Companies Ramp up Diversity Efforts

— -- NEW YORK -- The seasoned banker from Rhode Island and the junior banker from Brazil seemed to be worlds apart on the surface. But when Merrill Lynch managing director Kerry Cannella and young associate Selma Bueno joined forces on their first deal, they made a potent cross-cultural duo.

Merrill Lynch was representing Brazilian investors selling their stake in a multibillion-dollar Latin American company to potential U.S. investors. The deal was moving slowly, with both sides cautious.

Then Cannella and Bueno stepped up the pace. They jetted between New York and Brazil many times. Bueno analyzed financial papers in Portuguese. She put together an offering document for investors. She picked classy hotels and restaurants, translated during negotiations and made both sides feel more at ease with each other.

With the help of Bueno's business and social skills, the bankers finally closed the deal -- in the hundreds of millions of dollars -- to everyone's satisfaction.

"Selma and I were a perfect match," Cannella says. "She bridged the gaps between the U.S. party, the Brazilian party and me."

Most Merrill Lynch deals today involve an international party, which makes a diverse global workforce a must. Merrill Lynch boasts 740 offices in 37 countries, with non-U.S. revenue making up 54 percent of the total revenue of its global markets and investment banking group.

"The world is getting much smaller," Cannella says. "Borders basically don't exist anymore."

In past years, many U.S. companies lost their way in a business Babel, where international workforces are as likely to speak Spanish, Hindi or Mandarin as they do English. Today, though, as more multinationals race into the global economy, they're tailoring their diversity policies and practices to the new cultural and business order to a greater degree than ever before.

Like cultural chameleons, they're adapting to hundreds of countries, languages and religious practices. They're juggling more cross-border teams on all continents. They're recruiting and hiring diverse talent from Shanghai to Mumbai, India.

"Diversity is at the heart of globalization," says Douglas Freeman, CEO of Virtcom Consulting, a diversity-consulting firm in New York. "It's happening across economies on a global scale, and it will only grow in the future."

A must for businesses

For most companies, global diversity is a business imperative. "The speed of global business is accelerating diversity," says Pauline Ning Brody, former director of global sales at Colgate-Palmolive and a diversity consultant born in Shanghai who speaks several Chinese dialects. "All business processes cut across country borders now, with virtual teams in North America, Europe, Latin America and Asia."

During a recent diversity conference at the United Nations here co-hosted by Virtcom, the world's economy was reflected by a mélange of 400 diversity experts: Latino, African-American and Asian-Indian executives. Human resource managers from Hungary. A white male consultant from South Africa. A Hawaiian educator launching a college business diversity program.

One big theme that arose during the lively panels: how U.S.-style diversity, historically focused on compliance with federal hiring mandates, is evolving into a broader global version of a multilingual, cross-cultural workforce linked to strategic business goals.

"The world economy is changing dramatically," says Andres Tapia, chief diversity officer at consulting firm Hewitt Associates, "and so is the definition of diversity."

U.S. corporations are diving into global diversity by:

Going native. Diversity managers say that U.S. multinationals are growing more savvy and knowledgeable about native cultures and traditions in other nations. Instead of storming into a region and risking a backlash, corporations seek to gain the trust of locals and forge partnerships.

At Weyerhaeuser, the $23 billion timber giant with operations in 18 countries, executives hire and work with native people in Canada, Uruguay, New Zealand and elsewhere.

Over the years, Weyerhaeuser has faced lawsuits and protests from environmentalists and Canada's aboriginals, known as First Nations people. But the company has hired hundreds of aboriginal people at its wood-products plants, signed on aboriginal suppliers and contractors and forged several logging joint ventures with the tribes that have since been sold.

"Our goal," says Weyerhaeuser spokesman Frank Mendizabal, "is to have good relationships with the aboriginal people, to be aware of their concerns and to understand their cultures."

Recognizing religious differences. As multinational companies hire more religiously diverse employees in the USA and other countries, they're wrestling with how to adapt their workplaces to employees of all faiths, including Muslims, Jews and Christians.

Texas Instruments, American Express, Hewlett-Packard, Ford Motor and many other companies let workers form religion-based employee networks for support and networking. Some corporations offer chapels or prayer rooms for employees or give their workers time off to worship on special religious days, from the Jewish Sabbath to the Muslim holy day of Friday.

