If you are going to be a global player in today’s workplace, you must embrace diversity in a big way,” Phyllis James, executive vice president, special counsel for litigation and chief diversity officer for MGM Resorts International, the global hospitality business, says. And the organization has done just that — winning a raft of awards, including top ranking places for its diversity and inclusion activities from the Women’s Business Enterprise National Council, Hispanic Business magazine, Black Enterprise magazine, and the Association of Diversity Councils, to name just a few. James is the first to point out that reaching this pinnacle — and working to sustain this level of achievement — has involved hard work, money, and a huge commitment from top management downward.
The benefits of these efforts are also evident in the transformation of MGM’s internal audit department. Today, with a staff of 82 people, the internal audit department employs geography, technology, and mathematics majors, and people with construction and architectural backgrounds, among others, to better reflect the organization’s activities. Moreover, Bob Rudloff, MGM’s senior vice president of internal audit, has become one of the biggest champions of diversity initiatives in the organization.
A Business Imperative
In 2000, Terry Lanni, the late chair of then MGM Mirage, was the first to recognize the need for the company to establish a formal diversity policy. That year, he spearheaded the company’s diversity and inclusion initiative, which was given impetus during the development of a resort in Detroit. Lanni realized that if MGM was to successfully expand into other parts of the U.S. and further abroad, the company would have to embrace greater diversity across the board — in terms of employees, business partners, and customers. The company launched a massive communications and training initiative, called the Diversity Champion Workshop, to explain why diversity and inclusion is so important to the business — a program that still exists.
“We have an operating principle that everybody who is a manager — from the chairman down to the first level of management — must complete this workshop,” James says. Initially, that meant pushing thousands of people through the program — no easy task. But while many organizations reach this point, Lanni went further by insisting that diversity and inclusion is treated like any other business initiative. That meant formal strategic planning, quarterly status reports, and establishing a designated diversity officer with a department to support the program.
“A lot of companies stumble because there is no muscle behind their beliefs,” James says. By comparison, every business department at MGM Resorts International — from supplier and construction to human resources and public relations — is required to report annually to the board of directors about how they have integrated diversity and inclusion into their businesses. Those results are directly linked to the compensation system for the management group.
No Opting Out
|Diversity of Thought|
The real value of diversity in the global marketplace today is not just ethnicity, not just gender, but also the diversity of thought that allows a company to truly innovate,” says Larry Harrington, vice president of internal audit at Raytheon, a global defense and security company, and champion of The IIA’s Diversity & Inclusion initiative.
Traditionally, many professions — internal audit included — have tended to attract people of like minds, schooling, and backgrounds, he says. But the danger of this trend is twofold. First, it creates monocultures that are insular and conservative in the way that they think. Second, people from minority cultures feel invisible in such organizations and often leave because their views are not heard or acted on.
“It’s no secret that internal audit has tended to predominantly attract people with financial and accountancy training,” he says. “But if the profession is to have breakthrough thinking, it has to surround itself with people who don’t all think in the same way.”
Harrington says he is not a believer in reverse discrimination, promoting people purely on the basis of their race or gender to hit inclusion quota targets. However, Raytheon’s internal audit department has enviable inclusion and diversity statistics. Half of the team are women and 25 percent are people of color — and there are similar proportions of people with these attributes in the internal audit leadership team.
Instead of using quotas, Harrington says he has recruited from non-typical places, such as the National Association of Black Accountants for financial staff, other parts of Raytheon for people with expert business knowledge, and to novel places to acquire the skills the internal audit function needs.
Before working at Raytheon, for example, Harrington worked as head of audit at a life and health insurer. He decided to hire two female nurses who knew the health industry from the inside. “People thought I was a bit crazy, but those nurses were able to give internal audit insight into things we’d never looked at before, to better improve process, streamline efficiencies, and reduce costs.”
He says when he reaches out to minority groups about what he is trying to achieve in the internal audit department and what Raytheon is trying to achieve, the message is generally well received. “I’m able to attract really high-quality people because they want to be part of an organization that has upward mobility, that will invest in them, and in which they’ll feel respected and included,” he says.
Raytheon’s diversity and inclusion efforts have won it accolades. In 2014, for example, the Women’s Business Enterprise National Council listed the business as one of the top corporations for supporting women’s business enterprises — specifically through its supply chain procurement. The same year, it ranked eighth in the top 50 U.S. organizations for providing multicultural business opportunities.
From 2010 to 2014, Harrington headed this initiative as Raytheon’s executive diversity champion. He credits his time in that post, during which he met thousands of people, with helping him build companywide trust for the internal audit department. It has not only helped him recruit from across the organization, but it has made people understand that Harrington and his team are on their side.
“If you truly have a brand that says ‘we’re here to help’ — if they believe it, they are going to use more of your services,” he says. “And if when they use your services, you have such a diversity of people that you are truly able to relate to their way of doing things, think about things differently, and bring solutions to the table they never thought about, then they want more.”
Like most corporate initiatives, the diversity and inclusion program met with plenty of skepticism and apathy in the beginning. James says one of the biggest obstacles lay in persuading key influencers in the business that this was not just management’s most recent flavor of the month. The answer was tough leadership. “Our chairman and entire board of directors took this up as a fundamental initiative and said, ‘This is not negotiable by anyone in our company and no one gets to opt out,’” James says. “Leadership was extremely important in anchoring this in our culture and our business operations.”
