Globalization has changed many things for us in the 21st century. One of the things it has changed that is relevant to this topic is the population of the workforce. Globalization has created a diverse workforce in terms of ethnicity, race, gender, geographic location, religious beliefs, personality type, physical characteristics, education, age, sexual orientation, income, physical ability, marital status and income. The challenge to operate effectively and efficiently in a global environment is becoming more real everyday. This is why more and more companies nowadays are looking into diversity management as an important tool to exploit opportunities and meet challenges.
What is diversity management? Diversity management is a tool for capturing the diversity dividend that focuses on managing the difference within a firm’s workforce, capitalising on the benefits of diversity and minimising workplace challenges (Flynn, Nicholas, Sammartino & Lau, 2001). But how effective is diversity management really? What are the effects of diversity management on the workforce? These are some of the questions surrounding the debate about diversity management as a tool to improve team performance. In this essay, I will answer these questions and also discuss the effectiveness of diversity management from two different perspectives, the arguments behind the competitive advantage of diversity management and the various barriers of diversity management.
Before going further into the subject of diversity management, it is first important to understand the changing society and workforce. During earlier times in the western world, organizational culture was largely patterned by the values of dominant western European white men. The organizational cultures that were built were mirrored by the values and experiences of these white men and supported their goals and priorities. Women and minorities had very limited opportunities in the workplace. In the 21st century, the demographic composition of our society and workforce has changed dramatically and will continue to change at a faster rate. In the United States, it is predicted that by the year 2050, minority groups will make up almost half of the population. This means not only a more diverse workforce, but also a more diverse market. Hence with this realization of the significant role that diversity plays in the success of an organization, many organizations have started changing their cultures and beginning to apply more emphasis on valuing and managing diversity. Certain laws have also been passed to guarantee all people the right to apply and be evaluated for employment regardless of their race, sex, nationality, religion, age or disability. Organizations are also somewhat obliged to follow these laws.
According to Rossett and Bickham (1994), there are five reasons for organizations to initiate diversity programs: (1) compliance – want to do what is expected of them by taxpayers, shareholder, society, (2) harmony – want all employees to understand and appreciate each other), (3) inclusion – want underrepresented employees to succeed, (4) justice – want to correct past wrongs and (5) transformation – want to change the way the organization does business in order to take into account diverse employees, customers and markets.
Two Perspectives on the Effectiveness of Diversity Management
There are two schools of thought that can be used to argue for the effectiveness of diversity management as a tool to improve team performance. One perspective is based on the social identity theory and the other is based on information and decision making theories
Social identity theory suggests that people show favouritism to in-group members and behave in a hostile manner towards out-group members. Therefore, for example if a person identifies himself as being a white male, he will show favouritism to his in-group (white males) and may behave in a discriminatory way towards out-group members ( all others that are not white males). Based on social identity theory, it can be predicted that increased diversity will result in more conflict, less social integration, less cohesion in groups and diminished team performance. Furthermore, diversity programs may threaten the group identity of whites for an example as they have always held high positions in the workplace and with diversity initiatives; preference might be given to other groups. The conflict that arises can be essentially described as a power struggle.
However, more optimistic arguments based on information and decision making theories suggest that diversity management will provide a broad range of perspectives, insights and skills which can increase the group’s creativity, and problem-solving capabilities, thereby enhancing performance (Cox, 1991; Cox & Blake, 1991). Conflict, the optimists say, is not always a bad thing. Conflicting points of view can be beneficial as it avoids “groupthink” and brings additional points of view into the discussion.
Past research has found support for both of these schools of thought. The results however are paradoxical. In a study by Bantel and Jackson (1989), the diversity of 199 banks of top management teams were appraised, and it was found that the greater the diversity of the teams, the greater the number of administrative innovations. Another study among top management team members however, associated diversity with higher rates of turnover (Jackson, 1991). Hence, diversity management is more complex than the usual black and white picture that is painted of it. It is a palette of contrasting colours.
As for research concerning the impact of diversity management on performance, findings were also mixed (Ely, 2001). One study investigated the impact of four diversity dimensions – tenure, age, sex and race on performance in 486 retail bank branches and assessed whether the participations of employees in diversity education programs influenced these relationships (Ely, 2004). The results of this study were consistent with past research that found no strong positive or negative impact of diversity on performance.
