The Impact of Diversity on Global Leadership Performance

LEAD³

S. Storey

• Publisher: Palgrave Macmillan
• Year: 2014
• Print ISBN: 9781137426697
• eBook ISBN: 9781137426710
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

This book examines the cognitive, social and behavioural skills that leaders need to have within their capability portfolio and how this can be applied to drive a diversity agenda in their organizations. The book presents LEAD³ - an analytical tool that offers an integrated change management process to build leadership and diversity capability.

Part I

Leadership and Diversity in a Globalised World

Introduction: a changing landscape

Complexity. Ambiguity. Uncertainty. Words that sum up the current business landscape. A landscape that presents diverse scenarios, is endlessly fluid and continues to change at a fast pace. Global leaders can contend with wide-ranging scenarios on a day-to-day basis that range from financial meltdowns to terrorism, cyber attacks, cultural uprisings, environmental issues, changing economic and social powers and pandemics, such as SARS and bird flu. Underlining this context is the rise of globalisation. In particular, the increasing power of emerging markets and associated factors such as the diversity of stakeholders that global leaders need to engage with, and a transforming global workforce that leaders need to connect to. In this context, and in the pursuit of organisational effectiveness, leaders choose to embrace diversity.

However, diversity is often seen as a problem for business leaders – either because leaders in mature markets driven by compliance are experiencing “diversity fatigue”, or leaders in emerging markets do not always believe diversity is relevant because they see it as an “imported” concept. However, when diversity is seen from a “big-picture” perspective, then it is acknowledged as being vital to global growth, sustainability and maintaining strategic advantage. Diversity actually represents a huge commercial opportunity, but only if it is correctly understood and managed with this purpose in mind.

Critical to this purpose are the three key dimensions of diversity that this book advocates:

(1)Structural diversity – demographic and systemic differences;

(2)Cognitive diversity – different ways of thinking;

(3)Behavioural diversity – different ways of behaving.

Each dimension needs to be managed and coordinated with the other and, most importantly, be aligned with the organisation’s overarching business strategy if the business is to take advantage of all the latent opportunity available to it. Opportunities such as:

•Improving innovation capability

•Increasing performance through higher quality and comprehensive decision-making and creative problem solving

•Building transient competitive advantage by exploiting the inherent tension between cross-border integration and local adaptation

•Talent acquisition, retention and management

•Building leadership capability

•Enhancing brand reputation and public image

•Improving corporate agility to deal with changing environments (e.g., social technology)

•Collaborative ways of working between cultures that reduce inter-group conflict and increase organisational learning (i.e., strategic activities that are central to diversity, such as mergers and acquisitions, joint ventures, strategic alliances, etc.)

In addition to the benefits of diversity outlined above, employers today understand the importance of harnessing and leveraging diversity in order to have high-performing organisations that create value and channel transient advantage. This business necessity for diversity is driven primarily by three factors: changing national demographics, more companies entering the global marketplace, and recognition that individuals from diverse backgrounds bring valuable perspectives and experiences to all aspects of corporate decision-making – from operations to marketing, finance to purchasing, communications to human resources.

High-performing companies understand the key advantages of a diverse workforce. For example: the capability of organisations to communicate with different types of customers in differing segments and geographies; key management positions filled with diverse managers who, by virtue of their multicultural upbringing and experience, are able to readily contend with multiple cultures and can switch easily among them, enabling them to manage diverse teams.

But what impact does this business necessity to leverage diversity have on a global leader’s performance? In other words: What is the evidence for a leadership necessity for diversity?

Further, can an integrated change-management process enable organisations to have a cohesive approach to global leadership and diversity?

