Ask anyone in corporate America: When it comes to “ideas that work” in the marketplace, Microsoft Corporation is one of the most admired and emulated brands in the history of business.
And when Microsoft, acting on its overall commitment to diversity in the workplace, took on the issue of legal diversity, it brought its trademark pragmatism to bear on what has been, for the legal profession, an uphill struggle.
In 2008, Microsoft launched a groundbreaking incentive program for its top outside law firms, directly tying bonuses and compensation to those firms’ performance in meeting quantifiable diversity goals.
“One of the criticisms you hear is that lots of legal departments ‘talk the talk’ on diversity, but few show any real enthusiasm for changing the status quo,” says Brad Smith, Microsoft General Counsel and an LCLD Board member. “We wanted to create positive incentives, as opposed to simply punishing firms for not measuring up. We also wanted to create a framework for making incremental and measurable progress.”
Microsoft’s program, administered by its Department of Legal and Corporate Affairs, offers consulting law firms two ways to earn sizable monetary rewards for performance on diversity issues. A firm can qualify by increasing the number of hours spent on Microsoft business by diverse attorneys—or by increasing the overall diversity of its own legal workforce.
How’s it going so far?
“By and large, we’re pleased,” Smith says. “We’ve had a measurable and positive improvement across the board, including a 10% increase in the hours billed by diverse attorneys working on Microsoft matters.” Although overall attorney diversity remains “about flat,” Microsoft hopes that trend will change with an improving economy.
Building on the momentum of its incentive program, Microsoft has gone one step further—by tying the compensation of its own legal executives to performance against diversity benchmarks.
“We wanted to convey to our law firms that we’re all in this together,” Smith says. He hopes that the success of Microsoft’s program will encourage other clients to demand diversity in the legal firms that represent them.
“Everybody says they believe in diversity, and for the most part, they do,” says Smith. “But in the end, talk is cheap. What works is to put your money where your mouth is.”
This is the latest in a series of Ideas that Work from LCLD Members, who’ve agreed to share insights about diversifying their organizations.
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