Recommendations on Creating and Managing Inclusive
Transcription
Recommendations on Creating and Managing Inclusive
GLOBAL AGENDA COUNCIL ON TALENT AND DIVERSITY RECOMMENDATIONS ON CREATING AND MANAGING INCLUSIVE WORKFORCES As of 26 October 2009 Ashridge Business School http://www.ashridge.org.uk The views expressed in this publication do not necessarily reflect those of the World Economic Forum. World Economic Forum 91-93 route de la Capite CH-1223 Cologny/Geneva Switzerland Tel.: +41 (0)22 869 1212 Fax: +41 (0)22 786 2744 E-mail: [email protected] www.weforum.org © 2009 World Economic Forum All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying and recording, or by any information storage and retrieval system. Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces Contents Foreword 4 Introduction 5 Highlights from the discussions on talent and diversity in 2008 and 2009 6 Executive Summary 7 How can organizations connect demand for diversity with talent management? What is the compelling rationale for linking diversity and talent management broadly defined? 8 What are the benefits of diverse talent pools? What are the negative consequences of badly managed diversity? What are best practices? 11 What are the implications of the current economic environment and rising unemployment on workforces’ diversity? What is crisis-related “diversity to dos”? 15 What policies in the areas of education and employment would foster the best combination of diversity and talent maximization in organizations 19 What recommendations for leaders follow the answers to these questions? 22 Next Steps 25 Acknowledgements 26 Sources 26 3 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces Foreword The thematic foci of the World Economic Forum’s 77 Global Agenda Councils represent the most pressing challenges and opportunities that confront societies, governments, and private and public institutions around the world. In 2008, the Global Agenda Council on Talent and Diversity was formed in recognition of the fundamental reality that work organizations of all kinds are becoming more and more culturally diverse. The efforts of societies to reduce inequality and promote equal opportunity and labour migration across borders combined with the need for organizations, especially global corporations, to source talent globally to spur innovation and maintain competitiveness mean that the pace of workforce diversification will only accelerate as we move further into this century. Leaders must be prepared to manage the required integration of the differing perspectives and experiences that come together as a consequence. The Global Agenda Council on Talent and Diversity is focused on understanding these challenges and opportunities, and disseminating actionable managerial and policy recommendations intended to facilitate the effective creation and management of diverse work organizations. Our deliberations over the past year resulted in a number of important conclusions. First, few organizations, and by extension leaders, truly understand how to effectively manage a diverse workforce to ensure the realization of the benefits of having diverse perspectives. Second, any attempt to address workforce diversity must be done in the context of talent management, acquisition, development, promotion and deployment. Finally, council members were able to identify some of the best practices of companies that are reaping the advantages of having a diverse workforce. This report summarizes the council’s recommendations on creating and effectively managing a culturally diverse workforce. David A. Thomas H. Naylor Fitzhugh Professor of Business Administration Harvard University 4 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces Introduction The challenges faced by the world today are more complex and more interrelated than ever before. Confronting these global challenges requires collaborative thinking, creative solutions and, most importantly, a systematic approach to implementation. Amid the effort of prevailing international governance systems to effectively address global challenges, the World Economic Forum has leveraged its access to the very best of the world’s thought leaders to form Global Agenda Councils on the foremost topics in the global arena. The Forum has identified and convened 15-20 of the world’s leading experts to capture the very best knowledge on 77 key global, industry and regional issues. The Global Agenda Council on Talent and Diversity is part of the Forum’s network of 77 Global Agenda Councils. It has been established to challenge prevailing assumptions, while capturing several dimensions and recognizing that, in today’s multicultural world, demand for talent and for greater diversity goes hand in hand. The marketplace has become more diverse and the composition of talent needs to reflect that. Understanding diversity has broadened, going beyond gender and race to include profiles and cultural backgrounds, age and disabilities. Members of the Global Agenda Council on Talent and Diversity suggested compiling a white paper to help and inspire business leaders who seek to create an environment enabling harmonious and effective management of differences. The white paper will become an influential guide for World Economic Forum’s constituents. It includes references to existing research, literature, empirical evidence and sources of data recommended by the council as well as selected case studies and examples of best practices. This first version of the white paper is prepared for discussion at the Summit on the Global Agenda in Dubai, 20-22 November 2009. Afterwards, it will be expanded, finalized and shared at the World Economic Forum Annual Meeting 2010 in Davos-Klosters. The white paper summarizes the council’s recommendations on creating and managing inclusive workforces. Thoughts included in the white paper have been summarized from the council meetings and from interviews with the council’s chair and members. Kurt April, Professor, Senate Member; Sainsbury Fellow, University of Cape Town, South Africa Carlos Arruda, Professor of Innovation and Competitiveness, Fundação Dom Cabral, Brazil Martha C. Artiles, Global Chief Diversity Officer, Manpower, USA Subha Barry, Former Managing Director and Head, Global Diversity and Inclusion, Bank of America Merrill Lynch, USA Jaspal S. Bindra, Chief Executive Officer, Asia, Standard Chartered Bank, Hong Kong SAR Ángel Cabrera, President, Thunderbird School of Global Management, USA Marilyn Carlson Nelson, Chairman, Carlson, USA Caroline Casey, Founding Chief Executive Officer, Kanchi, Ireland Katherine Garrett-Cox, Chief Executive Officer, Alliance Trust, United Kingdom Timothy Garton Ash, Professor of European Studies, University of Oxford, United Kingdom Peter Goerke, Member of the Group Management Board, Zurich Financial Services, Switzerland Michael Hastings of Scarisbrick, Global Head of Citizenship and Diversity, KPMG International, United Kingdom Lynda Gratton, Associate Professor of Management Practice and Fellow, Advanced Institute for Management Research, London Business School, United Kingdom Harry Holzer, Professor of Public Policy, Georgetown University, USA Kevin Kelly, Chief Executive Officer, Heidrick & Struggles, USA (council member in 2008-2009) Tatsuya Sakamoto, Professor of the Faculty of Economics, Keio University, Japan Premkumar Seshadri, Senior Corporate Officer and President, Strategic Verticals, HCL Technologies, India Chaired by David A. Thomas, H. Naylor Fitzhugh Professor of Business Administration; Unit Head, Organizational Behavior, Harvard Business School, USA 5 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces Highlights from the Discussions on Talent and Diversity in 2008 and 2009 During the course of the last two years, the Forum arranged numerous discussions on talent and diversity, responding to the bigger than ever interest in this topic. In January 2008, Professional Services Industry Governors gathered in Davos to discuss the challenges of diversity and inclusion. Joined by leading faculty and Young Global Leaders, the Governors agreed that diversity should be understood broadly and not be limited mainly to gender and race. Lack of diversity among company leadership and retention of female talent were mentioned as two of the biggest challenges. Solutions for both include accountability for turnover levels and making leaders responsible for ensuring appropriate retention levels. On 9 September 2008 in New York, at the dawn of the financial market crisis, chief diversity officers from various industry sectors, Young Global Leaders and faculty met to initiate a collective action to address the challenges of diversity. The objective of this cross-industry meeting on “Bridging the Skills Gap through Diversity and Inclusion” was to identify action(s) that can make a positive impact, and to “determine if we have an appetite and vision for a collective action.” At the inaugural Summit on the Global Agenda in Dubai on 7-9 November 2008, the Global Agenda Council on Diversity convened for the first time. Participants agreed that solutions to today’s interdependent challenges can only be generated through diverse approaches and perspectives. Societies and workforces are becoming more diverse; demographics, ageing societies and migration patterns make diversity a global issue, which can bring a number of benefits to society and business, and requires a new value-based Industry Partnership Strategy Meeting 2008, New York leadership. As the dialogue progressed, the council agreed that diversity and talent management are indeed two sides of the same coin as was reflected in the council’s name when it became the Global Agenda Council on Talent and Diversity. At the World Economic Forum Annual Meeting 2009, a cross-industry community of various stakeholders gathered again to share positive experiences on leading organizations and developing people at times of crisis. While sharing their success stories, participants asked: “Is crisis a threat or an opportunity for