Diversity and inclusion in leadership - the key to boost international success and innovation
Estimated Read Time: 7 minutes
Hong Kong executive leaders with intimate knowledge of their market are pivotal to commercial success. But what happens when a business expands overseas? As we will explore, multicultural leadership and local knowledge matters. After all, in today’s globalised economy, the only barrier for executive leadership teams is their ability to service demand. How these teams are set up can boost international success and innovation through a deep understanding of foreign markets, including the nuances of language, communication, and customs of each business community.
Directors can often spend years abroad, setting up new ventures, building relationships, and reporting back to their headquarters. However, the international model is steadily evolving, with many executive teams now recruiting native experts with local knowledge. Someone born and raised in a country will understand more than a well-meaning expatriate, and they can join the board, too.
If there’s one thing that can’t be overstated in 2024, it’s the importance of diversity and inclusion in leadership. In addition to multicultural leadership and local knowledge, companies with diverse leadership teams are not only more innovative but also more successful in the international arena. As businesses in Hong Kong strive to compete in an increasingly complex market, embracing diversity and inclusion (D&I) in leadership is central to sustained growth and competitiveness.
After all, the potential for diverse leadership teams has never been higher thanks to the Covid-19 pandemic. Businesses don’t need executives to sit in one country anymore; they can benefit from people being anywhere in the world, connected by technology and coming together four times a year.
In this new era of leadership, it’s clear that multicultural leadership teams are in demand. Let’s investigate how to build them and, how to sharpen their competitive edge by harnessing diversity and inclusion in leadership.
How to develop a multicultural leadership team
Let’s say a business wants to expand beyond its native country into new markets. They need to get out of the mindset they’ve had for years – trading locally – and the best way to do that is to recruit executive leaders from other countries. The diversity of cultures, brains, and mindsets will certainly help them to perform better, kick-start their international ambitions, and boost innovation.
But it would be a mistake for them to say: “Tomorrow, we will recruit some foreign people onto the board because it’s a good thing to do.” At the beginning of the process, when the Chief Executive is considering the right approach, it’s important to address the right questions and recruit new leaders in alignment with the strategy:
- What are your plans for the next five years?
- Where do you do business and where are you looking to expand?
- How are you planning to do this?
- Does it make sense to have different nationalities on the leadership team?
- Would you be open to this approach?
If the business is in Hong Kong and its market is local, the CEO could recruit a Hong Kong national to join the board. But, if they want to expand further into Asian markets, or move into Africa, Europe, or the Americas, it would be wise to bring in new expertise, knowledge, and spirit. This is especially true when looking for specialist skills.
A Hong Kong company exporting and importing food might need to understand the sourcing of fruit from South America, for example. Sure, they could do it from a desk in Hong Kong, but would they fully understand the growing seasons, farming challenges, and local commercial realities? Much of that experience will sit with people in the country of origin; people who could also become part of a mobile, or distributed, executive team.
A multicultural and diverse leadership team should certainly follow the strategy and ambitions of a business, not the other way around. But if the plan is to expand overseas and grow in different markets, then specialist knowledge and a flexible business approach are essential.
Related: How to develop leadership skills in your employees
Diversity is the difference
In the quest for global expansion, local knowledge is vital to boost innovation. However, if two companies with the same turnover, and the same international goals, started this journey today: one with an executive team from the same country, and the other with a combination of nationalities, it’s likely that the second business would develop market share more quickly.
Why? Well, research shows that exposure to a diverse range of perspectives enhances an organisation’s resilience and agility while boosting innovation and financial performance. A Boston Consulting Group study corroborated this, finding that in both developing and developed economies, companies with above-average diversity in their leadership teams reported a greater payoff from innovation and higher EBIT margins.
The greatest finding is a strong and statistically significant correlation between the diversity of management teams and overall innovation. Companies that reported above-average diversity on their management teams also reported innovation revenue that was 19 percentage points higher than that of companies with below-average leadership diversity—45% of total revenue versus just 26%.
