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HR Magazine: Cultivating Female Leaders

Ann Pomeroy  2/1/2007

HR Magazine, February 2007Vol. 52, No. 2

Retail grocery giant Safeway is seeing the results from long-standing efforts to help women advance in the company. 

The research is clear and dramatic: Female executives can help improve a company’s bottom line. According to a 2004 study by Catalyst, a research and advisory organization that focuses on women’s issues, Fortune 500 companies with the highest percentages of female corporate officers saw, on average, a 35.1 percent higher return on equity and a 34.0 percent higher return to shareholders than companies with the lowest percentages of female corporate officers.

Yet, despite this correlation, companies don’t seem to be doing enough to promote greater gender diversity at the executive level. In fact, progress in this area has essentially ground to a halt.

Catalyst, which has tracked this issue for 10 years, says the results of its latest census, the 2005 Catalyst Census of Women Corporate Officers and Top Earners of the Fortune 500, were disappointing. While the number of women in top positions increased slightly, “the growth rate for the past three years is dramatically lower than the rates we have seen in the past.” In other words, Catalyst concludes, “progress has almost come to a standstill.”

In spite of these discouraging statistics, some companies are making significant progress in stripping away stumbling blocks to gender diversity. One of those companies is Safeway, a Fortune 50 corporation that began focusing a decade ago on ways to identify, promote and retain high-potential women.

Here is what the company is doing—and how it has prospered as a result.

Helping Women Succeed

Ten years ago, Safeway began facing increasingly stiff competition from up-market specialty grocers on one end and cut-rate pricing on the other from big box stores such as Wal-Mart and Target. To meet these market challenges, the company began exploring programs to attract, develop and retain its best talent, and to position Safeway as an employer of choice.

Since 70 percent of its customers are women, the retail grocery giant also wanted to broaden the diversity of its workforce to reflect the customer base. The company recognized that a diverse workforce would help it better understand and respond to the needs of its customers, and that would give Safeway a competitive advantage in the marketplace.

Male leadership has long been the norm in the retail grocery industry, so the new programs required a real culture shift. Kim Farnham, director of HR planning, says Safeway took a series of steps aimed at changing the corporate culture to “a culture of development,” one that focused on helping women—including women of color—advance into management.

The foundation of today’s diversity initiative was laid down in 1997, says Farnham. A diversity workshop to educate managers was designed, balanced workforce goals were created, and a system that holds managers accountable for meeting those goals was developed. Metrics to track their success were put in place.

The goal throughout the planning phase was “to do it right, not to be first on the block,” says Farnham. The resulting women’s initiative, “Championing Change for Women: An Integrated Strategy,” was fully implemented in 2000 as the first piece of Safeway’s overall diversity initiative.

The diversity strategy includes effective communication of the business case for diversity and programs that focus on leadership development, mentoring and work/life balance. A rigorous accountability system for measuring and tracking balanced workforce goals alerts the company to any potential problems.

Communicating the Business Case

Larree Renda, executive vice president, chief strategist and administrative officer, says communicating the business case effectively to the entire organization starts with “visible leadership at the top. You need executives who talk the talk and also walk the walk, and I think we’ve been very good at that.”

For example, CEO Steve Burd talks regularly with employees about diversity issues in live discussions and at town hall meetings and conferences.

He also makes a point of discussing diversity via taped satellite broadcasts, part of a program of weekly broadcasts that are sent to store managers and that frequently cover diversity. Managers are expected to make the broadcasts available to their employees. The programs, which can spark discussions at staff meetings in each store, are shown on monitors in the staff break room. In addition, employees can view the broadcasts on their computers, Renda says.

Renda, who was responsible for developing the unique in-store broadcast/interactive TV network for training and communication, says the system allows the company to quickly broadcast live or taped programs simultaneously to the approximately 1,800 stores in Safeway’s 10 divisions.

