(FORTUNE Magazine) – Berlinda Fontenot-Jamerson didn't plan on spending her entire career at Pacific Enterprises when she joined the utility as a clerk-typist. In fact, she was studying to be a social worker and intended to leave as soon as she received her degree. But while doing her time at the typewriter, she realized just how good the opportunities were for African Americans right there at Pacific Enterprises. Almost 30 years later she's still saying the same thing--and managing the company's diversity programs herself.

Jamerson's longevity isn't unique at PE, a $2.8-billion-a-year energy-services holding company whose principal subsidiary is Southern California Gas Co., the largest natural-gas utility in the U.S. The company is first on FORTUNE's list largely on the strength of its success in retaining minority employees, many of whom are now part of management. One-third of the company's officials and managers and half its employees are minorities; both numbers are higher than those reported by any other company on our list. (Pacific Enterprises recently merged with Enova, another energy company; the new enterprise, known as Sempra Energy, is based in San Diego.)

Most companies with more than a passing interest in diversity focus their resources on hiring at the entry level. The greater challenge is retention--training those new employees for better jobs, then promoting them before other companies poach them. Pacific Enterprises works hard at maintaining a work force that reflects the urban areas it serves. "We have a smorgasbord of customers and a smorgasbord of employees," says company treasurer Dennis Arriola, who is Hispanic. "The best salespeople are the ones most like the customers they serve." Another reason for keeping both employees and customers happy is that a utility, unlike a bank, can't simply shutter the storefront if it's not making money. As Joe Rivera, PE's director of procurement and logistics, says, "We can't pick up our pipelines and leave if business isn't good."

PE's retention effort includes a simple but effective program known as Career Conversations. Open to any of the company's 7,100 employees, the forums feature one or two longtime employees sitting on stools as an interviewer elicits tales of how they navigated the corporate maze to land their plum jobs. Afterward, audience members pepper the subjects with questions. The recently retired chairman, Willis B. Wood Jr., offered himself for group grilling, as have many people of color, including Fontenot-Jamerson. "People asked some pretty personal questions," she says. "They wanted to know about my parents, my childhood, my first jobs in the company, and all the successes and failures I'd had. What it does is humanize the officers and leadership. When you realize you have something in common with people further up in the company, it drives home the fact that you, too, could have a shot at something like that."

Many companies on our list attempt to identify employees with potential--especially minority employees--and place them on the fast track toward management. Usually, individual supervisors nominate their own staff. Thus a kind of old-boy network could still be at work, says Anne Shen Smith, PE's vice president of support services, who was born in Taiwan. "If you happen to irritate your supervisor, you'll never surface," she says. PE decided to squash any potential roadblock by allowing employees to nominate themselves for the fast-track program, called Readiness for Management. Once employees enter the program, they take a series of self-assessment tests to determine where they need the most work. Then they complete formal training programs as well as some short-term work assignments to improve their skills.

The RFM program allows people to shine who might have been previously overlooked, but it also puts the onus on all employees to take control of their careers. "Utilities are notorious for being paternal-istic," says Shen Smith. "They map out your career for you, and when they say, 'March,' you go where they want you to. It doesn't really support creating a more competitive work force."

There's another aspect to Pacific Enterprises' career development program that is truly unusual: The company actively encourages employees to seek jobs elsewhere. It even helps them prepare for the task. "We teach resume writing and job interviewing because we want employees to be prepared to interview well for jobs in our organization," says G. Joyce Rowland, vice president of human resources. "But we also want them to see what's out there so they come back more satisfied with where they are now." Now, that's confidence. It's especially gutsy to encourage employees to test the job market now. Corporate America is starving for talent in one of the tightest job markets in a generation. Also, Pacific Enterprises' recent merger and subsequent restructuring have created all the usual uncertainty and uneasiness among employees. Headhunters usually feast on this sort of situation, but so far most minority employees have resisted the temptation to leave.

The average employee tenure at PE--16 years--is the same for minorities as it is for the entire employee pool. "I've definitely gotten restless from time to time," says Patricia Wallace, an African-American graduate of the RFM program who oversees the company's call centers. "Then I ask myself what I value about this place, and I realize there has always been a commitment to continuous learning and an effort to make sure the population of workers reflects the communities we serve. I know working here is probably as good as it gets."

A diverse work force tends to beget an even more diverse work force. People stick around, then throw the rope back for others; the longer everyone stays, the more attractive the company becomes as a potential employer for others. Like Tom Sayles. He was secretary of business, transportation, and housing under California Governor Pete Wilson from 1992 to 1993. When Sayles, who is black, was ready to return to the private sector, he had plenty of options. But he had no interest in being someone's diversity poster boy, so he looked for a company where he wouldn't be alone among senior managers. He joined PE's Southern California Gas Co. division as vice president of public affairs. "A lot of companies have one black person they champion every time the issue of diversity comes up," Sayles says. "This is 1998, and the notion of tokenism is getting pretty old. We've gotten beyond that here, and I'm proud of it."

--Ronald B. Lieber

REPORTER ASSOCIATE Lixandra Urresta