| Herb Stokes knows how to make diversity work for | | | | opportunity to sell his piece of the company to Stokes |
| his $6-million company. Now he's on a mission to make | | | | for $10,000. (The former Chicago Bear died in 1999 at |
| it work for the rest of corporate America as well. | | | | the age of 45.) So in 1997, Alliance established offices |
| Herb Stokes is outspoken, aggressive, and | | | | in Chicago's West Loop, a shabby neighborhood |
| controversial in his quest for diversity. He's also | | | | whose narrow streets are often blocked by trucks |
| effective One morning last spring, Herb Stokes | | | | backing up awkwardly at warehouse loading docks. |
| descended on Bob Chinn's Crabhouse, a cavernous | | | | Stokes -- a registered Republican who nonetheless |
| restaurant in Wheeling, Ill. | | | | refers to Clinton as "my boy" -- relished being an urban |
| The owner of Alliance Relocation Services LLC had | | | | pioneer at a time when urban pioneers were becoming |
| arranged to provide English-language training programs | | | | fashionable. After learning about the Clinton |
| to the restaurant's predominantly Hispanic cooks and | | | | administration's new welfare-to-work programs, he |
| busboys, and he was there to talk logistics. Before the | | | | quickly bought into the concept. By 1999 he had two |
| lunch crowd arrived, an appreciative audience of 30 | | | | former welfare recipients on his payroll. |
| employees, many of them clad in yellow T-shirts | | | | Successful welfare-to-work programs often hinge on |
| proclaiming "I got my crabs at Bob Chinn's," swarmed | | | | retention and good training, and training is a Stokes |
| around him. | | | | specialty. As quality manager and later vice-president |
| This is the Herb Stokes people love. | | | | at Allied, he had supervised the reeducation of the |
| As the meeting wrapped up, Stokes's cell phone rang. | | | | kinds of employees who were most likely to damage |
| Taking the call in an adjoining dining room, the | | | | sofas. Stokes's solution was ingenious: he ordered the |
| entrepreneur began to pace, visibly perturbed. On the | | | | construction of a full-scale model apartment with |
| line was Jorie Thompson, a principal at Grayscale Inc., | | | | furnishings that the crews would move in and out, in |
| an advertising and graphic-design company that was | | | | and out, until they got it right. |
| working on a routine $15,000 project for Alliance. | | | | Despite his training expertise, Stokes admits that |
| Stokes had hired Grayscale, in part, because | | | | learning to manage welfare-to-work employees took |
| Thompson is African American. But when it came time | | | | time. The hardest part was persuading workhorses like |
| to present the work, Thompson had sent two white | | | | VP McElhany, whom Stokes hired away from Allied, to |
| employees to Alliance's offices. | | | | be patient and make accommodations. One employee, |
| After they left, Stokes groused to his vice-president of | | | | no longer with the company, angered McElhany by |
| marketing, "Why didn't they have anybody who looked | | | | asking to leave work before 5 p.m. |
| like me -- like us -- at that meeting?" Thompson | | | | because her "brain hurt." "I told Herb that he needed to |
| subsequently explained that although her agency | | | | let the person go," McElhany recalls. |
| employed African American designers, she had trouble | | | | Stokes didn't take the advice. "Diane, here's this |
| finding skilled minority candidates. | | | | woman who has been collecting welfare and watching |
| Sensing an opportunity, Stokes persuaded Thompson | | | | soap operas for three or four years," Stokes told |
| to help him develop a youth training program for her | | | | McElhany. "Now she's sitting in front of a PC all day, |
| company. The day before the gathering at Bob | | | | entering data. You think her brain don't hurt?" Another |
| Chinn's, Stokes and Thompson were scheduled to | | | | challenge was ensuring that Stokes's welfare hires |
| discuss the program, but Thompson, who had a family | | | | didn't compromise the quality of the company's service |
| emergency, missed the meeting without calling to | | | | -- the second defining theme in Alliance's culture after |
| explain. When the subject is diversity, however, Stokes | | | | diversity. From Allied, the founder had imported the |
