speech

Diversity at Texaco

By Angela Vallot,

LBG Associates Diversity Conference

It's my pleasure to welcome you today to Texaco. We're extremely pleased to be able to serve as host for this conference.

Texaco's an exciting place to be these days, especially for anyone interested in the issue of diversity in corporate America. We're a company in transition on many levels. This afternoon, I want to give you a glimpse of where Texaco's headed and how we're trying to get there.

I'll start by briefly describing what diversity means to us, and why we think it's critical to the success of our business. Then I'll share with you some of the things that we're doing to promote diversity throughout our company.

At Texaco today, diversity is part of our business strategy. In fact, one of our five key business strategies is the development of a world-class, diverse workforce.

But what exactly do we mean by diversity?

Well, first, we want Texaco to have a workforce that encompasses a diversity of cultures, ideas, experiences, perspectives and people. We want a workforce that reflects the race, gender and ethnicity of the communities where we operate. In the U.S., that means attracting more women, African Americans, Hispanics, Asians, Native Americans and other minorities that historically have been underrepresented in the oil industry.

Furthermore, we want a company that respects the differences that individuals bring to the workplace and, in fact, values those differences as a competitive strength for our company.

Why is this important to Texaco? Well quite simply we believe that promoting diversity makes us a better, smarter and stronger company. And valuing the differences and contributions of each individual fosters an environment where the best business ideas and results are surfaced.

We know that to find the very best people in each discipline, we need to aggressively seek them out in many different places and attract them to Texaco by demonstrating that their contributions to our company will be valued.

We need to be a part of – and have relationships in – every community where we operate. That's as true in New York or New Orleans, as it is in Nigeria or Kazakhstan.

Before 1996, Texaco was like many companies in the U.S. We had a variety of diversity programs and initiatives, but they lacked the kind of urgency and accountability we have at Texaco today.

The settlement of the racial discrimination lawsuit in 1996 and all of the ensuing publicity galvanized the company and provided a platform for more dramatic change.

That experience helped Texaco understand that diversity's not just a responsibility of being a good corporate citizen. It's a means of enhancing our global competitiveness . . . not to mention our image and reputation.

We not only learned that Texaco could do more, but we learned how to do more.

In response to the challenges posed by the lawsuit and the settlement, we conducted a rigorous review of our HR and business partnering programs. We then put together a five-year plan, called the Comprehensive Plan to Ensure Fairness and Economic Opportunity for Employees and Business Partners. It includes specific work force goals, new and enhanced workplace initiatives, and new business partnering goals. This Plan, publicly announced in December 1996, was our blueprint for moving forward.

Three years ago, during the height of the crisis, our Chairman Peter Bijur took a strong, and very public stand against the inappropriate conduct exposed in our company. His leadership clearly set the tone for this company going forward.

At that point, I hadn't yet joined Texaco. I was a lawyer working in private practice. met Peter Bijur at a conference, and I'll tell you, candidly, that given everything I'd heard and read in the media about Texaco, I was prepared to really dislike this man.

But at that event I heard Peter give a compelling and heart-felt speech about the challenges of diversity and the changes he was trying to make at Texaco.

Later that day, I had the chance to talk with him one-on-one. We had a frank discussion about race in America. It was clear that Peter Bijur was someone who thought and cared deeply about diversity – and, perhaps more importantly, that he had the courage to do something about it.

When I later met the rest of the senior management team at Texaco, it was clear to me that they too shared Peter Bijur's commitment to this issue.

That's critical – because if you don't have commitment at the top of the house, nothing's going to change. You need a CEO who's unwavering and constantly reinforcing the importance of diversity.

Today, we have that top-of-the-house commitment. Our senior management team has made diversity a key element of our corporate business strategy. At Texaco, diversity is not simply an initiative -- it's a way of life.

Even this past year, when oil prices sank to historic lows and the company faced painful cutbacks, senior management continued to focus on and pursue our diversity objectives.

Peter Bijur has led the way, making it clear for all, through his personal commitment, that diversity is a top priority and core value for our company.

We've learned that enhancing diversity must be a sustained and focused effort. It requires real resources to implement. A committed CEO is critical, but it's not enough; the commitment must be embedded in the company. You need an intense and systematic program to ensure that reality in the company matches the rhetoric at the top of the house---that you're walking the talk!

We've also learned that HR programs alone are not enough. To make real progress, you must continuously communicate the company's values and expectations on this issue. What we're really trying to do is change the culture of the company. That's no small task. It'll take time. And we may not be able to change the way people think, but we can change the way people behave. And, no employee should have any doubt about what's expected of them or what the consequences will be for failing to meet those expectations.

Finally, we learned that to achieve results, there must be accountability for meeting diversity objectives. We have clearly linked progress on diversity to compensation and career advancement. And part of our executive bonus compensation program is now contingent on meeting our diversity goals. In fact, last year, when Texaco just missed one of its diversity goals, a portion of that bonus compensation was withheld. That kind of accountability reinforces for everyone that diversity truly is a core value of Texaco.

One of the concrete changes that came out of the Settlement Agreement was the establishment of the Texaco Task Force on Equality and Fairness. This is a seven member independent group that reviews the implementation of Texaco's HR programs. The group not only serves as an independent observer, it has provided a useful, outside perspective that helps us to establish and meet our objectives.

Our diversity activities today all flow from the five-year Comprehensive Plan I mentioned earlier. They're focused in three primary areas: 1) Workforce goals, 2) workplace initiatives and, 3) Business partnerships with suppliers and vendors.

Let me describe for you some of the things we are doing in each of these three areas.

