The global workforce is changing. For many companies, demographic
shifts, growing workplace diversity and expansion into new markets will
profoundly change the makeup of the workforce to one that is more
geographically dispersed and multicultural.
The ability of organizations and individual leaders to succeed in this
environment will depend a great deal on their success in developing and
nurturing what we call an “intercultural competency.” What do we mean
by this? Fundamentally, it refers to the individual and organizational ability
to recognize cultural differences between and among employees at
every level, to encourage the maximum contribution from individuals in
these diverse groups and to create a framework for global collaboration
and knowledge sharing. These considerations transcend the traditional
nomenclature of “diversity” (race, ethnicity, gender, sexual orientation,
age, etc.) to include considerations of tradition, religion and values.
Why is this capability so important today
and for the future? First, companies with a
well-developed intercultural competency
will gain an edge in recruiting and retaining
the highest-performing executives. Individuals want to work for strong, wellrun
companies that provide opportunities
for development, exciting challenges and a
positive culture that values individual contributions.
In addition, companies able to efficiently share knowledge and skills —
especially across borders — will be better
able to adapt to new competitive opportunities
and challenges, wherever in the
world they arise.
The new workforce dynamics
Globalization and several significant
demographic trends are converging to
reshape job requirements, changing how
organizations attract and deploy talent
and, ultimately, changing the face of the
global workforce. While some of these
trends are well-established, we are only
beginning to see the impact of others.
They include:
The increasingly global nature of
business.
Companies are expanding their
global operations, setting up research
and manufacturing operations across
Asia and Eastern Europe to lower costs
or be closer to suppliers or customers.
Others are relocating global business
units or functions to new regions, particularly
the Asia Pacific region. The challenge
for these companies is not only to identify,
develop and retain strong local leaders
— as they increasingly try to reduce
reliance on expatriates — but also to
effectively deploy the right people with
the right capabilities in each location
around the world.
Migration and immigration shifts.
The ability
to travel more easily and less expensively
than in the past is increasing the
mobility of workers in all regions; more
often, workers are crossing borders to go
where the jobs are. For example, among
Eastern Europeans who migrated to the
West for higher-paying jobs after the
expansion of the European Union in
2004, some are returning to pursue economic
opportunities back home. In the
U.S., immigration — including the immigrants
themselves and their children — is
projected to add 117 million people to the
population by 2050,1 while companies in
India and elsewhere in Asia are recruiting
returnees and expatriates.
Growing ethnic, racial and gender diversity.
By some estimates, “people of color” will
represent 40 percent of the population in
the United States by 2050. Diversity is not
just a U.S. phenomenon, however. In
India’s technology industry, which was
once almost exclusively male, 35 percent
of employees last year were women.
According to Nasscom, the software
industry trade group, the percentage of
female employees in technology will rise
to 45 percent by 2010. As the workplace
becomes more heterogeneous, organizations
are looking at different ways to
attract, motivate, develop and retain their
employees.
The anticipated surge of retirees
Baby
boomers in many European countries as
well as in the United States, Australia and
Japan are reaching retirement age. The
exodus of experienced leaders — along
with their vast reservoir of business and
institutional knowledge — is likely to
have a significant impact on many companies.
In response to the aging workforce,
companies in established industrial
countries are adopting strategies to retain older workers while systematically
transferring
knowledge and identifying new
sources of talent for the long term,
including experienced leaders from other
regions.
Dynamic workplace
Many companies have
adopted a less top-down organizational
structure that encourages decentralized
decision making and more collaboration.
At the same time, businesses are preparing
for the influx of a new generation of
employees — the so-called Millennial generation,
born after 1978 — who often bring
different workplace values, different views
about corporate social responsibility and
different expectations about work-life balance.
These changes are creating challenges
for companies managing individuals
with a range of work styles and expectations.
Amid these changes, the companies that
will be the most effective at managing and
leveraging their talent will be those that
develop the intercultural competency.
These companies will build a nimble, globally
dispersed organization able to efficiently
move people, resources, ideas and
information around the world. They will
have an infrastructure that encourages collaboration
and provides the flexibility to
respond to changes in the competitive
landscape.
Building intercultural
competency into organizational
culture
What are the characteristics of an organization
that values individual differences
and leverages the intercultural competency?
These organizations have a culture not
just of tolerance, but of awareness and
understanding. They consciously create a
culture that accepts varying styles and is
open to wide-ranging perspectives. They
view diversity of thought as contributing to
a more complete understanding of the
opportunities and issues before them.
This, in turn, contributes to better decision
making and, ultimately, global competitive
advantage.
In practice, an organization with a strong
intercultural competency is able to effectively
develop and deploy its talent globally
by doing the following activities well:
Establish a learning culture and embed
processes to transfer critical knowledge
and skills.
Employees at all levels of the organization
benefit from having access to formal and
informal sources of knowledge and new
skills, whether they reside in headquarters,
at operations in other regions or with experienced
employees who may be approaching
retirement. Tactics such as mentoring,
training and educational programs,
onboarding of new employees and creating
global communities of interest will
help to preserve knowledge and promote
information sharing among employees.