talent?” Business, experts from academia and civil society, Young Global Leaders and policy-makers examined whether the current economic shake-up could be an opportunity to reform organizations’ leadership cultures and inclusive workforce strategies. During the Forum’s Industry Partnership Strategy Meeting 2009 in New York, on 1 October 2009, participants gathered at a Cross-Industry Summit on Talent Mobility. The impact of talent mobility on economies and on the competitiveness of countries was explored. Participants discussed issues related to migration of highly skilled people in the context of the economic crisis and rising unemployment, also from the perspective of developing countries. Moreover, the agenda of this highly interactive workshop of peers included managing a multicultural workforce and creating organizational cultures nurturing diverse talent. In addition, the council held three virtual meetings in its first year of operation (2008-2009) and one virtual meeting in the opening of the second year (3 September 2009) which guided the agenda and steered the approach to talent and diversity challenges in a systematic manner. Summit on the Global Agenda, 2008, Dubai 6 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces Executive Summary The globalization and universal access to information have transformed the marketplace – it has become more diverse. Multinational corporations with operations in many countries face the challenge of managing diverse workforces on a bigger scale than ever before. In many areas of the world, diversity has become one of the imminent features of the environment that makes an effective management of differences a critical success factor for many large organizations. The objective of the white paper is to highlight conditions for the creation of an inclusive work environment. The notion of diversity has broadened, going beyond gender and race to include profiles and cultural backgrounds, age and disabilities. Moreover, perceptions of diversity and its advantages are not the same in North America and Europe as they are in the non-Western world. Understanding diversity can be focused on one of its various aspects. Depending on the talent landscape in the region, the emphasis may be put on racial aspects or on gender, on religion or on nationality. Finally, monitories are not always underprivileged. In some cases, it is the majority group that is discriminated. All these nuances need to be taken into consideration and explored to build a comprehensive, global picture of diversity, as well as the language to describe it. Diversity and talent management are inextricably linked. Starting from recruitment and retention, talent management should be rooted in unbiased merit-based evaluation, tapped into a culture valuing diversity and taking advantage of different viewpoints. Every individual will be able to develop and contribute to overall merit and success. Mentoring and coaching of juniors by seniors plays an important role, similarly to encouraging employees’ networks. However, expectations should not be lowered in the name of diversity. Diversity efforts can only be credible if there are visible signs of success and diverse people play senior management roles. Organizations need to consciously attempt to create an inclusive work environment. Failure to build, develop and manage diverse talent can have negative consequences, such as limited access to a talent pool, lowering the bar and raising tensions, isolation of employees and lowered productivity, along with suboptimal decision-making as well as legal and reputational implications. The current economic crisis has highlighted imbalances on human capital markets. Moreover, it has also delegitimized today’s board structure, as the board is not able to better connect the dots. In a difficult economic environment, diversity is often perceived as a luxury that cannot be afforded. However, crisis can become an opportunity to invest in long-term productivity strategies for both majority and minority employees. Selection of people for layoffs should be based on unbiased performance measurement. Talent mobility should be fostered and restrictive immigration policies avoided while paying attention to the needs of majority workers. Companies should not abandon diversity during difficult times. Government policies should focus primarily on equal opportunities, access to high quality education and enforcement of the anti-discrimination laws. Regulation of diversity through quotas for minority workers has both positive and negative implications. There is no agreement among the council members in this aspect though there is unanimous recognition that, first, the diversity landscape is very different in various regions of the world hence solutions need to reflect that and, second, expectations will never be lowered in the name of diversity. Finally, each organization has to come up with a business case for diversity. And “if you want to have diversity, you need to start from the top” – from leaders and boards. Effective management of diversity leads to easier talent attraction and retention, maximizing talent, increased creativity, intellectual diversity, innovativeness, productivity and performance. It allows better decision-making and better connection with customers and, finally, it improves company reputation. Organizations, which build diverse workforces and create conditions that allow people to learn from each other and develop their full potential, are believed to be better equipped to address globalization’s challenges. 7 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces How can organizations connect demand for diversity with talent management? What is the compelling rationale for linking diversity and talent management broadly defined? Great organizations will seek, not simply tolerate, diversity. Talent management, at least talent management at a level required by large, integrated, global enterprises, is impossible without actively incorporating diversity. The primary aim of talent management is to identify the right people to execute strategy now and in the future. It is fundamentally about people but is driven by data, objectivity and performance. We use the phrase “the right people, in the right place at the right time” which is shorthand for saying we need to identify high performers, who have the capacity to be developed, to grow and to continue to outperform; we need to deploy these people in positions where they can make an impact – globally – and we need to time this. So we have to think ahead about how we develop for the future. These themes are shared by any sophisticated global organization. Logically and rationally, diversity has to be a critical element in this strategy. Talent has always been in short supply, and this will become more of a constraint in the future due to many reasons, not least demographic changes in developed economies. Organizations have certain representative functions as more often they play a semi-public role. This requires that workforces mirror the composition of societies in an appropriate way. In general, people recruited for organizations should reflect in a fair way geographic composition and the cultural identity of external constituents. They should represent not only customers and communities, but also investors. At a minimum, demand for diversity should then ensure the appropriate representation of people. Optimally, diversity efforts should lead to maximizing talent and creativity. Organizational innovative, fresh thinking tends to be generated by diversity of insight and thinking style. If everyone thinks the same, problems will not be addressed from different angles. Companies that build the best diversity practices can become better integrated and embrace competitive innovative ideas. A diverse leadership and workforce can also achieve superior execution. However, the focus on diversity must be integrated in companies’ strategies for recruitment, retention and talent. The search for talent has to be focused and blind to irrational data. It has to focus on performance and capability as the key differentiator between people. Limiting a potential talent pool by being non-diverse is counter-productive and non-competitive. Of course, this isn’t easy: people find it easiest to work with people like themselves. It is the paradox and challenge of teams that the most productive are often the least comfortable. In practice, this means you have to work at it, but we are past being a nice to have luxury: organizational success will increasingly depend on the ability to make the best use of a diverse, different talent pool. – Peter Goerke, Member of the Group Management Board, Zurich Financial Services, Switzerland Diversity starts at the top. Leaders have disproportionate influence on the actions of organizations, therefore it is important not only to make a strong business case to senior management for a diverse workforce, but also to senior leaders to role model appropriate behaviours. Leaders need to have the courage to foster diversity, and this has to start with the CEO. Diversity and talent management are inextricably linked. Diversity is an integral piece of, and solution to, talent management. As organizations become more global, cultural diversity becomes more prevalent than ever before. Diversity becomes one of the most important success factors for companies. While 100 years ago a key limiting factor was energy and 50 years ago it was capital, nowadays the most important limiting asset for the majority of companies is people. Organizations have to actively work at creating an inclusive work environment. Values and expected behaviours need to be explicit and clear. People of different cultures might not understand unwritten rules of the game the same way. This can range from simple rules such as dress code and punctuality to decision-making and respect for authority. Therefore, organizations should educate people and raise their awareness of different biases influencing thinking and decision-making. This applies to both diverse populations and majority populations. To some extent, this means establishing organizational norms that transcend some cultural norms. Talent management in simple terms means making sure the right people with the right skills are at the right jobs at the right time. Demand for diversity should mean having open recruitment policies and diverse role models, striving to have the best potential talent and to bring people from a variety of backgrounds to an organization. 