Diversity Management Strategy as the Instrument to Win in the War for Talent - Essay Example

Introduction We live in the world which is constantly changing. Interactions between individuals become easier due to the tremendously quick development of information and communication technologies, transportation systems and mobility level. People with various cultural backgrounds meet each other more often, especially at the workplace. This tendency is even more visible in the conditions of dominating role of huge multinational corporations, revenues of which can be sometimes bigger than GDP of some countries as indicated, for example, by Trivett (2011) In order to understand the importance of cross cultural management in business, it is necessary to understand what culture is. There is huge variety of notions of culture, which proves its broad multidimensional nature. For example, Rohner (1984) defines it as “the totality of equivalent and complementary learned meanings maintained by a human population, or by identifiable segments of the population, and transmitted from one generation to the next.” Trompenaars and Hampen-Turner (1997) identify seven different dimensions of culture. Others indicate that there exist eight dimensions of culture, including time focus, space, structure, action, time orientation, power, communication, competition (see Doing Business Internationally, 1992). Judith N. Martin and Thomas K. Nakayama (2010) show that there exist various cultural dimensions, based on multiple levels of cultural identities and contexts, values, beliefs and norms, which are not only highly interrelated, but also dynamic. In this situation, it is especially crucial to understand how managers can benefit from operating in multicultural environments. Ability to cope with cultural differences can lead to the spread of markets to the larger territories, increase of diversified human capital quality, and stronger competitive advantages due to growing innovativeness. In order to be effective on the global scale and operate in the situation of dynamic cultural values, multinational corporations work according to the defined codes of conducts, based on universal values, acceptable for all employees. However, even though the code of conduct is based on universal values, there is always tangible effect of headquarter culture. This makes every corporate culture unique and especially interesting to study. Solutions to the questions Diversity Management Strategy as the Instrument to Win in the War for Talent Cultural differences influence a lot of managerial decisions, including the selections of entry mode into the new market (Kogut and Sing, 1988), expansion of foreign investments, mobility of human capital between countries inside corporations and many others. Understanding cultural diversity, the ways to deal with it and to manage it effectively become today one of the most important skills for every manager. Taking into account the importance of studying cultural differences, there even appeared separate discipline called “cultural psychology”. While general psychology assumes that human behavior is presupposed by innate psychological factors, cultural psychology explains human behavior through the lens of contextual predispositions. (Shweder, 1990) It supposes that reality of each person is influenced by the cultural environment where this person lives or was grown up. The necessity of paying attention to the management of cultural diversity is also forced by the fact that most of the companies nowadays have multicultural employees. The degree of their multicultural diversity differs from “managing differences between gender and ethics minorities” (Browaeys and Price, 2011) to managing differences in work styles, attitudes to time management, personal relations etc. Taking into account imperative of the time, the companies have to adapt their policies to the cultural diversity of their personnel. The aim of such diversity management strategy is ensuring inclusion of employees with various cultural backgrounds, providing them with equal opportunities, which leads to the overall greater well-being of the organization. Companies can benefit from cultural diversity in many different ways. Among other benefits, companies may win in the “war for talents” (Michaels et al), which is especially relevant in the current realities of especially high competition among employees for the quality of their human capital. For example, the most intensive war for talents is taking place in IT sphere. IT specialists know that and can afford themselves to choose between many employees. They pay attention to many different factors while choosing the place to work. Well-known IT copany Google is known for its additional benefits for employees. Besides usual social package, they provide employees with free food. Global Logic, another IT company, provides employees with free entertainment. But, most importantly, both these companies pay special to inclusion of their employees. Free food and entertainment stimulate employees to spend more time at work and to communicate with each other, to undertand each other better regardless of their cultural background. Such strategy ensures advantages for the companies in the competition for the best employees. Winning in this competition is possible by ensuring equal employment opportunities for representatives of different cultures, providing welcoming environment for individuals with diverse backgrounds, and introducing compensatory justice. These are among the crucial foundations for developing innovative business environment