Strive to integrate, not assimilate,
individuals with diverse backgrounds.
Organizations with a strong intercultural
competency create a culture of acceptance,
not assimilation. Rather than trying
to mold individuals into a single ideal of
leadership, these companies accept and
accommodate the range of styles and perspectives
housed in the organization.
This may require the company to expand
its notion of what it means to be a leader.
Organizations with a well-developed intercultural
competency will be disciplined in
evaluating people based on their performance
and contributions, rather than who
they are or whether their styles conform
to traditional expectations. Organizations
that overlook high-performing leaders
who do not exhibit traditional leadership
traits — individuals who Harvard
Business School Professor Linda A. Hill
describes as “stylistic invisibles”2 — risk
losing effective leaders or wasting their
potential by assigning them to less
important roles.
Top management must signal the importance
of cultivating high-performing
talent by creating the expectation that
managers will identify and nurture promising
executives, regardless of their backgrounds
or styles, and evaluate managers’
success in this area. Managers
must be willing to give promising individuals
stretch opportunities or match them
with jobs that might not be obvious on
the surface.
Embrace and reward individuals with
the intercultural competency.
Efforts to promote diversity and inclusion
suffer when they are viewed as separate
from the other activities of the business.
An important way to reinforce the importance
of the intercultural competency is
to hold employees across the organization
accountable for advancing intercultural
priorities. Create incentives in the
compensation structure that reward managers
who support diversity, whether
in human capital planning, succession
planning or recruiting.
Have a recruitment strategy that
seeks out talent from nontraditional
sources.
Similarly, talent development and succession
planning processes should include
the conscious strategy of identifying highpotential
individuals outside of traditional
leadership sources and those with different
styles and points of view. Rewards
should be tied to individuals’ performance
and contributions to the organization,
rather than self-promotion or political
savvy.
Cultivating an individual intercultural competency
A company cannot build intercultural
competency at the organization level
without cultivating the competency in
individuals at every level of the business.
What does it mean for individuals to have
this intercultural competency? These
executives have a global orientation. They
possess an awareness and curiosity about
cultures other than their own. They have
compassion and empathy for others and
are skilled at recognizing others’ core strengths and weaknesses. They are
natural
problem-solvers, have a high level of
self-awareness and humility and are comfortable
with risk.
In practice, these individuals resist the
urge to work with or promote only the
people with whom they are most comfortable
and are willing to reach out to people
who are outside of their normal circle
of associates and friends. Because they
strive to understand the motivations and
aspirations of others, they are able to get
maximum performance from their teams.
Senior leaders have had to adapt to a
variety of new expectations over the years.
For example, as business has become
more global and more complex, senior
leaders increasingly are expected to have
international experience and the ability to
lead matrixed organizations. We expect
that, over time, the personal qualities and
characteristics associated with the intercultural
competency will become more
important for senior executives to develop
in themselves.
Conclusion
Organizations are evolving the way they
manage their global workforces as they
expand operations into new regions and
grapple with demographic trends that are
making the workplace more diverse.
Companies that successfully develop the
intercultural competency — creating a
culture that rewards performance,
embraces different styles and points of
views, and provides a framework for global collaboration and knowledge sharing
— will have a competitive advantage.
Companies with the best work environments
and strong employer brands will
attract best-in-class talent and have lower
employee turnover. They also will be better
able to move information, skills and
knowledge around the organization.
1. U.S. Population Projections: 2005–2050. Passel, Jeffrey S. and Cohn, D’Vera.
Pew Research Center. February 11, 2008.
2. Where Will We Find Tomorrow’s Leaders? Harvard Business Review.
January 2008.
Evaluating your organization
There is not a specific formula for cultivating intercultural competency, but there are
practices that help to create a culture that embraces people’s differences and encourages
collaboration. Consider the following questions to understand how your organization
addresses and resolves key talent issues:
- How do we build teams and share information?
- Are there roadblocks in the form of policies, practices, assumptions, attitudes
or behaviors that individuals with different backgrounds or nontraditional leadership
styles encounter?
- Is the company developing the intercultural competency in individual leaders
and putting in place a structure that makes it easy for people across the organization
to share information and collaborate?
- How do we assess people? Are we using the appropriate tools?
- What is the organization’s training agenda around multiculturalism, diversity
and inclusion?
- Who are we sending abroad and how are we preparing them?
- What are our expectations for individuals and managers with respect to intercultural
competency? How do we hold them accountable to these expectations?
- What are the barriers to inclusion, and how can they be changed? Who controls
those barriers and can change them?
Building your individual intercultural competency
- Seek experience working internationally or with international teams.
- Reach out to people who are outside your normal circle for work projects or
social outings.
- Recognize that qualities often associated with strong leadership — a commanding
presence, for example — may reflect tradition rather than actual
leadership capabilities.
- Cultivate self-awareness about your strengths and weaknesses and those of
others.
- Seek to understand how your communication style and approach to working
in teams may differ from others.
Notes
This article is included in Point of View 2008.
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