"Religion is the next big megatrend to emerge in diversity, and companies understand they have to deal with it," said Georgette Bennett, president of the Tanenbaum Center for Interreligious Understanding in New York.

At IBM, Bennett said, when security was tightened after the Sept. 11 terrorist attacks, diversity managers came up with a clever solution for a Muslim employee who wore her veil to work. Since observant Muslim women do not show their faces to men outside their families, IBM issued the employee two identification cards. One featured her photograph with a veil, to show to male security guards. The other card had her picture without the veil, to be shown only to female security officers.

Cross-border networking. In earlier years, "affinity groups" -- women, ethnic and gay employee groups -- were social networks and support groups for employees who may have felt like outcasts.

But now companies from Procter & Gamble to Lehman Bros. and others are tapping into the groups as powerful cross-cultural tools for hiring and recruiting, employee and management training and other business endeavors.

At John Deere, the 170-year-old agricultural equipment company in Moline, Ill., more than half of its 47,000 employees are based outside the USA in Latin America, Asia, Russia and other regions.

The company has 20 affinity groups from Finland to Mexico, and, "The groups must be tied to a business objective of the company," says Deborah Taylor, director of global diversity. To that end, John Deere uses the worldwide networks to find and retain talent.

"If you're sitting in Moline and trying to put together a global strategy, you're in a lose-lose situation" unless you fully connect with employees and affinity groups worldwide, Taylor says.

Finding global talent. With torrid economic growth in China, India and Russia, the global workforce in the 1980s doubled to 3 billion by 2000, according to research by Harvard University economist Richard Freeman.

Multinationals know they can no longer rely solely on the U.S. hiring pool, where the growth rate of engineering and science students has slowed. That means the hunt is on for international talent. Now recruiters from Fortune 500 companies are courting top management, financial, engineering and sales talent at elite universities in Asia, Europe and Latin America.

"Before, companies could pick and choose who to recruit," says Effenus Henderson, chief diversity officer at Weyerhaeuser. "Now, if we truly want to attract the best and the brightest, we've got to look at immigrants around the world."

Why is global diversity getting hotter? More capital, labor and business ideas are flowing around the world than ever before. Whether anti-trade forces like it or not, economic power is steadily shifting abroad, say diversity managers and consultants. And U.S. companies seeking double-digit revenue growth are looking to emerging nations with fast-growing industries and middle-class consumers.

Obstacles to movement

Companies face many obstacles, though, including anti-American backlash, stronger competition for talent from foreign companies and the sheer complexity of doing business overseas. Another problem: the failure of myopic companies to see that diversity strategies must be multifaceted enough to work around the world.

China sees sharp regional and dialect differences. Latin American countries may focus more on class and income-level distinctions among people. In Japan, businesses worry about the age and knowledge gap between older salarymen and younger generations.

Gender issues in the workplace also vary widely. The Scandinavian countries of Norway, Sweden and Denmark have strong workplace policies for women and mothers, while some Third World countries treat women workers harshly.

"One size does not fit all," says Anita Zanchettin, director of diversity at consultant Aperian Global and author of Global Diversity: Winning Customers and Engaging Employees Within World Markets. "It's a very different reality in every country … the business environment, the languages, the needs of the marketplace and consumers."

Companies must adapt more quickly than ever before to overseas cultures and regions. The European Union alone has 27 nation-states with dozens of languages and 500 million people.

Freeman at Virtcom Consulting says that corporations active in the Czech Republic, for instance, must seek ways to integrate into their workforces the Roma Gypsies, an impoverished and segregated ethnic group. The group is protected by the European Union's Article 13, a legal directive that bans discrimination by race, age, gender, religion, sexual orientation and disabilities.

In South Africa, a fast-growing economy, government affirmative action-style programs and a constitution that bans racial and sex discrimination have given diversity a huge boost in the past decade, says Alan Richter, president of QED Consulting in New York and a native South African. "The diversity agenda for businesses is booming," Richter says. "South Africa is the economic superpower of Africa and one of the most diverse countries in the world, and the black middle class -- known as 'black diamonds' -- grew 30 percent last year."

At the U.N. conference, executives on one panel struggled to define the new global diversity. Finally, they laughed and shook their heads at the colossal scope of their mission. "If we succeed, we'll change the world," said Floyd Pitts, senior director of diversity at Hilton Hotels and an African-American. "Just not tomorrow."