Reference no: EM133312828

Case Study: Walgreens is the nation's largest drugstore chain with annual sales of $47.4 billion. It operates 5,584 stores in 47 states and Puerto Rico and plans to have 7,000 stores by 2010. The plan was going very smoothly until March 2007, when the Equal Employment Opportunity Commission (EEOC) filed an employment discrimination class-action lawsuit against Walgreens, alleging widespread racial bias against thousands of African American workers. Robert Johnson, EEOC regional attorney in St. Louis, said, "Black managers are assigned to stores in black neighborhoods more often than one would expect, and black employees are not being promoted to management and within management as often as similar white employees." Walgreens issued a statement saying, "As a company with a history of commitment to fairness, diversity, and opportunity, we are saddened and disappointed by the EEOC's decision. Our commitment is to providing opportunity to all employees-not only because it is the right thing to do but because our business was built on this principle." Data compiled for the filing of the class-action lawsuit, however, suggest otherwise. Certainly, pressure is building for Walgreens to address these issues. Both Walgreen's minority employees and the public perceive the promotion differences, as real and problematic, and even stockholders are not happy. Regardless of the outcome of the class-action suit, something must be done. The company's current method for placing managers and professionals to particular stores is simple-the demographics of store employees should closely mirror demographics of customers served by the store. Walgreens must redefine that policy because the company cannot claim bona fide occupational qualification (BFOQ) defense. According to case law, customer preferences are not grounds for a BFOQ defense. Thus Walgreens should stop considering race when making placement decisions. Walgreens also needs to consider how to handle promotions, which is not easy. Even the use of objective criteria like store sales and profits, however, results in lower levels of promotion among minority managers. When store sales and profits are considered as criteria for promotion, managers and professionals in stores located in low-income neighborhoods will be disadvantaged. Because low-income neighborhoods have higher minority populations, and the managers are matched with stores according to neighborhood demographics, managers at stores in low-income neighborhood locations will have fewer opportunities for advancement. One alternative would be establishing a minority promotion quota, but unless ordered by a court, establishing a minority promotion quota would not be legally sound. So, Walgreens should completely disregard race when making promotion decisions and instead pursue a good-faith strategy of identifying and eliminating potential obstacles to promotion. At the time of the filing of the lawsuit, Walgreens did not have a senior vice president of diversity, which many companies of comparable size and revenue have. Surveys indicate that, at minimum, diversity-related efforts help avoid lawsuits and litigation costs. Creating a senior executive position solely responsible for diversity and related issues would help Walgreens manage diversity in a consistent-and beneficial-way throughout the company.

Question: What type of deep-level diversity should Walgreens harness?