When it comes to diversity and inclusion in leadership, Elaine Lam, Managing Director of Robert Half Hong Kong, is a true expert. With almost 20 years of experience in the recruitment industry, Elaine is a trusted thought leader on employment, recruitment and workplace trends, and a leading voice for diversity, equity, and inclusion in the workplace.
Elaine has a reputation for helping clients build fair and equitable workplaces that attract and retain exceptional talent. She says, “I am a strong advocate for workplaces that allow each team member to bring their whole self to work. After all, within any multicultural team, the range of identities is diverse – they’re made up of different genders, races, and sexual orientations. All of these factors shape the experience of a leader (and their staff). When my clients choose to harness this diversity, it pays off. In my experience, it has resulted in more engaged, productive, and loyal teams.”
“Diversity and inclusion in leadership is simply non-negotiable in 2024. If you want to drive innovation in your organisation, I challenge you to do so without embracing people’s different backgrounds, characteristics, and experiences.
Therein lies the magic – a diverse collection of people will look at the same problem in different ways and offer a range of different solutions. Ultimately, it gives your business a greater breadth of solutions and a greater chance of being able to solve the issue,” says Elaine.
A Tatler article explored this, citing that according to the 2021 Hong Kong census, non-Chinese ethnic groups made up about 8.4 per cent of the population or about 620,000 residents. The article posited that while it was diverse on paper, there was still room for improvement when it came to Hong Kong’s “inclusiveness”. Hong Kong’s Equal Opportunities Commission (EOC) is one organisation that strives to shine a light on the importance of these issues to empower organisations to understand the value of diversity and inclusion. According to the EOC, some ethnic minority residents in Hong Kong are marginalised due to language barrier biases, restricting their education and employment opportunities.
The importance of inclusive leadership
It’s easy enough to hire diverse employees, it’s not as easy to include them in organisational dialogue. Elaine believes this is where inclusive leaders shine. She says, “Diversity encompasses all the aspects that make us different, from gender to race, religion to sexual orientation. You can have all of these elements in a workplace but it’s meaningless if all of these people feel excluded. Inclusive leaders have a unique ability to relate to diverse people and perspectives, channelling this diversity in the way they shape an organisation’s strategy, growth, systems, and values.”
Related: How can men be allies to women in the workplace?
“Inclusive leaders have an exceptional ability to make every employee feel seen, heard, and valued for their unique ideas and contributions. It doesn’t happen by accident - it’s a conscious effort. These leaders strive to create a culture based on acceptance, one where everyone feels welcome, irrespective of their differences. Diversity plus inclusion is where the magic happens,” says Elaine.
Diversity and inclusion in leadership – A ‘how to’ guide
For businesses in Hong Kong aiming to leverage the benefits of diversity and inclusion, a strategic approach is essential. Elaine shares her top tips below, along with some real-world examples that have helped her clients boost international success and innovation.
1. Start at the top
“Commitment from business leaders is critical. While policies and goals are important, nothing is more powerful than leading by example. Inclusive leaders will participate in D&I initiatives, create a culture of inclusion, seek out diverse perspectives, and challenge their own biases. One senior manager made it her mission to amplify the voices of underrepresented individuals within her business. She regularly shared their concerns with other senior leaders which paved the way for better D&I strategies based on training, mentorship, and employee resource groups.”
2. Leverage comprehensive training programs
“D&I training should be a fundamental part of employee development (management included). These programs should aim to provide employees with the resources to be more inclusive and understanding of others. One of my clients became an executive at a company that had no D&I training programs. He immediately worked to redefine the training landscape, introducing compulsory D&I initiatives. The programs he introduced covered unconscious bias, cultural competence, and inclusive leadership practices to create a more inclusive work environment.”
