Tag Archives: cultural diversity

Supplier Diversity in 2017 – Here’s Why It Matters

2017 will be the year when Diversity in Procurement takes the spotlight. And here’s why.

In March 2017, the Institute for Supply Management is holding a major summit on Diversity in procurement and supply management.

Diversity advocate Shelley Stewart Jr (VP and CPO of DuPont), has seen first-hand the positive impact that a strong, diverse organisation can have on the bottom line. Stewart is championing the case for making supply chains a bias-free zone at ISM Diversity 2017.

Here’s why supplier diversity matters to your procurement function, your business and your customers.

  1. Increasing Supplier Diversity is our Responsibility

A 2009 study from Pew Research has found that while minority-owned firms made up 41 per cent of all companies in the U.S., they only took in 10.9 per cent of overall revenue. Why?

Contributing factors include:

  • unconscious bias amongst decision-makers;
  • a narrow focus on cost over other value;
  • restrictive criteria for suppliers;
  • inflexible and non-scalable policies;
  • a tendency for big business to be most comfortable working similarly sized entities.

These days, diversity spend is now firmly on the agenda and rising every year. Reversing the contributing factors above has led to a more inclusive focus on overall value (including social benefits) over cost, flexible and scalable policies and criteria for suppliers, and a recognition that the strongest business relationships are often made with smaller, more diverse suppliers.

  1. Customers Want to see Diversity in Action

The public relations aspect shouldn’t be the prime reason for having a supplier diversity programme. However, it’s still important to track, measure and report on your diverse supply base to win recognition from your customers.

Your customer base is diverse, so your business needs to be diverse as well. This comes through adequate representation in the supplier base.

Partnerships with diverse suppliers will give your business a competitive advantage when facing changing customer demographics. For example, if you operate in an area with a rapidly-growing minority population, your key relationships with minority-owned suppliers will become more important than ever.

  1. Diversity Drives Innovation

Essentially, diversity brings a number of different backgrounds and life experiences into your supplier mix to overcome homogenous thinking with fresh new perspectives.

Size matters, too. A study by CHI Research determined that small businesses generate 13 to 14 times more patents per employee than large firms. Since diverse suppliers tend to be small businesses, many companies use their supplier diversity programmes to tap into new and varied creative resources and the innovation that is occurring at these firms.

The fierce competition for business amongst diverse suppliers is another driver for innovation.

  1. Diverse Suppliers are Often More Flexible

Because most diverse suppliers are small businesses, they are usually able to offer greater flexibility, better customer focus and lower cost structures than larger businesses.

Smaller, diverse suppliers are less likely to be tied down by restrictive policy, red-tape or innovation-stifling bureaucracy.

  1. Follow the Leaders

Some of the world’s leading companies are moving ahead with impressive supplier diversity programmes.

  • Microsoft, for example, has recently exceeded $2 billion in annual spend with M/WBE businesses.
  • Google launched a best-practice supplier diversity programme in 2015. It brings key partners into the Google Academy for shared learning opportunities that will drive further innovation.
  • AT&T celebrate their suppliers as one of their “four pillars of diversity”, the other three being the organisation’s employees, community and marketing.

If your organisation’s supplier diversity program is still only in its infancy, it’s important to increase your focus on this area or risk being left behind.

There’s an impressive array of conferences and organisations dedicated to improving supplier diversity, including:

Register now to join DuPont’s Shelley Stewart and diversity experts from Honeywell Aerospace, Rockwell Automation, Whirlpool and Fiat Chrysler at ISM Diversity. The event takes place on March 1-3 2017, at the Renaissance Orlando at SeaWorld resort.

The Art of Cross-Cultural Negotiation

Negotiations can be tricky. A cross-cultural negotiation presents an entirely different challenge, one with countless pitfalls and potential faux-pas.

Andrey_Popov/Shutterstock.com

Negotiations in a business setting can be difficult at the best of times. Throw cross-cultural diversity into the mix, and the difficulty level rises again.

The way you speak, behave, control your body language, and operate can change hugely from culture to culture. This increases the chance of making a mistake, or accidentally offending the other party.

