Will the threat of a class-action lawsuit force advertising to finally solve its diversity problem?

Dec 1, 2008

-By Andrew Adam Newman

Black athletes, musicians and actors figure more prominently in ad campaigns than ever, but the chances that African Americans actually created those ads are pretty slim.

According to Bureau of Labor Statistics data from January 2008, the advertising field -- defined as advertising and PR agencies, as well as media, direct mail and other operations exclusively devoted to creating and delivering ads -- is just 5 percent African American, 3 percent Asian and 8 percent Hispanic or Latino. Those numbers are particularly stark considering that New York, the city with the highest concentration of ad agencies, is only 45 percent white, according to U.S. Census data. USA Today recently dubbed the ad industry "a poster child for a dearth of diversity."

For more than four decades, civil rights groups have accused the ad business of violating equal-opportunity hiring laws. In 2006, the New York City Commission on Human Rights (NYCCHR), acting on a complaint from Sanford Moore, an African American who had worked at agencies including BBDO, launched an investigation of 16 prominent New York firms, including BBDO, DDB, Ogilvy & Mather, Saatchi & Saatchi and Young & Rubicam. The agencies settled with the commission, committing to increase diversity over three years.

In the wake of that settlement, some agencies have increased the number of minorities working in their shops. And the industry as a whole is making progress, according to Nancy Hill, who became the American Association of Advertising Agencies' first female CEO this year, and whose commitment to diversity has been lauded by Moore and others. "I know the industry still has a long way to go," Hills says. "But a lot of things are starting to come together."

But the data suggest that some shops have merely donned a fig leaf -- offering bromides about how their hiring process is "colorblind," doing pro bono work for minority causes, but still hiring only those who look like them.

Soon, those shops could be in for a day of reckoning, as Cyrus Mehri, the civil rights lawyer behind several landmark racial discrimination suits -- including those against Coca-Cola (which settled for $193 million) and Texaco (which settled for $176 million) -- is now targeting the advertising business. The result could be the dropping of so many fig leaves that the industry will need a rake.

Mehri says he has been contacted by "people from inside the industry who have suffered discrimination" and that his firm will soon issue a report on African Americans in advertising. (Critics agree that the situation with African Americans is unique, since they have been confronting both racial stereotypes in advertising and the lack of professional opportunities for more than a half century.) Using Census and Equal Employment Opportunity Commission data, the report will benchmark advertising against 28 other "persuasion" industries.

Among the findings in a preliminary report obtained by Adweek: African Americans make up only 3.2 percent of advertising's upper management in the U.S., well under half of the average of 7.2 percent in similar professions.

Mehri won't say whether he's preparing a class-action suit against agencies, but even if he isn't, he will likely leave the industry more diverse than he found it. Based on the remedies he and the late Johnnie Cochran prescribed in a study about the lack of black head coaches in the NFL, for example, the league adopted new hiring policies and more than tripled their ranks within four years.

Luke Visconti, co-founder of the magazine DiversityInc, who describes the ad industry's diversity efforts as "laughable," says advertising pros should take note that Mehri "can use the legal system to grind you to bits," but that he is reasonable in crafting constructive solutions.



As Mehri turns over rocks, there's no telling what he'll find. It behooves industry insiders to know what to expect from his efforts, how some of his prior targets have responded, and how certain companies -- some of them the ad industry's biggest clients -- have embedded diversity deep in their hiring and management practices.

Mehri's track record

"I've yet to see an industry that has such a consistent record of indifference to minority involvement," Mehri says of the ad business on the phone from his Washington law firm, Mehri & Skalet. "It has a history of purposeful discrimination. They've been on notice a long time, but they just go through the motions and allow a discriminatory climate to continue. They're real laggards, and it's hard to understand why."

