Globalization Impacts Diversity Programs

Globalization of operations, products and services means multinational financial services firms must redefine the nature of their diversity programs. But morphing inclusion policies present benefits and challenges to both companies and local employees.

Globalization has changed the dynamic for firms looking to employ an old definition of diversity, notes Gerard M. Lupacchino, senior vice president for product development at Novations Group, a Boston-based provider of consulting and training services. In a report released in April, Novations Group observed "more employers have broadened their diversity efforts because of the impact of globalization." The company's survey of more than 2,500 senior human resources and training executives in the U.S. and Canada found more than 40 percent of organizations had expanded the scope of their diversity and inclusion programs, up from just 15 percent in 2005. The survey also noted another 24 percent plan to broaden their efforts in the near future.

"As the concept of 'diversity' as a human resources issue was considered primarily a U.S.-based problem, U.S.-based companies with global operations struggled with the consistent implementation of training in this area," explains Lupacchino. "Since diversity issues defined (and their litigation) vary tremendously around the world, the level of acceptance of this training also varies."

Global Variants

But the changes afoot in business are pushing managers to move on global diversity demands.

Lupacchino notes that if you walk into a U.K.-based firm, or the regional office of a global financial services firm, you'll likely find a range of "diverse" faces, languages and religions. You may also see more women. "The reaction to the U.S. concept of 'diversity' is often ambivalence at best, as these firms see themselves as already diverse, he says.

Lupacchino believes experience has taught global companies:

· Diverse organizations are not necessarily inclusive.

· Inclusive firms are not necessarily diverse.

· Diverse firms do not necessarily outperform their competition.

· Diverse firms that are inclusive often outperform their competition.

Across cultural and language differences - as well as time zones - managing diversity issues becomes even more difficult. Says Lupacchino, "Now layer in the complex matrix relationships of a U.S.-based office working with their Zurich counterparts, or a Japanese office working with Latin American partners, and the reality of how each culture sees relationships, activities, time usage and social conventions looms over every interaction. Not only have traditional 'diversity' topics become less relevant in the global economy, but those organizations who consider their work 'done' or 'enough' are falling far behind those companies who have connected diversity, engagement and development into one powerful human resources strategy."

Changing the Status Quo

The multi-country presence of U.S.-based financial firms certainly requires a change in mindset when it comes to implementing diversity initiatives, says Peggy Hazard, managing director and head of global services for Simmons Associates, a New Hope, Pa., consulting firm specializing in organizational development, diversity/inclusion management, global culture and HR management. "National culture recedes and a global hybrid culture develops, especially for executives working in high finance internationally," she explains.

Of course, notes Hazard, there can be layers of difference, depending on the part or sector of the organization an individual works in. For instance, executives would find it difficult to notice much difference between the cultural norms of top level management from an international office to the U.S. headquarters. Most executives across the globe are now exposed to a "Western way of thinking," she says.

However, lower levels of the corporate ladder may foster less English proficiency and less understanding of other cultural issues. "There are cultural layers within a country, and managers always need to be aware of that," says Hazard. "They need to be an advocate, managing and inquiring and asking for feedback in the actual environment."

Global Worries

Getting a handle on this "international dynamic" of diversity has become an essential part of global business. "You have to look at how the differences among people affect how they interact and judge others and then impact results," Hazard says.

However, U.S.-based companies haven't done well when it comes to broadening the definition of diversity. "Even when there is a broad definition, we tend to base diversity initiatives on race, ethnicity, handicap, sex or sexual orientation," says Hazard. "If you're taking this definition abroad and managing an international office, they're not going to relate to what you're saying."

Talent management is probably a more apt way to describe the diversity initiatives across the globe, with managers understanding the location-specific challenges. In China and India, for example, generational differences are a major challenge. "The younger generation there is much more westernized, so the incentives and ways to 'on-board' employees might need to be different," she says.

While many managers adapt global policies to their own needs, as the definition of diversity expands, some African-American employee groups have expressed fears that their concerns will not be addressed, Hazard says. "They are saying that it's fine to have a broad definition of diversity, but don't use that definition to sidestep the race issue here in the U.S. People might hate complexity in the system, but that's the reality.