With the recent spate of firms in the news over sexual harassment allegations and charges of gender bias, it is obvious that an issue many in business had thought was “done” is instead far from finished. Fostering corporate cultures which make half your employees feel somewhere between unengaged and unsafe is becoming risky and unsustainable. A lot of companies are doubling down on efforts to finally ‘crack’ the gender issue.
Most companies now have more gender-balanced talent pools, especially at the early-to-mid-career levels, and are looking for ways to make sure progress continues at the mid-to-upper levels. But the ones who really understand the issue see gender balance as not just a numbers game but part of a broader, more strategic cultural shift that includes developing leadership teams representing geographically diffuse markets. These leaders are recognising that this balance drives the innovation and market understanding they need for other key business transformations. Without balance, they simply won’t understand the world that’s emerging.
Dutch-based Royal DSM is a case study of multiple parallel transformations – in their business and in their leadership balance. The CEO is convinced that the one feeds the other.
“I’m absolutely convinced that the evolving balance of the top management team is a key factor in our success and our ability to change,” Feike Sijbesma, the 57-year-old CEO of Royal DSM, the $8 billion, global company active in health, nutrition and materials science, told me. I reached out to him because I was impressed with how he steered DSM from its chemicals company past to its broad, science-based innovator present; from a Dutch company to a global player; and from a completely male-run organisation to a more gender balanced leadership team. How did he do it? Sijbesma credits three steps:
- Setting a vision
- Engaging men of the company’s dominant nationality
- Building skills on working across nationality and gender differences (including your suppliers)
1. Setting a Vision: Balance for Business Success
Most companies have a very broad definition of “diversity,” which can make implementing change and measuring progress a challenge. What will success look like? What indicators will you track? Where is the business imperative?
They tend to frame gender as one diversity dimension among many. This makes it near-impossible to invest the time and management focus needed to effectively adapt to a gender balanced workforce and customer base. (And research has shown that different approaches are often needed to foster gender balance, as opposed to other diversity dimensions.)
DSM prioritized two diversity dimensions, transparently and strategically: the nationality and gender balance of their management. “We looked at all the research,” Sijbesma explains, “and it was clear that these were the two factors that had, by far, the biggest impact on the bottom line.”
DSM moved through three phases. First, they were an entirely Dutch and male company. The senior leadership team of 35 was dominated by Dutch men. They started by relocating some key positions around the world, staffed by other nationalities. The second phase was to attract and develop more local and international people. “Now,” says Sijbesma, “we are in the third phase, where we are moving international people across geographies for their development and the company’s benefit.” The top team of 35 is now 60% non-Dutch and includes 7 women. “Not good enough,” he admits, “but incredibly different. And totally transformational.”
To support the balancing of nationalities in leadership, DSM moved away from having a single global headquarters in Heerlen, and based different functions in each region (Singapore, Shanghai, New Jersey, and Basel). “This means that instead of having all the top 50 executives in the Netherlands (which isn’t very attractive to top talent from China, the U.S., or Brazil), we have global hubs that offer interesting jobs in a variety of locations.”
2. Engage Men of the Company’s Dominant Nationality
Many companies, especially in America, are well-meaningly focused on empowering “out-of-power” or under-represented groups. This has led to the spread of affinity groups, or employee resource groups (ERGs). These have the unintended consequence of minimizing these groups’ overall significance, separating them from each other, and keeping them away from real networks of influence. Companies then wonder why they aren’t making more progress on their diversity KPIs despite lots of noise and activity devoted to the challenge.
An approach that often yields better results, in my experience, is helping today’s in-group members become ready and accountable for hiring and promoting people who may not look like them, but who do look like the company’s customers. It’s good for the business, but it’s not easy. CEOs need to be ready to explain the necessity of the shift. That’s what Sijbesma tried to do.
In the year 2000, DSM’s top 350 executives were 75% Dutch and more than 99% male. Today, it’s 40% Dutch and 83% male (it’s not uncommon for companies to make faster progress on nationality than gender). Sijbesma aims to bring the male ratio down by 2% per year and down below 75% by 2025. He is prioritizing sustainability and credibility more than speed. He admits it has not always been an easy ride.
“The reaction of some of the Dutch guys is to loudly claim that if you are male and Dutch you no longer have a future at DSM. I remind them that I am male and Dutch, and that we share an obligation to change the profile of our management to guarantee our company’s continued success in the future. I ask them to help me build that group of people, because it’s better for the business.”
3. Build Skills Working Across Nationality and Gender Differences (Include Your Suppliers & Search Firms)
Companies are starting to acknowledge the pervasiveness of bias, as the proliferation of unconscious bias training for middle managers demonstrates. While these are laudable efforts, the research shows they can backfire. People are tired of what they see as “identity politics” and most don’t appreciate being called biased. Moreover, emphasizing that “everyone is a little bit biased,” as trainings often do, can make bias seem understandable and acceptable, and inadvertently reinforce negative stereotypes. A subtle but impactful alternative is to make “managing across differences” a vaunted leadership skill. If you visibly promote and reward those who do it well, actions speak louder than unmet gender targets.
For Sijbesma, the crucial issue is to build awareness of dominance – and its impact – among the dominant group. “You have no idea of the culture you have built in your organization until you listen to the people who are not a natural part of it.” The company mainstreamed both gender and culture training into all its leadership development programs. “There is no way for companies to become truly global players if their leaders haven’t learned the 21st century leadership skill of inclusion. If we want to draw on the world’s best talent, and connect deeply with customers across hugely disparate cultures, we need to teach them.”
The same education may be necessary outside the company, with suppliers and search firms. DSM found it had to lean very hard on search firms used to find fresh blood for its top team. “Search firms want to close the deal as fast as they can, so they propose all the usual candidates that they have in their networks. I had to really insist that I was looking for other nationalities and women. Some of those searches, like the one, three years ago, for our CFO, took twice as long as normal. I was absolutely determined. I took a lot of heat, both from the search firms and my own colleagues. But you need to know what you want, and what the priorities really are – and then accept some short-term discomfort. Our CFO is now a great asset to the company, in many aspects.”
The pieces all fit together: a compelling vision helps get your core constituency on board, and training them in inclusion skills helps them execute on it. “People are not discriminatory,” says Sijbesma, “sometimes they are simply unaware and unskilled.” He has learned that the “myopia of dominant groups to see their standards as normal” is a key obstacle. Building awareness, engagement and skills has allowed him to build balance, fuel innovation and stimulate growth. He’s celebrating, and DSM is flourishing. In 115 years of existence, its profits have never been so high, nor its share price so strong.