Can Abercrombie’s new Office of Diversity learn valuable lessons from Denny’s?

Our recent posts on the Abercrombie settlement (here, here, and here) have drawn great interest, especially thanks to the mention on Walter Olson’s popular Overlawyered.com.

One of the settlement points listed in Michael’s last post is “the creation of an Office of Diversity, headed by a Vice President of Diversity.”

What a bunch of garbage, I would normally think. I mean, I’m all for diversity, but what can you really expect to accomplish just by creating a new veep position?

A lot, if one reads this excellent profile of Denny’s and its Chief Diversity Officer Rachelle Hood:

“Diversity on the Menu” (by Irwin Speizer)

In 1991, . . . 18 African-American students who had stopped for a late-night snack were told they would have to pay a cover charge and prepay for their meals.

They launched a discrimination suit and were soon joined by . . . hundreds of other African-Americans around the country who complained of unequal, shoddy and sometimes rough treatment by the company. . .

Denny’s . . . settled the lawsuits in 1994 for $54 million. But the incident generated such bad publicity that the chain became tagged as one of the most racist companies in America. [Rightly or wrongly, this has just happened to Abercrombie]

What a difference a decade makes. Under Hood’s direction, the company spent millions on diversity initiatives that brought legions of new minority managers, franchisees and suppliers into a company run almost exclusively by white males. She was the nation’s first diversity officer to report directly to the CEO. . .

Women and minorities today make up half of Denny’s eight-member board of directors, and 45 percent of the 11-member senior management team. Minority owners hold 45 percent of Denny’s franchised restaurants.

Denny’s has also recovered ground with minority customers. A 1996 company survey found that only a third of African-Americans gave Denny’s good marks on measures such as respectful service; today, satisfaction totals from African-Americans range from the mid-70s to more than 80 percent.

About half of African-Americans linked Denny’s with discrimination in 1996; that has been whittled down to 14 percent today . . .

The change has been so swift and complete that by 1998, the company came in second on Fortune’s list of the 50 best companies in America for minorities. In 2000, the company was No. 1.

Read more [there’s much more– and it’s an excellent articleOne of the most important things is the realization of the importance of minority employees and customers to the success of the business — for reasons other than legal compliance. Maybe some people at Denny’s actually thought they were better off if they catered to racist customers by discriminating against black customers and applicants. They have now learned their expensive lesson — and obviously learned it very well.

In my opinion, this Abercrombie “image” thing appears to be the creation of marketers with no vision.

I’m no fashion expert, but I do have two teenagers attending schools with “majority minority” populations (i.e. most of the kids are African-American).

In our little corner of the world, the African-American kids are, if anything, more status-label conscious than the white kids, and hang out at the mall at least as much. I suspect this means they could potentially be hooked into buying high-priced clothing from Abercrombie simply because of the label and marketing image.

And I see no racial divide when it comes to teen fashion and popular culture: white kids in our neighborhood adopt hip-hop clothing and music.

If they were exposed to an inclusive marketing approach by a fashion merchandiser like Abercrombie, and when they went to the mall they saw some of their friends (or at least people who looked more like them) working at Abercrombie and wearing Abercrombie clothes, African-American kids might become great customers.

Abercrombie’s loss will be someone else’s gain if they don’t get this. The vast amount of money they threw away in the settlement will be compounded by a huge future loss of the potential sales that a broader and more diverse marketing approach would yield.

And a final point — much more important than my marketing speculations above — is this:

As an employer, do not wait until you are a class action victim to implement the type of measures described as part of the Abercrombie settlement. How much better off would you be in defending a case if you could show you had already been doing all those things?

If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.