Recommendations on Creating and Managing Inclusive

Transcription

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.
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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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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,
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
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
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
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
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
Timothy Garton Ash, Professor of European Studies,
Peter Goerke, Member of the Group Management
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. Thomas, October 2004
- Harvard Management Update, “How Coca-Cola built
strength on diversity”, edited by Christina
Bielaszka-DuVernay, April 2008
- HCL, October 2009
- Human Resource Management, “The Effects of
Diversity on Business Performance: Report of the
Diversity Research Network”, 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
- INSEAD knowledge website, Katherine Klein, Professor
of Management at Wharton, “Diversity is not Diversity”,
October 2009
- MIT Sloan Management Review, ”Bridging Fault Lines in
Diverse Teams”, Lynda Gratton, Andreas Voigt and
Tamara J. 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
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)

Recommendations on Creating and Managing Inclusive

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