Cracking the Bamboo Ceiling - The Next Wave in Leadership Succession

Aug 2017

While gender diversity is still at the forefront of external search assignments and internal succession programs for leading Australian companies, a recent Association of Executive Search Consultants (AESC) panel on “Cracking the Bamboo Ceiling” has reaffirmed ‘cultural diversity’ as a critical lens for leadership succession.

With seven out of Australia’s top ten export markets in Asia, our success as a country is already inextricably linked to Asia. When you consider that Asia represents a vast market for potential expansion with consumer demand worth US$10 trillion annually (similar to the US), companies are further understanding that fostering diverse talent from the top-down is not just a goal for equality, but has the potential to shape an organisation economically. Despite the potential, many leading Australian companies have failed their Asian-expansion strategies, or at least failed to optimise those strategies, in recent years largely for this reason: a lack of Asian-centric talent in their senior ranks.

As an economic powerhouse in the Pacific-region with a rich multicultural heritage, it is no surprise that 10% of Australians identify as Asian-born. 

However, the leadership of Australia’s major companies has failed to reflect the diversity of our community or to build executive capability able to support Australian companies to optimise the opportunities in Asia. Several stark metrics reveal the point:

•   Only two CEOs in the ASX100 are from non-Anglo Saxon backgrounds, namely David Teoh of TPG (Malaysia), and Sandeep Biswas of Newcrest Mining (India); and
•   Only 4% of Board Directors and less than 2% of Senior Executives in the ASX200 identify as having Asian cultural origins. 

The AESC recently hosted a panel on “Cracking the Bamboo Ceiling”, chaired by Jason Johnson, Managing Partner of Johnson, and accompanied by leading cultural diversity advocates. The panel agreed that cultural diversity brings three critical pillars to a leadership team including: 

•   It allows insights in, and connections to, new markets
•   It helps foster innovation; and 
•   It brings new perspectives. 

Fellow panellist, Felicity Menzies, founder of inclusion consultancy firm Culture Plus explains that “Cultural diversity brings a difference of thought, which allows groups to make better decisions and fosters better results”.

By developing an organisation’s Asia-Capability or “A-Cap”, as The Diversity Council Australia describes it, companies will be more able to tap into this potential. Yung Ngo, Westpac’s Chair of Cultural Diversity Leadership explains that “Our workforce composition is changing. Innovation will only come about through different people bringing different perspectives”. 

Counting Diversity


Taking a leaf from the gender diversity book, one tactic seen to foster ethnic diversity up the corporate ladder is to institute voluntary targets. For example, when Australian boards committed to adding female leadership, the percentage of female directors on ASX200 boards doubled in four years, from 8.6% in 2010 to 17.6% in 2014.

How to adopt a target for ethnic quotas, however, is a little trickier. One major hurdle is how cultural diversity is actually defined. PwC, for example, announced in 2015 that by 2016, 20% of their Partner admits would be from a “diverse cultural background”. Their 2020 target was for this to rise to 30%. However, their definition of a “diverse cultural background” seems inclusive of any non-Australian (including Europeans and Americans). 

Defining Cultural Diversity


The crux of diversity is that it develops differing and unique mindsets and ways of thinking. While people born from different countries will inherently bring different ways of thinking, the problem with including western, Anglo-Saxon executives of non-Australian countries of origins in these “ethnically diverse” target data sets, is that their mindsets are inherently similar. 

To drive innovation, companies should be looking for non-western mindsets, and increasingly in Australia, given the wide representation in our population, this is meaning people of Asian-ethnic backgrounds. 

Tracking Ethnicity


Tracking what it means to be ethnically diverse is one of the more difficult issues as at first it must be properly defined. There are many ways to do this be it country of birth, country of family heritage, country of childhood, adolescence, or university, language or religion. Yung Ngo believes that at its essence, “cultural perspective is defined as how you define yourself”. Three of the Big Four accounting firms adopt this idea by instigating voluntary surveys which ask staff to self-identify cultural (and other forms) of diversity. 

Deloitte, on the other hand, uses a data-driven approach. By using a third-party specialist, Deloitte draws from a database of 1.2 billion names from diverse cultural backgrounds, and analyses this against their employees. They claim this provides an accuracy rate of 86.5%. Deloitte, incidentally, is also the only Big Four firm to publicly reveal the cultural diversity of its partnership (one third come from non-Anglo Celtic backgrounds). 
Whether by internal surveys or through a data-driven approach, Racial Discrimination Commissioner, Dr Tim Soutphommasane, believes this data should be publicly released, just like with gender-equity reporting. 

Redefining ‘Cultural Fit’


While it is clear that organisations need to embrace diversity in leadership beyond gender, one of the biggest challenges that companies face is that the internal promotion of their diverse workforce and external executive search and recruitment activity often comes from looking through a “cultural fit” lens. While technical skills are highly sought after at the graduate level, for more senior management roles, hiring managers tend to accentuate EQ, personality and cultural chemistry with recruitment and promotion. The problem is that this can reduce diversity through the hiring process and lead to a homogenous workforce, whereby new recruits and internal promotion goes to ‘like-minded’ individuals, as opposed to people who would bring a diverse lens to the business.

While chemistry and the ability to be respected and manage a workforce is still naturally crucial in a hiring process, companies need to challenge unconscious biases around cultural differences and be prepared to embrace different management styles, given the economic potential of a diverse workforce. Dai Le, Founder of DAWN, a network that fosters cultural inclusion in Australia, notes that “leadership style in the west is very assertive”, which may be difficult for eastern-oriented, more conservative styles. “People aspire to leadership positions”, Dai continues, “so once diversity is established at the top-level, this will naturally filter down”. 

Conclusion


While cultural diversity targets are increasingly at the forefront of senior management, to foster an engaged and collectively-driven workforce “the common denominator should always be talent”, says Yung Ngo. “We need to recognise and promote talent equally. But at the same time, we need to challenge how we look for talent.” 

Internally, companies need to bring forward thinking to their succession plans, and ensure unconscious bias, and varied leadership styles and personalities are balanced with the economic advantages of diverse mindsets to help foster innovation. 

Externally, a dual feedback loop needs to apply where both clients push executive search firms to strive for cultural diversity, and in turn, search firms need to consult to clients on the advantages of diversity beyond gender.

Johnson is at the forefront of this topic and strives to produce diverse longlists and shortlists for every single assignment.