International Management Five

In this stage, leaders are trying to promote equal treatment inside the organization, idealizing assimilation and color- and gender-blind conformism , claiming that everyone is equal and should be treated the same.

However, this approach put pressure on the people from diverse background to let go the cultural differences they have if they want to survive in the company.

A typical example of such is in the United States Army, when blacks and Hispanics were discriminated and prohibited to join the army, even though they served as loyal soldiers being as navy during the Revolution war.

This situation started to change when Kennedy's executive order declared that federal contractors should “take affirmative action to ensure that applicants are employed, and employees are treated during their employment, without regard to race, creed, color or national origin”

Leading them to the Fairness-Discrimination paradigm, where Blacks and Hispanics soldiers were finally started to treat fairly, eligible to apply to jobs in white’s company and the navy, yet they still have to undergo the White’s culture in order to survive in the organization environment.

“Like the fairness paradigm, it promotes equal opportunity for all individuals. And like the access paradigm, it acknowledges cultural differences among people and recognizes the value in those differences. Yet this new model for managing diversity lets the organization internalize differences among employees so that it learns and grows because of them.” Thomas, & Ely (1996) Not only, this paradigm also promotes the environment where everyone must have freedom to communicate with anyone and it must be safe for everyone to offer ideas” (Cat mull, 2008)

As globalization takes place and it is inevitable for companies to go globalize to increase its market share to raise profitability, lower its production cost by outsourcing non-competencies and sustain a high level of R&D by employing more experts to order to compete with others, is it undoubtedly that such measures must utilize an effective diversity management to sustain its business continuity and create synergy effect by bringing different talented people to contribute together.

The failure case of Wal-Mart expanding to South Korea 1998, but exited in 2006 was a signal on a Marco-perspective for companies to truly understand how to proper utilize diversity management to assist its operations and global expansion strategies which inspired other companies to the effective learning paradigm.

Wal-Mart, a global giant, sticked to its western marketing strategies when entering Korea as the director ignored the advises given by their employees from their targeting country, partially because they are not white and partially because he has an illusion of thinking everyone should be following the taste of America as they are the strongest country in the world, and even terminated employees who have been actively trying to stop the director from implementing the strategy, which also created a hostile and unsecure environment which seizes employees from further giving out their constructive insights of what to do to make it work.

“There is no doubt contradiction always exist between employers, employee since their roles play differently. But it is believable that mutual benefit can be achieved through mutual understanding and communication. Moreover, both employers and employees should set certain disciplines on looking at the incident in an objective angle to facilitate a better result.” (My own blog)

Wal-Mart then promoted a membership approach that is used in Western contexts and concentrated on dry good, when rivals, who understand the local market demands, focused on food and beverages. The consequences of ignoring the cultural difference, constructive ideas and relevant knowledge from employees of other races lead to a total failure for Wal-mart’s expansion. This resulted in a loss of $10.4 million in 2005 and Wal-Mart was forced to sell all 16 outlets in May 2006 to Shinsgae, a local retailer to cut down the cost.

This result reinforces the statement, “We need managerial processes that ensure that all our employees are treated equally and with respect and that some are not given unfair advantage over others” (David A. Thomas, associate professor at Harvard Business School) (David A. Thomas, associate professor at Harvard Business School)

Another example is Coca Cola underestimating the impact of cultural symbols that may evoke deep feelings. In a report by YOU SIGMA (2008). "Coca-Cola's Learning Experience in Advertising." Coca Cola used white marble columns of the Parthenon that crowns the Acropolis in Athens to decorate their coke cans. Which resulted in a huge adverse impact by provoking all the Greeks as it is their cultural symbol and by disrespecting it, it is equivalent to disrespecting all the Greeks.