8 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces Leadership Model and Performance Management Approaches at Zurich Financial Services Focus on performance is the most critical tool in guarding against biases and differences, and the most important differentiator is basic leadership capability because tools cannot compensate for poor leadership. Annual PM cycles with minimum annual and mid-year reviews are run. Training for senior executives, line managers and staff are provided in using these tools. Source: Zurich Financial Services/Dave Ulrich/Peter Goerke Keep the focus on performance and fair evaluation of performance. The biggest danger for talent management is when, in the name of diversity, organizations lower expectations and create tensions among employees. Organizations must be able to help their leaders and teach managers how to foster diversity and develop people instead of giving them perceived unfair advantages. Diversity efforts are credible only if there are visible signs of success. This includes strong diverse pipelines and diverse people at top and senior management positions. Timeline, targets, precise planning and success measures, linked to evaluation, are necessary to build diverse workforces. There is enough diversity at schools and at entry levels but the higher on the corporate ladder, the less diversity. A general rigorous approach to performance management is a key tool in maintaining the focus on performance rather than difference. Attributes of effective performance systems include clear training on process, systems that set clear objective expectations, a fair and understood review process, a transparent link to compensation if there is a link, and calibration processes that compare individuals across groups and so ensure fairness and discipline in performance evaluations. 9 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces Diversity Matters – But How is Diversity Defined? (September 2009) 93% of managers believe that diversity impacts business goals, strategies and results at their organizations. 97% of managers lead a diverse team. Most (69%) claim that team diversity increases performance. Most respondents define diversity narrowly: • 31% cite only gender and race/ethnicity • 61% mention gender, race/ethnicity, age, religion, sexual orientation and disability • Only 6% include background/experience, 3% personality and 3% workstyles • No respondents think of diversity of talents, skills or abilities Source: “Diversity and Inclusion in the Workplace – Harris Interactive Survey”, commissioned by Capital H Group, September 2009. The survey involved 20 Fortune 500 companies. Broad understanding of diversity and “difference”. It is important not to reduce diversity to gender or race issues but to understand it broadly, through different backgrounds, education, experiences, etc. Moreover, we need to make a distinction between visible diversity (race, gender, etc.) and invisible diversity (age and, often, disability, etc.). Rather than simply focusing on particular target groups, entire workforces need to be educated about respect for differences to develop a positive approach towards their colleagues who will often be different, think differently and act differently. In particular, we should encourage the use of the terminology “underprivileged group/power holder” instead of ‘”minority/majority”. In many countries, minorities hold substantial economic power, whereas the majority remains disadvantaged. How IBM Found Profit in Respect of Differences Like many companies, IBM took big strides to eliminate discrimination by attempting to ignore cultural, racial and other differences among its vast worldwide workforce. In 1995, Lou Gerstner, the new CEO, started a shift from minimizing differences to amplifying them and to seizing on the business opportunities they present. Key success factors of this initiative were: • Strong support from company leaders • Full engagement of employees with the initiative • Alignment of management practices with the efforts to respect differences • Strong and well-articulated business case for action Since then, the number of female executives in the company has grown by 370%, ethnic minority executives have jumped 233% and the number of self-identified gay, lesbian, bisexual and transgender executives gained 733%. IBM announced a US$ 4.97 billion loss for 1992. In CEO Louis V. Gerstner Jr's four years at IBM, its stock value has tripled from its 1993 low point of US$ 40. Source: “Diversity as Strategy,” in Harvard Business Review, Professor David. A. Thomas, Vol. 82, No. 9, September 2004 10 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces What are the benefits of diverse talent pools? What are the negative consequences of badly managed diversity? What are best practices? Having a diverse workforce brings many benefits to the organization, their customers and the communities in which they do business. While there is a ripple effect from smart hiring practices that support diversity, there needs to be vigilance to ensure that they are also accompanied by a focus on retention. Diverse teams make better risk-adjusted decisions and are often more creative and collaborative, showing respect for all kinds of perspectives. Diverse boards enhance return on equity and invested capital. A diverse workforce also enables a better connection to customers, creating stronger loyalty and, in turn, makes it easier to attract top talent – both diverse and otherwise – to the company. Ignorance and ineptness are poor excuses for badly managing diversity. In fact, paying lip service to diversity or managing it poorly can damage a corporation’s reputation both internally and externally, making it vulnerable to lawsuits and eroding market share or, in the least, decreasing competitiveness. The human resource management of diversity has implications for its long-term business competitiveness. – Subha Barry, Former Managing Director, Bank of America Merrill Lynch, USA There are numerous benefits of diverse workforces: Better talent attraction and retention. Organizations with diverse management teams send a clear signal about being inclusive and valuing different aspects of talent. Such a message – seeing role models at organizations’ C-suite today – is highly valued by the brightest prospective employees who can picture themselves at senior positions in the future. Diverse role models have proven to have a positive effect on the retention of members of under-represented groups. Key to retention is mentoring talent and enhancing employee networks. Effectiveness of diversity programmes can easily be measured by the retention rate among under-represented groups. Focus on diversity enables a critical mass for developing the best and the brightest talent, based on merit and not simply on various visible or invisible features. We cannot compromise meritocracy for diversity. Increased cultural diversity produces increased intellectual diversity. A diverse set of opinions creates better solutions and better risk management. A diverse workforce limits group thinking and can ensure a broader, more holistic approach to problem-solving, to complement a typical Western approach. The Business Case for Diversity? Lew Platt, former CEO of Hewlett Packard, commented in 1998: “I see three main points to make the business case for diversity: • A talent shortage that requires us to seek and use the full capabilities of all our employees • The need to be like our customers, including the need to understand and communicate with them in terms that reflect their concerns • Diverse teams produce better results This last point is not as easy to sell as the first two – especially to engineers who want the data. What I need is the data, evidence that diverse groups do better.” Source: “The Effects of Diversity on Business Performance: Report of the Diversity Research Network”, in Human Resource Management, Thomas Kochan, Katerina Bezrukova, Robin Ely, Susan Jackson, Aparna Joshi, Karen Jehn, Jonathan Leonard, David Levine, and David Thomas, Spring 2003, Vol. 42, No. 1 Work units that are gender or race diverse outperform those work units that are more homogeneous. Analyses of demographics and performance data from over 275 retail bank branches conducted in two years revealed that racial diversity enhanced the performance of branches with a positive racial learning environment and undermined the performance of branches with a negative racial learning environment. Source: “Team Learning and the Racial Diversity-Performance Link”, Robin J. Ely and David A. Thomas, October 2004, Harvard Business School Working Paper 11 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces Increased innovation, creativity and productivity. There is a positive correlation between diversity and innovation, as well as creativity through access to a variety of perspectives. Well-managed diversity, linked with transparency and good feedback mechanisms, brings productivity gains. Better decision-making at the board level. Diverse ways of thinking are particularly important among companies’ boards. Diverse boards are apt to question existing approaches and ways of doing business; homogenous groups are more inclined to “group mentality”. It has been observed that there is an overlap between executive and non-executive board memberships. People of similar backgrounds belonging to similar networks sit on each others’ boards and by default hear the same viewpoints and react in the same way. A combination of diverse boards and diverse executives inside the financial