When it comes to the taped programs, “diversity is expected to be a regular item on the agenda,” she says. Employees also have access to a series of diversity DVDs featuring interviews with successful Safeway women and people of color.

Developing Future Leaders

Safeway likes to promote from within and has traditionally focused on the retail level as a source of potential managers. Many current executives came up from entry-level positions in Safeway stores through the Retail Leadership Development (RLD) program, a formal, full-time career development program. Farnham estimates that 90 percent of the company’s 1,800 store managers moved up through the company ranks this way, and all but one of the 10 division presidents began their Safeway careers working in one of its stores, often as grocery baggers or salesclerks.

When the women’s initiative was implemented in 2000, the RLD program began to focus particularly on women and people of color, and targets were established to increase the number of women and minorities who go through the training. Employees who are interested in becoming store managers can apply for the program by taking an entrance exam that tests such basic retail knowledge as understanding gross margins. Applicants also write an essay explaining how they would solve a business problem. Those who successfully complete the 26-week program are immediately assigned to a store as an assistant manager—a position that can lead to corporate-level jobs.

Safeway’s efforts to encourage women to advance don’t end there, however. Recognizing that women often need to coordinate work schedules with family responsibilities, the company ensures that all qualified employees—including part-timers and those who work flexible schedules—have the same opportunities for coaching, development and advancement as those who work more traditional hours.

The company also realized that frequent relocations didn’t work for some employees, particularly women. As a result, Safeway modified the once-traditional requirement that employees seeking to move up should broaden their experience by doing stints at a variety of company locations. (See “Surviving a Relocation Rejection,” on the right.)

Development Networks

Another resource for women interested in advancing into management is the women’s leadership network, established 10 years ago as part of the women’s initiative. The group sponsors such events as the “Women’s Road Show,” a series of presentations at Safeway locations throughout the country that highlight the success of individual Safeway women and provide learning and networking opportunities.

Wherever the “Road Show” executives speak, they also meet with women in the area who’ve been identified as likely candidates for management positions and targeted for developmental opportunities in stores. In discussions with these high-potential women about their career interests, the executives suggest potential job opportunities and encourage them to apply for so-called “stretch positions” that can help them advance to the next level.

Today there are five network groups, including groups for blacks, Asians, Hispanics, and lesbian, gay, bisexual and transgendered employees. Each is open to all employees and regularly offers a variety of educational activities and events. The Diversity Advisory Board, which includes representatives from each major operating and functional area of the organization, also sponsors events and seminars.

In addition to the corporate board, each Safeway geographical area has its own diversity advisory board to address local issues. Today there are 13 advisory boards and 14 network leadership groups throughout the company.

From One Mentor, Many

A strong mentoring program is critical to the success of the company’s leadership development efforts. Every Safeway manager, from the CEO on down, is expected to mentor his or her own employees, plus several others.

Because there is a serious lack of female and minority mentors, says Renda, it is expected that a manager’s first mentee should be a woman, the next a person of color of either sex, “and then you can have a [white] man, in that order.”

Renda, whose responsibilities include retail operations, HR, public affairs, labor relations, government relations, industrial engineering, re-engineering and communications, is the company’s top female executive and one of its five highest-paid officers. She’s also the company’s first—and so far only—female executive vice president, a statistic she would like to see changed. “There should be more of me,” she says.

From a 16-year-old, working part time bagging groceries at her local Safeway store, Renda has spent 33 years building a high-powered career at the Fortune 50 company. In 2001 and again in 2002, she was named one of the 50 most influential women in business by Fortune magazine.

As she moved up the ladder, Renda says she was often the first woman to hold each successive new job. As a result, while she always had a mentor, “I’ve never had a female mentor,” she says. She knows how difficult that can be for women, and she feels a special responsibility today to mentor women and to be a role model for the next generation of female leaders. (For more on female executives with male mentors, see "Playing in a Male Environment.")

