Building a Globally Diverse Team Is Actually Getting Easier
5 May, 2022 / Articles
Recommended article from Harvard Business Review
Open your favorite news site, and you’ll soon immerse yourself in a bleak reality of global migration, spanning from the U.S.-Mexican border, to China sending home expats, to urgent labor shortages in post-Brexit UK. These struggles are real. But they are not the entire story.
From a global perspective, it has in fact rarely been easier for skilled talent to cross borders. By and large, we see more and more firms build globally diverse teams, as research has shown these teams tend to drive firm-level and ultimately also country-level innovation. Germany is now considering a points-based visa system to attract skilled talent. France has introduced a new visa for entrepreneurs.
Although it’s not widely known, Japan offers a visa category aimed mainly but not exclusively at tech talent. Even in post-Brexit UK, a points-based skilled worker visa remains a core pillar of the country’s talent strategy. Australia’s Covid-19 restrictions today make mobility challenging, but this is expected to be a transitory phenomenon.
As part of our research on “Innovation Without Borders,” we analyzed the relative ease of global relocation for skilled talent, comparing the world’s 10 most popular destination countries as well as China and Japan. Many countries have now put the legal framework in place to hire and relocate global talent at a cost and speed that is broadly comparable with hiring domestically. The world is now “flat” for global talent.
- The United States and China are the exception, not the rule. Unlike other countries, the U.S. has hard caps in place for its highly skilled H1B visa program, and it struggles with administrative bottlenecks around other visa and permanent residency cards. Meanwhile, in addition to stringent Covid-19 quarantine laws, China is introducing new tax laws in January 2022 aimed at expat talent, making it harder to deduct housing rent and schooling expenses from personal taxable income.
- Western countries are surging ahead. France, Germany, and Spain are now among the most open to skilled talent, on par with Canada which historically has been seen as most welcoming thanks to its straightforward points-based visa system.
- The race for skilled talent is now global. Even India and Japan, countries not traditionally known for their openness are actively trying to attract foreign talent and make it easier for their firms to hire globally.
Why now?
Access to talent has become the number one growth constraint for firms accelerating out of the Covid-19 crisis. Besides this pull factor, important push factors remain in place: There is now more global talent, talent remains willing to move, and remote work is so far not slowing down global mobility.
- The talent pool is growing. In the next 10 years, more than 260 million university graduates will hit global labor markets. This growth is equivalent to the total stock of talent as recently as 1990 — and nearly all this growth comes from outside the traditional powerhouses: North America, Europe, China, and Japan.
- Many are willing to relocate. While it’s down from a peak of 64% in 2014, 50% of global talents surveyed in 2021 remain willing to move to seek better job opportunities elsewhere. Many also seek global mobility as a lifestyle choice.
- Remote work can kickstart a relationship. Startup CEOs and HR executives tell us that remote lowers the barrier to hiring globally. Starting remotely allows both sides to “try before buy,” making it less risky to hire from abroad.
As a result, we would not be surprised to see the 2020s be a decade of more talent moving globally particularly to European and Asian countries (outside of China). The data gives some early hints of that possibility: In 2019, annual inflows hit new highs in 20 out of 25 OECD countries — but not in the United States. During Covid-19, work-visa-based migration certainly dropped in many countries, but it also tended to be more stable than any other visa category and, at least in Europe, has strongly rebounded since, approaching pre-pandemic levels.
Business Leaders Face Hard and Soft Constraints
As part of our forthcoming research, we recently ran a survey of 850 senior executives and found a large gap between awareness and action however. A whopping 95% say they intend to build teams that are more globally diverse. But only 2% already see the full results.
The front runners use the diversity of their global teams as a catalyst for innovation. This translates into performance: They are more than twice as likely to be innovative and fast growing than their more homogenous peers. Take, for example, Delivery Hero, a global “decacorn” quick commerce player. Founded in 2009, the firm is now hiring globally not just in tech but across all functions, much like many startups on their journey towards unicorn status.
Meanwhile, late comers face a mix of hard and soft constraints. Hard constraints hit, in particular, smaller firms in the United States or China, who cannot circumvent hard limits on foreign hiring (e.g. via global intercompany transfers).
Soft constrains are often self-imposed: Many globally active firms outside the Anglo-Saxon world don’t have a “one language” policy, putting big language and cultural barriers in front of foreign talent that is often fluent in English, but not other languages. Rakuten, the Japanese tech player famously shattered this soft barrier when Founder and CEO Hiroshi Mikitani launched his full scale “Englishnization” requiring all teams to speak English in 2010.
Building a Globally Diverse Team
There are five tactics we’ve seen corporate leaders adopt to build globally diverse teams that drive innovation. The first two are aimed at firms facing hard constraints, the latter three are for those facing soft constraints or no material constraints at all.
1. Diversify geographically
If you can’t legally bring foreign talent to you, open hubs abroad. Wayfair, an online furniture retailer, understood that to hire all the developers and data scientists it needed, it would have to move beyond their Boston headquarters. As a result, it first built an engineering hub in Berlin. Then, in a move designed to tap not just into the local tech scene but also the wider global talent community, it opened a Toronto hub.
2. Team up
Countries that make skilled work visas relatively easy to get can still make the administrative process to get there painfully slow. Public-private partnerships can help solve this.
Germany offers a good example. Even though the country is very open to skilled talent, its bureaucracy does not always reflect this new welcoming attitude, or German Willkommenskultur. To drive this culture change, Berlin-based firms joined forces and co-founded BerlinPartner, a public-private partnership. The team quickly realized that a “business fast lane” for international hires was needed the most. Today, a small, dedicated team at BerlinPartner works shoulder-to-shoulder with local government secondees to speed up and de-risk global hiring for employers and to help send a welcoming message to new Berliners.
3. Become global first
Switching a firm’s main language to English as the global lingua franca is a simple operative act but can be a massive culture shock for teams used to running smoothly in their native language. To soften the blow, E.ON, a European energy networks operator switched all group-level communication to English nearly a decade ago, but it gives operating units the flexibility to run in their respective domestic languages. In practice, this choice leaves room for people to communicate in their native language but ensures seamless communication as all key documents are provided only in English.
4. Try before buy
Firms of all sizes now use global freelance or employer-of-record structures to onboard people remotely before physical relocation. Germany-based logistics startup Forto begins onboarding talent remotely and then decides to later transfer them into larger hubs to work in hybrid setups. What has started as a quick fix during the heydays of Covid-19 has now become a purposeful strategy to screen global talent.
5. Value all talent
Companies that are not attractive for domestic talent often end up not sustainably attracting foreign talent either. Firms must thus aim to improve the employer value for all employees, for example, by optimizing the full talent journey from branding, to fast recruiting, to personal onboarding support, to mentorship for new joiners.
Douglas, the European market leader in beauty retail, credits its recent success in scaling its digital beauty platform in part to its ability to attract skilled digital talent both from Germany, where it’s headquartered, and from outside Europe. To this end, the company recently introduced a smooth, remote hiring process for digital talent and has also added targeted relocation packages that not only help new recruits with housing support, but ultimately also ensure better retention of its globalizing workforce.
If you follow only the global headlines, you’ll get the impression that the outlook for global talent mobility is bleak. Dive deeper, and you will see an exciting opportunity to address urgent talent shortages and drive innovation. Now is the time to grasp this exciting possibility and deliver on it — while others are still sleeping.