| accepts no excuses. | | | | idea of tying pricing to performance benchmarks, |
| On the phone, Thompson complained that she felt as | | | | which he tracks using Gallup surveys of his customers. |
| though she were "under a microscope" and even | | | | Under the system, if a client's employees complain |
| offered to resign from Stokes's account. "I was trying | | | | about Alliance's service, for example, Alliance will |
| to send him the message that he's not going to tell me | | | | reduce its bill. If the employees rave, however, Alliance |
| how to run my company," Thompson says. | | | | charges a premium. Because the movers' rate of pay |
| Later, Thompson struck a conciliatory note when | | | | is tied to the marks they earn on each move, that |
| discussing her relationship with the Alliance CEO. But | | | | quality ethos pervades Alliance. |
| Stokes still bristled. "If people want to say I'm a bully, so | | | | By 1998, Stokes had assembled an ethnically mixed |
| be it," he says. "I don't think I'm a bully -- -just adamant | | | | team for Alliance that provided top-quality service to |
| in what I believe in." Alliance moved from a tiny suburb | | | | customers. But Stokes had made little progress |
| to the inner city. 'A luxury high-rise didn't recruit the type | | | | toward his other goal -- promoting a diverse |
| of people I wanted to employ,' Stokes says. | | | | workforce in the industry as a whole. So that year he |
| Stokes's dispute with Thompson underscores how | | | | launched Alliance Training Education and Development |
| charged and complex the diversity issue has become, | | | | Inc. (ATED), a nonprofit that solicits government grants |
| even among people with similar perspectives. The | | | | for welfare-to-work training projects. Under ATED, |
| difference between Stokes and Thompson is that | | | | Stokes taught a handful of people -- mostly women -- |
| while she cares about advancing minority opportunities, | | | | how to pack goods on trucks and operate a call |
| he is fanatical about it -- both within his own company | | | | center. Former ATED students now work at several |
| and in the companies with which he does business. "I'm | | | | moving companies with which Alliance has |
| like a pit bull," he says. | | | | partnerships. |
| "When I get my teeth in an idea, I'm going to own it." | | | | Leveraging the small-scale success of ATED, Stokes |
| For Stokes, 50, diversity is more than just a noble | | | | persuaded Allied Van Lines to donate $100,000 to the |
| cause. The CEO has discovered that the louder he | | | | Welfare to Work Partnership, a nonprofit based in |
| talks about the issue, the more big companies listen to | | | | Washington, D.C. After the check arrived, Stokes's |
| him -- and buy from him. These days corporations are | | | | currency skyrocketed, and he became an |
| eager to award contracts to qualified minority-owned | | | | executive-on-loan to Chicago BizLink, one of the |
| businesses. | | | | partnership's flagship initiatives. "I think Herb's one of the |
| Discrimination lawsuits have hit such powerful | | | | best things since sliced bread," says Thressa |
| companies as Coca-Cola, Texaco, Xerox, and | | | | Connor-McMahon, vice-president of Chicago BizLink. |
| Microsoft, spurring CEOs to embrace diversity for their | | | | "His business acumen is very valuable to us." At |
| own legal protection. New census statistics reveal that | | | | BizLink, where he labors alongside executives from |
| the U.S. population is more racially and ethnically mixed | | | | corporations like Sears and Marriott, Stokes considers |
| than ever before. | | | | how best to deliver training to former welfare |
| Consequently, so are the customer bases of many | | | | recipients and other low-income workers. |
| large corporations. What's more, the federal | | | | "A lot of small-business owners don't have time to help |
| government often takes minority representation into | | | | a program like ours, because they're too busy turning |
| consideration when awarding contracts. | | | | their small business into a large business," says |
| "There was a time when I had to do a lot to explain | | | | Rodney Carroll, president and CEO of the partnership. |
| what I did for a living, but not anymore," says Maye | | | | "Herb Stokes is unusual." In another sense, though, |
