Harvard Business Review — Sometimes the biggest issues aren’t even part of the conversation. I was speaking at The Economist’s Diversity Summit last month in London where most of the talk was about gender, ethnicity, sexual orientation and scorecards. A typical syllabus among Heads of Diversity. But a far cry from the diversity issues I hear preoccupying the executive teams of the world’s largest companies, where I spend most of my time.
As most executive teams look at their global sales and growth rates, they see a massive — and rapid — shift towards new markets, like Asia, Latin America, Eastern Europe. Over the next decade, the global economic pie will grow, and the developed world’s share of the result will shrink. “The rise of the rest”, Fareed Zakaria’s phrase, is upon us. BCG predicts a billion middle class Chinese and Indians by 2020. And it isn’t enough to keep selling Western products in Western ways to a bevy of new consumers. BCG underlines “the need for firms to adapt to local circumstances — not just in terms of what they sell but also in how they sell it.” That requires managers who understand local cultures and have enough clout to be heard so that headquarters adapt products and services. Yet most still insist on having “foreigners” adapt to “the way things are done” by headquarters.
As most executive teams look at their talent pipelines and managers, they know they are not well prepared. The leadership teams of most companies are still dominated by male home country nationals, in a 20th century legacy model of sending expats around the globe to run local operations.
How do you grow talent in China, India and Brazil? How do you attract it to your company, given that the best and the brightest will want a chance to get to the top? Does it have to pass through home country headquarters to be networked and acculturated into the current majority’s way of doing things? What languages should it speak? English is the official language of most big companies today, at least on paper. But in practice, dominant majorities usually hobnob with their colleagues in their mother tongue.
One American woman I spoke with last week told me that when she went to the annual conference of her global MNC’s top management in Germany, she was one of only a tiny handful of women. At dinner she made a determined effort to reach out and engage with her colleagues — who pointedly ignored her and continued the conversation in German among themselves.
There is resentment of course. All these foreigners. All these companies starting to push for more balance across nationalities and genders. But if more than a third of your business comes from Asia, it might help to have an Asian or two on your top teams. If university graduates are 60% female across the globe it might help to have more than a token HR woman on your board.
Many local men don’t like hearing that. They mutter about quality, compliance and competence. At every promotion cycle (usually still dominated by more dominant majority men) they mutter that the woman got promoted because she’s a woman… the Brazilian because he’s Brazilian. They argue that people should be promoted based on merit, as though the fact that these people may more accurately reflect today’s customers and sensibilities may not be a competence worth counting.
Underneath it all is fear, of course. They know that in many of the companies they work for, there are simply too many of them in management – and that the tide is turning. And the challenge for the leaders of these companies is to find a way to keep today’s majorities motivated and engaged, while bringing in the new talent they need to grow sustainably and compete in a new, multi-polar world.
It’s not impossible. But it does take leadership and strong communication — among all parties. Companies often make the same mistakes on cultural diversity than they do on gender balance: they focus too much on the minority, and ignore and alienate their majorities. Awareness building, strategic understanding and strengthening global, cross-cultural mindsets and skills are crucial.
Take the time to explain to the majority why the change is necessary. They often don’t have the big-picture view that seems so obvious to the guys at the top. And then give them the skills to manage across cultures and genders, so that they can have a role in knowledge transfer and talent development. Reward them for building more balanced teams. Don’t just celebrate the Chinese woman you finally promoted to your Executive Team. Also celebrate the Spanish guy who got her there.
Most companies are hotly debating a whole series of related challenges. How much mobility is required? Is mobility a criteria for high potential candidates, or not? The explosion of dual careers is making managers everywhere less mobile. Can you base global jobs out of non-headquarter sites? Will you have an HQ-centric model, or develop regional hubs and let local nationals run their own countries — or others? Will you introduce more short-term international assignments or get talent mobile much earlier in their careers? How about global project teams to build cross-cultural competencies and experience?
At the Economist conference in London, SHELL admitted that it had cut the number of expats in half in the last couple of years, and that it had shifted its main R&D center to Bangalore. Not to save costs, but as a talent play. It aims to be well-positioned to recruit the best engineering talent, which India is producing in numbers far exceeding the West.
The world is changing fast and it will take strong leadership to ensure that your people don’t see this as a threat, but as an opportunity for all.
by Avivah Wittenberg-Cox
Posted on January 9, 2013
HBR | Can You Push Diversity Without Creating Resentment?