services institutions could have helped avoid the current financial crisis. Better connection with customers. Companies with diverse talent pools usually have better connections to their external constituents. Workforce diversity should reflect customer diversity. Companies who make an early link between their workforce and their local communities are better positioned to win business. Diversity leads to better connection with customers, better understanding of clients’ needs and better client facing approaches. Improved company reputation. Diversity positively contributes to building a reputation of a preferred employer. Diverse leadership and workforces create a more conducive environment; an interesting, likable workplace; better camaraderie; and greater openness towards different viewpoints. Gender diversity often means better quality management. Focus on diversity can lead to better human capital management policies. Corporate performance and women’s representation on boards, 2007 Boards with the most women on them outperformed boards with the least women. The study based on Fortune 500 companies found that a critical mass of three or more women on a corporate board caused a fundamental change in boardroom dynamics and governance, and enhanced corporate performance. Source: 2007 Catalyst Census 12 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces The Road to Meritocracy at Carlson, August 2009 Carlson is a global holding company providing business travel, hotel, restaurant and marketing services in more than 150 countries. Recognizing early that the contribution of women in the company was underutilized, since 1998 it has pioneered a change in its internal culture to allow both men and women to have equal opportunities. Some of the programmes implemented included the following: • Provision of in-house childcare for the company’s employees at the headquarters and paid leave for new mothers and adoptive parents to make work a flexible undertaking for both men and women • Flexible work arrangements including part-time, flex-time, job-sharing, telecommuting and compressed work weeks to support work-life balance • A review process of 360 degrees for both men and women, to allow both genders to be equally considered for executive positions • Development, coaching and mentoring programmes for both men and women to better integrate women and encourage their participation in leading the organization. The company also created an executive MBA programme at the University of Minnesota’s Carlson School of Management targeted at the service industry Today, the company is recognized for its family-friendly work environment and promotion of gender equality. It has 49% women in management positions and has doubled its revenues to US$ 40 billion annually. Source: The Learning Journey at Carlson, Carlson website, October 2009 Goldman Sachs, 10,000 Women Programme in Afghanistan After publishing research papers on gender equity entitled "Womenomics" and “Women Hold Up Half the Sky” – quantifying the macroeconomic benefits of investing in female education and workforce participation – Goldman Sachs set aside US$ 100 million to provide business education for 10,000 women entrepreneurs around the world. The programme is currently active in 18 countries and is supported by a network of more than 60 academic and non-profit partners. Grants were provided to American and European business schools to partner with universities in their home countries. Every programme was designed to be uniquely suited to the needs of the developing country, and Goldman Sachs engages its own employees as mentors and resources for the various programmes. In 2008, Thunderbird School of Global Management (Thunderbird) became one of the inaugural members of the group of business schools participating in this programme. Thunderbird is partnering with the American University of Afghanistan (AUAF) in Kabul. In the programme, Thunderbird provides the academic development, curriculum design and faculty training, as well as continuing to leverage the school’s knowledge, people and networks to add additional mentoring and other resources. Source: Goldman Sachs, “10,000 Women Program in Afghanistan” and “Women Hold Up Half the Sky”, 4 March 2008 Some of the characteristics of ineffective approaches to managing diversity are: Lowering the bar, raising tensions. Lowering expectations for diverse hires and hiring less talented, “visibly diverse” people to meet quotas, particularly in companies complying with affirmative action, clearly raises issues within the organization. Among negative consequences of affirmative action, there can be resentment by majority workers, a perception of lowered (or uneven) standards and potential tensions in the workplace between the majority and diverse groups. Failure to access diverse talent pools. Some industries simply do not have a large enough diverse talent pool to draw from. Sometimes, even if you look in all the right places, you may not find diverse talent. The mistake companies make is they compromise quality to fill the quota. This is akin to paying lip service to diversity. Top diverse talent will want to go to companies who have figured out where to go, how to approach them and what to do with them when they bring them in. The best thing that companies can do is to take a longer term approach to their recruiting needs and build their own pipeline of talent. Bad decision-making. Streamlined ways of problem-solving may lead to suboptimal solutions. Non-diverse organizations face risks of narrow perspectives, lost opportunities and opinionated decisions. As they operate internationally, these risks are magnified. It is important to build diverse boards, to avoid group thinking and provide access to broad networks and insights. Moreover, there is a “risky 13 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces Why Wal-Mart cannot find happiness in Japan, 2007 The world's largest retailer has spent more than US$ 1 billion in Japan, but its Seiyu stores are struggling to overcome consumer apathy and employee distrust. Wal-Mart, which took control of Seiyu in 2005, is battling to survive in Japan. For many analysts, Wal-Mart's (WM) foray into Japan was under pressure due to cultural differences: • In 2004, WM persuaded Seiyu's management to dismiss 25% of the staff in headquarters, including 1,500 employees and managers. That kind of a lay-off happens rarely in Japan, which places a premium on social harmony. Firing done by foreigners added even more negative connotations. This action has created a climate of resistance among both laid off and current workforce, often complaining about WM’s efforts to instil an American operating model in Japan • Also, it seems that WM’s model of "always low prices", working in emerging markets such as China and Mexico, does not work in Japan, where consumers are willing to pay higher prices in return for higher quality Source: Holstein, William J., Fortune International (Europe), 2007 shift” phenomenon – teams who work together for a long time, where team members know each other well, have a tendency to make more risky decisions. Diversity as lip service damages credibility. If a company has a diverse workforce, but diverse employees are not successful and the organizational culture does not promote inclusiveness or there is lots of intolerance, it will not benefit from its diverse talent pool. Moreover, it will be very difficult to regain trust and introduce optimal diversity focused strategies, going beyond just the lip service. Interestingly, doing it halfway is worse than not doing it at all. Isolation, lowered productivity. Poorly managed diversity leads to the isolation of groups of workers and consequently lowers productivity. Poorly managed, culturally diverse groups perform worse than homogenous teams. Legal implications, reputational risks. Poorly managed diversity carries the threat of lawsuits and long-term reputational damage. The even greater risk is Participants discuss recommendations during breakout session at the Cross-Industry Summit on Talent Mobility, New York, October 2009 that, should the company’s employees become mistrustful of the true intent of its leaders in relation to diversity, it can damage the culture beyond repair. In such cases, the internal damage is even more difficult to repair than the legal and external reputational risk. Leading groups with diverse values Groups often consist of people representing different values; therefore, teams might be faced with the challenge of diverse work ethics. Some members will be hard-working and internally motivated to accomplish tasks, while others will not be so devoted. Teams may also vary in respect to authority and traditional values. Guiding these diverse teams to success requires some counter-intuitive management practices. In particular, team leaders should focus on tasks at the early stages, rather than on interpersonal relationships, and then switch to relationship building when the time is right. Managers who are task-oriented, providing a lot of structure and deadlines to the team, can effectively lead values-diverse teams. Relationship-oriented leaders are less successful in running values-diverse teams. Source: “Diversity is not Diversity”, Katherine Klein, Professor of Management at Wharton, INSEAD knowledge website, October 2009. “Bridging Fault Lines in Diverse Teams”, in MIT Sloan Management Review, Lynda Gratton, Andreas Voigt and Tamara J. Erickson, July 2007 14 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces What are the implications of the current economic environment and rising unemployment on the diversity of workforces? What is crisis-related “diversity to dos”? The current economic environment is one of the worst in living memory. It might well go down in history as an event of unprecedented significance. While it is easy to focus on the requirement for short-term solutions to address the economic backdrop, it is clear that it is necessary to remain focused on the long term; in situations of extreme