One of Mehri's best-known cases, originally launched in 1996 on behalf of two management-level employees against Texaco, and which expanded into a class-action colossus representing 1,400 aggrieved black Texaco employees, alleged that in hiring and promotion the company had regularly chosen less-experienced whites over African Americans. Texaco fought the suit for more than two years, but after testimony that claimed managers had referred to workers as "niggers" and "porch monkeys," and a recording emerged of an executive referring to African Americans as "black jelly beans," Texaco sat down in 1997 to settle.

Along with $115 million that Texaco agreed to pay employees, it promised $35 million to fund an Equality and Tolerance Task Force -- consisting of civil rights lawyers, scholars, retired judges and executives -- that would increase diversity at the company. It also set aside $26 million to administer salary raises over five years to black employees.

In 1999, Mehri's suit on behalf of 2,200 former and then-current employees against Coca-Cola claimed that blacks at the company were widely overlooked for promotions.

Coke's settlement of $193 million the following year was unprecedented in its heft. It was also noteworthy because Coke agreed to fund a task force, which would include a former secretary of labor and a former chair of the Equal Employment Opportunity Commission, to overhaul hiring practices. The company also agreed to tie executive compensation to diversity hiring goals and issue four yearly progress reports to the court.

Coke even asked the court to oversee its progress for a fifth year.

From 2000 to 2006, among senior executives -- the ranks which industries have struggled hardest to diversify -- Coke increased minority representation from 8 percent to 21 percent. For "pipeline" jobs a tier below, from 2002 to 2006, Coke increased the proportion of minorities from 21 percent to 27 percent.

"The work that we do and the decisions that we make all focus on inclusive and fair behavior," Steve Bucherati, chief diversity officer at Coca-Cola, wrote in response to questions from Adweek. Bucherati also noted that 29 percent of Coke's North America marketing and advertising division are minorities, as is the leader of the advertising team.

These settlements are emblematic of how vast class-action discrimination suits, by Mehri and others, gained popularity in the 1990s not just to recompense plaintiffs, but also to reshape hiring policies.



As Nancy Levit, a law professor at the University of Missouri's Kansas City School of Law, wrote recently in the Boston College Law Review, cases like Texaco's "have encouraged greater use of litigation to address deeply entrenched corporate practices." The goal often "is not damages but transformation of the company's treatment of employees" and the opportunity to "make a difference in workplace inclusivity."

Mehri's impact on the NFL was just as striking. In 2002, he and Cochran issued a report called "Black Coaches in the National Football League: Superior Performance, Inferior Opportunities." Though more than two-thirds of the players in the league are black, no team had hired a black head coach until 1989. When Mehri and Cochran issued their report, only two of the league's 32 teams had black head coaches.

The report recommended requiring team owners to conduct a face-to-face interview with at least one minority candidate when hiring in the future. The NFL agreed to adopt the rule, which became known as the Rooney Rule, after Dan Rooney, the Pittsburgh Steelers owner who chaired the league's Workplace Diversity Committee.

In 2003, Detroit Lions gm Matt Millen hired Steve Mariucci, who is white, as head coach without interviewing any candidates of color. The NFL slapped Millen with a $200,000 fine. Other team owners complied with the rule after that and while doing so might seem merely symbolic, the results were dramatic.

Four years after the Rooney Rule took effect, the NFL reached an all-time high of seven African-American head coaches. (Today, there are six.) Before 2007, no African-American head coach had reached the Super Bowl, but both coaches that year -- Lovie Smith of the Chicago Bears and Tony Dungy of the Indianapolis Colts -- were black.

"What is done in the NFL is really transferable to the business world, because at base the process ensures that those who are making decisions sit down with candidates and have a conversation about the position," says Jeremi Duru, a law professor at Temple University's James E. Beasley School of Law, who worked for Mehri's firm when it issued the NFL report. "If you sit down face to face and talk about issues of shared concern, racial biases tend to be diminished."

Where top marketers stand

One thing that often happens when Mehri gets involved in a case is that Weldon Latham's phone rings. Both Texaco and Coke hired Latham -- a partner in the Washington, D.C., law firm of Davis Wright Tremaine and chair of its Diversity Counseling Group -- to iron out a settlement with Mehri.

