How CVS Caremark CEO Larry Merlo Emphasizes Diversity from the Outside, In
Larry J. Merlo has a few words he uses a lot lately. One of them is “innovation.” The other is “reinventing.” And the two, he explains, are closely aligned with CVS Caremark’s diversity management strategy.
To understand how is to appreciate just how much the business has changed in the last several years. Here’s the short version: After a merger of equals in 2007, the retail pharmacy chain and the prescription benefits management business combined to form an entirely new kind of health care company. There were critics who said the marriage was ill advised. Others even went so far as to speculate that the company would eventually break up. But none of that happened. In fact, the “pharmacy innovation company” is thriving.
Merlo believes the new company’s success is attributable to its commitment to serving communities, rather than markets, and to a diverse workforce capable of turning extreme change into unquestionable success. To demonstrate CVS Caremark’s commitment to health care, earlier this year Merlo announced that the company’s 7,600 CVS/pharmacy locations would stop selling cigarettes and tobacco products by October 1, 2014. Merlo said the move was “the right thing to do,” considering the company’s expanding role in the health care landscape.
“I am convinced where we are today as a company has a great deal to do with two things: One, that we work very hard to understand and serve the communities—all of them—within which we do business; and two, that our employees are a diverse reflection of our customers,” Merlo said. “Beyond being simply the right thing to do, that diversity—and our ability to manage and leverage it—has a positive impact on our success. One size does not fit all, not in terms of our company culture and not in terms of our customer, patient, and client base. Our unique business model complements this complexity; everything we do is diverse by design.”
Innovation is thought diversity
The company didn’t want to just check the box off on traditional “head count” diversity. Instead CVS Caremark has gone beyond the expected hallmarks of a typical corporate diversity strategy—race, gender, sexual orientation, etc.—and taken great care to weave into the program’s fabric the idea that diversity must also be an ongoing appreciation of differences in thought, and a willingness to recognize that even disagreement can be extremely productive. Everyone is given
Merlo points to the company’s intranet, which is more a community than a run-of-the-mill corporate web portal. Called MyLife, the site features corporate news, but also allows employees to comment on every post, even if some comments tends to be critical in nature.
“Larry is about letting employees bring their full selves to the table,” said David Casey, CVS Caremark’s chief diversity officer. “The MyLife site is a digital reflection of our company’s philosophy around individuality. Be who you are and, while we’re at it, let’s talk about how that impacts your career and the company’s success.”
It’s anecdotal, Casey says, but he and Merlo believe this approach has helped CVS Caremark innovate and made it easier for the company to announce its new
purpose in 2012 (They’re “helping people on their path to better health.”). A diverse corporate culture, so goes the theory, is less wed to the status quo and more willing, able, and committed to exploring change.
Casey tells a story about CVS/pharmacy’s 2008 acquisition of Longs Drugs in Hawaii. At the time, employees of the chain wore Hawaiian shirts, and there was reflection back at headquarters in Rhode Island as to whether store employees on the islands would adopt the chain’s standard uniform or continue to wear the brightly colored cultural icon.
Merlo, who was president of CVS/pharmacy at the time, allowed the shirts to remain a fixture of the newly acquired chain.
“When I heard that story, which also included our preservation of the traditional blessing of the Hawaiian stores, it didn’t surprise me one bit,” said Casey. “He gets it. And it is that cultural appreciation, from the top down, that has enabled us to not just talk about diversity, but to actually live it—in how we value employees and in what we deliver
Living the philosophy
Under Merlo, who became CEO in March of 2011, the emphasis on the importance of diversity has continued to increase. Diversity is emphasized during new-employee training and in subsequent class offerings. The company also has 12 national Colleague Resource Groups (CRGs) with over 40 chapters, including those founded by professional women, Latinos, African Americans, Asian Americans, veterans, LGBT employees, and, most recently, by millennials. The value the company places on these groups is perhaps underscored by a recent decision to have all CRGs sponsored at the senior executive level. In fact, Merlo is the sponsor of one of the company’s most active CRGs, the Women’s Success Network, which boasts more than 1,200 members nationwide.
“We support and encourage a healthy workforce, so when a group of colleagues wanted to start a group around physical fitness, we said ‘of course,’” commented Lisa Bisaccia, senior vice president and chief human resources officer for CVS Caremark. “It’s completely in line with the kind of environment Larry fosters, one in which colleagues coalesce around what matters to them, and are given the opportunity to turn that coalescence into a company resource.”
It seems that decision is in alignment with Merlo’s chairmanship of the Diversity Management Executive steering committee, which ensures high-level oversight of the company’s Diversity Management Leadership Council. The Council is made up of senior leaders throughout the company who are charged with ensuring that CVS Caremark is not only embracing diversity internally, but also serving multicultural communities and customers, and developing a multicultural supply chain.
By all accounts, that structure seems to be bearing fruit in terms of the company’s offerings. There are the quiet but significant changes, like the CVS.com webpage being launched in Spanish, or the ever-increasing list of multicultural products being rolled out in CVS/pharmacy stores across the country, including the launch of Latina icon Salma Hayek’s beauty line. Or the growing participation in the Veteran’s Advantage discount program.
And then there is Project Health, a program aimed at providing millions of dollars of free health services and health insurance information to multicultural communities in major US cities, such as Miami, Los Angeles, and Washington, DC. The program, which encourages preventive health care in multicultural communities, screened more than 100,000 people in 2013 alone. Project Health attracted the attention of local and state lawmakers last fall. In fact, many visited the Project Health events in recognition of the health disparities that significantly and disproportionately impact diverse populations—and to acknowledge the vital role CVS Caremark is playing to help their communities.
“Project Health plays to our strengths,” said Merlo. “I think it, and programs like it, reflect all the progress we’ve made internally with diversity up to this point. Serving different communities is not a heavy lift for us, because we are just as diverse.”
Casey agrees and says he is excited at the prospect of going even further. The company remains a key supporter of the National Urban League, the American Society on Aging, and the Hispanic Heritage Foundation. It has also recently stepped up efforts to further diversify its various supply chains, and continues to sponsor workforce programs that assist those in multicultural communities find not just jobs, but careers. He remains confident, however, that CVS Caremark will go even further—and he specifically cites one reason:
“When you have a CEO who fundamentally believes in the power of our differences, and is willing to accept and embrace the tensions and complexities those differences inherently pose, the possibilities are limitless,” said Casey. “Larry Merlo isn’t interested in turning our diversity efforts into a tagline. He’s interested in recognizing that diversity is a resource that will help us continue to reinvent pharmacy care—for everyone.”
While CVS Caremark has worked diligently to define and implement its diversity management strategy in recent years, there is still more work to be done. The company is committed to enhancing and evolving its approach to managing diversity—both internally and externally—to meet the ever-changing needs of its colleagues, clients, and communities.
“Our diversity strategy is a work in progress,” said Merlo. “We’re proud of the gains we’ve made to date, but our journey is far from over. Celebrating differences and similarities among our colleagues, customers, and communities is imperative for our business to continue to thrive, as well as to live out our purpose—helping people on their path to better health.”