3. Demonstrate a commitment to diverse and inclusive recruitment processes
“D&I practices need to start before your employees are officially your employees. To build a diverse leadership pipeline, review your hiring processes to ensure they are inclusive, fair, and free of bias. Adjust your practices accordingly to ensure that all candidates are fairly evaluated based on their skills and experiences. One of my HR clients challenged his leadership team about their recruitment practices. He asked them to define what the term ‘cultural fit’ actually meant in their organisation. Once he had a formal definition, he was able to include it in the company’s hiring guidelines. He also mandated diverse candidate pools, diverse interview panels, and he re-engineered job advertisements to omit biased language.”
4. Foster an inclusive culture
“When it comes to diversity and inclusion in leadership, culture is critical. Inclusive leaders make it their priority to ensure that all employees feel like they belong. They make a conscious effort to promote respect, empathy, and understanding so that employees feel comfortable expressing their opinions and ideas. When leaders celebrate diversity and promote an inclusive culture, it reverberates throughout the company. These core values become central to the organisation and the employees within them. The most skilled leaders will embed D&I into all aspects of the employee life cycle, from recruitment to selection, development to retention. At a macro level, these leaders open dialogue on diversity issues and make it known that inclusion is not optional, it’s essential.”
5. Don’t stop
“Inclusive, multicultural leadership is not a static skill to obtain. It’s an ongoing journey that demands ‘cultural humility’, otherwise known as an ongoing commitment to self-exploration, self-critique, and a willingness to learn from others. If we want to truly honor the beliefs, customs, and values of others, we need to commit to continuous learning. The most successful leaders I know keep themselves accountable by regularly measuring and reporting on their D&I efforts. This includes tracking representation metrics, employee satisfaction scores, and the impact of D&I initiatives on business outcomes. With this information, they can pause and pivot where necessary to reach greater heights of diversity and inclusion in leadership.”
Diversity and inclusion in leadership are not just moral imperatives, they’re proven strategies for innovation and international success. Hong Kong businesses that prioritise multiculturalism, diversity, and inclusion, are well poised to navigate the global market, attract and retain top talent, consistently innovate, and drive sustainable growth. When it comes to diversity and inclusion, exemplary leaders have the power to set the tone in business, inspiring action, accountability, and most importantly, acceptance.
FAQ’s
What are the biggest challenges of promoting diversity and inclusion in leadership?
Unconscious bias, resistance to change, and a lack of diverse talent pipelines are the biggest challenges associated with promoting diversity and inclusion in leadership. In many cases, these factors stem from established cultural norms, fear of the unknown, and underrepresentation of particular groups and minorities.
How can diversity and inclusion in leadership benefit a company?
Diversity and inclusion in leadership can benefit a company by enhancing:
- Organisational resilience and agility
- Innovation and creative solutions
- Competitiveness
- Decision making
- Financial performance
- Market reach
- Employee satisfaction
- Employee retention
How can leaders create a more inclusive work environment?
- Start at the top – Lead by example.
- Leverage comprehensive training programs – Provide employees with the resources to be more inclusive and understanding of others.
- Demonstrate a commitment to diverse and inclusive recruitment processes - Review and adjust your hiring practices to ensure they are inclusive, fair, and free of bias.
- Foster an inclusive culture – Celebrate diversity and promote an inclusive culture where employees feel welcome, respected, and comfortable enough to express their opinions and ideas.
- Don’t stop - Honor the beliefs, customs, and values of others by committing to continuous learning.
How can I assess my own unconscious bias?
- Engage in regular self-reflection
- Take an implicit bias test, such as the Implicit Association Test (IAT), to uncover hidden prejudices. This test seeks to measures the strength of associations between concepts and evaluations or stereotypes to reveal an individual's hidden or subconscious biases.
- Lean into feedback from diverse colleagues to gain insights into your behaviours and attitudes.
- Participate in diversity training programs to help you identify and mitigate biases.
What resources can help me become a more inclusive leader?
- Diversity and inclusion training programs
- Inclusive leadership workshops
- Cultural competence literature
- Mentorships and D&I coaching sessions
- Any webinars, conferences, and professional networks focused on D&I
