Multinational companies view it as highly desirable, if not essential, to hire diverse and ‘glocal’ talent in Asia. But Asia can be a spectacularly difficult place to do business, with a plethora of different employment laws and regulatory regimes necessitating a bespoke approach to human capital in each jurisdiction.
Most organisations have not been able to move their diversity agenda forward in a meaningful way, or take a more enlightened approach to attracting top executives with particular nationalities, both of which are essential to building sustainable businesses in countries such as Indonesia.
You can’t fight demographics
Diversity is an impossible problem to solve in the short term as the candidate universe, for example for senior Financial Services or Technology roles, is representative of the overall demographics of those groups. Only long term and grass roots initiatives can change that. The same applies to executive talent from Asian countries which have historically suffered from sub-par education systems – there are simply fewer home grown candidates with the right skills and experience.
This sociological barrier is a good reason (and excuse) why many firms have not done enough.
‘Life is a spreadsheet’
My wife likes this phrase – I think she is joking (although she does have a lot of spreadsheets), but decisions in business are often rightly made on the basis of a model, ROI calculation or other analytical process. This is the point at which investment in diversity can often be deselected.
When the executive team is considering where to spend their precious investment dollars, the quantifiable return of a new technology program to streamline, save cost and improve customer experience or an improved compliance environment to guard against issues, regulator scrutiny or fines may prove far more attractive than a seemingly intangible investment in diversity.
The ROI can be stellar for firms willing to invest in diversity
The fact is that the ROI on diversity no longer remains intangible. McKinsey asserts that diversity is a competitive differentiator and that companies in the top quartile for gender or racial and ethnic diversity are more likely to have financial returns above their national industry medians. Gender diverse companies are 15% more likely to outperform the market and ethnically diverse companies 35% more likely.
Leadership advisory firms can help forward thinking clients improve their diversity ratios by tracking and curating global talent pools. This requires significant resources and effort on the part of the advisors and there is a cost attached, but it’s a drop in the ocean when you consider the ROI opportunity that hiring these individuals can bring.
Talent pipelining is not a guaranteed solution of course – nothing is in human capital, but it is a lot more scientific than commissioning tactical searches at times of need and hoping for the right outcome. A recent study by Ernst & Young found that female partners take 18 months on average to make a decision to move firms, where their male equivalents take 6 months. Companies are much more likely to be effective courting female leadership talent with a longer term approach, a worthwhile investment when you consider McKinsey’s claim that for every 10% increase in gender diversity in a company’s leadership team, EBITDA rises 3.5 %.
God created man in his own image
We can all be guilty of hiring ‘people like us’, in our tribe so to speak. It is perfectly natural to want our sons, daughters and - to an extent - work colleagues to reflect ourselves. It makes getting things done that much easier.
But it is in fact the very opposite of what we should be striving for. Diversity of thought and cultural-specific knowledge stokes debate, promotes creativity and leads us down more visionary paths. So many companies have gone spectacularly wrong in Asia through not being sensitive enough around local execution and not having the talent in place to effectively manage it.
So what happens once new blood is inside the tepee?
The identification, socialisation and eventual hiring of scarce talent is only the first step. Leadership advisory firms are now working more strategically with clients on talent planning.
A lot of good work can be done in advance to try and ensure the soil is fertile when talent is eventually hired. Typically, this involves detailed analysis on competitor organisational constructs that help clients benchmark their own structure, borrow best practice and evolve before going to market to fill leadership gaps.
The alignment between leadership advisory firms and HR chiefs will get even closer, with external firms operating as an extension of in-house HR departments. Part of the requirement is to manage the risk of post-hire rejection. This not only demands due diligence before the candidate comes on board, getting the framework right in term of organisational design, rules of engagement and support network. It also demands an onboarding program that carefully integrates the newcomer and maximises their chance of success.
Beanbag to boardroom
Many Financial Services companies are now creating bespoke ecosystems for their digital talent to thrive in, often housed separately from HQ. These innovation labs are a step in the right direction, but there is often significant cultural disparity that needs to be recognised and addressed when hiring a new breed of talent that does not emanate from a competitor across the street. Companies need to be mindful and invest in their culture to ensure that new seeds flourish and germinate.
Most major corporates have now established good diversity basics, ensuring role models are in place, mentoring occurs, unconscious bias is removed and company values are in line with 21st century work practices. Many others still have a long way to go, particularly from the perspective of embedding cultural change.
There are no easy answers, but a handful of leadership advisory firms have had some great success implementing longer term initiatives to repatriate and integrate Asian leadership talent from overseas. Such initiatives include on-boarding non-traditional executives and showing clients that cross-sector hiring can be hugely beneficial. With ever more studies proving the financial link between successful leadership and diverse hiring, there is every hope that diversity & inclusion initiatives across Asia will accelerate.