stress, whether financial, economic or social, this becomes ever harder. Organizations around the globe are now facing the very real prospect of having to take action to mitigate the unfolding economic downturn. Discretionary spend will be reduced, and once all of the line items have been addressed, the most expensive resource that organizations employ – people – will be the next to come under the microscope. The human dynamic in any organization defines it. Culture is not created by technology, PowerPoint presentations or numbers on a spreadsheet. People create the long-lasting and sustainable threads that will continue to be woven throughout organizational histories. Periods such as these will be defined by the leadership that is displayed. In particular, those organizations that work to promote and foster true diversity will set themselves apart. It has been acknowledged that diverse teams perform better, and maintaining a balance will be critical. In particular, this is not just about gender diversity but, in essence, this is far broader. Diversity of style and perspective can also bring a great deal to any organization faced with a difficult operating environment. For organizations to gain true competitive advantage, they will need to attract, retain and develop the right people. Regardless of role, title, gender, religious belief or other, organizations should enable all their people to maximize their performance potential. It will take courageous leaders in these troubled and uncertain times, to take the long-term view and continue to promote the benefit of inclusiveness while developing their people. It is perhaps too easy to focus on the short term and, for many, this is exactly what they will do. However, it is precisely at moments such as this that leaders should be seeking to fulfil the potential of the people who they lead. Maximizing the potential of a diverse workforce does not always have to attach a price tag, and playing the long-term game will be worth it. We should all strive for an inclusive and well-motivated organization. Not only are they more likely to stand the tests of time, but ultimately, the results will speak for themselves. – Katherine Garrett-Cox, Chief Executive Officer, Alliance Trust, United Kingdom There are numerous positive implications for the crisis on workforce diversity: The crisis can be an opportunity for women who can step up and ask for bigger responsibilities. Diversity will be embedded in a company’s DNA and not inserted into special programmes. When the crisis arises, organizations have to cut costs, particularly on special events and initiatives. However, organizations still focus on having the right people in the right places. The discussion becomes whether we should position diversity efforts within organizations in separate diversity departments, or in the overall strategy. Even during the crisis, it is difficult to find people with the right skills since diversity makes employers more attractive for the best employees. Why women managers shine in a downturn, 2009 A study of the French stock exchange index (CAC 40) pointed out that the more women in a company's management, the less the share price fell in 2008. Last year, Hermès was the only large company in France whose share price rose (16.8%). Interestingly, the company has the second largest group of women in their management (55%). Companies with a high number of female managers declined less than the CAC 40. Conversely, stocks of companies with mainly male managers have decreased more than the CAC 40. Feminization of management seems to protect against financial crisis because at times of high uncertainty, financial markets value companies that take fewer risks and are more stable. Source: Professor Michel Ferrary, Ceram Business School, France, in Financial Times, 2 March 2009 15 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces The Diversity & Inclusion Advisory Council at Novartis Set up in 2006, the Diversity & Inclusion Advisory Council (DIAC) comprises a group of diverse leaders, offering various perspectives on business, representing different nationalities, cultures and professional backgrounds. They are interested in enabling Novartis to achieve its Diversity & Inclusion Vision and Strategy through: • Providing an external and independent viewpoint on diversity and inclusion • Increasing awareness of diversity, while delivering business success • Serving as a resource to Novartis leaders in the promotion of diversity and inclusion of governance arrangements, initiatives and programmes • Identifying challenges, barriers and opportunities in the advancement of diversity and inclusion within Novartis; advising on specific programmes or initiatives to address the challenges • Establishing relationships with internal and community organizations/programmes that enhance diversity and inclusion in Novartis; developing/tapping into external networks, connecting them to internal networks Source: Novartis website, Professor Kurt April, October 2009 Some negative implications of the crisis are: Diversity falls off the agenda. Diversity in hiring as well as diversity in leadership can be perceived as a luxury that cannot be afforded in tough times. Many companies focus on survival and if diversity was just a lip service, they end up giving up their early programmes. Backlash against diversity of the workforce is a real risk. The current economic crisis causes much displacement and increases disproportions. Minorities are disproportionately affected by layoffs. Although disputed by some, recent US statistics prove that visibly diverse people are the most hit by crisis-related unemployment. When the crisis hits, immigrants and minorities are more easily excluded from the talent pool. The financial services industry was hit hard. The crisis had a big impact on human capital in the financial services sector and will have important ramifications. The current crisis has delegitimized the current structure of boards that failed to prevent or prepare for the economic downturn and did not read the market signals well enough. Group thinking is not the only thing that has affected numerous single boards comprised of executives with similar backgrounds and viewpoints. Moreover, similar people sitting on each other’s non-executive boards contributed to insufficient diversity of insight in the boardroom. Financial Crisis Puts Diversity Gains at Risk, 2008 As financial firms downsize or disappear, many new hires may find themselves competing with more senior employees in the search for new jobs. "As we all know, when anything goes wrong in this country, black employees are hit harder than most," said Barbara Thomas, President and CEO of the National Black MBA Association. "There's a saying: 'When America gets a cold, black America gets pneumonia.'" Source: “Financial Crisis Puts Diversity Gains at Risk”, in Business Week, 25 September 2008 "The financial crisis is expected to have serious, widespread impacts on the real economy and particularly on the lives of people already in poverty. Historically, economic recessions have placed a disproportionate burden on women. Women are more likely than men to be in vulnerable jobs, to be underemployed or without a job, to lack social protection, and to have limited access to and control over economic and financial resources. Source: Statement by Sha Zukang, Undersecretary-General for Economic and Social Affairs, United Nations, to the fifty-third session of the Commission on the Status of Women, New York, 2 March 2009 16 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces What is the crisis-related “diversity to dos”? Maintain/foster supplier diversity programmes through which organizations award contracts to minority ahead of non-minority suppliers. Companies should not abandon diversity during difficult times. Foster talent mobility and prepare to manage diverse teams. The workforce needs to become more mobile to respond to the needs of the human capital market. Companies have to cut costs so they can outsource from areas where skilled employees are available at the lowest price. This will necessitate culturally literate and sensible managers to lead geographically dispersed teams. Select who to lay off based on performance. Decisions about who to lay off should be based on objective performance measurements to avoid biased decisions. The results of the performance evaluations should be consolidated and calibrated on a relative basis to identify and address imbalances that may occur. People should be selected for layoffs based on individual decisions: it should not be socially engineered or ethnically devised based on quotas. This situation can be addressed by appointing a person in charge of diversity with a veto power in terms of layoff decisions. Avoid restrictive immigration policies or cutbacks in programmes, while paying attention to the needs of majority workers. Adequate labour and social protection policies including social safety nets should be implemented. Prevent tensions. The survival mode and layoffs create a destructive environment within organizations. Companies should recognize the valuable skills and achievements of their employees from both majority and minority groups, and promote positive examples from the different backgrounds represented. The crisis is an opportunity to invest in long-term productivity strategies for both minority and non-diverse employees. The Manpower Supplier Diversity Programme, 2009 Manpower’s Supplier Diversity Programme focuses on the following goals: • Increase the number and quality of relationships with diversity suppliers, while maintaining standards of quality, competitive pricing and service delivery • Identify and track qualified and approved diversity suppliers • Foster relationships with diversity suppliers dedicated to providing quality candidates • Mentor and assist diversity suppliers, accelerating their growth and profitability, by broadening their participation in Manpower’s client programmes • Promote the development of diversity suppliers to