Recruitment, hiring, retention and promotion

To enhance Texaco's workforce diversity, the Comprehensive Plan first established hiring and promotion goals for every department in the company. We measure against those goals every year and managers are held accountable for reaching them.

Last year, 59% of all of our U.S. hires were minorities and women, and 49% of all promotions were of minorities and women. In the first six months of 1999, women and minorities earned 65% of all U.S. promotions at Texaco. During the same period, the overall percentage of women and minorities in executive positions increased from 15 to 20%.

That progress has been the result of a variety of efforts. First, we now consistently hire search firms that have a demonstrated record of recruiting minority and women job candidates. We also started recruiting from a more diverse base of schools, including many of the Historically Black Colleges and Universities and members of the Hispanic Association of Colleges and Universities.

A challenge for us is that many of the positions throughout this industry require an education in engineering, math or science – disciplines where women and minorities traditionally have been underrepresented.

To increase the pool of qualified candidates in those areas, we launched our "Inroads to the Stars" program in partnership with INROADS, a national, non-profit organization. "Inroads to the Stars" offers scholarships and internships at Texaco and has helped produce a significant number of new full-time minority and women employees for our company in technical fields.

We're also reaching deeper into the educational system through our philanthropic support for early childhood education. Our "Touch Science" program supports childhood scientific discovery initiatives, while our "Early Notes" program supports early music training and explores the link between the cognitive skills used in music education and those used in math and science education. Both these programs are reaching many inner-city students.

Another new HR effort is our Executive Business Analyst – or EBA program. It aims to broaden and enrich our middle-management talent by attracting high-performing, experienced MBA graduates to Texaco. The program offers these individuals rotational assignments throughout the company, with the goal of developing the experience and leadership skills to assume management roles in the company. The program's 35 current participants are a remarkably talented and diverse group. Sixty percent are women and minorities. They include individuals from China, India, South America and Africa.

We've also restructured our Human Resource Committees, which are responsible for evaluating employees for career and succession planning. Every one of these committees today includes women and minorities.

Workplace Environment

The second major area of focus in Texaco's Comprehensive Plan is workplace initiatives designed to promote an environment of tolerance and inclusiveness throughout our company.

Part of that effort includes a new Diversity Learning Experience, commonly referred to as "diversity training." Nearly all of Texaco's U.S. employees have participated in this two-day workshop. The Texaco Task Force concluded that these workshops are one of the key reasons why Texaco's commitment to tolerance and inclusiveness has – quote – "penetrated deeply and widely in the organization."

Another key workplace initiative was the establishment of a Corporate Diversity Council, with members from each of our 6 regional Diversity Councils. These councils were established to help identify and address the unique diversity challenges in each region of the country. This is important because Midland, Texas – with few African-Americans, but a large Hispanic community – doesn't have the same challenges as New York or New Orleans – and our diversity efforts need to reflect these local issues. The regional councils also serve to raise diversity issues and concerns up through the organization so they can be addressed by the Corporate Diversity Council, and ultimately, Texaco's Executive Council.

We also have a variety of channels for employees to address and resolve workplace concerns. Our Ombuds Director, for example, serves as a confidential advisor and facilitator to employees with workplace problems. The Task Force, in its Second Annual Report, found that the growing use of the Ombuds Program was a sign of – quote – "increasing confidence in the Company's system for resolution of complaints."

Another key effort is our alternative dispute resolution program, entitled "Solutions." It was introduced in January 1997 and offers four steps for employees to address and resolve workplace issues, including the use of an independent mediator or arbitrator when necessary. As the use of the Ombuds Program has risen, use of the "Solutions" program has steadily dropped. This demonstrates the benefit of an early identification and resolution process like the Ombuds program.

Business Partnerships with Vendors and Suppliers

As part of our Comprehensive Plan, Texaco set a five-year goal of increasing expenditures with minority and women-owned businesses to a cumulative $1 billion. I'm pleased to say that after two-and-one-half years, we' re more than half way to that five-year goal. As of June, we spent over $600 million dollars with MWBE's.

We've achieved that milestone by constantly reviewing our progress and holding departments accountable for meeting their specific goals. Each month, we circulate internally a report that breaks out the progress achieved by each department.

That drives success and holds people accountable. Our CEO reviews that report. And people know that if they aren't meeting their goals, they're going to get a call from him asking why. And that's not a call anyone wants to get.

But our commitment to MWBEs extends beyond the simple purchase of products or services from these enterprises. We work to help them expand their business and enhance their capabilities so they can become key suppliers for us in relationships that benefit us both.

We provide mentoring programs, we sponsor workshops on financial and business issues, fund educational programs at leading business schools, and even help MWBEs gain access to capital to start or grow their business – as we recently did with Four Star Marine, a new African-American owned marine transport company out of New Orleans that we helped arrange financing for.

Indeed, in each of the three principal areas of our Comprehensive Plan, Texaco's workforce diversity, workplace environment and our business partnerships truly are being transformed. So much so, that last month, Fortune magazine described today's Texaco as – quote -- "nearly a model for diversity."

But understand, we're not doing this because we want to be a model for others. We're doing this because we believe that in a fast-changing global marketplace, building a diverse, inclusive workforce is a business imperative.

In conclusion, we know that despite our progress, we still have much to do. We are a long way from where we were in 1996, but we still are not where we need to be. Like any critical business initiative, diversity requires continuous effort and relentless focus. We understand that diversity is not a destination, but a journey that we need to work at every day.

I can assure you that Texaco is strongly committed to making that journey.

Thank you very much. Now I'd be happy to answer any questions you may have.

Updated: October 1999