with established local, regional and national organizations such as the National Urban League, the Hispanic Association for Corporate Responsibility, and civic, social, fraternal and faith-based organizations in minority communities to develop stronger lines of communication with diverse stakeholders. 14

15 IX. COMMITMENT OF RESOURCES As a business imperative and a hallmark of corporate responsibility, achieving diversity at all levels is an investment in the agency s long-term success and profitability. Diversity management is a long-term commitment that requires human and financial resources. 1. Agencies should establish budgets to support and implement sustainable diversity management within their organizations. 2. Supporting minority organizations, contracting with minority business enterprises, and utilizing minority experts and consultants demonstrate the agency s commitment to diversity and inclusion. 15

16 X. AAAA MANDATES AAAA is uniquely positioned to assist agencies achieve their diversity goals by providing information resources and administrative support. AAAA development and coordination of Operation Success is not a substitute for individual agency efforts on diversity. 1. As the industry trade association, AAAA should provide support to its member agencies in achieving their diversity goals and programs through research, resource sharing, sponsorship and coordination of industry events, communications, and publications on diversity and inclusion. 2. AAAA can demonstrate industry leadership on diversity by increasing the level of diversity in the organization, and by increasing the level of diversity among its vendors, suppliers and contractors. 3. AAAA should build awareness of the advertising industry among diverse constituencies through broad outreach, marketing and communications. 4. AAAA should seek to increase the level of minority participation in industry-sponsored events, conferences and programs. May 5,

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