enhance their ability to succeed in the marketplace • Promote integrity, ethics and social responsibility in the workplace by cultivating quality diversity suppliers Source: Manpower Inc., 2009 Project Ulysses: Cross-cultural awareness through CSR, since 2001 Under the programme, Ulysses, launched in 2001, PricewaterhouseCoopers (PwC) sends small teams of employees into developing countries to apply their business expertise to complex social and economic challenges. The cross-cultural PwC teams work on a pro bono basis in field assignments for eight weeks with NGOs, community-based organizations and intergovernmental agencies in communities struggling with the effects of poverty, conflict and environmental degradation. Currently there are 120 members in the Ulysses network spread over 35 different countries. Programme objectives include: • Building a global network of PwC leadership talent • Increasing PwC's capacity to capitalize on its diversity and transnational nature of operation. Programme motto: “Cultural differences should be an enabler, not an inhibitor” • Preparing leaders to guide the firm in a global world of ambiguity and tension between diverse interests and stakeholder groups Source: PricewaterhouseCoopers website, October 2009 17 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces Ensure that employees can create merit and think long-term. Meritocracy is the organizational production of a team. Therefore, organizations need frameworks and corporate cultures allowing every person to create merit. Work quality is a key factor to effectively implement diversity. If that principle is rightly applied, no matter how bad the economy gets, the management of diversity will not be hindered. If management considers an increased level of diversity in a short-term perspective, the economic crisis will negatively affect the increased diversity, because diversity will be seen as an “extra cost” or “extra burden”. Long-term perspectives should be adopted. How to build strength on diversity? The Coca-Cola case In 2000, the Coca-Cola Company settled a US$ 192.5 million – biggest racial discrimination – lawsuit in history. As a result of the ruling, the court sent an external federal task force to oversee the company’s diversity efforts for four years. Recognizing this as an opportunity to build business strength, Coca-Cola appointed a new management in 2004 to work with the task force in establishing a work culture that embraced diversity. They put into action several plans: • Programmes and initiatives designed to recruit, mentor and retain women and minorities in their workforce were put in place • The company broadened its recruitment strategy to include job boards and agencies for minorities (i.e. Hispanics, African-Americans) • Mentoring programmes to encourage employee development and growth within the company • Employee networks were established to enable employees throughout the organization to actively participate in shaping the company’s culture and identifying marketplace opportunities As a result of this initiative, minority representation among Coca-Cola executives and at the senior management level increased from 8.4% to 21% by 2006. Below the executive rank, minority managers increased from 16% to 25.5%. The percentage of women in executive positions grew from 16% to 28% during the same time. Over the five years following the 2000 ruling, the company maintained a robust 4% compounded annual growth rate. Source: “How Coca-Cola built strength on diversity?” in Harvard Management Update, edited by Christina Bielaszka-DuVernay, April 2008 Employee First, Customer Second at HCL, since 2005 In 2005, HCL created an initiative called “Employee First, Customer Second” (EFCS). HCL’s approach to employee development focuses on giving people what they need to succeed and treating them as the most important asset of the company. The strategic goals for EFCS were to create a unique employee organization, drive an inverted organizational structure, create transparency and accountability within the organization and encourage a values-driven culture. In accordance with these values, several projects have been introduced to keep employees engaged and create an environment of trust, transparency and a sense of meritocracy: • A CEO Connect – where the CEO is personally available to every employee in the organization. He visits every location and holds multiple interactive discussions – Q&A. The CEO also runs a fully functional president’s blog • An Employee First Governing Council – comprising function heads who hold town hall meetings and collectively address all employees’ questions and issues • Smart Service Desk – an SLA bound online ticket system to resolve all employee concerns and issues where the right to close or open a ticket lies with the employees and their satisfaction with the nature of the resolution made • Employee Passion Indicative Count – enabling the employees to identify their passion drivers and align their roles directly to their passion areas; assisting them in maximizing their strengths • A multilevel Employee First Academy – including the Harvard Emerging Leader Program for over 500 employees, where modern management concepts are taught • A 360-degree feedback process – a developmental tool where the reports of all managers are open for review to all employees in the company Source: HCL, October 2009, Interview of Premkumar Seshadr. “HCL Technologies: Employee First, Customer Second, in Harvard Business Review, Kamalini Ramdas and Ravindra Gajulapalli, 29 September 2008 18 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces What policies in education and employment would foster the best combination of diversity and talent maximization in organizations? Edited by Martha C. Artiles and Harry Holzer Policies to enhance the diversity of societies and workplaces are very important for two reasons. First, they are good for national economies, which can most efficiently develop and use their human resources if they take diversity into account; and second, they are important for making sure that the benefits of a productive economy are broadly and fairly shared, and that opportunity is equalized across the segments of society. Enforcement of anti-discrimination laws should be strong and efficient. The council’s discussions allowed to identify both positive and negative aspects of applying quotas. An example – legislation in Norway – has been selected to illustrate opinions both in favour and against the quotas. No for Quotas. There exist negative examples when diversity is enforced by policies. In most cases, policies should not regulate who should be hired and fired. States should not interfere with the decisions made by companies. There exist negative examples of overregulation of diversity such as legislation in Norway that obliges publicly listed companies to achieve quotas of men and women employees. If there are not enough qualified women, companies have to lower the bar and compromise their competitiveness. There is a place for affirmative action but it should not be affiliated with quotas. In those situations where visibly diverse individuals are hired in a quota environment and have the necessary skill and competencies, the rest of the organization assumes these individuals were hired to meet quotas and not because they are competent. As a result, these individuals can be ostracized by others and potentially treated differently because they are looked at as non-deserving of their appointment. The former is directly good for business; the latter is important for the stability and perceived legitimacy of the polity and society. To enhance diversity and achieve these goals, it is important to invest broadly in the formation of skills for all populations, to identify and attract potential talent wherever it exists, and to find cost-effective ways to realize that potential. The public policies that can help achieve these goals include a range of educational and employment policies designed to ensure equal opportunity and to enhance educational and employment outcomes for all social groups. – Harry Holzer, Professor of Public Policy, Georgetown University Policies should focus on ensuring equal opportunities. The role of a state is to ensure that people get proper, business relevant skills and qualifications through education, regardless of their backgrounds. Access to high quality education should be provided for all communities. Then competition should continue the selection process. Governments can stimulate development of certain skills because of the future needs of business through investing in targeted programmes, such as the green jobs policy in the US. Yes for Quotas. Legislation should enforce companies to have a certain number of women in senior management. Norway is a good example. Organizations change very slowly, so without quotas only very few women have a chance to get to leadership positions. Both women and minorities have always been affected by stereotypical Norway, 40% quota for women on corporate boards In 2005, the government of Norway put in place a minimum quota of 40% of women on the corporate boards of every publicly traded company by the end of 2007. The penalty for failure was drastic: if a company did not comply, it would be shut down. • Norway went from 6% representation in 2005 to meet the 40% mark by 2008. Over this period, Norway has continued to enjoy high rankings in terms of economic competitiveness. The country ranked 14th in 2004 and 2009 in The Global Competitiveness Report. • However, women selected to sit on boards were sometimes stigmatized: even if “equally qualified”, they could hear: “She got the job because of the quota system.” Also some argued that finding qualified talent in those numbers over a short time frame does not always appear healthy. Source: “Women take their place on corporate boards”, in The New York Times, 21 March 2008. Gender in Norway website, October 2009, The World Economic Forum Global Competitiveness Report 2004-2005 and 2008-2009 19 