With the continued advancement of globalisation, and with organisations increasingly treading into the emerging markets of the Brazil, Russia, India and China (BRICS) and Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa (CIVETS) and lead organizations through and across (all organizations), how leaders lead across cultures and geographies is increasing in complexity. At the root of this complexity is the need to lead the organisation through and across diverse scenarios. These scenarios can include: sustaining competitive advantage whilst at the same time balancing paradoxical needs of increasing market share whilst reducing costs; being aware of national and other country politics, as well as of important anecdotal concerns relating to corporate social responsibility. The leader has to orchestrate and influence on multiple levels and, according to Javidan, Dorfman, Howell and Hanges (2010: 370), “It is the diversity of the targets of influence that signifies and distinguishes the task of global leaders”. Further, not only do leaders have to deal with diversity of the targets of influence, but the leader has to manage his or her abilities and perhaps shift personal values and behaviours in the pursuit of greater collaboration and organisational effectiveness.

Rosen (2000: 22) magnifies this view by stating that “because multinationals are now an exotic hybrid of cultures, traditional boundaries between politics, culture, technology, finance, national security, and ecology are disappearing[;] ... business leaders must be ‘capitalists, psychologists, technologists and culturalists: they must understand the seamless interaction of all these dimensions’”.

Further, this research has highlighted that given that an acute slowdown of earning revenue in developed markets has resulted in the redistribution of economic and social power between developed and emerging markets (i.e., the BRICS and CIVETS), issues around risk, people, financial performance structures, cultural differences and communications all come into play. At this macro level, how a global leader pursues diversity strategies that these complex issues present is crucial.

Two core questions that focused the research this book is founded on and which led to its central tenets are:

(1)What is the evidence of a leadership necessity for diversity?

(2)Can an integrated change-management process enable an organisation to have a cohesive approach to global leadership and diversity?

The resulting findings suggest that, going forward, the way in which leaders and their organisations approach diversity and global leadership has to be updated and expanded so that the advantages realised by organisations, whether competitive or transient, is ensured and secured.

1

The Global Leader’s Role

Leaders are ultimately both the chief architects of their organisations’ cultures and climates, and the key connecters to their workforces. It is they who define the future of diversity. Thus, the relationship between leadership and diversity is pivotal as to how diversity can be effectively leveraged in a global context. Leaders decide what is important in terms of beliefs and values. Subsequently, what they pay attention to, measure and control and, how they react to organisational crises and critical incidents through their directing and positioning, facilitation, role modelling, teaching and coaching all contribute to the organisation’s way of being. That is, the interplay between leadership intentions, practices, attributes and deliverables is key to achieving buy-in to the value of diversity. This is the leadership necessity for diversity.

By committing to a diversity driven agenda, a leader paves the way for the entire organisation to recognise how crucial diversity and inclusion are to its overall success. Leaders move the diversity effort from a loose collection of best practices to an organisational strategy that improves performance. It becomes part of the fabric of organisational life and creates a culture that is equally values-centred and performance-driven. This is the leadership necessity for diversity.

So, for example, at a strategic and organisational level if leaders view diversity and inclusion as a business imperative so that it abides by the same internal accountability mechanisms as other business operations; if leaders prioritise diversity on their organisations’ strategic agendas as they do for business items; if leaders spread their diversity initiatives to address all elements of the organisations’ operations so that diversity as a business issue has multiple focal points; and, if leaders tailor and integrate their diversity efforts to differing contexts, then these actions will all contribute to a leadership necessity for diversity.

At a behavioural level, if leaders influence, engage and motivate across borders; if they respond to issues relating to innovation, localisation, challenge and conflict; if a leader is cognizant of the part that their heritage plays in their attitude towards diversity; if leaders position diversity as a tool that enables organisational learning; and, if leaders create knowledge platforms so that learning and a respect for others’ “ways of working” are leveraged then growth and sustainable change is achieved. These ways of being will all contribute to the leadership necessity for diversity.

According to Von Bergen (2005: 2) diversity can influence organisational performance in that a “diverse work force leads to sustainable competitive advantage and ultimately superior performance” (Barney & Wright, 1998; Cox & Blake, 1991; Johnson, 1999; Richard, 2000; Triandis, Kurowski & Elfand, 1994: 2). However, the biggest issue that leaders continue to face when considering whether or not to pursue a diversity agenda in their organisations is linked to financial performance. That is, do they solely channel their energy on achieving profits for their shareholders, or are they committed to leading a learning and developing community that is reflective of our diverse world?

