OriginsInsight Edition 7

Cultural Diversity in Australia’s Business Leaders

OriginsInfo recently contributed to ground-breaking research by Diversity Council Australia to reveal the cultural origins of ASX200 business leaders.  Released in October, the first-of-its-kind report showed that Australia’s business leaders do not reflect the cultural mix of the wider Australian population.

Using Origins name analysis, the report finds that only one in five leaders have culturally diverse (non-Anglo-Celtic) backgrounds, compared with almost a third of the wider Australian population. The vast majority of ASX200 business leaders are from Anglo-Celtic (English, Scottish, Irish and Welsh) and North-West European (primarily German) backgrounds.

If the definition of culturally-diverse background is narrowed by removing the North-West European grouping, the proportion of leaders from culturally-diverse backgrounds reduces to around 10%, compared with around 25% in the wider Australian population.  Particularly noticeable is that people originating from Australia’s more recent waves of migration from Southern and Eastern European and Asian countries are significantly under-represented.

Compared with the UK and the US, Australia has a similar ratio of culturally diverse business leaders to its culturally diverse population (0.47).  But in an era of globalised marketing, this reflects a significant opportunity for all three countries to improve their position.

Measuring and managing cultural diversity now sits clearly alongside gender and disability as key dimensions of human resource management and corporate responsibility.

The Business Case for Diverse Leadership

As one of the world’s most culturally and linguistically diverse (CALD) nations, businesses in Australia should aim to reflect the range of culturally diverse talent in its workforce.  Australian businesses must attract and retain people from CALD backgrounds if they are to continue as market leaders and maintain competitive a competitive edge.

As the report states, “Executive and workforce cultural diversity is linked to increased innovation and creativity, market share and sales revenue, brand reputation and differentiation, and improved financial performance.”  In order to attract, identify and engage with diverse talent, it is important for diverse representation throughout the workforce.  And this starts at the top.

With talk of the ‘Asian Century’, there is clear short-term opportunity for businesses to build and encourage leadership from people with Asian origins.  In a global economy, successful engagement with our international neighbours will be enhanced by the depth of diversity of our workforce and our leaders. A diverse workforce will bring particular knowledge and expertise to assist organisations to identify and expand into new and emerging markets.

The Capitalising on Culture report identifies six main business benefits that a culturally diverse workforce can bring:

• boosting local market share,
• entering international markets,
• creating strategic alliances,
• maximising innovation,
• differentiating your brand, and
• meeting critical talent shortages.

One of the critical elements of determining the breadth and depth of the diversity of a workforce is measurement. The Capitalising on Culture report provides organisations with tools and benchmarks for measuring workforce diversity. Origins is an invaluable tool to measure and monitor cultural diversity. With high accuracy, it is a quick, simple and cost-effective method for evaluating cultural diversity. It has the capability of determining under- and over-represented cultures and other analytical information to assist policy-making and setting of targets.

The Diversity Council Australia report is available here.  For more information about Origins and how it will provide insight into workforce diversity, contact info@originsinfo.com.au. More information about OriginsInfo can be found here.

After the Culture Shock

DCA’s Capitalising on Culture Report created lively discussion around the diversity of Australian business leaders. On the surface, Origins analysis found an encouraging breadth of diversity amongst ASX200 directors and senior managers. But the group overall is a poor reflection of Australia’s historic migration trends.

Specifically, leaders of ASX200 companies do not appear to have undergone change reflective of the profound shift in Asian migration. Origins data reveals just 1.6% of senior managers and 3.2% of board members have an Asian cultural background. This compares with 8% of the wider Australian population. The proportion falls lower still if the Asian-domiciled businesses, SingTel and SP Ausnet, are excluded.

Business commentators and other observers have highlighted the OriginsInfo finding that Asian talent is under-represented. In the wake of these revelations, report sponsors PwC Australia announced a focus on developing Asian talent and cultural intelligence across the organisation. We asked Luke Sayers, CEO of PwC Australia his view on discussion points arising out of Capitalising on Culture. He told us:

“The Asia Pacific region, in particular, has immense significance for Australia’s future prosperity. As the vice chair of our Asia Pacific network, I frequently hear from executives in Asia that Australians have a lot to learn with regard to how we form business relationships, and how we engage in the region. The challenge is that within the Asian corridor, there are many different countries, each with their own unique cultures and ways of doing business. Having the language skills as well as cultural awareness for each of these countries in your workforce is a real competitive advantage when trying to do business across the region.”

This bears out the Case for Capitalising on Culture, in which DCA posit that greater diversity in the executive workforce is associated with the innovation, creativity and leadership that build robust brands, deliver market share and boost performance. Luke agrees:

“It’s critical that businesses’ leadership teams reflect the societies in which they operate. We live in an increasingly interconnected world, and Australian businesses must have the cultural intelligence to thrive in that environment. Having workforces and leadership teams with a deep understanding of and connection with different cultures is an essential step toward developing that cultural intelligence.”

Today, around one in four Australians has a cultural background that does not reflect a NW European origin. When OriginsInfo completed its broad analysis of ASX200 companies, it found that one in ten Australian business leaders is culturally diverse. Senior Asian position-holders were among the least represented of Australia’s population at large.

Luke Sayers believes Australian companies are serious about getting cultural diversity and Asian talent up the pipeline:

“This is something I hear Australian business leaders talking about more and more, which is very encouraging. I’m thrilled that we’re out and we’ve put some solid targets in the ground for PwC, and we’re trying to move the ball to those targets.”

DCA’s breakthrough piece of research has brought cultural diversity to the fore, along with its challenges and value. Capitalising on Culture equips businesses to take the first critical steps in ‘counting culture’ and leveraging its enormous potential benefits. Watch this space.