What’s the Difference?

CORPORATE AUSTRALIA HAS A PROBLEM. IT’S LOSING TALENT AND MISSING OPPORTUNITIES, THANKS TO AN OUTDATED VISION OF WHAT LEADERSHIP LOOKS LIKE. CATHERINE FOX MEETS THE AUSTRALIANS CHAMPIONING CULTURAL DIVERSITY.

Why a monocultural leadership team is bad for business

Depending on the business setting, Ming Long can dial up her Australian accent or play it down. The non-executive director of Chartered Accountants Australia and New Zealand and former fund manager of the $2.5 billion Investa Office Fund has found it to be an advantage in her career. “In business, they’ve already seen my face when I first open my mouth,” she says. “Then they hear I’m Australian and they think, ‘What do I do with that?’ You can see it in their faces. I use Australian humour to help them.” When she’s in an Asian setting, she switches how she talks. “If I speak like an Australian, they won’t engage because I’m different.”

Like an increasing proportion of Australia’s population, Long was born in Asia but has spent most of her life here. “But corporate Australia still sees ethnicity plus being a woman as a double whammy,” she says. “It should be a strength.” To Long, Asian Australians “are the very people who are going to build a bridge into Asia so we will be more successful”.

IT APPEARS THOSE MAKING DECISIONS ABOUT LEADERS... DON’T VALUE DIFFERENCE. THEY SEE ASIANS AS INFERIOR, NOT AMBITIOUS. Ming Long, non-executive director of Chartered Accountants Australia and New Zealand and former fund manager of Investa Office Fund

Given the latest Australian census data reveals that nearly half of Australia’s population was born overseas or had a parent born overseas, Long’s mission to dismantle the “bamboo ceiling” and see more cultural diversity in business is timely.

Spend 10 minutes in the foyer of a professional services firm or on a campus in Australia and the cultural mix is obvious. But look to the group at the top of our organisations and the picture is jarringly different. In corporate Australia, the ranks of senior leaders remain overwhelmingly dominated by those of Anglo-Celtic and European backgrounds, according to Race Discrimination Commissioner Tim Soutphommasane. In 2015, he formed a working group consisting of the Australian Human Rights Commission, the Westpac Group, PwC Australia, The University of Sydney Business School and Telstra to author Leading for Change: A Blueprint for Cultural Diversity and Inclusive Leadership.

The statistics are startling. While 32 per cent of the Australian population has a background other than Anglo-Celtic, the number in leadership is minute. In ASX 200 companies, 77 per cent of CEOs have an Anglo-Celtic background and 18 per cent have a European background, while just five per cent – that’s 10 people – have a non-European background.

At board level there’s even more conformity: 18.8 per cent of ASX 300 directors have a non-Australian background, according to Watermark Search International’s 2016 Board Diversity Index.

Looking at female leaders in ASX companies, there’s even less diversity. While the number of women in senior ranks is slowly increasing, there’s a strong bias towards those with an AngloCeltic background. According to Diversity Council Australia research released this year, in 2015 there were just 15 culturally diverse women out of 1482 CEOs (male and female), 44 out of 2327 senior executives, 188 out of 7491 directors and 55 out of 1350 CFOs.

It’s one thing to claim that Australia is a successful multicultural society, says Soutphommasane, but it’s not reflected in the corridors of power. Although the top-performing students in Australian schools and higher education institutions are from diverse backgrounds, he adds, they are conspicuously missing from the senior ranks of business. “Where are all these brilliant people going? Does the talent disappear? Do they lapse into mediocrity?” he asks. “There’s a certain idea about what leadership in Australian organisations must look and sound like; it’s not reflecting cultural diversity and there are not a lot of role models from nonEuropean backgrounds.”

Far from disappearing, many talented Australians are heading offshore, as APN Outdoor non-executive director and former Maddocks and Blake Dawson partner Lisa Chung notes with dismay. “They’re going to Singapore or Hong Kong, where they feel more at home. It’s just a ridiculous waste. We’re investing, they are contributing and it’s a wasted opportunity.”

