Managing Diversity in Global Companies

When a firm starts to function internationally, an understanding of culture and its impact on behavior, particularly management behavior and practices, becomes essential. Very often, people experience difficulties when they have to work in another culture because peoples’ world views and mental programs are different in different cultures. Culture has been called “the collective programming of the mind which distinguishes one human group from another” (Hofstede, 1980).

Thus, the objectives of managing diversity in organizations emphasize the appreciation of differences in creating a setting where everyone feels valued and accepted. These objectives are:

1. To monitor an organization’s success or progress in managing diversity by organizational surveys of attitudes and perceptions, among other means.
2. To create and shape the firm’s common set of values that will strengthen ties with customers, enhance recruitment, and the like
3. To resist the fear of change in the organization itself and resist the discomfort of differences among the individuals in the organization.

Even though there may be real economic benefits to expanding the world view of executives and corporations, developing recognition of the existence and benefits of diversity in global management does not come easily to US managers, who often have less exposure to multicultural realities in their workplace compared to their European or Asian counterparts.

At present, most companies remain largely indifferent to changing corporate America’s predominantly white status quo. But gradually, it is reassuring to know that some 300 or so companies that are aggressively pursuing diversity initiatives. They include companies such as General Motors and Starwood Hotels that have excelled at seeking out and doing business with black suppliers, many of which are represented on the Black Enterprise Best Companies for Diversity list of the nation’s largest black-owned companies.

To make the BE Best Companies for Diversity list, a company must demonstrate significant representation of African Americans and other ethnic minorities in four key areas: corporate procurement, corporate boards, senior management, and the total workforce. Others, such as Xerox Corp. and FedEx Express, are among the very best at bringing talented people of color into the senior management ranks of their companies, while PG&E and Marriott International are among those that have excelled at African American board representation. And when it comes to fostering diversity, corporations such as McDonald’s Corp. and Verizon are old hands (Black Enterprise, July 2005).

However, when companies decide to venture in the global arena, it is significant that the manager is reminded that the first imperative for effectively managing cultural diversity is cultural sensitivity. In fact, according to Clark (1987), one of the most recognized global brands, Coca-Cola, attribute their success to the ability of their people to hold and to understand the following perspectives simultaneously:

• Their corporate culture.
• The culture of their brand.
• The culture of the people to whom they market the brand.

When global firms, small as well as large, service as well as manufacturing, have workforces that are distributed broadly across continents, and increasingly in emerging markets of the world. They include people from many countries and cultures, speaking many languages and educated in very different systems. The challenge for diversity for them would be twice as difficult. Thus, to manage diversity, domestically or globally, Laurent (1986) recommended espousing modern human resource strategy that requires these minimal orientations:

• An explicit recognition by headquarters that its own way of managing reflects the home culture values and assumptions.
• An explicit recognition by headquarters that foreign subsidiaries may have different ways of managing people, which may be more effective.
• A willingness to acknowledge cultural differences, and to take steps to make them discussible and, thus, usable.
• A commitment to the belief that more creative and effective ways of managing people can be developed as a result of cross-cultural learning.

As companies continue to expand worldwide, human resource leaders are finding that a one-size-fits-all global solution to promote diversity that does not exist. According to Kurt Fischer, Vice President Business HR. and Diversity Officer of Corning Incorporated, HR managers often find that basic HR functions–compensations. benefits, staffing – no longer support their company’s business strategy. Leaders today are faced with the challenge of rethinking and restructuring how they will deliver HR services – and on a global basis. He suggested transforming HR globally through Centre of Excellence Approach (Stopper, 2003).

According to Fischer, the Centre of Excellence approach provides content experts within the HR organization who focus on meeting strategic business needs. For example, a company’s HR functions may be aligned with its businesses on paper but not in practice. This disconnect can be addressed through a Centre of Excellence approach, which provides content experts within the HR organization who focus on meeting strategic business needs. These experts serve as consultants to corporate business divisions and develop customised HR products and services to support business issues.

For the Centre of Excellence approach to be effective, it should map to three levels of HR transformation: strategic, operational, and foundational. On the strategic level, HR leaders must work to define key HR objectives and a new value proposition with their client business divisions–in effect, changing HR’s positioning in the organization. A non-threatening way to accomplish this task is to participate with business divisions in developing their annual business strategy, and then craft an HR strategy to help each division meet its business goals.

HR leaders must transform the organization’s HR foundation, addressing core “people” elements of its change. Flexible networks of HR staff should be established to work cooperatively toward shared workforce management goals. A formalized HR reporting and organizational relationship system should be developed, and key HR performance requirements, accountabilities, and competencies defined. This right mixture of diversity is said to provide a wide-array of solutions to various problems and situations. On the other hand, it is also a venue for introducing conflict and disagreement.

As the intense global competition zooms in largely on knowledge, creativity, and human talent, multinational firms are finding it more important to make full use of their entire workforce, tapping the creative energy and talents of all their employees. Their task is to find ways of succeeding not in spite of a diverse workforce, but because of it. At the same time, consistency is more important than ever.

The integration of activities calls for close communication and reliable interaction, whereas the presence of global customers requires a single integrated approach to product delivery.  In view of this, Beamish et al. (2003) deemed that striving for consistency and fostering diversity is a continual process. There is no final resting point where a firm attains high consistency and high diversity once and for all. When managers cannot grasp consistency and diversity in a single step; they have to continually improve both. Thus, the actual challenge for global firms lies in their thrust for consistency and then their emphasis for diversity; this is also in consideration of their commonalities and deriving the full benefits from their differences.

Works Cited

1. Beamish, Paul W., Morrison, Allen J., Inkpen, Andrew & Rosenzweig, Philip M.  International Management: Text and Cases, (5th ed.), New York: McGraw-Hill Companies, 2003.
2. Black Enterprise. The 30 Best Companies for Diversity: When it Comes to Minority Representation, These Corporations Mean Business. Earl G. Graves Publishing Co., Inc. 35.12 (July 2005): 112.
3. Clarke, Jr., Harold F. “Consumer and Corporate Values: Yet Another View on Global Marketing,” International Journal of Advertising 6, (1987): 29–42.
4. Hofstede, Geert. Culture’s Consequences: International Differences in Work-Related Values, Beverly Hills, CA: Sage Publications, 1980.
5. Hunt, James G., Schermerhorn, J. R. Jr., and Osborn, R. N. Organizational Behavior, 8th edition, New York:  John Wiley & Sons, Inc, 2003.
6. Laurent, Andre. “The Cross-Cultural Puzzle of International Human Resource Management,” Human Resource Management, 25.1, (Spring 1986): 91–102.
7. Stopper, W. G. Current Practices. Human Resource Planning, 26.2 (2003): 5.