Cultural diversity in a Danish MNC Essay

Introduction Workforce diversity is a complex phenomenon and a major challenge for HR managers in MNCs. The case presents a Danish MNC, Danvita (not its real name)that has committed to pursuing a diversity strategy. The essence of a diversity strategy is a commitment to providing equal opportunities for employees regardless of their gender, age, nationality, disability and political and sexual orientation. In this case our focus is on cultural diversity. Drawing on individual perceptions of Danvita employees this case explores how Danvita’s diversity strategy in relation to national culture is experienced by Danvita’s employees. Diversity as a strategic resource It has been argued that MNCs that are able to draw on a diverse mix of employees can develop a strategic advantage (Richard, 2000). This is because workforce diversity establishes the potential for diverse perspectives that in turn facilitate creative thinking and effective problem solving (Cox, 1991; Cox & Blake, 1991). Understanding and valuing diversity can enable constructive conflict resolution, reduce miscommunication and lead to lower employee turnover and result in cost savings (Robinson & Dechant, 1997). A diverse workforce that can draw on a variety of cultural insights can also have a positive impact on international marketing and sales (Blake-Beard, Finley-Hervey & Harquail, 2008; Robinson & Dechant, 1997; Cox & Blake, 1991; Cox, 1991). However, workforce diversity can also have negative effects. Some researchers have observed that groups characterized by high degrees of cultural diversity have lower levels of employee satisfaction, lower levels or performance, high levels of miscommunication, conflicts and turnover than more homogenous groups (O’Reilly, Caldwell & Barnett, 1989; Watson et al., 1993; Richard, McMillan, Chadwick & Dwyer, 2003). Diversity as perceived by organizational members The focus of this case is in on the issue of how Danvita employees experience the company’s strategy of achieving cultural diversity. ‘As with many things in life, perception is reality’claims Allen et al. (2008: 22). Individual perceptions influence the way individuals interact with their colleagues and participate in the life of organization. Based on their perceptions, organizational members participate actively or passively in the implementation of the company’s strategies as well as support or oppose organizational change. Knowledge of how organizational members perceive diversity opens a possibility for improvement if necessary. The case data were obtained by means of seventeen qualitative interviews with seven Danish and ten international employees. Their narratives, however, should not be understood separately from the environment where the stories and events take place. Thus the narratives were supplemented with direct observations of diversity trainingsessions and with documents containing the new diversity strategy, managerial speeches and company annual reports. In this way information about the social context in which the employees’ perceptions of cultural diversity are constructed and re-constructed on an everyday basis was obtained. Denmark and Danish The context in which the diversity case is unfolding contains elements of both national and organizational culture. Although there is a considerable overlap, it is important to distinguish them. Despite its commitment to diversity and inclusion of international employees the head office of Danvita is still operating in a broader context of Denmark. In Denmark historical and religious development of the society led to formation of a very particular institutional environment in which the state plays a significant role. Denmark has a well-developed welfare state that redistributes wealth and that ensures inequalities are relatively limited (Andersen and Svarer, 2007). The role of the Danish language as a uniting and protecting mechanism in Danish society must be acknowledged. Historically the Danish language is an indicator of membership of and belonging to Danish society. Its significance for inclusiveness means that it may alsofunction as a mechanism of exclusion of non-Danish speakers. This factor co-exists with Denmark’s membership of the European Union and its policy of welcoming well-qualified professionals to work in Denmark. Danvita and the HR challenges it is facing The aim is to create a culture where all employees feel valued and have the opportunity to reach their full potential(Diversity strategy, Danvita) Briefly about Danvita Danvita is the company that has been a leader in the industry in which it operates. Annual reports indicate increased profits for 2009-2011. In March 2012 Danvita had more than 32,800 employees worldwide distributed across affiliates and offices located in 75 countries. Just over 40 per cent of its employees are located in Denmark. In order to function successfully as a MNC Danvita believes that it has to attract, develop and retain competent people from any location in the world. In 2009 it started a diversity initiative. At the core of this initiative is the operational guideline for HR which states that the company will provide: â€Å"(†¦) equal opportunities to all present and future people, regardless of gender, age, race, religion, nationality, cultural and social