TThere’s a strong business case for more cultural diversity in leadership, says Jesse E. Olsen, a senior research fellow at The University of Melbourne’s Centre for Workplace Leadership. It’s about creativity and adaptability but there’s a more superficial advantage as well, he says: if your customers and clients look a certain way, your employees should look like them, too. In a study released last year, Leadership at Work: Do

Australian Leaders Have What It Takes?, Olsen and his colleagues found that only 4.7 per cent of all privatesector workplace leaders (general managers) are born in Asian and Middle Eastern countries and 75 per cent of senior leaders (CEOs and directors) are Australian-born. More than two-thirds of overseas-born senior leaders operating in Australia in foreign-owned organisations are from English-speaking countries. He suggests there’s an in-group and out-group dynamic. “‘Do we let them into the group that has traditionally been white men?’ I think I can say there hasn’t been as much change as there should have been.”

Cultural stereotyping plays a role, too, says Long. “It appears those making decisions about leaders in an organisation don’t value difference. They see Asians as inferior, not ambitious, too quiet, submissive and the style too collective-focused compared with the Western leadership model.” That is not only unfair but also a business risk, she adds. “Uncertainty about how to bring the best out of people who are different to them is inherently limiting their organisation’s ability to deal with increasingly volatile and disruptive economic environments.”

Like Long, most of the small cohort of business leaders from non-Caucasian backgrounds face regular reminders that they are judged differently from their peers. Vik Bansal, CEO of ASX company Cleanaway Waste Management, recalls being told, “You have to be 20 per cent better because you start off behind.’’ (See “Diverse thinking” on page 122.) He’s been reluctant to talk about diversity but feels it’s now time for a more open discussion.“Normally,Iavoidhavingtheseconversations because they can appear self-serving,” he says. “Australia is not as advanced as the United States on this.”

As many Australian organisations are doing business around the region, it makes a good commercial case to improve the mix, he adds. Recently, he put his leadership team through cultural bias training. “They loved it because they all have children who bring home friends for sleepovers. It’s happening around us, in schools and unis, so why not bring that to the office?”

I’M OFTEN SITTING NEXT TO A CEO AND YOU CAN SEE THEY’RE THINKING, ‘WHY AM I SITTING NEXT TO THIS SMALL WOMAN IN A SCARF?’ BUT HALFWAY THROUGH THE LUNCH, THEY ASK ME TO SPEAK TO THEIR EMPLOYEES.

For Miriam Silva – who attends many business functions in her role as president of the Committee for Economic Development of Australia’s State Advisory Council in South Australia and the Northern Territory – there have been startled reactions when she joins a table of senior leaders. “I’m often sitting next to a CEO and you can see [the CEO] is thinking, ‘Why am I sitting next to this small woman in a scarf?’ But halfway through the lunch, they ask me to speak to their employees.” She also points out that during her career at ANZ Banking Group, she had crucial support from former CEOs John McFarlane and Mike Smith and executive Brian Hartzer (now CEO of Westpac), who recognised that leadership is where you find it, regardless of what a person looks like.

While Chung hasn’t faced much overt bias, she has lost count of the number of crowded business lunches where there were virtually no other Asian faces in the room. “At the National Press Club lunch after the Budget a few years ago, there were just two – Penny Wong and me,” she says. When she points this out to colleagues, the usual response is, “I hadn’t noticed.’’ That’s part of the problem, explains Chung. “I’d like to see [the Business Council of Australia and the Property Council of Australia] doing more. There’s enormous business activity going on with Chinese investors... if we’re not careful, that will develop in a parallel universe, which I find curious from a macro level.”

PwC Australia tax partner Ken Woo has also decided it’s time to take action. He has helped the firm develop a cultural diversity and inclusion strategy with targets. Though he’s been a partner since 1999 – and always saw the business opportunity from diversity – he has only started speaking out in the past two years. “You need to be at a certain point where you have political capital to burn, because you will burn it,” he says. “I wouldn’t advise anyone coming through the ranks to become known as a diversity supporter, as it can earmark you as a troublemaker.”

