Inside Denny’s Decades-Long DEI Journey

Denny’s committed to improving its diversity, equity and inclusion practices in 1994 after settling a discrimination lawsuit. Since then the organization has worked to improve in three areas: talent (by tackling bias in hiring, broadening its recruitment efforts, and building the promotion pipeline); supply chain (by seeking out minority-owned providers of goods and services); and continuous improvement (learning from outside partners’ expertise).  In the wake of a racial reckoning in the United States, other companies will need to get equally serious about their DEI efforts.

After the killings of George Floyd, Breonna Taylor, and Ahmaud Arbery in early 2020 and the resulting protests against systemic racism and demands for police and political reform, many corporations pledged to support diversity, equity and inclusion (DEI). According to research from Bloomberg, 87 companies made statements on racial justice after Floyd’s murder. Of these, nearly two-thirds pledged to change their hiring practices and half committed to improving diversity among managers and executives. Now corporate America must deliver on those promises.

Whether you’re just now starting this journey or refreshing an existing DEI strategy, pack a bag, download your favorite podcasts, and don’t forget your toothbrush. It’s going to be a long trip.

Ours began in 1994, when Denny’s settled a lawsuit for discrimination in some of our restaurants. We don’t believe in hiding from this shameful part of our history. It is most productive to discuss it openly and honestly. By sharing the steps we’ve taken to rectify past mistakes and become what we hope is a model organization for DEI we can hopefully help others do the same. We’re not perfect, and we never will be, but every day we work to do better in this area and live up to our as aspiration to be “America’s Diner for today’s America.” We’ve learned a lot over two and a half decades of doing the work, and we want to share those lessons.

Building a Diverse Workforce

To be an impactful DEI practitioner in 2021 and beyond, your workforce must be diverse at all levels. For Denny’s, that means representation everywhere from our board of directors to our franchisees to our restaurant teams.

Multicultural groups are represented by two-thirds of our employees, including half of those at restaurant management level. Our board is 55% people of color and 44% women. We can still improve, of course. For example, our officer team of 20 remains mostly white men, comprised of 15% people of color and moving shortly to 20% people of color. But we are building a more robust and diverse pipeline for future promotions to our most senior levels. Several years ago, we set targets to hire 50% women and 40% people of color at the director level and above and have achieved this mark on average for several years in a row. This effort is complemented by annual pay equity checks to ensure equal compensation regardless of gender, race, sexual orientation, or any other protected basis.

How did we do it? By tackling biases and expanding our search efforts. For example, there is  fascinating research on gendered language in job descriptions. When we started looking at our postings through this lens and tweaking them to be more gender-neutral, we opened doors for candidates who otherwise might not have been motivated to pursue those roles.

We also worked to reduce or eliminate affinity bias, the desire to work with someone who looks, thinks and acts like you do — which is often coded as a “culture fit.” One strategy on this front was to diversify our recruiting teams and hiring managers first. We also shared Francesca Gino’s research and insight on the need for “rebel talent” — those who refuse to conform. We helped those in decision-making roles to understand how diversity of experience, background, and thought help a business to innovate and grow.

We have found huge value in promoting people from underrepresented groups from within. For outside hires, we expanded our views on the talent pool. Too often we see companies claiming that there are simply not enough qualified candidates of color. This is unequivocally false. For example, Kauffman Fellows put out a great piece of research highlighting the discrepancy between working-age Black and Latinx populations and their representation in startups. At Denny’s, we’ve found that there is tremendous value in forming relationships with higher education institutions and organizations, including Historically Black Colleges and Universities (HBCUs), The Hispanic Association of Colleges and Universities (HACU), junior colleges, and trade schools.

