ulobal Biveisity Nanagement at Eiicsson the business case

6. Global Diversity Management at Ericsson:

the business case


Ferhan Karabacakoglu
Global Diversity Manager, Ericsson
and
Mustafa zbilgin
University of East Anglia


The Problem

Global Diversity Management involves a set of activities and interventions which
seek to leverage individual differences in internal and external labour markets and
among consumers and community groups in order to contribute to the wellbeing of
global organizations. Global Diversity Management involves a more complex set of
activities than local and domestic variants of diversity management. The
international and often networked context of Global Diversity Management
activities warrant extensive negotiation of meanings, priorities, processes and
outcomes of individual and group differences in ways which can reconcile the
specific requirements of the multitude of local and national contexts in which the
global organization operates. A global telecommunications company, Ericsson is
studied in this extended case study, as a company which has had considerable
success in promoting diversity in order to support individual and organizational
wellbeing and to accrue bottom line benefits.

The case study draws on extensive documentary evidence provided by Ericsson and
it highlights a unique way in which a global firm has cultivated the business case for
diversity in order to achieve performance improvements. In particular, the case
study examines the implementation of Global Diversity Management as a benefit
for all at Ericsson. Teasing out the utility of diversity as a common utility for all, the
case study shows how Ericsson has articulated its commitment to diversity.
Reconciliation of global and local priorities is a major challenge for most global
organizations. The case study explores the process of reconciling global and local
priorities at Ericsson, including a focus on roles and responsibilities of diversity
management at local, national and global levels. The case study also reviews targets
for Global Diversity as well as monitoring process.




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Ericsson: a global telecommunications company

Ericsson, which is known as Telefonaktiebolaget L. M. Ericsson, in its homeland,
Sweden, is one of the largest Swedish companies. Ericsson has a wide portfolio of
business activities, including businesses in telecommunication and data
communication systems, mobile networks, mobile devices and cable TV systems.
Ericsson was founded originally as a telegraph equipment repair business Lars
Magnus Ericsson in 1876. With its headquarters in Stockholm, Ericsson has an
extensive network of operations. Ericsson employs more than 20,000 staff in
Sweden. It also has considerable numbers of staff in the UK, India, Ireland, the USA,
Finland, China, and Brazil.

With over 1,000 networks in more than 175 countries utilizing its network
equipment, 40 percent of all mobile calls are made through its systems. Ericsson is
one of the few companies worldwide that can offer the full range of products and
solutions for all major mobile communication standards. Through a joint venture,
Sony Ericsson Mobile Communications, Ericsson offers a range of mobile devices,
including those supporting multimedia applications and other services allowing
richer communication.

The company invests heavily research and development (R&D) and actively
promotes open standards and systems across all its operations. Also reflecting their
ongoing commitment to technological leadership, the company has one of the
industry's most comprehensive intellectual property portfolio containing over
23,000 patents. Although Ericsson has also suffered considerable set backs due to
the crises of the telecommunication sector in the 2000s, its financial performance has
picked up after the second half of the 2000s.


Diversity at Ericsson: benefit for all

Ericsson operates in over 175 countries, with all the richness of backgrounds and
cultures this international outlook implies. The company actively works to ensure
that diversity is a competitive advantage. Ericssons broad definition of diversity
includes core and personal differences such as age, gender, race/ethnicity,
personality and beliefs; differences based on experience such as education and
work/functional background; situational differences such as family status; and
organizational differences that relate to function and position. The company seeks to
achieve competitive advantage through diversity by constantly striving for a
workplace that leverages, respects and values individual differences. Ericssons
approach to diversity focuses on core and personal differences which are cultivated
in order to achieve competitive edge.


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Diversity is about promoting an environment where people bring a variety of
backgrounds, styles, perspectives, values and beliefs as assets to the groups and
organizations in which they interact. Respecting and valuing differences in the
workplace contributes to the success of the business and optimizes the willingness
and ability of all employees to contribute to that success too. At Ericsson, working
with diversity means constantly striving for a workplace that leverages, respects
and values individual differences, thus positively contributing to team performance
at all levels to increase innovation and customer success.


Diversity is integrated throughout Ericsson and is communicated in a number of
ways. Within the core values professionalism, respect and perseverance diversity
is at the heart of respect, emphasized as a strength that provides equal
opportunities. Ericssons unique approach is presented as a Wheel of Diversity in
Figure 1.


Figure 1: Wheel of Diversity at Ericsson



Organizations which have diversity cultures, climates and leadership which are
conducive to supporting diversity initiatives are likely to have more effective
diversity activities such as human resource flexibility initiatives, progressive human
resource management practices and inter-cultural competency programmes. In
carrying out these activities organizations can expect positive staff reactions and
improvements to innovative and creative potential at work, as well as
improvements to performance, wellbeing and cohesion. Ericssons case proves
interesting for observing these expectations.

