Shift thinking: Rx for Texaco and other global enterprises.

There are three obvious lessons to be learned from the Texaco saga now unfolding on the American stage. First, there is a wide gulf between the official policies of an organization and how its people behave in the trenches and executive offices. Second, diversity in its U.S. context is the unfortunate prisoner of EEO definitions at a time when such language no longer fits the reality of global economics. Third, best-practice management is gaining ground and damage-control exercises are fast becoming a high art form. Not so obvious is a prescription for what the private sector can do in the next five years to leverage human equity.

From his White Plains, N.Y., office, Texaco chairman Peter Bijur characterized the discriminatory behavior of a handful of past and current officials as "representative of attitudes I hoped had disappeared long ago from our landscape." Company lawyers settled a pending 1994 racial discrimination lawsuit for $176 million, although the suit was originally brought for $520 million. "It will be cheaper to settle this suit than to prolong it," Rev. Jesse Jackson had told Bijur, threatening consumer boycotts when audiotapes brought by the plaintiffs into Federal District Court became public. Texaco executives had, indeed, belittled minority employees with racial slurs and discussed destroying documents subject to legal discovery requests.

The 1994 Roberts v. Texaco lawsuit did not stand alone. Publication of the audio transcripts supported an Equal Employment Opportunity Commission report that blacks who sought promotions at Texaco from 1992 through 1994 were selected at significantly lower rates than those of their non-black counterparts. The Office of Federal Contract Compliance had, in 1994, found sub-standard treatment of females. And, in 1995, a Los Angeles Superior Court jury awarded $20 million to a Texaco credit manager who had not been promoted because of her gender.

The 1993 annual survey conducted by Charles Mann Associates for Mobil Corporation showed Texaco well behind industry standards. Studies by Progressive Management Consultants had shown that Texaco was doing the least with regard to making sure that minorities and women were recruited, mentored, and retained. In 1990, a U.S. Labor Department audit found Texaco lagging on minority representation at management levels.

Such findings and a history of glass-ceiling …