A penny-dropping moment for Woo came in a meeting when discussing talent and someone said, “We’re all aware that Ken is cultural diversity in the firm.”

“Some days I’m in the majority group and some days I’m an outsider and you develop empathy,” he says. “I’ve been in the power group for 17 years and many of the people I want to change are my mates. How do I do that? We have to engage the mainstream and rethink the approach we’re all taking.”

Aaction across the business sector is gaining momentum, with bodies like the Leadership Council on Cultural Diversity, chaired by Soutphommasane, set up last year.

Diversity specialist Julie Chai launched the Asian Leadership Project in June and says there has been national interest in the body, which is partnering with PwC Australia and developing a working relationship with the Australian Institute of Company Directors (which has announced that it’s considering introducing cultural diversity targets). Asians, says Chai, “have no career paths or role models”. So the leadership project runs masterclasses and aims to establish a “talented Asians list” for identifying board and C-suite candidates.

The Leading for Change blueprint, which Woo contributed to as a member of the working group formed by Soutphommasane, recommends that organisations: ensure CEOs become role models by visibly legitimising and addressing the problem; measure diversity and introduce targets and accountability; and use education as a way to deal with bias and redefine assumptions about leadership.

Targets have made a difference, says Woo, with PwC Australia meeting its 20 per cent target for culturally diverse partners by 2016 and aiming for 30 per cent by 2020.

Although there is little evidence to show that some sectors are more inclusive than others, the latest wave of activity is being led by professional services and banks

Miriam Silva, president of CEDA’s State Advisory Council, SA and NT

Lisa Chung, non-executive director of APN Outdoor and former partner at Maddocks and Blake Dawson (now Ashurst) MANY TALENTED AUSTRALIANS ARE GOING TO SINGAPORE OR HONG KONG, WHERE THEY FEEL MORE AT HOME. IT’S JUST A RIDICULOUS WASTE.

such as Westpac and Commonwealth Bank. Some of this initiative is about reflecting client expectations or changes in ownership.

When Katrina Rathie was in her first job at Mallesons Stephen Jaques two decades ago, she was the law firm’s first lawyer and partner of Asian descent. In her current role as partner in charge of Sydney for King & Wood Mallesons – and five years after the merger of Mallesons Stephen Jaques with Chinese firm King & Wood – she estimates that of its 2700 lawyers in Australia and Asia, there are 1600 of Asian origin as well as nine culturally diverse partners in Australia.

Rathie’s focus on cultural diversity has had a tangible impact on appointments. “I’ve got three Asian associates and when I put out a job specification, I got 20 applications from Asian women – that’s never happened before in my 23 years as a partner. That’s because they see me as someone who supports [cultural diversity].”

The barriers to the C-suite are less easily tackled. Although few business leaders will admit that appointing a non-Caucasian to the top job carries risks, Long says boards need to understand the social and cultural context of such appointments and realise these CEOs may need different support. There’s some work to do in this area, concedes Bansal. But instead of making anyone feel guilty or using quotas, there has to be some raising of personal awareness. “Every board should go through cultural bias training rather than saying there should be 30 per cent [cultural diversity] on the board.”

The pressure for change is building beyond the business case. It’s only a matter of time, says Woo, before a cultural diversity disaster occurs in an Australian organisation. “Many [immigrant] families made sacrifices and if they find how their children are being treated, they will have something to say about that; they are clients, too, and there comes a tipping point because of potential damage to reputation and brand.”

Addressing these issues is not simply a case of following gender diversity strategies, though many observers do see some overlap. Olsen says several Workplace Gender Equality Agency tools work well in this area.

A model such as Male Champions of Change, formed to get more women into senior leadership, relies to an extent on powerful men relating to the issues because of their female relatives, says Soutphommasane. “We can’t always rely on that empathy. Not everyone has someone in their circle from a different cultural background. It requires those who don’t experience racial prejudice to listen to those who do.”

And claiming to be “racially blind” is part of the problem, not the solution. “That’s the worst thing to say, because you need to see race,” says Long. “Don’t define me by that but don’t eradicate my identity. See it and be open to someone who is different.”