Using a wide range of intervention and management techniques Ericsson seeks to
leverage diversity. Consequences of managing diversity have been recorded
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extensively: the company reports that workforce diversity enhances team
performance at all levels and positively impacts on customers success. Diversity
also reportedly improves Ericssons ability to respond to their everchanging
business environment by enabling them to better understand and foresee customer
needs and by increasing creativity and innovation. The company also reported that
their diversity has a number of external benefits for Ericsson. For example, diversity
management improves their corporate and employer image, and increases the
attractiveness of the company among present and future stakeholders.

At Ericsson, a complex and highly dynamic market environment, coupled with their
growth targets, requires Ericsson to ensure ongoing change processes to retain and
develop competitive advantage. Diversity improves Ericssons ability to respond to
this ever-changing business environment by enabling them to better understand
and predict customer needs and respond with creativity and innovation. The
assumption is that as present and future customers also become more diverse,
Ericsson will be better able to understand and predict their needs by attracting and
retaining employees that reflect this diversity.

Diversity is a priority for many of Ericssons stakeholders, including employees,
customers, shareholders and society. By working actively with equality, diversity
and inclusion issues, Ericssons reputation as a responsible corporation is enhanced
and the business is positively impacted. Hence, for Ericsson diversity is not only
about being fair; it is also about giving all stakeholders added value by identifying
and seizing opportunities. As such Ericsson does not espouse a dichotomous view
of fairness and business case. It is now established that companies which embrace
the business case for diversity are also likely have more developed ethical and legal
case arguments. Such is the case in Ericsson. Besides a professed commitment to
diversity management, Ericsson espouses a strong commitment to equal
opportunity in employment, development, compensation and all other personnel
actions without discrimination due to race, colour, gender, sexual orientation,
marital status, pregnancy, parental status, religion, political opinion, nationality,
ethnic background, social origin, social status, indigenous status, disability, age or
union membership.


Ericssons commitment to diversity

Ericsson declares its commitment to diversity across five important areas:

Ericsson is committed to equal opportunity in employment, development,
compensation and all other personnel actions, without discrimination due to
race, colour, religion, national origin, gender, sexual orientation, marital
status, age or disability.
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Ericsson actively supports the attraction, development, retention and
promotion of diverse talent.
Ericsson is committed to creating awareness among employees about
diversity and developing the leadership skills necessary to manage a diverse
workforce.
Globally and locally, Ericsson are establishing diversity plans, which include
actions and targets to continuously improve and develop their management
of diversity.
Ericsson encourages employees to point out any behaviour not in accordance
with Ericssons values or this policy to the appropriate and relevant
management level.

These five areas of commitment are also translated to responsibilities for
management and employees:

Managers
The responsibility of a manager at Ericsson includes attracting people with a
wide range of talents, experience and perspectives, and to develop and
empower them to achieve the companys business objectives.
All managers at Ericsson are expected to actively create an environment that
values people with diverse backgrounds, beliefs, values and perspectives,
and to see those differences as assets for the organization.
Through the performance management process every manager receives
feedback on how they contribute to a diverse work environment and focus
on diversity-related goals. Diversity is an important criterion when
appointing leaders in Ericsson. Management and leadership training
programs at Ericsson contain modules on promoting and managing
diversity to support managers at all levels.

Employees
All employees at Ericsson are expected to respect differences in the
workplace and communicate and interact with each other with respect.


Global and local priorities across Ericsson

There are three models of global diversity management that are evident in global
firms: universal, localized and transversal. The first approach is one of transposing
and imposing a set of universal criteria for managing diversity across branch
networks. This approach is doomed to failure if there is disagreement across the
national branch networks about diversity priorities, activities and methods. For
example, affirmative action is lawful in the USA, however, it is considered unlawful
in many European countries.

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The second approach of localizing diversity at the level of national branch would
work if the variations across the branch network complement the global reputation
of the organization. The risk of localization is the possibility of corporate scandals
associated with variations in national practices. For example, exclusion of gay and
lesbian workers in one country may lead to loss of reputation in another country
where such practice is unlawful and socially illegitimate.

The third approach is the transversal approach. In this one, the global firm sets a
number of shared global priorities based on a discussion across the branch networks
and also allows the national branches to identify their unique priorities for
managing domestic diversity. The third approach recognises the tensions between
global and local applications of diversity management. It is also underpinned by an
assumption that both global and local priorities for managing diversity have
legitimacy.