Creating an Inclusive Business Ecosystem

It’s also important to have a diverse supply chain. Today’s consumers hold companies accountable not just for who they hire but with whom they do business. And partnering with companies owned by multicultural groups, including people of color, people with disabilities, veterans, women and/or members of the LGBTQ community, leads to the same kind of innovation, growth, and outperformance you see from a diverse employee base. In fact, some of our most popular menu items are a direct result of our diverse suppliers introducing us to new products and flavors. These include our classic pancake syrup, our breaded boneless wings, and our Honey Buttermilk Chicken Tender Sandwich. The business case is clear: Hackett Group’s 2017 study showed that companies that don’t have diverse suppliers are more likely to suffer revenue losses.

With an inclusive supply chain, you also create a direct investment pipeline to the communities your DEI strategy is designed to benefit. Your business partners can expand and hire additional staff themselves, creating a virtuous cycle. Denny’s has invested more than $2 billion in underrepresented suppliers since we started our program in 1993 and we routinely hire local, minority-owned small businesses and entrepreneurs as consultants.

Partnering with Others

For every lesson you learn in DEI, there are two you still need to pick up. So, no matter how well you’re doing, you must also acknowledge the gaps. While we strive to be a leader on these issues in the corporate world, we have forged partnerships with organizations focused on racial justice as well as individual civil rights leaders.

When we first partnered with the late Coretta Scott King, we helped raise money for the Reignite the Dream Fund and contributed to the expansion of the National Civil Rights Museum. But she also helped shape the corporate values that Denny’s holds to this day, including our “Non-Negotiable Rules to Live By” which inform our training, customer service, and workplace culture. And she introduced us to partners such as the late NAACP Chairman Julian Bond and the Southern Christian Leadership Conference and National Urban League President Hugh Price, among others, to help us identify new franchisees, new suppliers, and best practices on enhancing our workplace culture. We recognize the need to be constant learners if we are to make continued progress. These conversations help shape strategy and turn words into action.

Companies must also use their platforms to help others. Philanthropic efforts improve employee morale, boost recruiting and retention efforts, and communicate to consumers that your organization is interested in leaving society in a better place than you found it. When donating, you should think and act with strategic intention, choosing causes that match your brand purpose and serve diverse communities. Our purpose at Denny’s is feeding people, which includes nourishing bodies, minds, and souls and extends beyond our customers. That is why we work with No Kid Hungry to raise money to help end childhood hunger in America and St. Jude to help find cures for childhood cancer and other life-threatening diseases and why we created the Denny’s Hungry for Education™ program to provide academic scholarships through our diverse national partner organizations including HACU, USPAACC, Tom Joyner Foundation, NGLCC, and Partners for Youth with Disabilities.

An Ongoing Journey

DEI is a long trip because the goal is always improvement and forward progress, not to find a comfortable stopping point. Leaders in this space need to be comfortable consistently critiquing themselves and looking for holes in their strategy or its implementation. Just recently, we analyzed our own program and laid out a plan for the next five years to make progress in all the areas we’ve outlined above.

To ensure accountability, we have set specific goals and 10 DEI Council Members along with 10 senior leaders are responsible for delivering against them. They are tasked with reinforcing buy-in from leadership, including the board of directors, building safe and collaborative spaces for employees to have tough conversations, and measuring our success.

Each of the six Business Resource Groups we offer — employee-led, self-directed volunteer groups intended to promote DEI within Denny’s — is chaired by a senior executive or vice president who is either a part of, or has direct access to, our C-suite and board. Without that element, we risk employees feeling like they are shouting into the void — venting rather than using their voices to constructively create change.

We strive to judge progress through data, not anecdotes. Establishing transparent key performance indicators and creating measurable goals like diversity benchmarking and supplier diversity targets creates motivation and accountability at both an individual and organizational level.

The Time to Act is Now

Last year was a wake-up call for the United States, the force of which was felt across the business community. According to the Axios Harris Poll 100, which looks at drivers of corporate reputation, 81% of Americans agree that large companies, with resources, expensive infrastructure, and advanced logistics, are even more vital now to America’s future than before the pandemic. 2021 is no less pivotal a year — especially for diversity, equity and inclusion. Employees, customers, partners, and investors expect organizations to make more and faster progress. It’s time to figure out how your organization can play a bigger role in creating a more equal and just society.

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