These two cases highlights the serve conditions when improper or lack of diversity management is deployed and gave examples for organizations to learn from the mistakes and utilize it for further improvements or to capture more market shares; such as knowing the importance of adapting the local market and knowing the positively relating cultural symbols might be a good way to tackle into the market. An example of such might be Yahoo tackling the local market in Japan, it expanded rapidly as it is aware of the different cultural differences due to their diversified working team which contributed on ideas of the local culture, such as creating a webpage with pink flowers which resembles the national flower of Japan along with trendy topics about the local community to arouse its popularity.

In Micro-perspectives, Toyota and 3M are one of the leaders in successfully implementing diversity management inside their organizational culture and learning that leads to success.

Reported by Business Week, 3M created a unique environment by allowing their employees to have an hour, in working hours but doesn’t require them to work, throughout the day to think of something innovative, such as what might be potentially useful to the company, and what might be the products that customers are interested in. If an employee came up with a good plan and had successful passed the board and the manager’s requirement standards, they will be given an amount of money to develop on the product on their working hours along with some percentage of the profits as an incentive. This could facilitate the company’s learning by collaborating different people together, from different diversified backgrounds, and foster a community of helping each other and brainstorm with each other. This implication has not only boosted the sales of 3M after launching new innovative products like our daily use “yellow memo paper”, but also helps to create a enthusiastic, highly motivated and friendly environment where knowledge can be exchanged and utilized towards success.

Another good example of implementing diversity management is Toyota. It has an excellent knowledge management system which records down both explicit and tactic knowledge, by various Artificial Intelligence and workflow management tools. This helps to solve the diversity issues in the organization where, leaders are required to go on job rotation shifts or when there are employees who came from different countries to be apply to easily understand how to perform the work by seeking answers from the AI expert systems or by posting blogs or questions such as how to tackle the markets in China in the intranet where employees actively respond to. Employees who came from China will then post on their person experiences and understandings on the culture to help employees and leaders to work effectively and efficiently

In conclusion, doing business is an area which involves of a lot of task uncertainty, task interdependency and environmental uncertainties, especially when it is operated in a global scale. Therefore, diversity management is essential for companies to deploy in order to synergize its resources to attain competitive advantage to compete and to capture new opportunities in the global market.

Toyota’s KM case chart as an reference on how they motivates employees to contribute in order to increase efficiency .

A Business Ethics Approach:

Every company possesses their own assortment of business strategies and beliefs to gain competitive advantage. Undoubtedly, a firm’s employees are considered to be its most powerful and important asset. As globalization becomes a ubiquitous phenomenon, diversity management cannot be ignored and must be focused with great care. Globalization and diversity trends have forced businesses to become more flexible in order to manage the new complexities during these shifts, but being too flexible may force companies to face a moral quandary as they cross into unchartered territories of management. Throughout the revolutionary shifts of diversity management, questionable company practices forces attention to the realm of business ethics. Noticeably, cultural clashes and conflict of gender roles can cause dangerous rifts in employee relationships if not handled properly. In this analysis, we will observe the fascinating shifts in diversity management and how business ethics plays a major role in shaping strategies that either cause a company’s goals to fall short or enables it to gain sustainable competitive advantage.

From companies that are big or small, domestic or international, having a diverse workplace can enable profitability and competitive advantage. As Thomas, & Ely (1996) noted, “a diverse workplace brings different knowledge and perspectives on how to actually do work – how to design processes, reach goals, frame tasks, create effective teams, communicate ideas, and lead.” We begin by observing the early shifts in the fairness and discrimination era or workplace diversity. The 1964 Equal Opportunity Employment Law prompted many companies to proudly embrace employing people of color and large firms such as TWA, IBM, and Xerox were the early adopters. Not surprisingly however, many companies large and small have failed to utilize the benefits of a diverse workplace. Regardless of what reasons the company uses for its defense, discriminating against race or gender does not really satisfy any of the four approaches to ethical decision making such as “utilitarian, moral rights, universalism, or cost benefit” (Yu, 2011).

