Managing Diversity in the Global Organisation
26 January 2007 Celia de Anca
The economic and business environment in which most companies operate has changed drastically over the last decade. In an extract from her recently published book, Dr Celia de Anca, IE Business School, explains how this has led to significant changes in the way companies are run and the way they include new management skills and competences.
Today's business organisations are increasingly open to the idea that the diversity of the members of their workforce can act as a catalyst for the firm's capacity to innovate. The key to diversity does not lie, however, so much in its existence, but rather in knowing how to manage it effectively.
Companies such as JPMorgan Chase, BP, Shell, American Express or Ford have embarked upon major reform processes in recent years, from senior management down, which have translated into major changes in strategy aimed in the medium term at enabling firms to maximise the potential of their workforce.
The reason for this is not just social justice, but rather the belief that an increase in diversity, if well managed, represents an important source of potential for the company. It is also widely believed that it will allow the firm to respond more efficiently to demand in general, with a wider range of opinions and the greater flexibility needed to compete in a market that is constantly changing.
In the book Managing Diversity in the Global Organisation, processes that have begun in recent years in large international companies are analysed using a framework of analysis focused specifically on the management of the different levels of diversity and on the specific objectives of each level.
The key objective of this analysis is to try to identify best practices in the international market, the application of diversity management in defined contexts and the degree of success that such practices have brought to the companies involved.
The promotion of diversity in the company is a result of external, social and legal pressures on the firm to meet the needs of society, and specifically its clients, shareholders, suppliers, workforce and managers. This increase in social demand is spurring companies on to carry out a more fundamental internal reform of the company, aimed at managing and efficiently integrating diversity to achieve increased efficiency and to improve the process of innovation.
The company's medium-term aim, therefore, is to integrate the various components of the organisation into a single system in which members contribute with their abilities, resulting in the company being able to grow and innovate. There are, however, objectives and results that can be achieved in the shorter term. These can be analysed at three different levels, each of which has its own specific objectives and results.
LEVEL 1: SOCIETY
Objective: to harmonise the company to society's demands.
Benefits: improved reputation and an effective response to demand.
At the first level, that of society, the company interacts fundamentally with society in a continuous dialogue with its stakeholders, introducing diversity policies that aim to meet a social demand and which provide immediate benefits, such as an improvement in reputation for the company or its brand name.
The corporate social responsibility reports that many companies, such as Telefonica or Opel - General Motors, have been producing in recent years illustrate some of the initiatives that international corporations employ at this level.
LEVEL 2: THE ORGANISATION
Objective: to provide a flexible environment.
Benefits: retaining talent, access to markets, organisational integration and cost savings.
In addition to acting on a social level, the company has to act within its own organisation to provide its employees with a flexible environment in which they can achieve their full potential, and to thus retain its brightest talents.
JP Morgan Chase, BP, Accenture, IBM, Ford, American Express, Shell (Merck) and Dome are some of the corporations that have gained international recognition for best practices in this respect, with initiatives that include work-life balance programmes, recruitment and promotion policies, career development programmes, and employee networks or policies aimed at integrating the disabled.
LEVEL 3: THE INDIVIDUAL
Objective: supports the development of the individual members of the organisation.
Benefits: innovation, leadership, a variety of opinions growth, and adaptability to change.
Finally, the company acts on an individual level. The company can provide systems, particularly those related to training and personal development, which support individuals in their personal growth. The individual capacity to grow and innovate will determine, in turn, the organisation's capacity to grow and innovate. The development of human capital therefore forms the foundations of organisational strategy.
DEALING WITH DIVERSITY
Although these processes take place simultaneously, they have different rhythms and use different policies and tools.
It is not a case of setting out a plan of action with rigid targets to achieve radical change at the three levels of action. It is about beginning a step-by-step journey on three levels, with greater or lesser emphasis on each, leading in the long term to the creation of an integrated, continuous learning organisation that can act as a whole but is made up of highly developed individuals who are capable of creating and innovating.
Society is changing rapidly; the business world gets more global by the day, new groups come into the market and the climate is becoming more and more competitive.
Diversity at all levels of the organisation is an imperative that is recognised by the majority of European companies. But at the same time, the ever-increasing diversity of the workforce brings with it a whole new set of problems and conflicts which managers in the future will have to be able to solve if they want to create flexible, diversified organisations that are capable of creating and innovating within a single vision and unique strategy.
The challenge for the 21st century manager is to find a balance between diversity and the unity of aims and objectives of the company.