To examine what the impact of diversity may be on a global leader’s performance when the above elements of performance are considered, and to understand how a global leader’s performance can effectively leverage diversity in a global context, it is necessary to evaluate where the industry currently stands in its thinking and practice of leadership.

Domestic leadership

To understand the concept and process of leadership, numerous theories and frameworks abound and, although for the purposes of this book there can be no attempt to perform a meta-analysis on all these theories (see Yammarino et al., 2005; Avolio & Chan, 2008, for a meta-analysis of leadership theories) below I provide a succinct summary of some of the more prominent theories as they form part and parcel of global leadership:

•Who are leaders? Innate traits (e.g., drive, self-determination, confidence, etc.), that are attributed to leaders (Trait-based/“Great Man” theory).

•How can leaders engage their followers in a relationship of mutual dependence? Leaders give followers something they want in exchange for something they, the leaders want (Transactional leadership).

•Why do followers follow leaders? That is, making sense of the relationship between leaders and their followers (Leader–member exchange theory).

•How do followers perceive the level of influence that their leaders have and what are the ideas and implicit theories people have of what leaders are and how they ought to behave? In other words, what are the cognitive mechanisms that mediate the influence process as opposed to a focus on overt behavioural displays (Information processing/ Cognitive theory).

•What do leaders do? How leaders differentiate themselves by universal observable behaviours. These behaviours are developable and could be modified through practicing certain skills (Behaviour-based theory). Examples of leadership theories that are operationalised behaviourally include:

•charismatic leadership, which proposes that leadership style is based on personality and is generally defined in terms of the behaviours that leaders draw upon from within their armoury to influence.

•transformational leadership, which, in essence, is about inspiring and changing attitudes and as such involves an underlying influence process that motivates followers by encouraging them to transcend their self-interest for the sake of the organisation and goal accomplishment.

•What situations are most favourable for a leader? The assumption is that there is no one best way of leading as leadership style that is effective in some situations may not be successful in others. That is, the optimal leadership style is contingent upon various internal and external constraints (Contingency/Situational approaches).

•How can we as a group or network pool our initiatives and expertise together as opposed to complete reliance on one individual? That is, the outcome is a product or energy which is greater than the sum of individual actions. There is an openness of the boundaries of leadership (Distributed leadership theory).

•How can I be of service to my followers? I as a leader will ensure that other people’s highest priority needs are being served (Servant leadership theory).

•What are the values that drive and sustain a leader? In this approach the leader fosters greater self-awareness and self-regulated positive behaviours. Leaders know who they are and what they believe in and display transparency and consistency in their values, ethics, and actions (Authentic leadership theory).

The practice of leadership is normally associated with these traditional mainstream theories of leadership (i.e., “transactional leadership”, “situational leadership”, “transformational leadership”, “charismatic leadership”, “authentic leadership”, etc.) and consequently when leadership and leadership development are referred to they tend to be within the confines of these theoretical frames as well as within the confines of a domestic environment as opposed to a global environment. That is, current theory focuses on leading in an environment with which the person is normally acquainted. In this scenario leaders are comfortable with how what they say will be interpreted in the way that they mean, and how they behave will be experienced with the intention that they have in mind.

This book makes the case that the attributes of effective leaders, and some of the taken-for-granted assumptions associated with the practice of these traditional theories of leadership, are no longer “fit for purpose”, given the challenges and complexities of globalisation. Due to the unprecedented rise of globalisation, a leader’s style and way of being must be refreshed and adapted.

Global leadership

As well as facing commercial, political, technological, social, ethical, integration, cultural and within-cultural challenges, global leaders also have to be comfortable dealing with ambiguity, complexity, unpredictability, and competing views whilst at the same time coalescing key organisational elements by driving through change that is framed in an inclusive environment.

Examples of scenarios that global leaders can contend with range from:

•Addressing the increasing demands of varying demographic compositions. For example, the demands of the “mi...

Table of contents

• Cover
• Title
• Part I  Leadership and Diversity in a Globalised World
• Part II  The Research Process and Findings
• Part III  The Tool LEAD
• Part IV  The Big Picture
• Appendix
• Bibliography
• Index