Special Report: Diversity Knocks

Every quarter, Business without Borders will publish more research findings on the nature of Canadian business expanding abroad. The next special report—available exclusively to BwoB.ca members—will appear on February 10, 2011.

Paul Beamish hired Gigi Wong because of her answer to a simple question: how would she react if a Chinese businessman belched after his meal? It was a difference in cultural etiquette he’d observed hosting Asian clients and wanted to know how a prospective employee would handle the situation. A Canadian-born job candidate said she’d politely tell the person to stop, but Wong had the correct response. “I would ignore it,” she said. “It’s a sign they are enjoying themselves.”

Photo: JFelipe Trueba, Corbis

Thirteen years later, she’s still the associate director of Asian Management at the University of Western Ontario’s Richard Ivey School of Business. Beamish, director of the Asian Management Institute, was looking for someone to help set up an Ivey School branch in Hong Kong. A colleague recommended Wong, who had been working at the university registrar’s office for 10 years, and before that in Hong Kong as a high-school teacher. He needed someone with cultural sensitivity, who could help develop teaching materials for the region, host Asian business people and anticipate challenges that would arise. Wong was the perfect fit—entrepreneurial and culturally savvy.

Beamish says when it comes to expanding internationally, often companies need only look as far as their own staff to find someone with the cultural expertise. “These people are often already in an organization and should be the next incremental hire,” he says. “Too many Canadian companies are so risk-averse they don’t notice.”

According to the representatives of 833 Canadian companies surveyed by Canadian Business as part of the Business without Borders initiative, 82% strongly or somewhat agree that their organization has a multicultural workforce, but only 38% feel that companies generally take advantage of it to do business abroad. Among those employed in a multicultural workplace, just 63% felt their own company was leveraging that advantage to conduct business internationally.

Some corporations, such as RBC Financial Group, have built diversity into their hiring processes. Their reasons are self-serving; it gives them a leg up in certain markets. Still, many Canadian firms aren’t recognizing this advantage, and are leaving immigrant employees in low-level positions where their multicultural knowledge goes unused.

Stephen Siu, assistant director of public relations for the Hong Kong Economic and Trade Office in Toronto, says in the past 10 years, 30% of Hong Kong immigrants have returned there for better job opportunities. “They were underpaid or the job they found [in Canada] was not on par with previous employment,” says Siu. “If young immigrants return to Hong Kong after graduating, within five years they can rise to a senior position.”

Corporate Canada’s risk-averse nature could be to blame. Alex Alagappan, whose Toronto-based strategic consulting company Rmagine focuses on helping companies enter Middle Eastern and Indian markets, says Canadian companies don’t take advantage of their multicultural staff for the same reason they continue to do 80% of their international business with the U.S. “We’re comfortable dealing with Americans,” he says. “The status quo is a comfortable place to be in, and that’s the single biggest barrier we need to overcome.” Indian-born Alagappan says this means though Canadian companies have the talent on staff to help them expand internationally, these people aren’t promoted to the proper positions.

Joan Vogelesang, CEO of Montreal-based animation software company Toon Boom, says five of the seven members of her executive team are first-generation immigrants. She thinks Canadian companies need to look past immediate differences like imperfect English and cultural customs when hiring. With clients in 120 countries, Vogelesang says the 20 languages spoken on staff have proven invaluable when doing business internationally. “Our Spanish-speaking employees are worth their weight in gold,” she says over the phone from Colombia. “Two of our staff members speak Japanese. You can hardly do business in Japan if you don’t speak it.” She estimates business has increased by 10% in markets where employees born in those countries are in charge—a fact she attributes to putting the client at ease and a deeper level of communication.

Wong, who speaks Cantonese and three other Chinese dialects, says Asian clients feel more comfortable when they can speak and write in their own language, and she is able to capture the nuances. “I can understand when someone says ‘thank you’ whether they meant a sincere thank you or ‘no thanks,’” she says, “and can hazard a guess whether a silence means no.” Wong works with publishers to distribute collections of business cases put together by Ivey, and since she started, Ivey has developed 90 books specifically for the Asian market. In January, Wong signed a memorandum with 190 Chinese schools to develop business cases about Chinese companies.

The most common way companies leverage their multicultural staff is using language skills, cited by 66% of respondents to our survey, followed by knowledge of local customs, maintaining contacts and customers, and understanding the local political environment. When, in its second year of business, Edmonton-based Upside Software was thrust into the international market after scoring a contract with Hewlett Packard—which operates in 90 countries—CEO Ashif Mawji had to hire new staff. He says it was easy to find first-generation immigrants with experience in different markets and the right qualifications in Edmonton.

Kenyan-born Mawji says 50% of his current staff were born outside of Canada, a fact visually represented by a 12-by-six-foot map near the office kitchen where employees mark their birthplace with a push pin. He says most companies probably don’t use their multicultural staff because they forget about the asset. Thanks to the map, Mawji says, “we always remember who we have when going into a new area.” Before sending someone to do business in another country, Mawji circulates a questionnaire about the region to any staff members born there. Upside has clients in approximately 150 countries, and it’s been helpful to know what to expect. For example, before going to Sweden, a Swedish staff member described how the business culture is laid-back and private. If the sales team went in with a typically aggressive North American style, they’d be perceived as boastful or off-putting.

Another advantage to using employees’ multicultural knowledge is the sense of loyalty that builds for the company. “It gives them a huge sense of pride and motivates them to perform,” says Alagappan. “He or she goes back to their native country with a badge of honour being part of a management team setting up an office there.”

For her first 10 years spent working at Western, Wong was never asked about customs in Hong Kong. Now she feels like she’s contributing something back to her birthplace. “I’m not just doing a business transaction,” she says. “It actually means something for China and me as a Chinese person.”

THE RESEARCH

Business without Borders has commissioned a major new study of Canadian companies’ attitudes toward building their businesses outside Canada. The survey was conducted by Rogers Connect Market Research, a division affiliated with Business without Borders through Rogers Media Inc. Every quarter we present a different facet of the survey’s findings, drawn on the opinions of 833 Canadian decision-makers, whose company companies have revenues in excess of $1 million a year.

The latest results, shown below, pertain to multiculturalism.

Respondents were asked about the level or multiculturalism within their workplaces and how Canadian companies use multiculturalism to their advantage.

• The workforce in their organization is multicultural 82%
• Canadian companies do not take sufficient advantage of their multicultural workforce 61%
• Their organization leverages their multicultural workforce when doing business internationally 63%

How respondents organization’s leverage their multicultural workforce when doing business internationally.

• Using their foreign language skills 66%
• Helping to understand local customs 55%
• Leveraging their local contacts and/or customers 52%
• Understanding of local political, regulatory or taxation environment 35%

Methodology

The Business without Borders Survey of Canadian Business interviewed 833 business decision-makers across Canada in companies with more than $1 million in revenue, and who had decision authority or input into supplier choice and/or customer development. Respondents were sourced from members of the Rogers Business and Professional Publishing Group database, the largest database of Canadian decision-makers in Canada who are accessible for research. The study was conducted on-line between April 15 and May 4, 2010.  With a sample of this size, the overall results are estimated to be accurate to approximately +/-3.3%, nineteen times out of twenty, of what would be found if all qualifying companies responded.

For other research into Canadian business attitudes to doing business abroad click here; and be sure to read the related feature, “Are we missing the boat on overseas trade?”