origin, disability, political or sexual orientation and family status† (Danvita). In 2009 when diversity strategy was launched about 700 of Danvita’s employees in Denmark were foreigners. Although 68 nationalities were represented it should be noted that half of the foreign employees were from a handful of countries, the UK, the US, Germany and Sweden. The highest percentage of the international employees was among the professionals and specialists. An effort was necessary to be made to make these employees feel welcome and willing to stay. The turnover rate for international specialists was 3 times higher than that among the specialists from Denmark. These numbers do not have to be as alarming since employees change jobs and employers frequently and international employees return home after rotations and expatriation. Nevertheless, feeling welcome and happy with their working environment, international employees can contribute to higher retention rates in the organization which claims to be in need of workforce. Thus the diversity strategy was developed. The diversity strategy The current diversity strategy has an ambition that by 2014 all senior management teams will include employees of both genders and different nationalities. In pursuing this objective the company insists that all positions are filled by the best candidate. â€Å"All management teams or the senior VPs teams will have to have at least a representation of non-Danes and gender diversity. They will have to have. It is not a wishful thinking. That means implementation and they will have to do something with it.†(Respondent 2) At the end of 2011, diversity in terms of gender and nationality was reflected in 18 of the 29 senior management teams, compared with 15 of 28 at the end of 2010. Guiding principles The guiding principles of Danvita’s diversity strategy attempt to lay the foundation for equal treatment of all the organizational members. These principles highlight the strategy’s focus on providing equal opportunities and selecting the best-qualified candidates in order to attract and keep talents from all over the world. Supporting initiatives A number of supporting initiatives contribute to the creation of a culture of inclusion. There is an International Club which is run on a voluntary basis and which aims at creating a network for foreign employees. The idea is that foreign employees have the opportunity to meet in a non-work atmosphere and to experience the traditions and leisure activities of the host country. It also provides an arena to talk through their frustrations with more experienced colleagues. Corporate way of speaking about diversity Drawing on company documents we now present three company discourses on diversity. Business and business needs One discourse emphasizes the business needs of the company. Diversity is a way of dealing with these needs. The discourse portrays the company as ‘a global company’, having an ‘expanding presence in the world’. The key issue is:‘as we expand where are we going to find the people (we need)?’A representative of top management team emphasizes the current growth and success of the company which is going to be ‘even larger and more global’and articulates the need for attracting talent: ‘We want to be among the most attractive companies so that we can continue to attract – and retain – the talent we need’. The business discourse constructs diversity as the necessary attribute for sustainable growth with satisfying the needs of international recruits as the means to this end. Equality A second discourse emphasizes diversity as an expression of equality. This discourse views diversity as a product of emphasizing talent regardless of any other considerations. We need to make a greater and more systematic effort to identify women and non-Danes with leadership potential when we are filling a management position (†¦). The company will never use either negative or positive discrimination. We will always choose the best individual for a vacant position. (Interview with top management team representative Employee magazine) The discourse sees selection of the ‘best’ individuals for positions as the guiding principle with the provision of equal opportunities to all as the means to this end. In practice this means that: ‘We need to re-evaluate who it is that we are hiring’(Diversityadvisor). Inclusion The third discourse involves how the company talks about diversity as inclusion.This discourse presents inclusion as a precondition for achieving diversity: ‘Inclusion is an integral element of the diversity strategy, as this is about how to value and utilize all the differences among our people.’(Danvita Diversity strategy). While emphasizing inclusion this way of talking about diversity constructs diversity in terms of differences. In the annual report for 2008: (†¦) inclusion of men, women, locals and non-locals must be considered for succession list for all key positions. Mentorship will be offered and supportive network initiatives including expatriate networks and a ‘family-buddy’ system are being set up. (Annual report 2008) These three main corporate ways of speaking about diversity coexist in the organizational space of the company. Of the three the business discourse is the most pronounced discourse and the inclusion discourse by far the least pronounced.