In 2003, clothing company Abercrombie and Fitch, based in the United States faced a lawsuit on grounds of discriminating against blacks, Hispanics and Asians by “enforcing a nationwide corporate policy of preferring white employees for sales positions, desirable job assignments and favorable work schedules” (Abercrombie & fitch,” 2007). A&F were also forced to remove T-shirts from its stores which depicted two slant-eyed men in conical hats and the slogan "Wong Brothers Laundry Service, Two Wongs Can Make it White." Although A&F did hire a small number of minority groups, “the company would channel them to stock room and overnight shifts as well as reducing their hours” (Abercrombie & fitch,” 2007). This management practice was clearly unethical and violates the Equal Opportunity Employment Law. Indeed, A&F’s brand reputation was considered tarnished as many people started to regard A&F as a racist company, but taking a closer look at the company’s stock price and earnings reports, this incident did not significantly affect its earnings as one would expect.

Much to contribute seems to be A&F’s quick ability to recognize the seriousness of the situation and using “truly substantive credible responses in behavior” (Greyser, 2009) for its crises management policy. Over the years after the discrimination incident, A&F transformed itself to utilize a much more diverse workforce, and according to its website, approximately 40%-50% of its in-store workers, models and store managers are of color. The lawsuit served as sort of a wakeup call for A&F and the company took the necessary steps to communicate to the public of its morally correct values. A&F created the Stores Diversity Council which comprises of District Managers and Recruiters whose job is to manage diversity initiatives. This restructure illustrates A&F’s willingness to adapt to cross cultural awareness by “recognizing the role of culture and developing employees” (Gardenwartz, & Rowe, 2001). “Abercrombie had a back-of-the-bus mentality,” said Kimberley West-Faulcon of the NAACP Legal Defense and Education Fund. “Now instead of hiring them in the back of the store, they will have diversity recruiters. It sends a message to young people that we are moving past this kind of thing” (Abercrombie & fitch,” 2007). Noticeably, A&F entered into the Access Legitimacy Paradigm (Thomas, & Ely, 1996), and gained access to a broader global marketplace by utilizing its now diverse workplace. A&F now operates in Canada, Europe, Latin America, Japan and currently planning stores in China. In a statement on its website under the career section, A&F notes how it regards diversity as key to their organizational success and that they are determined to have a diverse culture throughout the organization that benefits from the perspectives of each individual.

In another real case analysis, as one of the early adopters of Equal Opportunity Employment program and initiative, IBM has a long history of progressive management in diversity. From the early 1950’s to present, IBM serves as an excellent example of transforming from the fairness / discrimination paradigm to access legitimacy and now effective learning. IBM had their own naming scheme for it; Diversity 1.0, 2.0 and now 3.0 respectively. During the 1990’s when Lou Gerstner took over as CEO, he felt that his “senior management team did not properly reflect the diversity of the market for talent or IBM’s customers and employees” (Thomas, 2004). In 1995, Gerstner launched a diversity taskforce initiative that “became the cornerstone of IBM’s HR strategy” (Thomas, 2004). IBM then shifted its strategy over to “access legitimacy paradigm” (Thomas, & Ely, 1996) by creating eight task forces with each focusing on different minority groups such as Asians, Hispanics, blacks, gays, lesbians, and women. The goals for these taskforces were to “uncover and understand differences among the groups and find ways to appeal to a broader set of employees and customers” (Thomas, 2004). At IBM today, the number of female executives worldwide increase by 370%, minority executives increased more than 233%, self identified gay, lesbian, bisexual, and transgender executives increased by 733% and the number of executives with disabilities more than tripled since 1995. Not only does IBM increase the diversity of its talent pool, Gerstner goes on to state how their objective is to deliberately seek ways to more effectively reach a broader range of customers.