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces perception as well as biases in performance management; therefore, quotas can be helpful. However, in some places, such as Japan, the idea of legal quotas for diversity is still foreign. It should be more seriously considered. Education policies should be based on the following broad principles: • Start early • Provide young people with multiple pathways to success • Promote technical education and other career options • Do not neglect education and training for “middle-skill” jobs, which include those that require some post-secondary education or training without a full university diploma; many such jobs require significant skill, pay well and are often in high demand in domestic economies • Provide financial and social support for disadvantaged students • Foster international exposure during studies • Connection with local, national and global evolving business needs • Engage in affirmative (or positive) action in university admissions for under-represented groups, without admitting very clearly underqualified candidates Employment policies should focus on the following aspects to promote diversity: • Include diversity-focused organizations in their recruitment strategies • Build workforce development systems for the young and adults • Workforce development policies should create a comprehensive advancement system for all workers, especially those who are disadvantaged • Use affirmative action to broaden talent pools, not quotas. Maintain flexibility on individual credentials and standards without lowering the bar on performance • Organizations need to educate people about the business benefits of diversity • Maternity/paternity policy should include paid leaves of absence for childbearing and early childcare, along with incentives for mothers and fathers to return to the labour force and their former jobs in a timely manner • Introduce performance assessment processes ensuring that employees are judged by the quality of their work and are being developed to leverage their full potential What is affirmative action? At least since 1978 (when the US Supreme Court handed down its decision in Bakke versus the University of California), racial quotas in university admissions as well as employment have been illegal. Yet, affirmative action in both realms has survived over time. So, if affirmative action (or positive action, as it is widely known in the EU) does not include quotas, what does it include? Affirmative action in universities or workplaces can take many forms, but generally it includes at least some of the following components (over and above a strong commitment to non-discrimination against under-represented groups such as women and certain minorities): 1. Special recruitment efforts to identify strong candidates in under-represented groups, and to encourage them to apply for positions 2. Selection procedures that allow the standard credentials to receive last weight in the decision process 3. Special efforts to evaluate their performance more closely and to remediate any observed deficiencies in their skills once they are accepted into the institution through additional targeted education and training efforts Of the three mechanisms, the extra recruitment efforts (1) are probably the least controversial, while compensatory efforts at skill development (3) are also quite widely accepted. But the use of different selection procedures for minorities or women relative to white men (2) – either in universities or in workplaces – is much more controversial. These often entail some “preference” for the minority/female candidates relative to white males, either when their credentials (i.e. grades or test scores in universities or work experience in employment) are equivalent or even when those of white males are somewhat stronger. This has also led to charges of reverse discrimination against the majority group. The proponents of affirmative (or positive) action argue that, in the absence of these policies, the effects of past/present discrimination elsewhere in society and persistent differences in the opportunities available to these groups will lead to continuing gaps in advancement between them and continuing underutilization (and underdevelopment) of the potential of members in under-represented populations to be fully productive citizens. Source: Professor Harry Holzer 20 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces Policies within organizations include the following: • Create inclusive environment where individuals can succeed • Introduce informal and formal mentoring and coaching of juniors by seniors, accessible to all employees, both minorities and majority. Mentoring unlocks secrets for being successful in an organization. It usually also creates a situation where the mentor, senior member, learns as much from the mentee, junior member • Recognize successes of individuals from all backgrounds and promote an understanding that everyone can be successful • Make technology tools available for people to share ideas, regardless of their position in the hierarchy • Create practices that democratize input and foster merit-based contributions • Introduce volunteerism programmes so employees can contribute to local communities and society and feel good about who they work for, as well as create an environment where employees remain loyal to their employer because of these important community programmes • Promote policies that increase the attractiveness of young female workers for employers through introducing paternity leave so both parents can share childcare responsibilities • Bring in business needs to education systems through teaching useful business skills and good practices about money to high school students and even younger children The Global Leadership Fellows Programme at the World Economic Forum Each year, the World Economic Forum selects and hires around 30 individuals from a pool of more than 2,000 applicants to join a three-year programme as a Global Leadership Fellow (GLF). As part of their regular work at the Forum, GLFs have unique exposure to the business world, the public sector and civil society. In addition, GLFs take part in intensive leadership and management training, and get insights in issues on the industry, global and regional agendas, with training modules designed in collaboration with top universities. Originating from over 25 countries, aged between 28 and 38, the GLFs represent a broad variety of personal and professional backgrounds and profiles. Professor Gilbert Probst, Managing Director of the Forum and the Dean of the Programme, acknowledges that “in a world growing as fast as it is shrinking, in which the most pressing challenges are increasingly interconnected … winning strategies are those that are comfortable with diversity. ...” Source: The World Economic Forum website, Gilbert Probst, Managing Director, Dean of the Global Leadership Fellows Programme at the World Economic Forum 21 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces What are the recommendations for leaders that follow the answers to these questions? The clear sense of this council is that there should be no contradiction between recruiting for diversity and recruiting for talent. The challenge is not balancing these two things but combining them. No compromises should be made to secure diversity, but special effort should be made to search for talent among diverse groups. Another clear conclusion is that there is a body of experience and know-how in ensuring that a diverse workforce can also be a creative and harmonious one. It is not necessarily that a diverse workforce is always more creative and functional; without the proper management techniques, rules and cultural cooperation, it can be destructive and dysfunctional. Therefore, to combine talent and diversity involves thinking about both recruitment and management in new ways. – Timothy Garton Ash, Professor of European Studies, University of Oxford, United Kingdom If you are serious about building a diverse workforce, start from the top of the organization. Leaders need to realize that it is key to integrate talent in various forms to run a successful organization. Leaders should surround themselves with different people. In the Japanese context, leaders should change their mindset from the traditional view of uniformity and conformity to productivity and creativity. 2009 DiversityInc Top 20 1. 2. 3. 4. 5. 6. 7. 8. 9. Johnson & Johnson AT&T Ernst & Young Marriott International PricewaterhouseCoopers Sodexo Kaiser Permanente Merck & Co. The Coca-Cola Company 10. IBM Corp. 11. Procter & Gamble 12. Verizon Communications 13. American Express Co. 14. Bank of America 15. JPMorgan Chase 16. Abbott 17. Cox Communications 18. Pepsi Bottling Group 19. MGM MIRAGE 20. Novartis Pharmaceuticals Corp. Source: DiversityInc, 2009 The marketplace has changed. Its level of diversity has increased and workforces need to reflect that. Building the future for a business requires investment in diversity, raising tomorrow’s leaders and educating tomorrow’s employees. Organizations need to find out what important dimensions of cultural and demographic diversity impact the bottom line of their business and the demographics of their customers. Basically, each organization has to have a business reason for diversity. Additionally, an organization has to look at how and who it purchases products and services from and assure, where possible, that it considers small businesses that are owned by diversity individuals. In doing so, this helps build the economic well-being of visibly diverse communities by strengthening small businesses and the individuals they recruit, who many times are also diverse individuals. In the United States, this takes the form of supplier diversity programmes, but these programmes are beginning to take hold in other countries, such as Canada, the United Kingdom and India to name a few. Having a diverse workforce means richer debate and a fruitful success story over time. Respect for other cultures and nationalities needs to be systematically strengthened in organizations. 