By: Patricia Digh , RealWork
Source: Center Collection
Originally published in MOSAICS by SHRM
Published: November 2001
Learn how diversity and globalization has impacted the manner with which organizations do business. The key issues addressed include: "the business case" for diversity; overview of the American diversity model; and the potential for cross-national and cross-ethnic "borrowing" of best practices. This article will be especially useful for association professionals engaged in international activities and ventures, partnerships, strategy and organizational management.
The cover of The Economist for the week of November 27, 1999 is simple and clear: a picture of a hurricane from space is shown with three words in large print - "Storm over globalization."
The recent flurry of activity over the World Trade Organization (WTO) meetings in Seattle, WA was as much about globalization and presidential politics as it was about trade. It was as much about fear of loss and the erection of cultural barriers as it was about reality. Regardless of the focus of the protest, the meeting itself underscored the reality that businesses, both large and small, are increasingly global-whether they like it or not-and that HR professionals are increasingly required to deal not only with the plethora of domestic diversity issues that arise in our workplaces, but also with cross-border and multicultural issues as well.
Yet, the structural approaches to globalization taken by many corporations tend to neglect culture as a key variable or treat it superficially. International HR practitioners typically address global compensation, sourcing, relocation issues and even cultural adaptation at its simplest-but often there is a gap between domestic diversity practitioners and those dealing with the complexities of the global business. Often, the work of diversity professionals and international HR practitioners is not coordinated or synergistic. And in many organizations, global diversity and cultural differences are seen as obstacles to be overcome rather than as tools to be leveraged for business success.
Although more than 75% of major American companies now focus on diversity as a strategic advantage and business leverage in the U.S., there is minimal carry over internationally. These companies find themselves in the perplexing position of attempting to "roll out" overseas those diversity initiatives that were designed for a domestic workforce-in many cases without knowing why or, more importantly, how. What are the issues and questions that emerge when organizational and national cultures come into contact and when the need to capitalize on diversity poses significant dilemmas? Four key issues arise for
- What is the business case for global diversity and how is it different from the domestic business case for diversity?
- How do American value statements underlying domestic diversity efforts need to be altered to have meaning and relevance outside the U.S.?
- How well are we applying our learning in the domestic diversity arena to our efforts globally-or are we reinventing the wheel?
- Are we actively learning from other cultures or are we simply attempting to make them "more like us?"
It is vital to note that companies do not need to do business outside the U.S. to face global diversity issues. Immigration to the U.S. is at its highest point in 50 years-and the face of immigration has changed dramatically-bringing global diversity to our own backyards and providing significant challenges and opportunities to U.S.-based businesses as well.
The Business Case
The U.S. has more than $600 billion of direct investment in foreign markets. Global labor mobility continues to increase exponentially. A survey by the National Foreign Trade Council (NFTC) notes that the numbers of Americans working abroad jumped 30% in 1997. A more recent survey by the London-based Employment Conditions Abroad reported that two-thirds of companies had increased their expatriate population in the past five years and two-thirds expect to increase the population further over the next five years. Sixty percent of respondents in the Global Relocation Trends Survey (1996) increased their expatriate population since the previous year, and 62% increased their number of non-U.S. expatriates. Since the cost of placing employees on expatriate assignment is typically almost two and one-half times as much as a local national, their success in foreign cultures is financially important for the company as well. But global issues for corporations are not limited to the ranks of their expatriate population-or to cultural norms-any longer.
As noted by Nancy Adler, author of Competitive Frontiers: Women Managers in a Global Economy (Blackwell Publishers, 1994), there are two big shifts away from the past. First, previously only a very small portion of people in the enterprise needed international expertise, while "now almost every manager needs at least some veneer of international, cross-cultural competencies because they're dealing with suppliers, clients, and colleagues from various countries and cultures around the world." Second, organizations used to focus on getting a small cadre of people to learn a lot about a particular place. Now, says Adler, "you're on multinational task teams, on multinational projects...companies need global representation, people from multiple cultures who can work in multicultural teams talking about strategy, and that strategy has to be global in content."
