1995 Global Cultural Diversity Conference Proceedings, Sydney
Diversity Pays: the Competitive Advantages of a Culturally Diverse Managerial Team
Mr Hari Bedi
Writer and Columnist, Hong Kong
The strengths most companies used in the past in extending their businesses across national borders were mainly in the areas of technology, finance, and marketing. Today the most important edge they can have over their competitors is their competence in managing diverse human resources.
Now a company is no longer considered global merely because of the geographic spread of its business and investments or even its human resource diversity. Simply having 35 different nationalities on its pay roll does not make a company global. It must possess the ability to use the unique qualities of its employees worldwide in a way that together they are stronger than as separate groups.
Its success depends upon how broadly it defines diversity and how well it is able to manage it. For instance, does its management believe in bridging differences and looking for synergy? Does the management only tolerate differences in culture and ethnicity or is it prepared to go beyond that and honour and encourage differences of gender, perspectives, personality, style, values, and feelings. A company cannot be considered global if it grinds its diverse human resources into corporate uniformity.
l. Individual Relationship
So the very first advantage of consciously promoting real diversity within an organisation is that you have made a start to foster a trusting, interdependent, reciprocal relationship among individuals. It helps to discard old fears and stereotypes. It creates an emotionally healthy, multicultural work environment.
2. Organisational Relationship
The second advantage is closely related to the first. Once a company has been able to promote an atmosphere in which individuals relate to each other in a creative and productive manner, it is easier for it to promote healthy relationship between different functions or different parts. It finds it easier to cope with changing boundaries and to deal more effectively at local, national and international level a quality that is critical in the context of global competition.
It's futile for a company with a single culture top management team to try to make people in its far flung operations feel that they are part of a worldwide team. These employees may be the recipients of global pressures for quality or cost improvement but they never feel they are fighting a worldwide cause. That can only happen when they see some familiar faces on the global management team.
Decentralisation is not diversity. Only certain kinds of decisions are ever decentralised. Often operations in many companies are being decentralised at the same time that global control is being centralised. Policy is basically formulated and handed down by the parent company which controls its subsidiaries through control of capital expenditures, products, and operating budgets.
3. Creativity
Thirdly, individuals, groups, and even nations decline because they become hidebound. They reject new ideas simply because they are new. Diversity removes mental blocks in the organisation and encourages receptivity to new and unfamiliar ideas. It makes managers see people with differences adding value to the organisation rather than taking something away from it. It motivates employees to use their talent to the full. Most innovative and creative teams are heterogeneous.
4. Planning
Another advantage of a diverse managerial team is in the excellence of marketing and planning. No single group can market or plan successfully on a global scale. International dialogue and debate and synthesis of various approaches is needed. How can a company be customer-led if its global marketing strategy is devised by a single ethnic group? Cultural intuitiveness can sometimes point us towards a better marketing or planning path than computer data. Contrarians can often help to put things in a more rational perspective.
There are risks if sales targets are set by a group of people or management unfamiliar with cultural differences. The chairman of an American medical equipment and optical products company recently visited its Asian regional office based in Hong Kong. In an inspiring message to employees, he announced that the company had set a target of 15 per cent sales growth for the region, especially for China. A few employees looked at each other but no one raised a question. They didn't want to be discourteous to the chairman, especially as they treated his target only as an encouragement to do better. But the number was included in the company's worldwide projected sales. The following year the sales did not materialise and the company's stock prices fell sharply.
5. Cost Advantage
The fifth advantage of diversity is that it is cheaper than assigning people from the headquarters to all parts of the world. Global companies have for long held the view that a person with certain skills could be an effective manager anywhere in the world. That assumption produced several spectacular failures. So some companies began providing basic cultural orientation to people they planned to send abroad. While that is helpful, many companies now find that the cost of sending people abroad is becoming prohibitive. It is cheaper to develop global teams than global managers.
6. Decision-Making
The sixth advantage is that the decision-making process in a global company run by a diverse managerial team is faster. There is less tension between the corporate, subsidiary and the CEO perspective. Far less time is wasted in demonstrating who is right or who should decide what. The issues of differences are managed well.