| Foster-Thompson, the executive director of the | | | | Stokes is very usual. Like any other CEO, he wants to |
| Chicago Minority Business Development Council, which | | | | make money. "Economics drive this," Stokes says. For |
| introduces minority-owned businesses to large | | | | his next venture, the CEO plans to start a for-profit |
| corporate buyers. | | | | consulting company for corporations grappling with |
| With just nine employees and $6 million in revenues, | | | | diversity issues. He has already talked to AFC |
| Stokes is under no external pressure to turn his | | | | Enterprises Inc., the parent company of Popeyes, |
| company into a diversity showcase. But | | | | about setting up a training program at one of its |
| Chicago-based Alliance, which contracts with | | | | inner-city franchises and has advised Kmart on its |
| companies to move employees who have been | | | | urban staffing needs. |
| transferred, profits from its CEO's philosophy. | | | | "Everything I'm doing now is gratis because I'm |
| Customers attracted by Alliance's rainbow initiatives | | | | developing the knowledge I need to be confident I |
| include Coca-Cola, McDonald's, Popeyes Chicken & | | | | know how this works," Stokes explains. "At some |
| Biscuits, UPS, McGraw-Hill, and Nordstrom. "He has the | | | | point I'll charge a fee." But before Stokes can thrive as |
| quality, he has the service, he has the delivery, and also | | | | a diversity consultant, there's one detail he'd like to nail |
| he's doing philanthropy in the community and bringing | | | | down. |
| others along," says Brenda Dizer, the supplier-diversity | | | | Stokes's support for the welfare-to-work programs |
| manager at Nike Inc., who wants Stokes to bid on | | | | promoted by the Clinton administration has boosted his |
| upcoming contracts. "It shows he has aligned his goals | | | | profile in Washington. |
| and objectives with ours, and that really makes him | | | | In the supplier-diversity movement, minority |
| attractive." Stokes has grander ambitions as well. | | | | entrepreneurs who want to sell to big companies are |
| The CEO believes his expertise in training and | | | | first advised to seek certification, which is awarded by |
| integrating minority employees can become a viable | | | | minority-business-development councils across the |
| enterprise in its own right. Much as W. Edwards | | | | United States. Certification assures corporate |
| Deming -- whose books Stokes has studied -- built a | | | | customers that the entrepreneur is not merely a |
| reputation by championing corporate quality, Stokes | | | | figurehead at a company owned by somebody else. |
| would like to become a leading guru of diversity. | | | | So far, the Chicago Minority Business Development |
| To that end, he has begun informally advising his | | | | Council (CMBDC) has refused to certify Alliance. |
| Fortune 1,000 customers regarding their recruiting and | | | | "Political bullshit!" Stokes rails. |
| contracting practices. If his plans to launch a | | | | According to Stokes, at issue is how he financed |
| diversity-management consultancy pan out, Stokes | | | | Alliance. The CEO's former employer, Allied Van Lines, |
| says, he can go to his relocation customers and say | | | | lent him $500,000 to start the company, and Allied |
| to them, "What's your strategy in the inner city? I can | | | | agents, including Berger Transfer & Storage Inc., |
| help you with that." Recently relocated to a building just | | | | agreed to cover Alliance's accounts receivable until the |
| blocks from the notorious Cabrini-Green housing | | | | fledgling business generated positive cash flow. |
| project, Alliance has a setting that seems congruent | | | | Neither company took equity. Stokes says Allied |
| with Stokes's desire to be at gritty ground zero of the | | | | supported him because he was a quality expert, and |
| diversity movement. The building's interior, however, is | | | | because Allied CEO Mike Fergus wanted to foster |
| the picture of opulence. Stokes's loftlike office is filled | | | | diversity in the industry. An Allied spokesperson |
| with Tiffany lamps, large paintings in gilt frames, objets | | | | confirms that statement. |
| d'art, and photos of the CEO with such luminaries as | | | | Altruism aside, Allied and Berger had a financial reason |