The Supplier Diversity Program was introduced to help minority- and women-owned businesses become competitive providers of their products and services. “They were sitting there under our noses and we had just never looked at them before,” James says. Pulling from a wider supplier base made the company more competitive, she says, and helped persuade managers that the diversity and inclusion program was there to help rather than hinder their work.
James also credits the program with being one of the key drivers to making the 2000 merger with Mirage Resorts and the 2005 US$7.9 billion acquisition of Mandalay Resort Group work. Numerous studies have shown that such mergers look good on paper, but often fall apart because the separate cultures do not gel as a single entity.
The inclusion message became a unifying platform for the three very different organizations, James says. “The fundamental message of our diversity and inclusion initiative is mutual respect, regardless of race or ethnic origin, regardless of where you came from and what company you used to be with,” she says. “It has become a powerful, unifying force for understanding that we are a part of one whole company, that we are all dedicated to one mission — which is to provide world-class guest services to the people who come to stay with us, or who entertain with us. That message has become embedded in our culture.”
The internal audit department is responsible for auditing the accuracy of the diversity data that the program generates and that is publicly reported. Given the prominence of the initiative within the organization, Rudloff says that when he first stepped into the role 12 years ago, the CEO emphasized audit’s role in challenging the data to ensure figures were correctly stated. But internal audit’s involvement with the program goes way beyond verifying data.
When Rudloff joined the internal audit function, it had a staff of 24 people, all of whom had graduated from the same school and were accounting and finance majors. “There was nothing wrong with the school,” he says, “but we needed some diversity of thought on the team to bring us fresh ideas, so it was obvious we had to recruit more broadly.”
Rudloff says he wants to initiate a rotational program to bring people from other parts of the business onto the internal audit team. He has hired auditors who previously held positions in departments such as housekeeping or from the food and beverage division. He says that has helped his team get a grip with the real world experience of the organization and to deal with employees with more sensitivity. In addition, Rudloff has hired people whose first language is not English to help audit overseas operations.
“The makeup of my team now represents the employee work base and it allows us to engage better with our employees at all levels,” he says. “Sometimes it takes getting a conversation going in someone’s own language so they don’t feel threatened by us as the auditors coming in to deal with them.”
Walking the Talk
Two years ago, Rudloff made a personal challenge to members of his team to go through the organization’s Diversity Champion Workshop. This workshop is now seen as a rite of passage for all who become managers. But Rudloff wanted to go further, to encourage team members at all levels of seniority to participate.
“Audit team members interact with people in different parts of the business through the workshop and develop relationships that can last through their careers,” Rudloff says. “On the other side, people in the business develop relationships with internal auditors and see that we are not bad guys.”
“The workshop helped me to listen more to the organization and the business units, rather than just crunch the numbers or point out what’s wrong,” Yakima Brookins, director of internal audit at MGM Grand in Detroit, says. “I’ve created a regional brand that shows internal audit considers the objectives and challenges of each business unit when making its recommendations.”
She says that the workshops also made her reflect on her approach to leadership and the way she communicates within the business. “Often, what we’re relaying could be contentious to management,” she says. “My role has been to proactively consider potential objections and keep interactions positive as, ultimately, the goal is to present solutions in the best interests of the organization.”
Additionally, MGM Resorts International currently runs 15 different employee network groups. People of like minds, backgrounds, and interests communicate with each other and feed their concerns and ideas into the organization via these networks. Rudloff encourages his team to be active in these groups. In fact, he says, internal auditors hold more network leadership positions and offices than other departments in the organization. Rudloff chairs the interfaith group, for example, and Jerry Hancock, senior internal auditor at MGM Resorts, is actively involved in the Veterans and lesbian, gay, bisexual, and transgender (LGBT) employee network groups. Participation in the network groups has multiple benefits, including individual development, the opportunity to contribute to the business, and networking.
“My involvement with the company’s Veterans and LGBT employee network groups has quickly allowed me to expand my professional network while developing stronger relationships in the company,” Hancock says. “As I continue to build trust and expand my network, I gain greater influence, which provides more opportunities to contribute value to the company.”
Hancock says that the company’s diversity training made him reflect on the business’ motto, “You don’t have to be one of to stand with,” which means that you do not have to belong to a particular demographic to support equality.
“During the two-day Diversity Champion workshop, we did an emotionally charged activity that underscored that fact,” he recalls. “It involved identifying harmful stereotypes and associating them with actual people in the room. The objective was to show the tremendous power that words can have while reinforcing the idea that, when united, people can make a difference.”
He says this experience has made him think more about the stereotypes that people may have about internal audit — such as seeing them as the company police. That has made him strive to conduct himself in ways that aim to change other peoples’ perceptions of his audit work and of the internal audit profession.
Audit staff members also are involved in the broader enterprises under the organization’s corporate social responsibility initiative, including environmental sustainability and community engagement. “When they go out to our different business units to audit, they are now naturally seeing things from a sustainability standpoint, for example,” Rudloff says. “They often have very untypical internal audit input into what they see going on in our business. It’s created a mind-set beyond the narrow scope of what internal auditors do, which is of great benefit to the business.”
A Broader Vision
This broader view, the creation and acceptance of diverse and unexpected viewpoints, is the real goal of MGM’s diversity and inclusion initiative. As Lanni realized in 2000, the company’s future success depended on its ability to innovate and empathize in equal measure. To be a 21st century company in a global market requires the wide-ranging, inclusive outlook that diversity enables.