Some people may also make the mistake of assuming that when we talk about culture, we are limiting this to a purely geographical standpoint.

When referring to a cross-cultural negotiation we often talk about different nationalities as a primary characterisation. But this is not the only element that affects culture.

Culture is the unique characteristics of a social group, and the values and norms shared by its members. This social group may be a country, a corporation, a religion, gender, an organisational function, or one of many others.

Dealing with Cross-Cultural Negotiation

How can you prepare for a cross-cultural negotiation? What do you need to know? What do you need to prepare in advance? And how should you approach negotiating with different cultures? This is where expert advice can help.

Procurious were lucky enough to be invited to listen in on a cross-cultural negotiation roundtable, organised by Giuseppe Conti, Founder of Conti Advanced Business Learning. Participants came from a range of businesses and diverse backgrounds, and comprised 8 different nationalities. The discussion was fascinating, and provided some great insights into a complex subject.

In this series of articles, we will examine key factors to be taken into consideration during cross-cultural negotiations, and see some real-world examples straight from the experts.

Power Dynamics and Balance

Giuseppe kicked off the discussion by asking the participants to talk about their own experiences of cross-cultural negotiations.

Jonathan Hatfield, Director of Purchasing, EMEA at PPG Industries, talked about his first trip to Russia to purchase chemicals.

Supplier power played a large part in the negotiations. Jonathan visited factories in Siberia, where no-one spoke any English. In line with the strong hierarchical culture of the country, he was also dealt with several junior product managers before he could access more senior people.

While Jonathan’s aim was to create a relationship with the supplier, the supplier cut straight to the point. They only wanted to know what he wanted to buy, where it was going, and what the price would be.

Jonathan left Russia not even knowing if he had managed to secure any materials (happily he did!). It taught him about power balance, and also to make sure that he had approvals lined up in advance.

Language Barriers and Coffee

Two other participants gave examples highlighting the difficulties of language barriers and body language.

Thierry Blomet, Senior Vice President at Kemira, took part in a negotiation with an Indian customer, who appeared to be shaking their head from side to side at every argument that was presented. This left Thierry feeling that none of his ideas had been accepted.

When he questioned this with his local representative however, he was told that he was doing fine. The shake of the head was actually a sign of agreement with what he was saying.

Matthias Manegold, Head of Procurement and Supply Chain Practice at Kinetic Consulting, talked about a situation where language barriers played a major role.

He was negotiating with an Asian business to bring new technology to Europe. Each statement in the negotiation was met with a “Hai” (Japanese for yes), but it wasn’t until later on that Matthias was told that this actually meant, “Yes, we hear you, but we don’t necessarily agree”.

Jean-Noel Puissant
Jean-Noel Puissant

One final example came from Jean-Noël Puissant, Head of Procurement EMEA at Monsanto International. Jean-Noël highlighted the difference in how negotiations start in different cultures.

In one negotiation in the South of Italy, the owner of the supplier arrived with his wife, listened to the agenda being laid out, then suggested everyone get a coffee.

It was his way of starting the negotiation by getting to know the other party better with some conversation before the business discussions kicked off.

Company Cultures

The participants also reflected on company cultures, and how current or former employers’ cultures had shaped their own negotiation approaches.

Stephane Guelat, Senior Director – Supply Chain at Pentair Valves and Controls, spoke about one of the key factors for procurement and supply chain – ethics.

Stephane said that, while many organisations will put employees through ethics training, the ethical standards may be different across cultures. For instance, the exchange of services or gifts may be perceived as completely unethical in Western Europe, while fully normal in India.

Xin-jian Carlier Fu, Strategic Sourcing Commodity Manager at Honeywell, argued that there are likely to be many different cultures within the same organisation.

This was confirmed by Jonathan Hatfield, who said that this is ever more the case as organisations from different cultures and countries merge. He added that it was something buyers needed to be cognisant of when dealing with companies which had been taken over.

Finally, Giuseppe highlighted how his first job with a large multinational with a very competitive culture shaped his initial approach to negotiation.