Jewel Hunt, vice president for corporate deli food service, Starbucks and Jamba Juice, also “believes in mentorship.” She has been fortunate to have mentor-managers throughout her career who helped her learn needed job skills as she advanced in the organization. Hunt, who started 25 years ago as a part-time bakery salesclerk while she was attending college, recalls when she was promoted to director of marketing for the Northern California division. Her new boss, the chief financial officer at the time, helped her develop the software and complex math skills she would need in her new job.

In turn, Hunt strives to perform the same kinds of services for her mentees. For example, she remembers one mentee who had applied for a director position. Although she was very well qualified, says Hunt, the woman withdrew her application at the last minute. She said she lacked retail skills and was afraid she wasn’t ready for the job.

“I knew she was the strongest candidate, so I encouraged her to go ahead and apply,” says Hunt. “I promised that I or an associate would personally work with her in the stores if she got the job.” The woman agreed, she did get the job, and “today she’s a superstar.”

Without Hunt’s encouragement at the crucial moment, the woman “might have waited a couple of years to apply, and she had so much to add today.”

Lori Raya, vice president of retail operations in Safeway’s Northern California division, feels a real sense of mission about her responsibility to mentor other women. “My goal is to impact someone’s life,” she declares. “I love it when I get notes from former mentees who tell me about a promotion and say, ‘Thanks for believing in me.’ ”

Raya says her first mentor at Safeway, who recognized her ability and took steps to keep her when Raya was ready to quit, has had a lasting effect on her life. Raya was in college, working part time and coaching high school girls’ basketball, soccer and volleyball in the evening when a new female store manager asked her to change her hours.

Raya explained that the proposed schedule would conflict with her coaching job. “I was ready to walk out the door,” she says, when the manager asked, “What would it take to keep you?” Undaunted when Raya said, “Well, your job looks kind of easy!” the woman encouraged her to apply for the RLD program and subsequently became her mentor.

Today Raya is the only female vice president among approximately 19 vice presidents in the retail division, and she is looking ahead toward the next step up—division president. “There is only one female division president today, and I hope to become the second.”

Balancing Work and Home Life

Work/life issues tend to affect women more than men, and Safeway seems to have taken this fact into account in its efforts to help all women—regardless of their family status—ensure that they have a healthy work/life balance. For example, Hunt faced significant work/life challenges as a single mom raising two sons while going to school and working full time.

Her sons, now 22 and 24, were 1 and 3 when she became a single parent. Although her former husband remained involved with the children, he lived in another state and couldn’t participate in their day-to-day care. Hunt, who left college before graduation to marry and start a family, now had to raise her sons and finish her degree.

She says she has always had supportive managers at Safeway who helped her juggle school, work and child care. And Safeway’s tuition reimbursement program helped pay for her degree.

“I’ve always been grateful that Safeway helped me with work/life balance” during that difficult time, she says. In turn, she tries to do the same for the women she mentors today. She makes a point of working with them on the kinds of problems that are particularly relevant to women—the need to work flexible hours during some periods, for example, or to deal with child care or elder care responsibilities.

Safeway also makes a point of ensuring work/life balance for those who do not have children. For example, Dianne Lamendola, group vice president for information technology, has no children and does not plan to have any. She does, however, have an active life outside of work.

Lamendola spends many hours training for competitions in adventure racing, a demanding sport that combines running, kayaking, mountain biking, navigation and orienteering. When Lamendola is in training, she does not hesitate to say she can’t work late on a particular night. Since she throws herself into her work with the same kind of energy she devotes to adventure racing, Safeway knows she’s a high performer for the company too.

In addition to her outdoor activities, Lamendola serves on the board of the San Francisco Bay Area Girl Scouts, participates in a book club, and enjoys spending time with her sister and her nieces and nephews.

Because she has so many outside interests, Lamendola says work/life balance has always been important to her. At Safeway, she has been able to pursue those interests while holding a very demanding job.

