Capitalising on Culture

Australian organisations are well aware of the pressures imposed by the global marketplace and the requirement that they be competitive and nimble enough to compete against international competitors. Companies focused on building a culturally diverse workforce will be more equipped to deal with these pressures moving forward and will benefit from the advantages to be gained from harnessing the talents of a widely different team of employees.

Culturally diverse workplaces benefit from improved productivity and profitability and may also gain a competitive edge through being able to offer a tailored client experience. Culturally diverse workplaces also enjoy improved creativity and innovation through having access to a pool of people with a wide worldview and different life experiences. Organisations like this quickly build a reputation as a great place to work leading to greater staff retention, less absenteeism and improvements in morale and productivity.

Despite the swathe of well documented benefits Australia’s leading listed companies are still failing to deliver great results when it comes to cultural diversity within their senior ranks.

Recent DCA research examined the cultural origins of board members and senior executives within the top 200 companies on the Australian Stock Exchange. The results showed that there is some depth in cultural diversity among business leaders but also revealed some serious under-representation in key areas.

DCA’s CEO Nareen Young said the research offers important insights on Australia’s business leadership.

“…a culturally diverse and capable leadership team can provide enormous benefits for organisations, such as the potential to boost local market share, enter international markets, create strategic alliances, maximise innovation and meet critical talent shortages,” said Ms Young

The DCA research shows that:

22.2 per cent of directors are ‘culturally diverse’ (referring to people from non-Anglo-Celtic cultural origins, i.e. European, Asian, African, Middle Eastern and Pacific Islander origins), 21.9 per cent of CEOs, 19.9 per cent of senior executives and 13.5 per cent of chairs. This compares to 32.2 per cent in the general Australian community.

  • When a narrower definition of ‘culturally diverse’ is adopted (i.e. excluding people from North West European cultural origins), the degree of culturally diverse business leaders drops by at least half. The proportion of culturally diverse directors falls to 11.3 per cent, CEOs fall to 11.4 per cent, chairs to 7 per cent and culturally diverse senior executive positions to 9.7 per cent. This compares to 24.3 per cent in the general community.
  • Most culturally diverse directors have North West European origins (10.9 per cent)
  • The proportion of business leaders with Asian cultural origins is relatively low compared to the general community, especially given the importance of the Asian region to Australia’s future economic growth. Only 1.9 per cent of executive managers and 4.15 per cent of directors have Asian cultural origins (versus 9.6 per cent in the general community)
  • The commercial and professional services industry has the highest levels of cultural diversity while the transportation industry and the automobiles and components industry have the lowest; and
  • Culturally diverse female and male leaders are at a similar level with 22 per cent of female directorships culturally diverse and 20 per cent of male directorships. However, there is a very small pool of culturally diverse female leaders: 29 female versus 233 male.

Andrew Stevens Managing Director of IBM Australia and New Zealand, who backed DCA’s research, said his organisation understands the advantages of a culturally diverse workforce.

“As a global company operating across nine time zones in 170 countries, where more than 70 languages are spoken, cultural diversity is one of our greatest strengths. Now more than ever it is important to capitalise on the full breadth of talent in the marketplace. A culturally diverse workforce, at all levels from graduate hires through to executives, fosters creativity and innovation which is essential to any company’s ongoing success,” said Mr Stevens.

The DCA makes a number of recommendations for organisations seeking to more accurately measure and capitalise on cultural diversity within their senior ranks. These include learning how to measure the cultural diversity already present and then using that information to build internal engagement and understanding around cultural diversity.

Benchmarking to assess how well your organisation is doing now and over time and against cultural diversity levels in the community, your industry, your key labour pools and your customer base. The DCA also strongly recommends that organisations specifically consider Asian talent, which according to the research is very under represented in leadership compared with the wider community.

The DCA recommends that organisations place greater value on multiple cultural identities, global experience, multilingualism and community engagement skills when recruiting and promoting. Importantly, the DCA also urges organisations to adopt an inclusive not assimilatory approach to managing work place diversity. According to the DCA inclusive approaches drive improved team performance, organisational innovation and responsiveness while assimilatory approaches are associated with poorer team performance and greater racial bias.

For information about the DCA research and to read the full list of recommendations for organisations wanting to capitalise on culture click here.

 

Sources:

1. Capitalising on Culture: A Study of the Cultural Origins of ASX 200 Business Leaders, Diversity Council Australia

This Better Workplace Bulletin was First Published in February 2014