Diversity Practices at CH2M HILL
DANIEL E. ARVIZU1
Group Vice President
Good morning. I’m Dan Arvizu, and I’m pleased to be here to talk about a subject that’s very near and dear to my heart, a topic I spend a lot of time thinking about. I hope I won’t disappoint you in not having a plethora of statistics to go with this talk, but I think some of the themes that have already been set up in the opening introduction and in Dr. Wulf’s talk speak to the nature of the diversity initiatives in corporate America.
Let me start by giving you a very quick profile of our company to help you understand where I’m coming from. CH2M HILL is a global project delivery company with 11,000 employees. We have 120 offices—actually, 200 area offices, but 120 permanent offices—on seven continents. We provide engineering consulting and other integrated services to a variety of clients, and we generate about $2 billion in revenue. What is interesting to me about this company as it relates to diversity is that we’ve roughly doubled in size in the last five years and plan to double again in the next four to five years. So this is a very robust, growing company and one that I believe has a lot of interesting features.
One of the things that attracted me to the company—I’ve been with the firm for about three years after a long career in the national laboratory system—is that it’s employee owned. That’s an important facet of this discussion because employee ownership means that I’m a shareholder in my company. As a result, I hold my management accountable for the decisions they make. And those decisions clearly affect everything about the company, including, but not limited to, the bottom line. In our business practices, we’re always looking for the business case and asking why this is important and how it reflects on the bottom line.
An employee-owned company has a strong advantage in that it isn’t publicly traded. This gives us a bit longer time horizon in which to operate. If we’re focused on growing and doubling again in the next four or five years, what we’re really focusing on is how to attract the best and the brightest people. To meet our financial targets, we have to add a person a day. That’s 300 or 400 people per year, a lot of employees to try to hire, especially in a profession with a daunting war for talent.
Our history of growth and the fact that we’re still in a growth mode are relevant to the topic at hand. The diversity initiative at CH2M HILL is designed to help us understand and attract the best talent we can find and retain the talent we have. Retention is a big issue. It costs our company between $30,000 and $60,000 to replace an employee who leaves. So it’s much cheaper for us to retain an employee that we’ve trained and started on a career path with the firm than it is to go out and replace employees when they leave.
This company, because it’s made up of consultants with diverse backgrounds who are located around the country and across the globe, has a lot of working relationships in the communities where we live and work. Because our clients reflect the demographics of the nation and of the world, our employee profile has to reflect that as well. We never lose sight of what we’re trying to do—to add value both to the shareholders of our company and to the clients we serve.
So what do we do? Throughout its 50-year history, CH2M HILL has traditionally focused on hiring at the entry level, then developing and promoting people from within. As part of this philosophy, we have implemented work-study programs to identify the cream of the crop of future employees in the pipeline of universities and the local communities in which we work.
We consider career development very important, so we spend a lot of time on mentoring and on moving professional staff laterally, giving them the opportunity to gain experience throughout the company. Formal career goals, succession planning, and evaluation of employee interest and track records are part of this process. We furnish training in the skills required for the company to benefit from diversity and also to foster understanding of why diversity is so important. Along with internal training, the company supports continuing education for individuals who want to add a particular component to their skill mix.
We established a succession management process at various levels in the company. These “succession pools” must include a diversity component. We measure and link the performance of people in meeting diversity targets to their compensation. We have a unique internal Web system where every employee can go in and learn about their own personal financial metrics, such as client ratio and overhead cost structures in particular groups, but also the diversity statistics that go along with all of those things.
We also do benchmarking to assess how we’re doing in relation to our industry and to the rest of the world. For example, we identified six companies we think are a lot like us and looked at what they do. We reviewed their best practices and tried to emulate the things that work and learn from the things that
don’t. Some of the firms we benchmarked against include PG&E (San Francisco), American Management Associates (New York), Northwestern Mutual Life (Milwaukee), CompUSA (Dallas), and USA Group (Indianapolis). Because these companies are progressive in diversity, they’re important to us. Benchmarking to learn from what others are doing takes sustained effort. To truly integrate diversity, you can’t just roll out a couple of initiatives and expect to be done. Diversity has to be part of the overall effort that makes your business tick. You have to do what’s important in your particular organization.
