Can diversity management in outsourcing make a difference in the potential return on investment (ROI)? I discussed this issue with Joe Santana, Senior Director of Diversity at Siemens USA. He has an extensive background in outsourcing, even prior to his diversity position with Siemens, providing him the opportunity to see from the inside and outside how effective diversity management can be an important factor in outsourcing relationships.
Please explain how diversity arises in outsourcing. Is it something more than having a workforce of multiple races and ethnicities?
JS: Yes. Add to that the recent increase in the number of working women, who now make up more than 50 percent of the workforce, and the multiple generations that make up the workforce and talent pool. In addition, on the global stage, you now have increasing globalization of business with, for example, Asian companies doing business in the U.S. and U.S. companies working in Asia, forming supply chains that circle the planet. Within each of these globalized societies, there are forces moving them away from more homogenous to more heterogeneous societies.
Why are companies placing more emphasis on managing diversity in outsourcing relationships? Is it something more than addressing communication challenges because of diverse cultural perspectives?
JS: Organizations are recognizing the huge opportunity as well as the challenges of getting the best results out of the varied collections of people. Business leaders are recognizing that even groups of people who appear to be the same are often diverse. For example, a group of five white males may appear to be a homogenous collection of people; but because of variations in upbringing, education, job experience, marital status and many other factors, they can be very different from each other.
An organization that manages this challenge well can gain a big competitive advantage over one that handles it poorly in terms of workforce, marketplace and workplace performance.
What is diversity management?
JS: Managing diversity is simply organizing and coordinating the interactions of the similarities and differences in the people that comprise workforce teams in a mutually respectful and inclusive manner to achieve the most positive outcomes.
Please describe an example of managing the diversity of a group of employees.
JS: Here’s a simple example of what can happen when we put three highly intelligent people together on an important project, but they lack diversity management skills. One person, as a result of his or her background and upbringing, is aggressive and wants to move forward quickly. Another is equally aggressive, but prefers a slower, more careful pace. The third is a subject matter expert whose personal background has caused him or her to develop a very quiet and restrained approach. The manager of this group of people may note with some frustration that their project seems to be stalled, as the two more aggressive members of the team struggle for control over the pace and direction and the subject matter expert seems to be sitting on the sidelines, watching everything unfold. Not exactly what the manager expected from a self-directed team of smart people. So, what is happening here? Simply put, this is a failure to effectively manage the rich potential of diversity.
How would effective diversity management change the outcome in the example you just gave?
JS: The very same diversity of traits – similarities and differences – possessed by these three people can, if properly managed, produce a much more effective and innovative team than a more homogenous group would be. For example, the aggressiveness of the two can be harnessed to provide strong project leadership, while our third, more careful person can make sure that hasty enthusiasm does not result in gross errors. Meanwhile, by drawing out the subject matter expert’s knowledge, the entire project can find itself on a firmer foundation, resulting in a higher quality result.
Multiply this scenario by the millions of possible team combinations that can result in any company at any time, and you can quickly see how diversity, if well managed, can be a boon, and if not managed can become quite costly to organizations.
For a local functional or process outsourcing relationship, which is one where the outsourcer enters the culture of the host/client company and takes over the management of many of the client’s former employees, the value of diversity management is quite obvious.
It seems clear that an outsourcing service provider needs to manage the diversity of its workforce. But what do buyers of outsourcing services need to understand about diversity management?
JS: One of the biggest vulnerabilities that an outsourcer faces when taking on a new client is the loss of key personnel formerly employed by that client. Another is rapidly understanding and being able to operate within the client’s culture, managing similarities and differences. The diversity of experiences represented within the client’s culture and their individual former employees and the outsourcing company’s management team contain the seeds for great achievement – but only if these varying elements are properly managed; it can mean total disaster if they’re mismanaged.
For global relationships that involve the delivery of services utilizing a chain of partners in different countries, cultures and time zones, the importance is equally obvious. Many of my friends who entered offshore outsourcing relationships expecting huge cost-savings dividends that did not materialize wound up admitting to me that they’d failed to factor in the cost of bridging communications gaps and other challenges arising out of a variety of cultural, language and expectation differences.
So it’s possible that not managing diversity in an outsourcing relationship can cause it to fail.
JS: Yes. Something very similar to the situations I just described can happen in remote provider relationships even without the offshore factors. In outsourcing, it is necessary for service providers and service recipients to partner in order to deliver a solution. Because of the human partnering factor in these relationships – and an increasingly diverse environment – diversity management is guaranteed to be a factor in creating competitive success.
How can organizations start a diversity management program to address the challenges and opportunities?
JS: Investing in diversity awareness and management skills training is an important first start. The specific types of outsourcing relationships in which the partners engage should obviously define the parameters of the training, but embedding this training into a company’s standard management development curriculum ensures that it is and remains a component of its workforce competency training.
What about the ongoing efforts in diversity management? Does that involve something more than the initial training you just described?
JS: People don’t generally start immediately practicing what they’ve learned. It’s a pretty well-established fact that most people tend to quickly forget the majority of what they learn in training situations and seldom change their behavior very much even regarding the elements of the training that they do remember. Diversity training is not often that different in this regard.
Like other types of learning, diversity training has a greater impact on behavior when it is reinforced by follow-up coaching. Having coaches work with newly trained employees through simulated situations, as well as giving helpful feedback during the early phases of adoption, can do much to take these skills from simple possessed knowledge to active practices.
Joseph Santana, Senior Director of Diversity, Siemens USA, has authority over the development and implementation of nationwide diversity strategies for the firm’s 60,000 U.S. employee operations. He accomplishes much of this work through close partnerships with business leadership and the councils and employee resource networks in the various Siemens sectors and divisions. In a prior position, he was the New York and New Jersey IT Outsourcing Area Director for Siemens Business Services (now SIS). In addition to outsourcing, his background spans a number of functions including finance, IT management, HR operations, and journalism. He can be reached at joseph.santana@siemens.com.
Since 1998, freelance writer Kathleen Goolsby has studied outsourcing relationships’ successes, failures, trends, and best practices. She has interviewed more than 860 executives at buyer and service provider companies and is the author of “Critical Requirements for Building and Sustaining a Successful Outsourcing Relationship,” a chapter in Global Outsourcing Strategies: An International Reference on Effective Outsourcing Relationships (December 2006, Gower Publishing). As a freelancer, she also currently serves as the Senior Writer for Outsourcing Center (whose parent company is sourcing advisory firm, Alsbridge) and has authored dozens of articles as well as white papers. In a past role, she was editor of Outsourcing Venture (a former print publication). You can contact Kathleen at ksgoolsby@gmail.com.
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