By Sarah McAdams
Embracing diversity and inclusiveness is not only the right thing to do — it also, of course, makes good business sense.
When we think about organizational diversity, we usually first consider the individual level. We want to make sure, for instance, that your gay/Mormon/Asian/disabled/female worker feels that her ability to work productively is not being hampered any discrimination by her coworkers or managers. And then we think of the topic on the corporate level — how the organization’s overall diversity might help attract new employees, customers, partners, and clients. But we also must consider diversity on the industry level, says Michael Schell, CEO and president of RW3 LLC.
Take the 1998 Daimler-Chrysler merger. The top leaders at both companies, says Schell — coauthor with Charlene Solomon of the just-released book Managing Across Cultures: The 7 Keys to Doing Business with a Global Mindset
“Equal” — But Not Really
At the time, Daimler-Benz CEO Jürgen Schrempp raved that the partnership was “a merger of equals, a merger of growth and a merger of unprecedented strength.” Immediately post-merger, the company spent millions of dollars on cultural sensitivity workshops for its employees on topics like “German Dining Etiquette” and “Sexual Harassment in the American Workplace.”
But there never was a merging as equals, never a real effort to understand the differences between the two employee populations and get them to work together Schell says. Indeed, Schrempp didn’t install any German management team at Chrysler until the end of 2000 — eleven months after Chrysler CEO Bob Eaton retired.
As a result, the two groups of managers, executives, and employees never really came together and, indeed, ended up publicly slinging mud about each company’s cars publicly in the press (“The Jeep Cherokee can beat up any Benz, any day”, and so on). “Had the management of DaimlerChrysler done the same due diligence in the cultural melding of the organization as it did in the financial arena, these cultural differences could have been anticipated and, where possible, even used to advantage,” Schell said.
Instead, the business steadily eroded. In the mid-1990s, Chrysler was the most profitable automaker worldwide; by 2001, the Chrysler Group was losing billions of dollars annually. Schrempp offered some insight into the problem in an interview with the German financial daily Handelsblatt: “The Merger of Equals statement was necessary in order to earn the support of Chrysler’s workers and the American public, but it was never reality,” he said.
Companies Must Be Able to Recognize — and Appreciate — Differences
The risk that all industries face in a global business environment is the failure to recognize the powerful force that culture represents in the global economy, Schell argues. “In the case of the DaimlerChrysler merger, it was the refusal to recognize how difficult it would be for the two cultures to co-exist and capitalize on each other’s strengths,” he explains. “After all, Chrysler was a typically American company, interested in speedy change, lots of new models and a very flat, egalitarian management structure. Daimler was typically German, interested in careful detail at all levels and needing lots of approvals to move a process along.”
By not blending the two cultures — appreciating the differences and meeting in the middle — the leadership began the slow destruction of what was once of the top-performing U.S. automakers.
We say that embracing diversity must be more than just lip service — or a line in the company’s value statement — and the Daimler-Chrysler merger is proof. But business leaders at any stage can learn from these mistakes, Schell maintains. “Having a global mindset means having the ability to recognize the importance of culture and recognizing that global management skills are needed to be successful when doing business around the world,” he says. “Culture is learnable, but as with any knowledge, you have to first recognize the need for it before you go out and try to learn it.”
Sarah McAdams writes the popular “Balancing Act” and “Office Watch” columns for HR Insight. Sarah has reported on human resources for a variety of publications, including the Journal of Employee Communication Management, Corporate Legal Times, and The Ragan Report. She has written about many other subjects for publications like the Chicago Tribune, Montreal Gazette, Orlando Sentinel, Self magazine and Daily Variety. McAdams also helped ghostwrite the book Portfolio Life: The New Path to Work, Purpose, and Passion After 50