IBM takes steps to ensure that it promotes and hires high-potential minorities by avoiding mistakes such as “focusing on current performance rather than management potential and failing to adopt a consistent and accurate process for identifying candidates” (Byham, 2009). The structures of each taskforce were virtually identical and Gerstner implemented procedures to ensure that the hiring and promotion decisions did not favor any particular group. When the taskforce initially launched, IBM made sure to set expectations and ensure that roles and responsibilities were consistent and unambiguous. Indeed, having these taskforces for each minority is critical for ensuring that minorities to have a voice in a safe environment much similar to Pixar’s operating principles; “where everyone must have freedom to communicate with anyone and it must be safe for everyone to offer ideas” (Catmull, 2008). In the early 2000’s IBM also wanted to include employees who were not at the executive level to be involved with the effort and thus the diversity councils and network groups were created. Through these “72 councils IBM seeks to ensure that its workforce represents an environment that visibly encourages and values the contribution and differences of employees from various backgrounds” (Thomas, 2004). These diversity councils and network groups contribute to the “26 key drivers of engagement that managers must take such as learning and development opportunities, having support management and being recognized, valued and respected” (Ketter, 2008). The diversity councils and network groups shifted IBM’s diversity management practice into the “effectiveness learning paradigm” (Thomas, & Ely, 1996). As explained by Thomas, when the fairness and discrimination paradigm is used, the company focuses on employees treating each other the same. When the access and legitimacy paradigm is used, the company focuses on differentiation, utilizing what each culture and demographic can bring to the market. However, in the current shift to effectiveness learning paradigm, IBM uses knowledge management via the assigned taskforces, diversity councils and network groups to realize the different perspectives and knowledge each group has to offer and internalizes it to learn and grow. Although, combining effective diversity management with knowledge management is a long and complex approach, if implemented and executed well, it can be a “major source of sustainable competitive advantage” (Kasper, & Haltmeyer, 2002).

IBM paints a rosy picture of its impressive diversity management principles and techniques, but not surprisingly, the company still struggles and faces ethical dilemmas. At home, IBM faces criticism for laying off thousands of US workers and expanding its staff and outsourcing most of the jobs overseas as noted in a March 26^th 2009 CNN news article. In a report by Business Week (“IBM draws criticism,” 2009) , the company’s workforce went up from 386,558 in 2007 to 398,000 by the end of 2008 but US employment fell from 121,000 to 115,000. Although IBM may justify their policies under the Utilitarian approach, it will always be a controversial issue. As the world becomes more flat and globalization makes it easy to reach cheaper labor, it forces IBM to rethink its strategy while it faces a moral dilemma between outsourcing workers and keeping US jobs.

Away from home, IBM struggles with cultural relativism in South Korea and China, as they are being charged with violating the Foreign Corrupt Practices Act. IBM employees “allegedly paid cash bribes and provided a range of improper gifts to government officials” (Segall, 2011). Although this type of act is considered normal in their respective countries, the United States court system does not take these practices lightly. Without violating the three basic core values of “respect for human dignity, respect for basic rights, and good citizenship” (Donaldson, 2009), IBM took a stance of neither admitting nor denying the charges. On March 18, 2011, IBM agreed to pay $10 million dollars to help settle federal bribery charges.

In another incident however, IBM clearly made unethical choices by ignoring workers conditions from its suppliers. On January 28^th, 2004, the Catholic Agency for Overseas Development (CAFOD) criticized IBM “for failing to include provisions that would stop suppliers from using forced labour or child labor, imposing excessive working hours, or using harsh or inhumane treatment. It had also failed to ensure that suppliers pay a living wage” (Weardon, 2004). IBM may justify its decisions by using one of the cost-benefit approach for its ethical decision, but the basic core values has been clearly violated. Although IBM noted in a statement that it took actions to remedy the problems that were uncovered, it should have taken preventive measures by implementing policies or avoiding doing business with them all together.

Businesses have come a long way since the inception of equal opportunity in the 1960’s. Strategies and techniques in diversity management shifted and evolved, and although every firm has their own naming conventions for it, the shifts are all very similar. Globalization has forced many firms to re-evaluate their business practices and ethical policies and at the same time embrace diversity from different culture backgrounds. There is never a simple answer on how to manage diversity, especially when ethical decisions are involved, but businesses will continue to learn from each other and their most important asset: their diverse set of employees.