When working later in his career with a smaller, family-owned organisation, he learned to adapt and broaden his approach to negotiation. According to Jean-Noël, we cannot assume one-size-fits-all. We need to understand the specific culture of each large or small organisation.

There’s much more to come on this topic, including tips on negotiating with different nationalities, and applications of cross-cultural research in negotiations. Come back next week for more.

This roundtable was organised by Conti Advanced Business Learning (www.cabl.ch), a Swiss training company that specialises in Negotiation & Influencing training. Giuseppe Conti, has over 20 years of Procurement experience and 10 years of negotiation teaching experience at leading Business Schools (including Oxford, HEC Paris, IMD and ESADE).

Navigating Rule Based Cultures

When dealing with different or rule based cultures, it’s important to remain mindful of differences, so as to avoid misunderstandings.

fizkes/Shutterstock.com

Last month I had an assignment in Japan.  On our first night in town, five colleagues and myself met in the bar of a major hotel where we had planned to have a pre-dinner drink and decide on a dinner location.

Upon arrival, we ordered our drinks and were each served a very small bowl of nuts. After a brief discussion, and review of the hotel menu, it was decided that we would eat at the hotel restaurant.  Given that we didn’t have to travel anywhere for dinner, we decided to spend a bit more time relaxing and catching up before heading to the restaurant.

One of my colleagues politely asked the barman for a second bowl of nuts, to which the barman replied, “No, it is only one bowl per drink.” After some discussion it was clear that the barman was not going to bend the rules, there wasn’t going to be a second bowl of nuts unless a second drink was ordered.

In response to this inflexibility, we decided against having another drink and eating dinner at the hotel restaurant.  Following our earlier conversation with the restaurant manager regarding the menu, on our departure he questioned why we were leaving.

We told him of our reason for leaving, to which he was very apologetic, thanked us for the feedback and then proceeded to escort us to the concierge, while also suggesting other local restaurants.

His friendly manner persuaded us to dine at one of the other restaurants within the hotel. We appreciated his demeanour and kind generosity – providing our table with a surprise complimentary bottle of wine.

Appreciate the Differences

The point of this story is to emphasise the differences of rule based cultures, that some cultures are bound by rules, formalities and regulations more than others. This doesn’t make one better than the other, more rude or generous than another, it just makes them different.

We need to understand and appreciate these differences. In the moment they may seem significant or even pedantic but their effects can be long reaching and detrimental toward future relationships, behaviours, attitudes and biases.

Strong rule based cultures tend to encourage conformity, embracing the status quo, while other cultures tolerate greater degrees of flexibility and adaptability.

The key to successfully navigating, working and interacting within and across cultures is to understand that these traits are often hidden, unspoken, understated characteristics that are bound up in the unspoken cultural rules, expectations, systems and processes.

Reflection and Mindfulness

They can appear when you are engaging in cross-cultural social and professional interactions i.e. different expectations and formalities of hierarchical and equality based structures, during negotiations, navigating through ambiguous, tense situations or when establishing and maintaining trusted working relationships with internal and external stakeholders.

The barman serving us was not rude, rather he was efficiently performing his job, behaving in a manner that was appropriate for a barman in his role, respecting the rules and processes of his job. Our observations and expectations of the barman’s behaviour and attitude were considered through our own cultural lenses.

This example highlights how interpretations of social rules and behaviours can quickly become construed as impolite, disrespectful and inappropriate. Reflection and mindfulness are valuable skills, especially when interacting with differences of any kind!

Dr. Tom Verghese is the Founder and Principal Consultant at Cultural Synergies, a leading global intercultural and diversity consultancy that specialises in developing and sustaining cultural intelligence.

Samurai & Cowboys – Cultural Perspective on Management Styles

Whether you support or detest change, it is happening. But how much impact do management styles in different cultures have on change?

Do you have a Smartphone? Do you use Google? Do you use global internet sites to get information on clothes, food, travel, music, research, work opportunities? These sites influence people and bring countries closer together, especially countries that share a lot of trade and commercial contact.