| Henry Kissinger and Bill Clinton. The decor mirrors | | | | to back Alliance. |
| Stokes's personal fashion style. He's a peacock, | | | | Stokes's company doesn't own a single truck: it |
| typically clad in perfectly tailored suits, shirts with | | | | supervises customer service and pays other |
| French cuffs, and vintage cuff links. | | | | companies to do the physical moving. Under that |
| If Stokes is choosy about his silk ties, he is even more | | | | arrangement, Alliance retains less than $1 million of its |
| meticulous about selecting employees. The Alliance | | | | gross revenues, while more than $5 million flows |
| staff consists of five African Americans, two Latinas, | | | | directly to haulers like Allied and Berger. "It is accurate |
| and two Caucasians. That mix is no accident. Several | | | | to say that Alliance is an independent sales rep for |
| years ago, when Alliance needed to hire a | | | | Berger," says David DeWitt, a Berger executive |
| customer-service representative, Stokes says, he told | | | | vice-president. |
| one of his managers, "I want a Hispanic in here." Finding | | | | Maye Foster-Thompson, the executive director of the |
| a qualified person required more than 20 interviews, | | | | CMBDC, declines to comment on Alliance, except to |
| but the CEO never relented. | | | | confirm that the company has not been certified by |
| On another occasion, when Stokes was recruiting a | | | | her organization. A letter from Foster-Thompson to |
| grant writer for a nonprofit that he also runs, he | | | | Stokes cites Alliance's "dependent relationship" on |
| thought it would be nice to have a person from India. | | | | Allied as one of the reasons certification has not been |
| A.K. | | | | granted. "The reason I can't get certified in Chicago is |
| Hazari, a native of Hyderabad, in Andhra Predesh, got | | | | that people do not like that I got a loan from Allied," |
| the job. "When I want something, that's what I want, | | | | Stokes says. |
| and there's no discussion," Stokes says with a smile. | | | | For minority suppliers, lack of certification has financial |
| Such bald pronouncements sound provocative at a | | | | consequences. |
| time when lawsuits are piling up against | | | | By withholding its blessing, the CMBDC automatically |
| affirmative-action programs. Todd Campbell, manager | | | | bars Stokes from full membership in the National |
| of the diversity initiative at the Society for Human | | | | Minority Supplier Development Council (NMSDC), a |
| Resource Management, says that if Alliance | | | | nonprofit at the forefront of the supplier-diversity |
| "underutilized" the Hispanic segment of the labor force, | | | | movement. The NMSDC acts as a formal liaison |
| Stokes could make recruiting Hispanics a priority. But | | | | between minority-owned small businesses and large |
| turning a priority into an edict might cross the line into | | | | potential customers. Without certification, Stokes can't |
| what a court would consider discrimination, according | | | | partake of NMSDC's services as fully as he would like |
| to two employment lawyers who talked with Inc . | | | | to. |
| Asked about that analysis of his practices, Stokes | | | | Alliance has, in the past, won certification from less |
| modified his original statement, saying that he | | | | demanding authorities in Cook County and is applying |
| requested only that his customer-service hire be | | | | for certification from the Small Business Administration. |
| "bilingual" -- fluent in Spanish and English. And he insists | | | | The company has also formed partnerships with |
| that his hiring policies conform to the letter of the law. | | | | African American entrepreneurs to set up |
| Stokes's wife, Valeria, a human-resources executive, | | | | independently owned and locally certified sales offices |
| tutors him on the legalities of hiring. In addition, Alliance | | | | in California and New Jersey. (Stokes is negotiating to |
| retains legal counsel to vet its business practices, | | | | open a third affiliate, in Atlanta.) But even those deals |
| including diversity initiatives. "I'm not discriminating at all," | | | | have complicating elements. |
| Stokes says. "I made a conscious decision that I | | | | For example, Stokes says he persuaded a local Allied |