The product manager for The Global Toaster sitting in his office in Darien, Connecticut, charged with global responsibility is an old organisational fiction. It consumes too much time in making decisions. Truly diverse companies are more realistic in not charging any mortal manager with global responsibility. Their man in Singapore or in Tokyo enjoys more corporate clout than the fictional global manager at the head office.
The old organisation required experts in traditional business skills. The new organisation is part of an endless adaptive process demanding a variety of expertise. Management teams need the skill to deal with the unexpected in a fast-changing environment. Diversity enhances organisational flexibility.
7. Competing for the Future
The seventh advantage of a culturally diverse company is improved future competitiveness. As companies compete for the future they realise that it is quite different from competing for the present. The present is primarily concerned with market share. The future involves a search for opportunity. It deals with new products and new services to better the human condition. It calls for a high degree of empathy for basic human needs which a diverse managerial team is better placed to handle.
8. R&D and Design
Another advantage is in the management of Research and Development and Design functions. A scientist or an engineer working on a project with his focus limited to only one country can miss out on other possible applications of the process or the product elsewhere in the world. A design team with only one perspective may produce products suitable for one culture but a diverse team could produce adaptations for a much wider customer base.
9. Instrument for Change
The ninth advantage is that the process of managing diversity acts as a powerful instrument for change. A company today cannot be a meaningful player without having a global outlook. In this respect we lag far behind the West in Asia. Asian companies lack experience in operating internationally and managing cross-culturally. But with increasing globalisation and freedom of market access, they are becoming aware that a formidable task of turning smokestacks into global corporations lies ahead.
With expansion abroad, managers with an international outlook or overseas experience are at a premium. Schemes have been established to cultivate internationalism such as Samsung's project to send junior managers abroad for a year with US $50,000 not to work but to broaden their outlook. In a bid to give its 2000 managers a global mindset by l995 Samsung has earmarked US $100 million for this program.
Overseas Asians, especially those settled in the US are much sought after as middle managers. There are also some cases of Asian companies hiring foreign trainee managers and putting them into their own domestic training system. Stan Shih, chairman of Acer, Taiwan's best known personal computer maker, sees development of international business managerial team as his biggest management challenge.
There is a tremendous increase in the number of expatriate Asian managers working for Asian companies. When these managers are assigned outside their own countries, they face a situation quite different from Western expatriates. The latter have been dealing with employees in Asia for a long time. Their task was relatively simple. They were secure in the knowledge that they represented the dominant culture of the twentieth century. They found local managers eager to adjust to them.
But the new Asian expatriate managers have to assimilate themselves to the local culture to a much greater degree than the European expatriate manager had to do. However, there is a certain similarity of core cultural values and it is easier for them to acculturate in the countries to which they are assigned. These managers could be trail blazers for regional and global expansion.
Meanwhile the role of Western expatriate managers is changing rapidly from bosses to resources. Companies now give more thought to the type of person being assigned to Asia not only from the viewpoint of business need but on grounds of social and cultural acceptability.
Moral Dividend
Finally, diversity yields a high moral dividend. Most of the talk about the global village takes place in the context of trade and investment. We hear about the developing countries growing 70 per cent faster than the industrial countries, their manufactured products accounting for 60 per cent of exports compared with only 5 per cent 40 years ago. Also in the next 25 years there will be more of them than today's industrial countries on the list of the world's 15 biggest economies.
But the cultural aspects of this shift in the world's economic balance are all but ignored. The biggest benefit to the companies practising real cultural diversity lies in equitable and fair treatment of the people who are going to manage the global village. In an organisation that values diversity there is neither a mainstream privileged group nor a dominant home culture.
It is difficult enough to be sanguine about the world's future managed by makers of mayonnaise, soap, and aspirin. It is impossible to view it with any hope if these people don't value diversity. The global corporation, with its simple overriding goal of world-wide profit maximisation, is poised to colonise the future. But its vision so far is without ultimate hope for a majority of mankind. Its search for economic efficiency challenges traditional loyalties to family, town, and nation. The pervasive sense of meaninglessness in modern life can in part be attributed to the values of the huge corporations. If the global village is to become a happy place, it will have to be managed by a diverse managerial team.
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