In this three-dimensional framework, Ericssons approach to global diversity
management is closer to transversal approach. One of the key challenges of global
diversity management for Ericsson has been to encourage better representation of
women across all levels of management in the company. Ericsson prioritizes
achieving a representative proportion of women at all levels of management and
increasing the proportion of people from different backgrounds among its top 200
executives globally. This global challenge is supplemented with national priorities
which are established by country managers coordinating diversity management
efforts across the branch network. Locally, each Country Manager defines country
diversity priorities in accordance with national circumstances and legislation.


Responsibility at the global and domestic levels

Global Diversity Management should be located within the strategic core of an
organization in order for it to generate positive outcomes. Every year as a part of
strategy development in Ericsson, country plans are reviewed and updated to
reflect the business situation. The progress of the programme is also reported in
relevant management platforms both locally and globally. The Human Resources
and Organization department is responsible for developing the global framework
for diversity, including the development of global diversity initiatives. Based on
country level action points, the global initiatives are developed to support local
units in the successful implementation of their initiatives. For instance, web based
learning has been developed and deployed globally instead of each country
developing their own learning solution. Also, diversity is globally embedded into
HR processes. For instance, diversity is addressed in 1) the Individual Performance
Management process where all managers should identify one goal in relation to
diversity; and in 2) the core Leadership Development Programme, which contains a
section for diversity and the content is enhanced centrally.
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Each Country Manager will promote, manage and assure progress for diversity
initiatives in the country. The status of local diversity actions and progress will be
reported on a quarterly basis to the unit management team and Global Diversity
Program Director. All line managers in Ericsson are responsible for carrying out the
global and local diversity initiatives. All employees at Ericsson are expected to
respect differences in the workplace and communicate and interact with each other
with respect. Employees are encouraged to indicate any behaviour not in
accordance with Ericssons values or this policy to the appropriate and relevant
management level. At the local level the roles and responsibilities of parties which
interface with diversity management are clearly defined. Figure 2 outlines the roles
and responsibilities at the domestic level in setting up diversity management teams.
The illustration provides guidance in how to establish local diversity teams and to
summarize main roles and responsibilities in local diversity teams. The purpose of
diversity teams is to develop local diversity plans that are reflecting different points
of views and to ensure that the local implementation plan is carried out. Each unit
establishes a local diversity team. Each Country Manager together with the Human
Resource Business Partner is responsible for putting a team together. The team
consists of 7 to 15 people depending on the size and composition of the unit. The
team should include a diverse group of individuals in terms of gender, age, length
of service, nationality, background, capabilities etc. Team members should be
represented from all levels of the organisation (i.e. employees, line managers, senior
managers) as well a person from HR and a labour union representative, if
applicable. The selection of the diversity team members is dependent on culture and
practices in the local unit. Important criteria for the selection of the team members
are:

Employees personal interest
Willingness to contribute to the plan
Previous experience and/or knowledge about diversity

It is recommended to keep the same team members for at least two consecutive
years in order to ensure consistency and continuation of the diversity work.


Figure 2. Roles and Responsibilities in Managing Diversity at the Unit Level

Unit Management Team
Have the possibility to give direction or ideas to
the diversity team and input to the diversity plan
Monitor the diversity work and progress on a
regular basis
Ensure resources allocation e.g. people and budget
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Consistently communicate the key messages to
ensure accountability
Be good role models for diversity
Approve the country plans on a yearly basis
Country Managers
Inform on strategic and operative business
perspective to set the direction of the diversity
work
Ensure the alignment and integration of the
diversity plan in the business plans
Be the pro-active voice in the unit in fostering new
ideas, programmes and culture that advance and
enhance diversity
Report and present progress and results to Unit
Management Team
Monitor and assure diversity progress and
evaluate the diversity results against diversity
goals
Diversity Representative (HR Representative)
Coordinate and manage the diversity team
Plan and drive the project forward
Document the work and make progress reports to
country manager, Unit Management Team and to
Group Function HR&O
Deliver agreed outcomes formulate the results of
the group in a diversity plan
Ensure compliance with local laws and regulations
Ensure consistency with global diversity policy
and programs
Labour Union Representatives (if applicable)
Provide ideas and continuous feedback about
diversity challenges and opportunities
Actively participate in action planning of the
diversity plan
Diversity Team Member
Provide ideas and continuous feedback about
diversity challenges and opportunities
Actively participate in action planning and
implementation of the diversity plan
Act as ambassadors for diversity inside and
outside the organization

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The Global Diversity Management Programme at Ericsson

Ericsson is a global company with experience of building networks in more than 175
countries and with employees who represent even more nationalities and cultures.
In each country where Ericsson operates, the company ensures compliance with
legislation and best practice in the area of diversity. In 2006, Ericsson adopted a
global approach to coordinate, support and encourage local diversity initiatives.
Since then, a number of diversity-related activities have been started at group level
in addition to local activities. The aim for 2007 was to establish a system for
reporting the results of local diversity activities. Ericsson achieved this and
established a global diversity program, including a recruiting diversity manager
and a system for reporting the results of local diversity activities. Ericsson also
conducted base-line analysis in order to guide Ericssons global priorities and
actions. Global Diversity Management Programme is presented on a Ericssons
timeline in Figure 3.