Accountability

Managers are responsible for driving the company’s diversity efforts throughout the organization, so education and training begins with them. All new managers, starting at the top, attend the Managing Diversity Workshop, an eight-hour session co- facilitated by a line manager and HR. Farnham says she intentionally involves line managers to avoid the perception that the workshop is “just an HR program. It’s integrated into the business,” she says.

While each manager attends the workshop only once, “we recognize that diversity education is not complete in one eight-hour session.” Farnham says the education continues through events sponsored by the network groups and diversity advisory boards, through video productions such as a “Women in Management” DVD, and through regular diversity discussions in staff meetings. A toolkit designed to guide managers in incorporating diversity discussions into their staff meetings is available on the company intranet.

“Safeway is a data-driven company,” says Farnham. “We track census data to identify the demographics of each geographic area,” and this data is used to set each manager’s specific targets for developing women.

Managers are evaluated on their success in meeting the diversity goals via balanced scorecard data and performance evaluations from their supervisors, employees and customers. And there are big incentives for managers to reach their diversity targets: High marks all around can increase a manager’s bonus by up to 10 percent, and consistently high ratings are critical to advancement in the company.

Conversely, those who have trouble meeting their goals will be coached by senior leaders, and their bonuses can be reduced.

The Proof Is in the Pudding

The following metrics offer mounting proof of the success of the women’s initiative programs. Since 2000, says Farnham, the number of female store managers has increased by 42 percent. Within that group, the number of white females rose 31 percent and the number of women of color shot up a whopping 92 percent.

She cites another statistic to corroborate the connection between these increases and the women’s initiative strategies. During the past five years, says Farnham, the number of women who have qualified for and completed the RLD program rose 37 percent.

There is external validation of the initiative’s success as well. Last year, Safeway’s “Championing Change for Women: An Integrated Strategy” was honored with the highly coveted Catalyst Award, which is presented annually by the nonprofit research organization to outstanding companies that promote the career advancement of women and minorities.

In addition, Safeway’s diversity efforts have garnered praise from global investment bank Lehman Brothers. A research report prepared by the bank’s independent analysts points out that Safeway’s diversity programs have not only “led to substantial advancement for women and minorities both at the stores and at the corporate office,” but also increased the company’s sales and earnings. (In an industry with razor-thin margins, Safeway today is a highly profitable $40 billion company with 200,000 employees throughout the United States and Canada.) “Diversity is good for business,” concludes the report.

CEO Burd is fully aware of the value a diverse workforce brings to the company. In his acceptance speech at the Catalyst Award ceremonies last year, Burd told the audience that Safeway had approached the subject of diversity as a business issue, “just like we do any other important objective.”

In fact, he said, “all we did was act in our own best self-interest.”

Ann Pomeroy is senior writer for HR Magazine.

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Surviving a Relocation Rejection

Larree Renda, executive vice president, chief strategist and administrative officer at Safeway, has maintained a high-powered career while raising three children—now ages 19, 18 and 15—with the help of a “very supportive husband who has always shared the load. I’ve had an ideal situation,” she says.

But raising kids, even in the best of circumstances, requires personal sacrifices.

For example, when Renda’s son was 5 years old and preparing to enter kindergarten, Renda was offered a promotion that required a cross-country move. But she and her husband—lifelong Catholics who wanted their children to attend Catholic schools—found it was too late to enroll her son in a Catholic school in the new area. So she refused the promotion (astounding her boss) and took the risk that her career might suffer. “I did the forbidden [at the time],” she says. “I said no to a relocation.” (Rejecting a relocation is no longer considered a career-threatening move since the advent of the women’s initiative 10 years ago.)

As it turned out, her career did not stall. On the contrary, six months later, Steve Burd was brought in as CEO, and he promoted her to vice president of corporate retail operations. Renda has worked closely with Burd since that time, moving up to senior vice president in 1994 and to her current role as executive vice president in 1999.

“I’ve been fortunate to work for people who understood that my family was important to me,” she says. “And I’ve never been afraid to raise my hand and say, ‘This is important,’ when my children needed me.”