Diversity alliance finds inspiration in way Dennys eateries changed
Denny’s restaurants, once accused of racist practices, is now considered a model of diversity by some business leaders.
Members of the Lakeshore Ethnic Diversity Alliance hope the Denny’s story will help promote ethnic harmony in the area.
Rachelle Hood-Phillips, chief diversity officer at Adavantica Restaurant Group-, told about 120 people at the Ottawa Area Leadership Conference how Denny’s has been transformed into one of Fortune Magazine’s 50 Best Companies for Minorities.
“Leadership is the key to change,” Hood-Phillips said.
“People at the top need to catch the vision of valuing diversity.”
This “inspirational method” is not as effective a catalyst in correcting institutionalized racism as the “big stick method,” she said.
Changes at Denny’s were forced by the “big stick” of two class action lawsuits filed by minority patrons who claimed employees of some restaurants would not seat them or serve them.
Denny’s – already saddled by huge debts from a leveraged buyout – paid about $54 million to settle the lawsuits in 1994. The U.S. Justice Department is monitoring the company’s compliance to civil rights issues.
Denny’s had to react quickly, decisively and sincerely to save itself, Hood-Phillips said.
Advantica, then called Flagstar, hired outspoken Jim Adamson as its chief executive officer. Adamson hired Hood-Phillips to drive change through the organization. Both had helped improve diversity when they worked fro Burger Kind after civil rights complaints 10 years before.
“My faith in Christ led me to Denny’s.” Hood-Phillips said. “I felt he had raised me up to do this work.”
Hood-Phillps began by persuading Coca-Cola, one of Denny’s biggest vendors, to fund a marketing study, which indicated the restaurant was losing $100 million annually because of its treatment of minority customers.
More than a million Denny’s employees received diversity training. A zero-tolerance policy toward racism was adopted. Random undercover testing began, and employees demonstrated prejudice were fired on the spot. Patrons making racial slurs were ordered to leave.
Merit raises were tied to managing diversity. Up to 25 percent of the raise could be withheld for impeding inclusion. All 11 members of the company’s governing board were white males in 1993. Today, 46 percent of the board is made up of women and minorities, Hood-Philips said.
Now, about one in three officers and mangers at Denny’s is a minority. Forty-seven percent of its 45,000-person work force are minorities. Thirty-give percent of Denny’s franchises are minority-owned. About 18 percent of he company’s business is with minority owned vendors.
Sales also have begun climbing through the roof, Hood-Phillips said
Participants questioned how companies can afford such a diversity program.
“We did it bankrupt,” Hood-Phillips said. “Consider what you’re losing by not dealing with this issue. If valuing diversity is made a business priority, it can be done.”
Following Hood-Phillips’ presentation, participants divided into seven groups to discuss what can be done locally to eliminate prejudice. The groups reconvened to shared ideas
Suggestions included commitments from top executives to specific diversity policies; training about issues affecting minorities; recognizing, accepting and celebrating differences among people; churches reaching out to members of other races, and programs to support minority business and professional development.