Centre for Organisational Studies

1
Creating and Sustaining Culturally Competent Firms
Mary van der Boon

• Centre for Organisational Studies
• Ashridge, U.K.
• November 3 5, 2006

2
Defining a Flat World

• Thomas L. Friedman
• A global, Web-enabled playing field that allows
  for multiple forms of collaboration without
  regard for geography, distance, and soon
  language.
• This means knowledge, and the ability to change,
  is crucial

3
Defining Global Diversity

• Global diversity is all the ways we are similar
  and different that impact our ability to work
  together effectively worldwide. This includes
  personal, interpersonal, organizational, and
  national cultural similarities and differences
  that impact performance.
• Shannon Murphy Robinson and Mary Beth
  Lamb
• Consortium for Global Understanding
• www.cfgu.com

4
The Business Case for Diversity
www.equalopportunity.on.ca
5
Intersectionthe act of combining elements of
dissimilar effects integrating two previously
dissimilar frames of reference
The Real Business Case for Diversity
Diversity Creativity Innovation
Frans Johansson, The Medici Effect
Creative people can stand more chaos than
ordinary people. Frank Barron
6
So why doesnt it work?

• Diversity is a reality in both labour markets and
  product markets today.
• Gaining value from this diversity requires
• a sustained, systemic approach and commitment
• a perspective that views diversity as an
  opportunity for all in the organisation to learn
  from each other
• a supportive and cooperative organisational
  culture
• group leadership and process skills required for
  effective group functioning1.
• 1 Managing Diversity for Business and Personal
  Success, Managing Transformations in Work,
  Organisations, and Society, MIT Sloan School of
  Management, 15-343, Spring 2002,
  http//ocw.mit.edu/ .

7
The Need for Diversity Management

• Effective management of a diverse workforce
  translates into bottom line results. That is
  different from saying that just because you are
  diverse you are going to get the benefits of that
  diversity.
• David Thomas, Harvard Business School

8
The Importance of Metrics

• What gets measured, gets done
• Nearly 70 of companies that have or are
  implementing diversity policies do not have
  systematic measurement or review mechanisms in
  place for their diversity initiatives
• The successful ones do.

EC Report The Business Case for Diversity
Good Practices in the Workplace. Sept
2005 http//publications.eu.int
9
Leadership Competencies
Successful leaders will model these behaviours,
demonstrate these capabilities and apply these
skills, both within their own sphere of influence
and to achieve optimal results for the good of
the corporation.

• Value Diversity
• Foster Open Communication
• Demonstrate Work Commitment
• Accept Personal Responsibility and Accountability
• Demonstrate Adaptability
• Sustain an Environment of Trust
• Use Financial and Quantitative Data to Make
  Decisions Manage by Fact
• Possess Business Knowledge Acumen

• Understand the Strategic Issues
• Analyse the Issues and use Sound Judgement
• Successfully Manage Execution
• Optimise Processes and Systems
• Effectively Influence Others
• Achieve Success Through Teams
• Drive for Peak Performance
• Successfully Coach Develop People
• Relentlessly Champion Change
• Demonstrate a focus on Customer Needs

how one Fortune 500 company measures diversity
and inclusion
10
Pepsi-Cola (pull) vs Coca-Cola (push)
PepsiCo one of the first companies to begin
hiring minorities in professional positions
(1940s), first Fortune 500 company to have an
African-American vice president.
To be a leader in consumer products, its
critical to have leaders who represent the
population we serve. Steve Reinemund, former
CEO, PepsiCo, 2001
In 2000, Coca-Cola settles one of the USAs
largest racial discrimination suits for 192
million.
I constantly remind my leadership team that we
still have a long way to go. Our journey is long
because our aspiration is huge - to become the
most respected company in the world. As CEO of
The Coca-Cola Company, I am committed to leading
our organization in doing whatever it takes to
ensure a successful diversity strategy. I know
the commitment starts with me. Neville Isdell,
CEO, Coca-Cola, 2006
11
Record out-performance
FEM business, October 21, 2006, the Netherlands
December 2005 Pepsi share price passes that of
Coke for the first time in history
October 23, 2006
12
Pepsi Coke 5-Year/Industry
13
A Tale of Two Companies

• 2001 half of new hires at Pepsi must be
  minorities or women
• Establishes own diversity monitoring forum
• Senior management among most diverse in U.S.A.
• Pepsi alumni among most senior businesswomen in
  U.S. business
• 2006 Indian-born woman Indra Nooyi appointed CEO

• 2000 African-American employees bring suit
  against Coca Cola for racial discrimination and
  win almost 200 million.
• Court mandates commission to supervise diversity
  at Coke
• 2003 Commission finds Coke fails to meet
  diversity objectives in most senior positions
• Coke fills two board positions with older white
  American men
• 2006 Coke board half as diverse as Pepsis,
  diversity drops drastically in senior management
  in comparison

14
Factors in Diversity Ranking 100 Best Corporate
Citizens

• Diversity Strengths
• Board of Directors
• CEO
• Employment of the Disabled
• Gay Lesbian Policies
• Promotion 
• Women Minority Contracting
• Work/Life Benefits
• Gay Lesbian Policies
• Other Strengths

Concerns Controversies Non-Representation Other
Concerns
Pepsi 13th overall in diversity rankings Coke
not there
Source Business Ethics Magazine, Spring 2006
15
Discussion

• The key to diversity effectiveness lies not in
  having the diversity policy itself, but in how it
  is implemented.
• Your organisation has adopted the following
  approach to implementing its diversity and
  inclusion strategy. Present the arguments for and
  against this implementation policy. Give examples
  of other organisations you have observed
  following this approach.

16
Discussion The key lies not in having the
diversity policy itself, but in how it is
implemented

• The access-and-legitimacy perspective views
  cultural diversity primarily as a potentially
  valuable vehicle through which organisations can
  gain access and legitimacy with diverse markets
• The discrimination-and-fairness perspective views
  cultural diversity as a means of ending
  discrimination and ensuring equal opportunity and
  fair treatment among employees
• The integration-and-learning perspective
  communicates to all employees that they are
  valued, in addition to providing opportunities
  for cross-cultural learning which enhanced the
  groups work.

Akinola, M., Thomas, D., Racial Diversity
Initiatives in Professional Service Firms What
factors differentiate successful from
unsuccessful initiatives?, Harvard Business
School, September, 2006
17
An effective model for diversitythe
integration-and-learning perspective
David Thomas, Harvard Business School
18
Collective Wisdom

• A group can be no smarter than the IQ of its
  members, but it can be a lot dumber if the
  internal workings dont allow people to share
  their talents.
• Robert Sternberg (Yale Psychologist)