These factors influence what you and your colleagues may see as the norm. You are open to influence whether you know it or not, to leading thoughts, persuasions, technologies, arguments, speeches, TV adverts, products. Nothing stands still.

Management Styles – East and West

Could all of this affect management styles? If you compare Japan and the USA there are, of course, differences. However, countries will find it difficult to maintain existing management cultures in the face of fast-paced change, and as technology makes the world smaller.

There is a belief that you can group countries with similar management styles – the USA, UK and Australasia in one group, and Japan and other East-Asian countries in another. Traditions, national roots and leadership are different, and this difference should be cherished. But could this have a negative effect on business?

When a multi-national company starts operating in Japan, Directors “back home” will see differences in culture. A Japanese firm, starting operations in the USA, is going to experience a culture shock when they hire local staff. Because of this, management styles cannot stay the same.

So which culture is better and will things change?

Values, Norms and Variances

There is a widely held belief that traditions and leadership styles in each country lead to the development of styles. National values, norms and education are instilled from an early age. These can lead to national variances such as:

  • Power of leaders to influence citizens
  • Pressure on a corporate employee if an error is made, and the outcome
  • Time scale to make decisions in a company, and by whom, a person or a group

Most will agree that management styles in some counties have changed over the years. People believe if you treat your staff well, they will perform better and go the extra mile. This is seen by customers, who tell others, and the company prospers. The ability to complete work to ‘best endeavours’ is initiated or halted by management – despite their wish to ensure good company performance.

But what or who influences the Directors and the Managers?

In a ‘Top Down’ style, the manner of the CEO is reflected across the organisation. But the leadership of a country can be influential too. Comparing Japan and the USA again, both have similar approaches and beliefs when it comes to market share, commerce and winning business. But there are variances that have evolved, which are more effective in their own regions.

Japan and the USA have traditionally strong trading links. Is there an argument for finding a cultural ‘middle ground’, where the best of both cultures are adopted by both parties in order to prosper? Is it a case of change and adapt, or fail commercially?

Power Distance

Current legal systems and education in each country lead to different responses by managers. Let’s take the concept of leadership and ‘power distance’ – the level of acceptance by society to the distribution of power. In some countries, an order might be met with “You must be joking!”, whereas in others the response will be “Yes, sir”.

It is said that ‘power distance’ and the process of decision making are inversely proportional. So, the more a person is deferential, the more that person looks for consensus before any decision is made.

If the citizen feels less influenced by their country or company leader, or traditions, they can make decisions faster, are able and prepared to take risk, and feel empowered to innovate and adapt rapidly to market forces.

In these countries when the economy thrives, the countries’ leaders tend to take the credit themselves, while, where there is a consensus or group response, leaders congratulate the group and see this as a mutual success.

Risk Avoidance

There are further differences when looking at risk taking or uncertainty avoidance in the USA and Japan. In Japan, the concept of a ‘job for life’ means there is traditionally high uncertainty avoidance.

In the USA, people will generally take these decisions, so when the company thrives, the employee receives the praise. Even if it turns out to be a bad decision, and the employee loses their job, a new employer may look favourably on the courage and innovation in the decision.

People don’t get it right every time – Thomas Watson, former Head of IBM, said in 1943 that there was a “world market for maybe five computers”. But if we don’t try, we will never succeed. The key is balancing the risk.

Long-term vs. Short-term

Gadget makers take ideas and concepts from multiple sources in order to make a better product, so too can management style benefit from taking the best from other models.

In any industry, there are people who are in for the long-term, and others who are in only for the short-term. In Japan, companies look at the long-term picture, and employees at the long-term ‘loyalty’ to a company, while in the USA, there is more focus on the short-term and individual careers.

However, this is changing in Japan, with candidates publishing Portfolio Career CVs showing skill sets, and not necessarily their list of corporate positions.

To take a simplistic view, we have one culture where short-term planning, individual confidence and easier movement between jobs, while the other focuses on long-term planning and thinking, collective confidence and the job for life.

But in 2016, the tide is changing, and a global perspective is required. Where the prevailing culture will end up is open to discussion but change is constant and more important, the pace of change is exponential – the rate of change is getting faster.