In the case: "After settling a highly public $54 million class-action lawsuit, the Dennys restaurant chain made a miraculous turnaround. How did it do it? What programs did it put in place to effect such rapid change in such a large organization? Ray Hood-Phillips, chief diversity officer, outlined the steps Dennys took to transform the embattled company into a model for inclusion. The key, she said, was taking a holistic approach to diversity making both cultural and structural changes.

Dennys and its parent company Advantica first sought to change the culture of the company through intensive diversity training. Everyone, from the board of directors to every cook, hostess, and server, was required to participate in varying levels of training. Servers and cooks, for example, were required to watch a video on diversity, while the board of directors received a full day of training. Restaurant managers received the most extensive training: two nonconsecutive days of training lasting seven to nine hours each. The training covered diversity awareness and diversity skills. At the peak of its implementation, there were more than 100 certified diversity trainers on staff. That number has now been reduced to roughly sixty-six trainers to handle new hires throughout the system.

Then the company looked at its structureits people systems, as Hood-Phillips calls them: the way Dennys hired, fired, developed, and promoted people. After analyzing their policies, Dennys realized they had unwittingly created a system-wide diversity vacuum. Most corporations have barriers in place and they dont even know it, Hood-Phillips said.

In Dennys case, they found that their recruiting practices were partly to blame. Dennys executive recruitment firms had had contracts with the company for ten to twenty years. Many of these companies had their own diversity issues as a result of their network base. White males, and rarely white females, were always presented as candidates for employment. So Dennys hired firms owned by African Americans, Hispanics, and women to take advantage of their inherently diverse networks. All of us operate in our own cultural silos, said Hood-Phillips. The goal is to recognize the limitations of our own personal surroundings and to find ways to reach out to people with entirely different cultural surroundings.

Hood-Phillips employed many of these same tactics during her tenure at Burger King. For instance, Burger King used to recruit students from the top ten schools in the country. On the surface, this sounded like a good plan. But these schools have very low minority representation, usually less than 10 percent. So the chances of recruiting a minority dropped precipitously at the outset. Couple this with the fierce competition for students at these schools, and Burger King was often left empty-handed. Historically black colleges and universities, on the other hand, produce 75 to 85 percent of African-American business and engineering professionals in the United States. If you arent recruiting from these schools, Hood-Phillips said, you arent even in the game. Dennys then evaluated its performance appraisal system. Previously, there was no value placed on diversity, and no incentive for managers to hire diverse candidates. So the company instituted a process that evaluated ten core competencies, one of which was valuing and managing diversity. In addition, the company tied 25 percent of senior managements bonuses to the number of women and minorities in their divisions. As a result, approximately 50 percent of Advanticas 46,000 employees are minorities, and not just in entry-level positions; a full 32 percent of its supervisory positions are held by minorities. The icing on the cake? Fortune magazine has named Advantica the Best Company in America for Minorities two years in a row.

Advantica has also made huge strides in supplier diversity. In 1992, none of its supplier contracts were held by minorities. Not one. This year, the companys spending with minority suppliers reached id=mce_marker00 million, which amounts to 17 percent of the companys supplier purchases. To put this in perspective, this is three to four times the level required by the National Minority Supplier Development Council to reach World Class supplier diversity status.

Dennys was very aggressive in its franchise sales division as well, where the company had succeeded in recruiting only one African-American franchisee in 1993. Merit increases of franchise sales managers were tied to their ability to recruit and retain minority franchisees. In 2002, the number of African-American franchisees has jumped to sixty-four. And minorities now own roughly 42 percent of the companys franchised restaurants.

As you can see, Dennys took a very deliberate approach to changing the face of the company, putting systems and incentives in place that keep diversity top of mind at all times. This approach could not have succeeded without the complete support of upper management. Much of the credit for this support goes to Advanticas former CEO Jim Adamson, who refused to allow the company to explain away its discriminatory practices with excuses.

In addition, Dennys did not relegate diversity issues to the sole realm of human resources. Diversity shares the stage equally with other divisions of the company, and sufficient resources are dedicated to diversity issues and interests to maintain the positive momentum gained in the last several years. For instance, Advantica has pledged to donate id=mce_marker million a year to human rights or civil rights organizations. This year, the company will contribute to the National Civil Rights Museum in Memphis through its Reignite the Dream Campaign. For every Dennys Grand Slam breakfast sold, Dennys will donate id=mce_marker to the Reignite the Dream Fund. Started in January, the company had already raised more than $400,000 toward its id=mce_marker million goal.

This dedication to diversity has paid off. According to their latest study, African-American traffic in Dennys restaurants increased to 61 million visitors in 2000, from 51 million in 1998. In addition, sales reached a record $2.23 billion, proving once again that companies can indeed benefit from paying attention to diversity. Given the right attention (and incentive), corporations can find quality minority and women talent, said Hood-Phillips. Minorities have always been out there, she said. Companies just need to re-evaluate their methods for finding them.

4. How can Denny's and its HR team support DEI in the long-term?