20 Best Companies to Work for in 2009 1. NetApp 2. Edward Jones 3. Boston Consulting Group 4. Google 5. Wegmans Food 6. Cisco Systems 7. Genentech 8. Methodist Hospital 9. Goldman Sachs 10. Nugget Market 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Adobe Systems Recreational Equipment Devon Energy Robert W. Baird W. L. Gore & Associates Qualcomm Principal Financial Group Shared Technologies OhioHealth SAS Source: Fortune, 2009 22 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces KPMG Great Place to Build a Career KPMG’s Great Place to Build a Career initiative is a set of programmes that focuses on recruiting, retaining and developing talented people from a diverse pool of backgrounds and experiences in KPMG. The initiative consists of a recruiting strategy that includes unconscious bias training for recruiters and a targeted mentoring programme for new hires who are people of colour. Other components include transparency on career paths through an interactive set of online resources and tools, enhanced person-to-person career guidance provided by professionals who have an aptitude for career coaching and a mentoring culture supported by a formal programme with 6,000 mentors and nearly 10,000 mentees. In 2008, women comprised 18.2% of partners, up from 12.9% in 2003. Also, women of colour represented 10.2% of managing directors, directors, senior managers and managers, up from 5.7% in 2003. In 2009, KPMG won the Catalyst Award which celebrates cutting edge strategic approaches to advancing women in the workplace. Source: Catalyst website, October 2009 Diversity should be embedded in an organization’s DNA and should integrate top global organizations with all their stakeholders. Companies should move away from the mindset where diversity is a fashion of the day owned by a separate diversity department, and focus on organizing events and initiatives for underprivileged groups of employees. Building diversity cannot be a tick the box exercise; tokenism will not build credibility. Re-examine HR practices so they enable attraction, recruitment and retention of a diverse workforce. Diversity needs to be a design principle for HR activities and recruitment strategy. There is a need for immigration policies that foster talent mobility, allow successful integration of workers into hosting society and discourage illegal immigration. Immigrants, who have already entered their host societies illegally, have put down roots and begun to raise families, should have opportunities to become legal citizens. Recomendations for Inclusive Talent Development Strategies Source: Global Agenda Council on Diversity, Dubai 2008 23 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces Across Europe nationality is taken for granted – multinationals are nationally blind these days. However, age is becoming an increasingly interesting factor. Three generations coexist in the workforce – baby boomers, Generation X and Generation Y. This will have consequences for legislation, pensions, etc. Saving the business without losing the company…. The Nissan story by Carlos Ghosn In 1999, the objective of the turnaround initiated by Carlos Ghosn, CEO of NISSAN, in the Japanese automaker was to introduce changes while protecting the identity of its employees. He had to find the right balance between the two and overcome the scepticism of the company’s managers and employees to a non-Japanese outsider. As Carlos Ghosn puts it, “Success is not simply a matter of making fundamental changes to a company's organization and operations. You also have to protect the company's identity and the self-esteem of its people.” Some of the changes initiated at Nissan are: Old practices New practices Outcome • Nissan paid and promoted their employees based on tenure and age • Look at people’s performance records • Do not hesitate to bypass employees with longer tenure in the company • Quality of leadership is truly tested • Managers did not receive any incentives or shares options • Revamp the compensation system • Drive to performance and to focus on performance achievement is encouraged • Provide cash incentives for strong performers and stock options for managers • A culture of blame existed because • Define clear responsibilities for managers had undefined roles employees • Employees are held accountable • Mobilize Nissan’s own managers through a set of cross-functional teams (CFT) to identify and lead the necessary radical changes. Particularly it: - Helped managers to think “out of the box” - Provided mechanisms to rationalize changes and deliver messages to the entire company - Made mandatory for each CFT to have sub-teams focusing on smaller issues - Set up two team leaders per team so that no single function could dominate the other - Created “pilots”, who drive the agenda • Allow sensitivity to Nissan’s culture by allowing the company to develop a new corporate culture that builds on Japanese best practices: - Showed people respect - Made employees understand that the goal was to restore Nissan to its old glory - Build on Japanese culture of keen competitiveness and sense of community • Build trust through transparency: - Made people personally committed to every observation and claim they made - Each employee had to share their work plan in committees at regional meetings Source: “The Nissan Story”, in Harvard Business Review, by Carlos Ghosn, January 2002 24 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces Next steps This first version of the white paper is prepared for discussion at the Summit on the Global Agenda in Dubai, 20-22 November 2009. Afterwards it will be expanded, finalized and shared at the World Economic Forum Annual Meeting 2010 in Davos-Klosters. The white paper summarizes the council’s recommendations on creating inclusive working environments and cultures, and on effective management of diverse workforces. It summarizes the council’s discussions to date and develops a context for further dialogue. Next steps: Gather more input and feedback • Perspectives of council members who joined in 2009 will be included in the white paper after the recently confirmed members have been interviewed • Outcomes of the council’s discussions during the Summit on the Global Agenda will further fuel the white paper • Insights from other relevant Global Agenda Councils may also be incorporated, as well as the viewpoints of business participants in the cross-industry dialogue on talent. (To be discussed by the council in Dubai.) Refine the white paper • What are key messages? • What areas should be further explored? Finalize the outreach strategy and the next steps Connection of the Talent and Diversity Issue with other Global Agenda Councils 25 Ashridge Business School http://www.ashridge.org.uk Global Agenda Council on Talent and Diversity Recommendations on Creating and Managing Inclusive Workforces Acknowledgements The World Economic Forum would like to thank the chair of the council and the members for their remarkable contribution, engagement and support. In particular, we would like to thank the council’s chair for overall guidance to the white paper and for leading the works of the council and to those members who were involved in editing the white paper: Martha C. Artiles, Global Chief Diversity Officer, Manpower, USA Subha Barry, Former Managing Director, Bank of America Merrill Lynch, USA Katherine Garrett-Cox, Chief Executive Officer, Alliance Trust, United Kingdom Timothy Garton Ash, Professor of European Studies, University of Oxford, United Kingdom Peter Goerke, Member of the Group Management Board, Zurich Financial Services, Switzerland Harry Holzer, Professor of Public Policy, Georgetown University, USA Chaired by David A. Thomas, H. Naylor Fitzhugh Professor of Business Administration; Unit Head, Organizational Behaviour, Harvard Business School, USA Forum Contributors Anna Janczak, Associate Director, Professional Services; Global Leadership Fellow Khaled Lahlo, Community Associate, Professional Services Sources - Business Week, Financial Crisis Puts Diversity Gains at Risk, September 25, 2008 - Capital H Group, Diversity and Inclusion in the Workplace – Harris Interactive Survey commissioned by Capital H Group, September 2009. The survey involved 20 Fortune 500 companies. - Carlson, The Learning Journey at Carlson, October 2009 - Catalyst Census, 2007 - DiversityInc, 2009 - Financial Times, March 2 2009, Professor Michel Ferrary, Ceram Business School, France - Fortune, 2009 - Fortune International (Europe), Holstein, William J., 2007 - Gender in Norway website, October 2009 - Goldman Sachs, “Women Hold Up Half the Sky”, 4 March 2008 - Harvard Business Review, “Diversity as Strategy”, Professor David. A. Thomas, Vol. 82, No. 9, September 2004 - Harvard Business Review, “The Nissan Story”, Carlos Ghosn, January 2002 - Harvard Business Review, “HCL Technologies: Employee First, Customer Second”, Kamalini Ramdas and Ravindra Gajulapalli, 29 September 2008 - Harvard Business School Working Paper, “Team Learning and the Racial Diversity-Performance Link“, Robin J. Ely and David A. 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Erickson, July 2007 - Novartis website, October 2009 - The New York Times, 21 March 2008, “Women take their place on corporate boards” - United Nations, Statement by Sha Zukang, Undersecretary-General for Economic and Social Affairs, 2 March 2009 - PricewaterhouseCoopers, October 2009 - Thunderbird School of Global Management, 10,000 Women Program in Afghanistan - World Economic Forum, Global Leadership Programme - World Economic Forum, The Global Competitiveness Report 26 Ashridge Business School http://www.ashridge.org.uk The World Economic Forum is an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas. Incorporated as a foundation in 1971, and based in Geneva, Switzerland, the World Economic Forum is impartial and not-for-profit; it is tied to no political, partisan or national interests. (www.weforum.org) Ashridge Business School http://www.ashridge.org.uk