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The commercial case for a comprehensive diversity initiative is a strong one and many businesses have already realised that a multicultural workforce is in fact a huge asset. However, misconceptions, inappropriate practices, poor language skills and ignorance about other cultures continue to cause businesses to miss out on valuable opportunities both at home and abroad. To survive in the increasingly global market place British companies need to realise that they no longer have a choice - it is now essential to have knowledge of and be able to communicate with, people of different nationalities, cultures and religions.
In today’s global economy traditional barriers are disappearing and for many companies cross border trade is now integral to their growth and success. A decade ago Japan, Europe and North America were responsible for over 80 per cent of global commerce, but new markets are opening up throughout the world and these have brought increased opportunity and also competition. In addition rapid developments in technology such as the internet, have made new markets accessible to even the smallest of companies.
The growing markets of Latin America, Asia and Central and Eastern Europe are now playing an ever more important role in global buying, selling and manufacturing. For example, burgeoning free enterprise in China has not only drawn attention to its one billion consumers, but has also strengthened the country’s economic status. Equally, India’s continuing economic growth has caught the eye of long-term investors and created new opportunities for business. However, these developments have also brought a number of challenges and many UK companies have failed to capitalise on new markets.
In recent years there has been a backlash against large multi-national corporations, which have in the past exploited poorer countries and failed to invest in local communities. An increase in smaller home grown companies is forcing large western organisations to re-evaluate the way in which they do business. Local businesses have the advantage as they possess a greater understanding of their customers’ needs and are more in tune with changes to local markets. Furthermore, consumers prefer to deal with a workforce with which they can identify and that have a true commitment to their community.
To succeed in this diverse environment it is essential to have knowledge of, and be able to establish effective relationships with, people of different cultures and languages and larger western corporations must work to better match the populations that they are trying to reach. Businesses that employ people of different backgrounds can swell their knowledge and understanding of diverse consumer groups, enabling them to provide a more tailored and satisfactory service. By ensuring that their workforces reflect the ethnic make-up of the areas in which they do business, companies can better meet the needs of their customers as well as improve visual representation and create vital ties with the community.
HSBC is a transnational company that has responded positively to the challenges of the global market. The bank’s present advertising campaign, highlighting how different cultures and nationalities respond to different messages and the benefits around this, has successfully raised the companies profile as a pro-diversity organisation. As ‘the world’s local bank’, HSBC has become a leader in diversity and recognises that by employing people of differing backgrounds they are gaining a competitive edge and are better able to adapt to new situations. For example, to win over the south Asian business community the company established a service that tailored to its needs by employing staff that understood the market and with which the region’s consumers could identify. Almost 50 per cent of employees in the 12 special teams devoted to winning over this sector are from south Asian backgrounds.
A failure to meet the needs of these increasingly powerful consumer groups could have serious implications for western economies, as home grown industries will squeeze out European and American companies. For instance, Microsoft Windows software presently uses a simplified version of Chinese and Japanese characters, despite the fact that in 20 years time over half of the world’s computer users will be from these countries. As their own software industries grow the prospect of these nations dropping Windows may become a serious threat to the American IT industry.
A diverse workforce wields immense power in the domestic market as well; eight percent of the UK workforce is made up of minority ethnics and these groups have considerable purchasing power, with almost £15 billion in after-tax income belonging to black and Asian consumers. In some urban areas the proportion of the ‘buying’ minority ethnic population rises to over 30 per cent. More enlightened companies have already recognised the need to capitalise upon these new markets and the requirement for different competencies that reflect ethnocultural diversity. Both Sainsbury’s and Marks and Spencer have realised that they can attract new customers by implementing changes to their recruitment policies that will create a better match with their customer base. Both companies are now working to ensure that the workforces in their shops reflect the ethnic make-up of the areas in which they are based.
The need to better understand and establish effective relationships with people of different cultures and language is equally important at board level. Those at the top need to develop their sensitivity to and competence in, differing cultural practices if new partnerships are to be created and opportunities seized. For example, in Asia there is a far greater emphasis on the nature of a business relationship than in the UK and in China an understanding of ‘Guanxi’ (the network of business relationships that exists among various parties that support each other) is vital to achieve success. Time and resources must be invested to establish a strong network as the Chinese prefer to do business with people they know and trust. South American organisations, such as those in Mexico, also look for ‘personalismo’ in their business arrangements and will often expect repeated personal visits from senior management before any deal is struck.
A diverse workforce is not only necessary to penetrate new markets but also to attain a competitive edge. A varied pool of talent, experience and perspective is inherently more creative and innovative than a homogeneous one and these characteristics are vital for success and growth in today’s competitive environment. It is not enough however, to merely employ people of different backgrounds, neither is it enough to ensure that these people are represented at the higher levels of the organisation. There is little point in recruiting for diversity but then pushing people to conform and fit in with the stereotypical and traditional white, British, male model of working. UK companies cannot expect employees with vastly differing needs and potential to flourish in such an environment and if they are to truly gain from the knowledge and skills of a diverse work force then changes must be made to facilitate positive contribution from minorities. An added benefit of this is that staff will then feel more able to contribute their wider skill set to the mission of the organisation.
Successful programmes will result in fundamental changes to an organisation’s culture and challenge traditional attitudes. For example, if companies fail to tackle underlying discrimination when implementing policies designed to increase and promote diversity, then the business benefits of such programmes will not be realised. Processes and behaviours will need to be modified and a more accepting and flexible environment established. Businesses should implement changes to their practices that make the most of their diverse workforce; working practices and attitudes need to be flexible enough to both accommodate and complement every individual to ensure that they are able to give their best. For those companies that do recognise that one size no longer fits all and implement the changes required to make the most of the modern workforce, the benefits may be vast.
Companies that aspire to grow, need to implement a comprehensive business focused, diversity programme that will enable them to adapt to and compete in today’s ever changing and increasingly diverse global economy. If British companies want to succeed in this environment they must wake up to the business benefits of diversity before they are pushed out by their more enlightened competitors in both the international and domestic markets.
Eden Charles is an Account Director at Berkshire Consultancy Limited and specialist in diversity. Eden has worked with numerous multinational organisations helping to develop and implement diversity programmes that allow them to realise the business benefits of diversity. For more information visit www.berkshire.co.uk or telephone 0118 9883749.
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