Report: European Workplaces Ill-Prepared for New Business Realities

European workplaces that are homogeneous—staffed with similar-looking and similar-minded employees—lack the broad range of insight and experience needed to meet the challenges of a highly competitive global business environment, according to a study by the Boston Consulting Group (BCG), a global firm, and the European Association for People Management (EAPM), which represents personnel management organizations in more than 30 European countries.
Hard-Wiring Diversity into Your Business, released in June 2011, presents the findings of a survey of 2,039 managers, executives and staff in and out of human resources from more than 30 European countries. Reactions to a series of diversity-related questions were gathered from 444 of the respondents.
The report noted that four key trends impacting European companies are influenced by the makeup of an organization’s workforce:
  • The customer base is increasingly heterogeneous. “Refining products for the elderly, working mothers and other segments requires a deep understanding of customers’ preferences—one best achieved by a workforce that accurately reflects the demographic makeup of the customer base,” the report authors noted.
  • Globalization requires insights into developing economies and other new markets.
  • A talent crunch is expected in most European countries. “Companies will have to expand the geographic territory in which they recruit,” the authors noted. “They will also need to tap into pools of currently underutilized groups, such as women, older professionals, retirees and immigrants.”
  • Corporate leaders need a new approach. “Effective leaders today don’t issue orders so much as they exert their influence over diverse groups of talent and stakeholders,” the report noted. “Leadership teams comprising a diverse range of individuals will be able to draw on a wider set of experiences in order to inform their decision-making.”
A diverse workplace, therefore, is seen as “the enabler to radically change the way a company operates,” Gustavo Bracco, the head of HR at tire maker Pirelli, is quoted as saying in the report.
"Diversity must be seen as a strategic response to major business trends such as globalization, demographic shifts and the talent shortage," added Rainer Strack, senior partner at BCG, HR expert and an author of the report.

European Organizations Lack Diversity

Major European organizations display little diversity in top management, the report revealed. An analysis by BCG of 40 companies from the Euro Stoxx 50 index showed that, on average, 93 percent of the executive directors were male, 86 percent were native Europeans and 49 percent were between the ages of 51 and 60.
Yet the purchasing power of women is increasing steadily, the companies generate an average of approximately 40 percent of their revenues outside of Europe and their customers are growing older.
Respondents acknowledged these realities by citing business risk caused by aging as the greatest diversity challenge (noted by 48 percent), followed by gender (29 percent) and nationality (18 percent).
Many European companies are beginning to make efforts to address such challenges: Eighty percent of respondents said their company had implemented at least three measures to enhance employee diversity, such as offering flexible work arrangements, language courses or partial-retirement programs. However, the survey found that most companies apply these initiatives selectively.
“Our research has shown that the business case for diversity is clear and that HR needs to integrate such measures into its broader people policies,” said Stephanie Bird, an author of the report and the director of HR capability for the Chartered Institute of Personnel and Development (CIPD).
The BCG/EAPM report suggested several steps that HR professionals can take:
  • Create transparent workforce plans. Use strategic workforce planning—the quantitative and qualitative analysis of workforce supply and demand and of the individual capabilities of workers—to target workers with needed skill sets and experience.
  • Redefine recruiting. Tailored recruiting campaigns and the employment of recruiters outside the home country can expand the existing talent pool and help reach underrepresented groups.
  • Promote diversity. The sooner the promotion of diverse talent is achieved at low levels in a company's hierarchy, the more likely it is that the organization's internal diversity can be tapped and enhanced.
  • Build leaders for the 21st century. Expose aspiring managers to different business units, countries, functions and projects.
  • Retain employees. Identify obstacles to continued employment, such as issues with work/life fit, and work to resolve them.
  • Make progress visible. Monitor and share metrics related to diversity efforts so that proven progress can be established quickly and the organization can promote a corporate culture based on diversity.
“Diversity is an integral element of HR work. It's a recurring theme that touches all topics, including workforce planning, recruiting and career management,” added Pieter Haen, president of EAPM and an author of the report.
But HR alone cannot ensure that a workplace is filled with employees representing a variety of perspectives and backgrounds. 
According to Jean-Michel Caye, senior partner at BCG and an author of the report, “In order for diversity to be successful, top management must visibly support the objectives, and the entire workforce must be integrated in the development and execution of the programs.”
Rebecca R. Hastings, SPHR, is an online editor/manager for SHRM. You can read the original article here.