When it comes to the ad industry, though, Latham actually was on the scene before Mehri. Omnicom Group hired him when its agencies BBDO, DDB, Merkley + Partners and PHD were among the 16 shops named two years ago in the investigation by New York's human-rights commission.

Latham, who has worked with numerous Fortune 500 companies not just to defend them against suits, but to help proactively develop multicultural initiatives, says business-to-business industries like advertising have been slow to adapt to diversity.

"Consumer products companies that interact with the public directly are usually a lot better about recognizing the value of diversity than a business-to-business company," he says.



DiversityInc's Visconti says, "If you believe people are created equally, then talent is distributed equally. If it's all white men in your executive committee, something went wrong."

Visconti's magazine has been compiling a Top 50 Companies for Diversity list for eight years. This year, 352 firms were evaluated on factors including the racial makeup of their workforce, CEO diversity policies and the use of minority- and women-owned suppliers.

Iconic companies crowd the list: The top five this year, in order, were Verizon, Coca-Cola, Bank of America, Pricewaterhouse-Coopers and Procter & Gamble.

Conspicuously absent from the list is an advertising agency, and in eight years an agency has never appeared. (Full disclosure: Adweek currently does not employ a single person of color among the 16 members of its editorial and design staffs.)

Adweek cross-referenced the 2008 list with the top 100 U.S. ad spenders for the first seven months of 2008, and found that four of the top five diversity companies are also top ad spenders. In all, 22 of the top diversity companies -- nearly half -- were among this year's 100 top ad spenders.

P&G, the largest ad spender, has a unit within its so-called "talent supply" team that "solely focuses on diversity recruiting," according to Maxine Brown Davis, the company's chief diversity officer, who responded to questions from Adweek in an e-mail. The company, she wrote, attends professional conferences held by groups with "high-potential diverse candidates," like the National Society of Black Engineers.

Verizon, the fourth-biggest ad spender, provided a statement in response to Adweek's questions, saying the company is committed to looking like America because "customers and constituents are increasingly diverse and require diverse employee experiences." The company ties 5 percent of upper management's pay to diversity: half for promoting minorities and the other half for contracting with diverse suppliers.

How agencies are responding

Clients increasingly are inquiring about diversity on the agency side, according to Heide Gardner, chief diversity officer for Interpublic Group. "They're pushing their values along the supply chain and they are interested in our progress," she says. "More clients are including questions about workforce and supplier diversity in RFPs. I would guesstimate that at least a third of all RFPs include questions about supplier and workforce diversity."

Agencies, however, are not keeping up in certain areas.

As part of their settlement with New York's human-rights commission, the 15 agencies (down from 16, after Draft and FCB merged) reported their minority hiring numbers for 2007 to the commission, and the results appeared impressive: As a group, they committed to have 18 percent of new hires be minorities, and on average they actually hired 25 percent.



But according to data from the NYCCHR as reported in Advertising Age, the number of African Americans hired -- which had been the original issue -- were still paltry. Moore, who brought the complaint to the commission, said he was discouraged by the African-American numbers and unswayed by the bright spots elsewhere. "Blacks are not the minority of choice" for those doing the hiring, he says. And he adds that he's seen minority hiring spurts before, only to see people of color leave the industry after bumping up against glass ceilings.

The NYCCHR was not able to provide data about those agencies' 2007 hiring results to Adweek by press time.

"You don't let someone off the hook for decades of blatant discrimination because they hire a few people," Moore says. "Madison Avenue has been about supporting, subsidizing and propagating a value system that marginalizes blacks, black media institutions, black creativity and black culture."

And advertising, he says, requires neither special degrees nor a particularly keen intellect: "Madison Avenue is one of the last places where undereducated whites can still make big money." White executives for decades, he adds, have told him that diversity was "the moral issue of our time" and that their own shops had a "level playing field." To which he counters, "If it were a level playing field, black people wouldn't be rolling off the playing field."