Andre Laurent makes the following observation based on his study of multinational organizations: "Multinational companies do not and cannot submerge the individuality of different cultures. That is, strong as a corporate culture may be, the template for behaviors isn't from the company-but from the national culture." ("The Cross-Cultural Puzzle of Human Resource Management," Human Resource Management 25, no. 1, Spring 1986, pp. 91-102).
Robert Reich writes in his 1991 book, The Work of Nations, that "we are living through a transformation that will rearrange the politics and economics of the coming century. There will be no national products or technologies, no national corporations, no national industries." All this points to an increasingly complicated diversity "mixture" that American companies, their executives, and their employees are facing. In addition, American corporations increasingly feel pressure to export their focus on diversity because it has become so central to the fabric of their organizations domestically. Key to this process is the need for HR professionals and other business leaders to ask two questions: why is the diversity initiative being exported and, secondly, how should it be exported, depending on the national culture involved.
Philosophical Underpinnings May Be Different
"When in Rome, do as the Romans do" as the famous saying goes. But, while we may espouse that belief, Americans are often not culturally sophisticated or humble enough to really do as the Romans do. More often, we will work hard to convince the Romans that they have got it all wrong. We are a powerhouse of a nation, ready to show the rest of the world how business-and human rights-should work. Yet we often do so without a full understanding of the beliefs underlying our behaviors.
Before attempting to conduct diversity initiatives outside the U.S., it is vital to first understand the basic beliefs and assumptions underlying diversity work in the U.S. They include, but are not limited to, the following list:
- Human rights should be universal
- U.S. approaches to civil and human rights are more advanced o Diversity and the ability to harness different talents and strengths adds value
- Paying attention to and allocating resources for diversity affects the bottom line
- All people should be treated with equal dignity and respect
- Business has the resources and responsibility to increase justice and equality and strengthen the social fabric
- An inclusive climate/environment increases productivity and profits
- Legal compliance is mandatory and, therefore, helps to create a compelling case
- Individual needs, preferences, and perspectives are of primary consideration
There may be other philosophical underpinnings unique to your organization's culture and diversity focus-for each assumption, several questions must be asked: How might a different national culture respond to each statement? In what way, if any, would the religious, cultural, and social norms of another culture come into conflict with this U.S.-centric approach? How might we imaginatively mediate between local cultural norms and our corporate expectations, values, and norms? On which assumptions is there no room for variation?
Learning from Our Domestic Diversity Experience
Diversity "business" in the U.S. is a well-established one. Diversity initiatives have evolved over the past 20 years from a confrontational "do-the-right-thing" model to a much more ROI-focused business model. Each step in that evolution must be examined to ensure that as we address global diversity issues, we are not simply reliving that historical process.
Outlining the U.S.-focused experience of your corporation may prove useful in outlining the major learnings from the process: What has worked well, and what are some of your failures? What are the major steps of your diversity process in the U.S.? How do you measure results and how might those measures need to change in non-U.S. locations?
Learning from Everywhere
According to data from the global, four-year research project that is outlined in Global Literacies, the most globally successful companies are clearly those that have learned to be culturally confident enough to teach the world and culturally humble enough to learn from the rest of the world. These are companies actively searching the world for better practices and suspending judgment on "difference" in order to learn from it rather than try to overcome it. In addition, successful global leaders measure success in this area of cultural learning as they measure other business factors.
For example, the CEO of Switzerland-based Novo Nordisk requires his managers to "buy" and "sell" three best practices to managers in other parts of the world each year on their corporate Intranet. In such a way, he is underscoring three valuable lessons:
We must use technology to move information around the company;
We must learn from our colleagues around the globe and share information with them; and
We must measure these "soft" skills as we measure "hard" business returns, and hold people accountable for them.
In that way, his lessons are not that different from the lessons of our domestic diversity work: Culture Matters.
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