Fixing diversity-challenged companies: corporations learn the difference between minority representation and true inclusion.

Two years ago, at a professional meeting, a fellow stood up and said, 'I'm trying to figure out how to retain minorities and women,'" recalls R. Roosevelt Thomas Jr., founder of The American Institute for Managing Diversity and author of Building the Promise of Diversity (AMA-COM $27.95). "It was like I had gone hack about 20 years when you used to hear that all the time."

Why do diversity experts like Thomas feel trapped in a time warp? Because most corporations have merely replaced the term "affirmative action" with "diversity." Senior management hasn't changed the mindset of employees or modified company culture. So while diversity may be embraced at the top, most executives still grapple with how to actually manage the process.

In order for organizations to reach the next level, they have to admit they're diversity-challenged. Many don't really have a full grasp of what diversity means or may look like. And because most diversity efforts are focused on race and gender, it's often compared to familiar processes of the past.

Joe Watson, CEO of Strategic Hire, a Reston, Virginia-based diversity consulting firm, explains, "Most people, particularly rank and file [employees], have been through diversity training that often lumps together EEO education or affirmative education with sexual harassment training. And diversity gets painted with a broad brush."

When it comes to diversity, managers must focus on more than just the number of minority hires because such figures may not provide an accurate metric for success. "Society wants to look at your organization and see a workforce that reflects the population of the country, but you really don't know how great a job I've done creating a diverse workforce," asserts Thomas. "Most of the time when people talk about diversity, what they are really equating it with is representation."

Frances Kendall, an organizational change expert and consultant, adds, "Diversity is a word that has come to mean what people want it to mean. Unless they say [they're] looking specifically at racial diversity or gender diversity, many people either waffle on it or act as though it has the same meaning for everybody and that's problematic."

Thomas argues that, technically, you can have a diverse workforce with very little racial and gender representation--that is, if one considers diversity of thought and ideas. In fact, he says, a staff of all white men or all black people could represent diversity: "That's why you have to specify what kind of diversity you're talking about."

Many companies have also developed "diversity fatigue," says Watson. "Someone at the senior executive level thinks diversity is a great idea. There's this push--events, posters--that lasts for a year or two and then it goes by the wayside. Folks stay up late at night watching CNN or Nightline and decide, after they see a story, that they need to do something, and then it becomes energized yet again."

Diversity practiced in this manner has very little impact on these corporations' bottom line. To change this cycle, experts say top management must clearly distinguish between preferences--hiring people who make managers feel comfortable, and requirements--choosing team members who could change the landscape of its business. Overall, most companies still hire based on preference and, in turn, miss out on real business opportunities. "You want disparate ideas on the table," says Watson. "You want to go through all the what--if scenarios--not to a paralytic point but it's a healthy [process] ... That's where the innovation and creativity came from that fueled some of the greatest advancements in business. When you have different thoughts you're going to make better decisions."