This is not to say there haven't been concerted efforts to diversify. Over the last few years, a handful of ad agencies have hired diversity officers whose primary focus is to increase recruitment, and to structure mentoring programs and affinity groups within the agencies. The programs build a supportive culture within firms that, consciously or not, have not always supported people of color, and in so doing may be beginning to crack the glass ceiling.

Gardner was named director of diversity for IPG in 2003 and, in 2007, was promoted to svp and chief diversity officer, marking the first time a person of color has served as an officer in the company. (Last year, IPG appointed its sole African-American board member, Jocelyn Miller-Carter, who owns a Florida technology company.)

According to Gardner, a major challenge involves not just hiring minorities, but keeping them on board, since turnover with minorities is 30 percent higher than whites at IPG. "This really speaks to the issue of sustainability," Gardner says. "We have done a much better job of recruiting" for entry-level jobs, she says, "but now we have to focus on the mid- and senior levels."

Today, 20 percent of the company's junior staff are minorities, but of the nearly 100 agencies that Interpublic owns outright or partly, only two are headed by African Americans: Larry Harris in 2007 was named president of the newly formed Ansible, a mobile marketing agency that is a joint venture between IPG and mobile technology provider Velti; and Steve Stoute is founder of Translation Consultation + Brand Imaging.

Gardner says the company does not go so far as the NFL and require a diverse candidate slate, but it "recommends" it.



She also says that some, but not all, of IPG's companies tie bonuses to diversity goals, a practice some experts say is a key to achieving diversity. For a senior executive, it can account for 10 percent to 15 percent of a bonus, or $40,000-60,000, according to Gardner.

Tiffany Warren, vp and director of multicultural programs and community outreach at Arnold, says the company has achieved its level of 31 percent non-white employees without tying executive pay to diversity goals, since "what works for a Fortune 500 company doesn't necessarily work for us."

An old problem

In his recent book Madison Avenue and the Color Line, about African-Americans' role in advertising over the last century, professor and advertising consultant Jason Chambers links the historically negative depictions of black people in ads to their limited opportunities in the industry.

"If one looks at advertisements as documentaries, then the world for much of the 20th century was one in which whites enjoyed the fruits of consumption and blacks, if visible at all, contentedly served them from the margins," Chambers writes.

The book, among other things, details how civil rights groups and the NYCCHR have decried the lack of representation in the industry -- and how agencies have vowed to remedy the situation -- for more than four decades.

In 1963, the Urban League of New York released a study that found of the more than 20,000 employees in the city's largest ad agencies, only 25 African Americans were in "creative or executive positions." Five years later, a report from the NYCCHR said the scarcity of African Americans and Puerto Ricans employed at ad agencies was "a state of de facto segregation strongly suggesting discrimination."

In the wake of that report, writes Chambers, virtually every major agency instituted recruitment and mentoring programs and diversified, but the programs were expensive and disappeared because of the recession in the early 1970s.

Reached at his office at the University of Illinois at Urbana-Champaign, Chambers puzzles at why ad executives seem to see diversity as a do-gooder issue rather than a bottom-line one. The firms' leaders, he says, should be asking themselves these questions: "Why aren't we as mediators between manufacturers and consumers pushing hardest for diversity? What level of insight creativity are we not getting because of that insularity?"

Leading a horse to water

After the NYCCHR began its latest investigation of the industry, the 4A's assembled a task force that culminated in a handbook, "Principles & Best Practices for Diversity and Inclusion in Advertising Agencies." It recommends establishing diversity goals and timetables, tying executive compensation to those goals, focusing recruiting both on minority universities and minority executive recruiters, increasing retention of minority employees through mentoring programs, and hiring more minority businesses as vendors.



Adonis Hoffman, the staff lawyer for the 4A's who wrote the handbook, says the trade group can only lead horses to water. "We can provide guidance and leadership and give them all the resources," says Hoffman, "but it becomes a matter of individual corporate will."

