A scenario-based approach to predicting demographic shifts can prepare organizations to meet challenges and take full advantages of opportunities. An essential part of scenario creation is calling on a diverse group of employees to openly and constructively share ideas about what the future will likely hold and how to meet the challenges.
One of the key strengths of the global and international company of today is an ability to combine the ideas, genius and human energy of employees into productive and competitive resources. As these organizations grow, expand and increasingly rely on innovation, this strength must be sustained and expanded. This is easier said than done, especially in light of fast changing conditions in the modern business world. Changes in politics, regulation, labor markets, social values, and local and national economies can have unanticipated impacts on company strategies and human resources.
An essential part of any strategy designed to prepare for change is encouraging employees to openly and constructively share their diverse views, ideas and perceptions for how to meet challenges. The reality of cultural diversity in most modern public organizations creates such opportunities. How do we identify an emerging relationship between diversity within the organization and business strategy? One way is to identify links between diversity and business strategy so as to take full advantage of it from a human resource perspective.
This article explains the use of scenario analysis as a process tool in doing just that. Scenario analysis will be provided to demonstrate how to address two of the key management challenges for incorporating diversity and inclusion into meeting the challenges of the global enterprise: (1) keeping abreast of how diversity and inclusion in the employee pool may change overtime; and (2) how to keep abreast of the changing factors that define diversity in customers and markets.
How diversity and inclusion can change overtime within the employee pool
A widely reported example from the 1990’s of how a shift in diversity among employees can pose challenges that are not easily dealt with. Toyota Motor Company decided to manufacture cars within the United States, which resulted in a shift from a mostly domestic Japanese pool of employees to a culturally diverse group of Americans with mostly male Japanese managers. Misunderstandings related to cultural values, management styles and worker expectations resulted in lawsuits against the company.
Toyota has mainly solved many of its diversity problems through effective interventions in training, communications and much deeper community involvement. Many U.S. companies are now experiencing similar issues as they expand into the market in China. Chinese companies that buy American companies are likely to face similar issues. The challenge is to find ways to anticipate and prepare for these challenges.
How managing diversity matters in changing markets
The writer was told by a manager working for a major cell phone manufacturer that it took him several months to get his engineers and designers to understand the importance of changing the color of the cell phone casing to increase sales. Understanding that cell phones would not only be sold to business people with expense accounts, but also to women, children and teenagers seems obvious today, but it has taken while a for engineers who grew up with stationary phones to consider the larger picture.
Another case in point comes from a major pharmaceuticals manufacturer. Sales increased after writing the label and dosage instructions of an over-the-counter drug in Spanish to target those customers. Drug manufacturers are now seeing the growing migrant, refugee, and immigrant populations as growth opportunities. Is there a way to prepare for or anticipate these demographic shifts in advance? How can a diverse workforce contribute to developing future opportunity strategies? Managers need answers to these questions in order to more effectively handle changing diversity climates.
Scenarios as a tool for anticipating the future
Creating scenarios offer a testing ground for considering possible market and business conditions in the anticipated future. They are constructed by imagining different environments in which a company’s decisions and strategies will actually play out at some later point in time. In this way, scenario-based methodology is a useful research and development tool.
Challenging and realistic alternatives that could arise from the same set of conditions when considered in possible future scenarios, along with the known and uncertain factors driving it, are analyzed to develop strategies for managing those conditions. Creating scenarios thus involves a good dose of assessing current expectations and assumptions as well as researching the range of possible future realities in key areas of uncertainty, such as economic conditions, technological innovation, political change, and demographic shifts. The remainder of this article focuses on how scenario-based methodology can be used to develop strategies for managing demographic shifts related to diversity climate within the workforce and in the customer base.
Use of Scenarios to Consider the Challenges of Diversity
There are many uncertain factors that global organizations must consider when addressing the challenges of diversity and inclusion.
They include, among others, demographic changes (affecting both customers and the employee pool), legislative and regulatory changes, political developments, economic conditions, cultural shifts, and changes in values that affect notions of fairness and inclusion. Some of these changes can develop in brief periods and others are long term in nature, but hit hard when they occur.
A structure for possible scenarios can be created by considering key significant and highly uncertain factors. The structure can then be elaborated by considering how other factors may play out in the overall structure and how they might play out over time. An example that focuses on the challenges of diversity and inclusion is explained by the scenario matrix shown below might be appropriate.
The scenario structure highlights four possible future states based on different possibilities for changes in customer demographics and shifts in workforce demographics—how fast and diverse might customer demographics be; and what might be the nature of change in employee demographics. These possibilities may be based on physical and ethnic characteristics or individual values and self-identity. In either case, the four possible worlds that emerge are described below.
Knowable World Quadrant
This scenario predicts a future in which APEX company can easily predict customer change patterns as well as shifts in diversity among employees. This is world in which customer changes are slow and fall into well known, well understood categories. This is also a world in which shifts in the workforce diversity are within easily recognizable
physical and ethnic attributes. Managing diversity and inclusion in this world, thus, is made possible by a base of clearly knowable and understandable facts. Solutions might be easily measurable and monitored.
Teamwork World Quadrant
This scenario predicts a future in which APEX company cannot project customer change patterns, however the shifts in diversity among employees are predictable.
This is the world in which customer changes are occurring quickly resulting in the emergence of new customer groups, while the organization’s workforce diversity is changing within recognizable, easily manageable patterns. Managing diversity and inclusion in this world may be a matter of creating effective teams that can learn quickly and communicate well in order to meet the changing customer demographic needs.
Program World Quadrant
This scenario predicts a future in which APEX company has a well-defined and steady customer based, but its employee diversity is changing so rapidly that service delivery suffers. This is a world in which customer changes are slow and in well known areas, but the employee pool is changing in ways that are not always directly measurable and easily observed. Here the challenge of managing diversity may be in finding programs that can take a diverse pool of employees and create a common and shared work culture so that they can deliver consistently to customers.
Fast Shift World Quadrant
This scenario predicts a forecast in which APEX company experiences rapid changes in the consumer base and diversity among employees. Managers find these conditions most difficult—dealing simultaneously with continuous changes in customer base and workforce diversity. Managing in such an environment necessitates a lot of open thinking, willingness to experiment, and open to changing course rapidly. A wide range of educational and communication tools can be especially useful.
The scenario matrix and ideas in this article are clearly simplified for the present purposes. They are easily expanded by applying them to the specific circumstances of a company, such as its industry dynamics and location of operations. The additional details offer insights enrich the construction of different worlds needed for other strategies and solutions to emerge.
Using scenario-based analysis to consider future uncertainties and predicting how they might play out can be a useful tool for assessing an organization’s changing needs in order to better manage diversity and inclusion. The process of creating scenarios, discussing their implications and creating different solutions can be a powerful tool for diversity managers.
Gerald Harris is a San Francisco Bay Area organizational consultant specializing in scenario-based problem strategy and capacity building. He can be reached at firstname.lastname@example.org.