| wanted a diverse company, so I recruit from sources | | | | agent to pay the salary of one of his "independent" |
| -- employment agencies, placement companies -- that | | | | partners for the first year that the partner was |
| are going to give me diverse people." Alliance's | | | | supposedly out on his own. |
| management team supports Stokes's methods | | | | Although Stokes argues that his "30 years in the |
| wholeheartedly. "I think Herb should be commended for | | | | business" is his certification, he still wants the CMBDC's |
| what he does," says Diane McElhany, vice-president of | | | | stamp of approval. To help win it, he's paid back |
| operations. | | | | $350,000 of his Allied loan, and he hopes to knock off |
| Stokes's obsession with diversity evolved during his | | | | the remainder this year. "In a couple of months I'm |
| 23-year tenure with industry giant Allied Van Lines, the | | | | going to reapply," he says. "I think this time I'll get it." |
| only place -- other than Alliance -- that he has ever | | | | Although stokes's critics may challenge his methods, |
| worked. The CEO began his career as a laborer in his | | | | nobody seems to question his unswerving support for |
| native Newark, N.J., and remained with Allied even | | | | struggling minority business owners. For every meeting |
| when he was assigned to an office in Nebraska. | | | | in which he drums up business for Alliance, Stokes |
| But as he advanced into the management ranks, | | | | attends a gathering like the one at Bob Chinn's, where |
| Stokes noticed a disturbing trend: the number of | | | | helping minorities is the priority. In addition, Stokes |
| African Americans he saw each day kept shrinking. "It | | | | personally mentors about 10 African American |
| became apparent that there was very little diversity in | | | | entrepreneurs, including the owners of a technology |
| the company," says Stokes, who was for years | | | | consulting company, an art gallery, an Italian restaurant, |
| Allied's only African American executive. "I had a | | | | and a start-up designer of men's loungewear. He |
| responsibility to help change that." At first Stokes | | | | pushes his own customers to buy from those young |
| sought to reverse the situation by mentoring other | | | | companies and has even goaded corporate contacts, |
| African Americans who worked at Allied. But he | | | | such as Brian Lacey, vice-president of franchise |
| began to realize that Allied was not unique: the entire | | | | services at Popeyes, into reviewing business plans for |
| relocation industry had the racial makeup of an Iowa | | | | start-ups that Stokes would like to fund through a |
| lacrosse team. Stokes concluded that he could make | | | | minority-business incubator he has in the works. |
| a real difference only by starting his own company. So | | | | Such start-ups, if they are successful, will demonstrate |
| in 1995 he founded Alliance with NFL great Walter | | | | the business reasons for promoting minority |
| Payton, whom Stokes had met at an Allied sales | | | | representation. And that is critical. If companies don't |
| meeting. | | | | see diversity through the prism of profit, experts argue, |
| For two years Alliance was run out of an office tower | | | | they are likely to abandon it when times get tough. "As |
| in affluent Oak Brook, Ill., an address most start-ups | | | | the years have gone by, people are grappling to come |
| would covet. Stokes hated it. Finding employees was | | | | up with a business case to justify a diversity agenda," |
| difficult at that location, and everyone who applied for | | | | says Tammy Borman, cofounder of the Workplace |
| a job was white. | | | | Diversity Network. "The social-justice argument has |
| "A luxury high-rise didn't recruit the type of people I | | | | just not swayed a lot of people." Stokes's philosophy, |
| wanted to employ and didn't establish the image I | | | | of course, happily embraces both social justice and the |
| wanted in the industry," Stokes says. He decided to | | | | bottom line. His mission now is to convince the rest of |
| move Alliance to the inner city, where rents were low | | | | the business world that diversity isn't just the right |
| and the workforce was diverse. Payton, who | | | | course to pursue -- it's also the wise one. |
| disagreed with plans for the business, took the | | | | |