Study shows lack of international diversity on German executive boards

What role does cultural Diversity play in the context of business management and diversity management in major corporations in Germany? This was the key question that business economist Insa Harms, former associate of European Diversity, followed when starting her analysis of the DAX30 company websites and executive director profiles, and she came to some amazing, or rather worrying results.

Almost all of the companies analysed state on their website that they have implemented a Diversity Management strategy. The main reasons that they give alongside their commitment include to focus their customers’ needs, to increase the success of their organisations, and to create a strategic competitive advantage. Regarding topical emphasis, almost half of the blue chip players put one focus (out of two or more) on cultural diversity. Here, a striking detail is that only one (!) company explains this choice by the growing cultural diversity of German society. For many decades, the country has seen an increase of citizens with a ‘migrational background’, the phrase nowadays used in Germany due to both historical reasons and for the sake of political correctness. The facts that only half of the major corporations explicitly focus on cultural diversity shows that they have not yet connected Diversity Management with their global business models, with global talent markets (c.f. business case story below) or let alone with local societal trends and related market opportunities.

Especially with regard to the intense export orientation and the dramatic globalisation of German firms, internationality has become a strategic priority. Research clearly suggests that the executive boards should in this case be also composed inter-culturally, according to markets, footprint and future expansion. This is unfortunately not at all the case, since 70 percent of all the Board Members analysed are German (by nationality), 7 percent come from the US, and 4 percent from Austria. Strategically important countries like China or Russia are not represented on any board of managing directors. Also Turkey, which is both the largest ethnic group in German society as well as a key foreign growth market, is not presented among the 194 board positions considered.

But evaluating nationality only can be hefty error in many European countries. This is due to the fact that the concept of nationality can inter-relate with ethnicity, race, culture, religion, and mother tongue(s) in complex ways. Even a team that only consists of one nationality might have great variety in several of these dimensions.

The DAX30 also publish some of their tools relate to cultural diversity, the predominant being inter-cultural training, which could be simplistic profile comparison…

Overall, the study shows that cultural diversity is half-heartedly acknowledged as a strategic dimension. Despite globalisation and skill shortages, changing systems and cultures that were successful in the past seems challenging due to communication barriers and fearing cultural conflicts. But progress is also made, though slowly, in this area.