Figure 3: Timeline of Global Diversity Management Programme Activities at Ericsson



Global diversity priorities

The diversity strategy on a global level puts special focus on two areas:

Achieving a representative proportion in terms of gender at all levels of the
organization In a male-dominated industry, the challenge that Ericsson is
facing is to encourage greater female representation at all levels of the
organization. Currently, 22 per cent of Ericssons 74,000 employees are
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female and women hold 18 per cent of all managerial positions and 12 per
cent of top 200 executive positions across the company (2007).

Increasing the proportion of people from different backgrounds (nationalities) in
senior management roles Ericsson has a tradition of providing opportunities
for employees to work in other countries. This practice increases individuals
understanding of how to conduct business in cultures different from their
own. Today 73 per cent of Ericssons organization is outside of Sweden and
73 per cent of employees have a background other than Swedish. Currently,
36 per cent of the top 200 executives have a background other than Swedish
(2007).


Global diversity targets:

The companys diversity goals have both a short-term perspective and a long-term
perspective, which looks as far ahead as 2020. As a general guideline, all senior
management teams at Ericsson should include a mix of men and women of different
nationalities. Figure 4 below illustrates the current situation with representation and
the Global Diversity targets that Ericsson works towards.


Figure 4: Global Diversity Targets at Ericsson




Roadmap of diversity management activities at Ericsson

In order for diversity management activities to be effective, they should engender
changes in organizations. This is the main focus for the diversity roadmap that
Ericsson has been following. Ericsson approaches diversity as a change process that
involves individual, workgroup and organizational levels of change.
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Using this approach means that there is a roadmap to guide the diversity
management actions:

There are two key stages that Ericsson will address in relation to the diversity work:
1. Structuring and awareness Ericsson aims to establish a baseline to measure
progress against and increase awareness of diversity.
2. Integration and inclusiveness Ericsson aims to fully integrate diversity in all
key processes to ensure the success of their initiatives.

Based on Ericssons global diversity policy and strategy, each country will develop a
diversity plan that includes actions based on specific country or regional diversity
priorities in accordance with national circumstances and legislation. This local
diversity plan will drive the diversity actions from a country perspective. The heads
of Ericsson units and companies will have special roles in actively communicating
the Ericsson group diversity policy and programmes within the organization as well
as monitoring and ensuring progress. In addition to the local activities, a number of
initiatives and programmes will be driven and carried out from a group perspective:
for example, employee branding, global online diversity training, management and
leadership development, and assessments including mentoring programmes and
progress monitoring systems, structures and reporting.


Monitoring progress

The progress of the diversity work is measured continuously through the Dialog
survey. This measurement captures diversity at individual, workgroup and
organizational levels as seen below. Diversity results are strongly linked to the
Human Capital Index (HCI) score in the Dialog survey. The value-added questions
on the workgroup/organizational level are strongly linked to health, operational
excellence and motivation. Figure 5 below outlines the questions that the survey
includes.

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Figure 5: Diversity Questions in Dialog Survey




There are different approaches to monitoring diversity management. While some
approaches include quantitative measures such as representation, turnover and
productivity, others include qualitative measures such as employee satisfaction,
psychological contract as well as Global Diversity is also monitored through
different metric and qualitative measures across different levels of the organization.
Figure 6 outlines these measures for monitoring global diversity activities and
achievements at Ericsson.


Figure 6: Global Diversity Monitoring at Organizational Levels



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Conclusions

In this case study, the particular global diversity management approach and
practices of Ericsson are examined. The case study shows that Ericsson has a
complex approach to global diversity management which combines an effort to set
global priorities (gender and national representation) and allow for domestic
priorities. Ericsson also uses targets in order to develop gender and national
representation. Global Diversity Management is considered as a management of
change process and driven with targets and efforts to monitor organizational
change.















References

Ericssons website and the companys internal sources.


Questions

1. Why is Ericsson adopting a global diversity management strategy? What
are the characteristics of this strategy?

2. What are the challenges for implementing a global diversity management
strategy?

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