and establishing effective knowledge transfer and idea generation. The above mentioned benefits for the business development, reputation and corporate image of the company are among the main reasons for the companies to adapt their policies to the cultural diversities of personnel. Providing equal employment opportunities for people with various cultural backgrounds leads to the possibility to choose the most talented employees, regardless of their cultural identities. Besides that, providing equal opportunities to enter the company for individuals, whose way of thinking differ from the one, established in the company, can lead to inflow of new ideas. This is crucial in the situation of increasing dynamics of business environments, where the speed of idea generation becomes one of the most crucial foundations of its success. After employees with diversified backgrounds entered the company, it is especially important to ensure that they work in the atmosphere of respect regardless of their cultural identity. This can be achieved through promotion of tolerant atmosphere within the company. Creation of such atmosphere is not just responsibility of human resources management development department. Everyone working in the company is responsible for maintaining tolerance level. One of the most important roles in this process is the role of manager in every department. Manager is the person who should show positive example to his or her subordinates and coworkers. Companies also pay special attention to the equality of opprotunities in the process of career development. Special focus is currently paid to the gender equality. For example, the Coca-Cola Company recently announced the global program "Women in leadership positions". The main goal of this program is to promote equality of opportunities and equal representation of both genders in the highest positions in the company. Besides positive effect on tolerence level within the company, this program also promotes life and work balance. Mothers show by their exmple how it is possible to maintain balance between their responsibilities at work and at home. Compensatory justice is another way to promote equal opportunities, to make the positive corporate image even better and to strengthen the brand of employer, which is important managerial concept, introduced by introduced by Ambler and Barrow (1996). This is a very good way to avoid discrimination and provide employees with the feeling of safety. People want to work in the environment of justice, where they feel safe. Such safety can be ensured, among other, by compensatory justice. Diversified business environment provokes more effective problem solving, better understanding of the market, and ability to base decisions on more diversified experience. The chance that you would not have to invent the bicycle is much higher in the diversified environment of colleagues. Cultural diversity of personnel is a great advantage, but only in case it is managed appropriately, which requires strong intercultural knowledge, leadership, and communication skills. Otherwise it can lead to the conflicts, which are sometimes very difficult to be dealt with. According to Moore’s circle of conflict (Moore, 1986), it is especially difficult to deal with value conflicts, therefore, the best solution for any company would be avoiding them. This is another reason why diversity management strategy is especially important in current business realities and the companies should not neglect the necessity to adapt their communication, training and recruiting policies to the cultural diversities of their employees. I believe that such adaptation should be based on the universal values of equal treatment and mutual respect between company and its employees, which requires development of the universal code of conduct. The Importance of Universal Code of Behavior Development for Functioning of Multinational Business As companies operate in the conditions of highly diversifies business environment, where employees come from many different cultural backgrounds, the question of universal norms and values becomes more and more relevant. The reason for that is the fact that there might exist so many cultural values within one organization that it is usually impossible to adapt to all of them. Besides that, cultural values are constantly changing, overlapping each other in the continuous process of cross-cultural communication (Hofstede, 1991). Among universal values, one can name the following as meeting deadlines, meeting delivery dates or obeying terms of contract (Browaeys and Price, 2011), non-disclosure of confidential information to third parties, ethical and equal behavior towards every employee regardless his or her position in the company and many others. One can argue that it is impossible to follow the above mentioned rules due to such specific features of each culture as dominance of contract customization in China (Zhou and Poppo 2005) or special attention to personal relations and indirectness of people in Arabic countries. (Payne 2013). But my argument is that even though there exist so many cultural peculiarities all over the world and it is crucial to take them into account, it would be impossible to operate globally for any company without universal rules, as in this case activities of the organization would be chaotic, imbalanced and ineffective for many reasons. First of all, universal corporate culture disciplines the working process. Universal procedures make the company operate quicker and therefore more effectively. Even though diversified creative