In addition to looking at other companies, we do lots of voluntary employee surveys. On our internal Web site, people can log in and complete these surveys, and although the surveys aren’t mandatory, employees do respond. We also hold focus groups, which provide opportunities for people to offer their individual comments. We use similar techniques to assess staff attitudes. We also try to understand why people leave by talking to objective third parties. We continue to provide mechanisms by which people can give us feedback.
We take a fairly aggressive, essentially analytical approach to understanding the internal statistics. These data become part of our spreadsheets, if you will. We have a lot of engineers, of course, who are very analytical. Everybody is always asking for the data. Although we do make the data available, we try not to get hung up on the numbers because the issue of diversity has many different elements. However, data management is something we do quite actively.
And finally, we have a board of directors committee on diversity in the workforce, on which I serve. Diversity is an important piece of our corporate culture. One of the main ingredients in best practices is commitment at the top. Our CEO, Ralph Peterson, is passionate about this topic, and he supports it personally with his time and involvement, as well as through corporate sponsorship.
I can’t overemphasize the importance of the relationships the firm maintains with various other entities that focus on educational and skill training opportunities. Historically black colleges and universities (HBCUs), of course, are a very important mechanism for identifying top talent. Our CEO maintains a strong relationship with HBCUs. The Hispanic Engineer National Achievement Award Conference Corporation (HENAACC) is another organization that our firm feels strongly about; we support HENAACC both with sponsorship and on an individual level. The company directly supports employee associations and diversity councils, and we’ve established programmatic ties with placement groups, academic programs, and trade schools to broaden our hiring pool. We use various other mechanisms to help us connect to the local community and to demonstrate our strong commitment to the underrepresented groups in the engineering field.
How do we track our progress? Metrics are an important tool. We are a very diverse company with a lot of small offices around the world. Our office in Boise, Idaho, for example, serves clients who are very different from our clients in Los Angeles or Atlanta. Our clients expect a certain mirroring of their demographics and their particular communities. So we use metrics on a local basis, as well as on a broader basis. Our workforce comprises roughly 22 percent women
and 8 to 9 percent underrepresented minority ethnic groups. Although that represents the national average in terms of availability for the kinds of professionals we seek, it doesn’t necessarily represent the demographics of a local community. That’s why we try to focus in on particular areas.
In our industry, retention statistics indicate roughly 20 percent turnover. At CH2M HILL we do a bit better than that. However, turnover is very expensive for companies and has a strong impact on the bottom line. When economic times get tough, as they are now, turnover tends to fall. But, historically, turnover even in the low teens in terms of percentage, remains a very important area of corporate focus. Although we do better than our industry average, we need to do even better.
From my career in the national laboratory system, with brief exposures to AT&T and Lockheed Martin, I’ve learned that corporate practices vary widely, and every business is different. Although there is no silver bullet, a number of different things work in a particular set of circumstances. Here are some of the critical success factors with which we challenge our people. We have a clear vision that says we reflect the demographics of the clients we serve and that we bring the diversity and the broad suite of engineering talent and solutions to clients with very interesting and important problems.
We articulate our business case. One of the founding fathers of CH2M HILL, Jim Howland, made it clear from the beginning in his “Little Yellow Book,” which you can find on our Web site at CH2M.com. Howland described what the founders envisioned for this company. He suggested that the firm should provide an opportunity for engineers to get together to do interesting work, enjoy the people they work with, make a little money, and have some fun. That philosophy reflects the ethos of this firm, and that’s how we try to attract and keep people engaged in the business.
Another critical success factor that may be missed sometimes is that we specifically define what diversity is and carry on a continuing dialogue about it. We create a common, inclusive language that helps us engage in that discussion.
Then we make diversity everybody’s job. Although strong leadership support is clearly important, everybody must “own” diversity because it contributes to shareholder value. There may be individuals in the firm who are very entrenched in their ways, and you have to bring them along with the rest of the group. That requires change in the culture of the organization.
In the long term, incorporating diversity requires courage. It requires service leadership. It isn’t just a box on some form somewhere that you can check. It requires sustained effort. You must continually nurture and mentor everyone around you. And that is how we look at it. That’s how we challenge our own folks, and that’s our commitment. Our diversity strategies are linked to our core business strategies of developing leaders, planning for successors, strengthening the role of group leaders, developing local community relationships, and growing the company both in the United States and around the globe. Diversity and the issues that relate to it are tightly woven into the very fabric of our firm.