As for the forthcoming report -- and possible legal action -- from Mehri, Hoffman says agencies should accept his recommendations. "I wouldn't advise the companies to hunker down," he says. "I'd advise them to face this head-on and see what they can do, because it's an issue that has been bouncing around this industry for a long, long time."

Hill, the 4A's CEO, says the association is doing what it can. This includes the continuation of its AAAA Foundation, which has created a number of scholarships for multicultural aspirants, including the Bill Bernbach Minority Scholarship, the John Mack Carter Scholarship and Operation JumpStart.

In January, the association announced a partnership with Howard University to place multicultural talent in management at ad agencies, help African Americans transition from other industries into advertising and work with traditional black colleges to highlight the industry.

Also, Hill serves on the board of Together Our Resources Can Help (TORCH), which provides underserved New York City public high school students with exposure to career training and opportunities in communications and the arts. (Adweek publisher and editorial director Alison Fahey serves on the same board.)

On another front, Arnold's Warren hires interns to help out with the AdColor Awards, an initiative she co-founded last year to recognize creative achievement in five categories for multicultural talent both within agencies and at marketing departments in general-market companies.

One of those interns, Andy Deaza, is now 20 and recently moved to South Beach to study at the Miami Ad School. But Deaza, who is Dominican and Puerto Rican, did not find the ad business so much as the ad business found him. When he was a sophomore at Washington Irving High School in Manhattan, "I wasn't the best student and was kind of getting into trouble," he says. Deaza, whose favorite subject was art, was introduced to TORCH by his art teacher.

He threw himself into the program, was chosen to host its annual talent program (twice), attended an expenses-paid conference in San Francisco, and interned with JWT director of trendspotting Ann Mack and then Warren. Along the way, he says, he improved his grades and stayed out of trouble.

"There were definitely people helping guide the way," says Deaza. "If it wasn't for Debi [Deutsch, executive director of TORCH] and Tiffany, I wouldn't know about the industry. For whatever reason, white people know about the industry, but we don't -- I don't know why."

Hill met Deaza not long ago.



"The night I met this kid and heard his story, the hair on my arms stood up," Hill says. "What it says to me is that you have to attack this problem from many different angles and when you see the programs come together in one individual like Andy, you know our efforts are worth it."

Asked if he had a dream client he'd like to work for one day, Deaza does not even have to think about it.

"Nike," he says. "I've been a Jordan fan all my life and I'm too young to have seen him play growing up. But those Spike Lee commercials -- man, things like that are the reason I love this industry. To be able now to be so close to making something like that is surreal -- that gives me the chills. If I ever got to put a swoosh on the end of something, I'd be a happy man."

Do clients that spend more care more?

Is there a correlation between a company's diversity achievements and its level of ad spending? Below are the top 25 firms on DiversityInc's current list of the Top 50 Companies for Diversity. If the company also ranks among the top 100 U.S. ad spenders through the first seven months of this year, that rank appears after the firm's name. As you can see, four of the top five companies on the list are also among the top ad spenders in the country.

1 Verizon Communications (4)

2 The Coca-Cola Co. (44)

3 Bank of America (59)

4 PricewaterhouseCoopers

5 Procter & Gamble (1)

6 Cox Communications

7 Merrill Lynch & Co.

8 Johnson & Johnson (5)

9 IBM

10 American Express (61)

11 Marriott International

12 Sodexo

13 JPMorgan Chase (71)

14 Wachovia (97)

15 Blue Cross and Blue Shield of Florida

16 Deloitte LLP

17 Ernst & Young

18 HSBC Bank USA, NA

19 Starwood Hotels & Resorts Worldwide

20 Cummins

21 Merck & Co. (74)

22 AT&T (3)

23 Turner Broadcasting System

24 Prudential

25 Monsanto Co.

Andrew Adam Newman is a frequent contributor to The New York Times whose work has appeared in New York magazine, Salon and on National Public Radio's "Studio 360 with Kurt Andersen."

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