ideas are important, most of the working process consists of routines. Their existence secures normal effective existence of the company. Following the same rules all over the world is much cheaper for the multinational corporation than inventing omething specific in each country. This works due to economy of scale. For example, it is much cheaper for such company as Nestle to create one universal TV advertisement for the whole world than to pay for the work of creative and productive agencies in every country. Besides that, existence of universal code of conduct makes the adaptation of new employees much easier. Existence of unified guidelines for induction period of every employee regardless of place of work makes the adaptation period quick and effective. New employees can have different approaches to decision making, different habits of using language in business situations, different styles of presenting their views, according to their different backgrounds. Common code of conduct and corporate culture can people understand each other better, put less efforts into effective process of communication and sharing their thoughts, which makes overall functioning of the company more effective. Moreover, universal norms existing in the company make easier the process of employee transfer between the different countries within one company. Employee coming from another culture can adapt much quicker to the realities of new country as internal company’s standards are the same. At the same time the process of employees transfer between affiliated companies in different countries ensures knowledge transfer and contributes to the effectiveness of decision-making process, which is based on broad experience and ability to elaborate best-case scenario. Finally, existence of the universal code of conduct makes much easier interaction with suppliers and meeting high quality standards all over the world. The most successful multinational corporations spread their codes of conduct on their suppliers. This is usually indicated as the separate part in every contract. Such strategy usually makes the contractual relations easier both for the client and supplier. For example, the Coca-Cola Company while signing every contract with new supplier includes into it the stadard universal code of conduct. It contains the norms, which function inside the Coca-Cola Company in all countries of the world. If the supplier can not sign this part of the contract, this automatically means that it does not ensure the level of quality which is required by the Coca-Cola Company and therefore can not be trusted. Even though corporate culture of every multinational corporation tends to be based on universal business ethics and values, the culture of each company is still different. I believe that the culture of headquarter strongly influences the universal code of conduct, which is used in affiliated companies. It is reflected in the strategy of the company and its main priorities. For example, Japanese companies tend to value team working more than American companies, where you would more often meet individualistic approach to accomplishing tasks. In Russian companies one would probably see much longer distance between the director and his or her employees, than in American or European companies. Of course, there is never “one-fits-all” solution. Therefore the wisest decision is always to apply the well-known strategy of “thinking globally but acting locally”, which means that while applying global code of conduct, based on universal values, one should always remember about local peculiarities and existing cultural diversity. Conclusion In our globalized world the issues of cultural diversity gain the utmost importance. Every company operating nowadays should take them into account. Everyone should understand the importance of intercultural knowledge, the complexity of which is proved by its multidimensional nature. Analysis show that for effective functioning of every company, it is crucial to ensure effective diversity management strategy, which includes adaptation of training, recruiting and communication policies to diversified backgrounds of its employees. Every organization should ensure the equal opportunities for every individual, regardless of his or her values. This equal opportunities strategy means equal access to the process of entering the company and equal career opportunities within organization, in the atmosphere of mutual respect. The strategy of cultural diversity management ensures competitive advantages in the war of talents, which result in better quality of human capital and better business opportunities. Successful cultural diversity management would be impossible without developed universal code of behavior for members of organization and its counterparts. This proves the necessity of following universal norms around the world, which make possible well-functioning of work routines, quick and effective adaptation of new employees, mobility within organization and simplification of interactions with suppliers. References Ambler, T. and Barrow, S. (1996). “The Employer Brand”. Journal of Brand Management, Vol. 4, pp. 185-206. Browaeys, M.J, Price, R. (2011) Understanding Cross-Cultural Management, 2/E, London: Financial Times Press, Chapter 6 and 12 Doing Business Internationally: The Cross-cultural Challenges (1992) Participant Workbook, Princeton, NJ: Princeton Training Press. Hofstede, G. (1991) Cultures and Organizations: Software of the Mind, London: McGraw-Hill. Kogut, B., Harbir, S. 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