The Competitive Advantage of Diversity Management
According to research (Cox, 1991; Cox & Blake, 1991), diversity can result in a competitive advantage via (a) the resource-acquisition argument, (b) the marketing argument, (c) the system-flexibility argument, (d) the creativity argument, (e) the problem-solving argument, and (f) the cost-reduction argument.
The rationale for the resource-acquisition argument is that companies can develop favourable reputations as prospective employers for women and ethnic-racial minorities by managing diversity. A diverse workforce is becoming increasingly important in building and sustaining competitive advantage.
In our increasingly globalized world, markets are also becoming more diverse, therefore the marketing argument proposes that recruiting women and minorities will enable organizations to gain and sustain competitive advantage by tapping into additional markets.
It has also been argued that diversity management can help to decrease resistance to organizational change (system-flexibility argument). The rationale behind it is that if organizations are able to overcome resistance change in the area of accepting diversity, then it will be better equipped to handle other types of change in the future. This kind of flexibility provides a competitive advantage in an increasingly changing environment.
Another popular argument is the creativity argument which states that diversity in the workplace increases creative and innovative ideas as there are many different viewpoints to draw upon. Other than producing more creative and innovative ideas, the problem-solving argument states that with a wider range of perspectives, diverse work groups also produce better decisions. Organizations are often faced with complex problems and better decisions mean increased competitive advantage.
Failure to integrate workers in an increasingly diverse work environment may result in increasing costs from turnover, absenteeism, and lack of productivity. Therefore, the cost-reduction argument states that managing diversity effectively can greatly reduce costs.
The Diversity Model
The model presented above was developed by the members of the Diversity Research Network based on a large number of studies that were done on the effects of diversity on group performance. This model suggests that the positive or negative impact of diversity on performance may depend on several aspects of an organization’s strategy, culture and human resource practices (Kochan et al, 2002). The studies done revealed that racial and gender diversity does not have a positive or negative effect on performance. Therefore, it was concluded that the organizational context is crucial in determining the nature of diversity’s impact on performance.
Barriers to Diversity Management
Some of the common problems faced in diverse workforces are discrimination, harassment and prejudice. According to Sanchez and Brock (1996), perceived discrimination in the workplace may influence employee outcomes such as organizational commitment, job satisfaction and work tension. Therefore, managing diversity is an important tool to keep problems such as these at bay and doing so in return can be said to improve organizational commitment, job satisfaction and work tension. However, remedial programs created to eliminate discrimination also cause diversity conflict. Resentment is created when it is believed that people from distinct demographic groups are unjustly given organizational benefits. Hence, it is important to understand the possible conflicts that can occur when diversity initiatives are introduced in the workplace in order to manage diversity effectively.
Backlash has been identified as one of the most common negative reactions towards diversity initiatives. Backlash is a negative response to a decision or policy that occurs when a person thinks that others have received undeserved benefits (Crosby & GonzalezIntal, 1984).
It was found that white men in diverse work groups felt less attachment to the organization as measured by absenteeism, intentions to remain with the firm, and psychological commitment (Tsui, Egan, & O’Reilly, 1992). Diversity management also may have negative outcomes for the beneficiaries because employees often suffer negative self-perceptions of competence if they perceive their employment as attributable to their demographic status rather than to their qualifications.
Actually much of the debate about diversity management in the workplace is actually concerning the justification or rationale for the procedures and the outcomes produced by programs perceived to be unfair. Perceptions of fairness are very important to the success or failure of diversity management (Kirby & Richard, 2000). Majority perceive it is fair when policies or decisions work to their advantage or purpose though it might be detrimental to the needs of others. So fairness can sometimes be perceived as being unfair to a minority group.
When diversity initiatives are justified in a clear and worthwhile way, resentment and perception of unfairness decrease. Findings indicated that both men and women preferred the resource-acquisition argument that organizations with the best reputations for managing diversity win the competition for the best personnel. However, second choice for women was the system-flexibility argument (diversity management can help to decrease resistance to organizational change) and men on the other hand found the marketing argument (recruiting women and minorities will enable organizations to gain and sustain competitive advantage by tapping into additional markets) equally valid as the resource-acquisition argument.
Diversity, if managed effectively can be used as an important tool to exploit opportunities and meet challenges. There are many advantages and disadvantages of a diverse workforce, but it is in our hands to make the best of the situation at hand. As discussed earlier, the effectiveness of diversity management on team performance may depend on the organizational context in which the work takes place. In organizations in which varied ideas and opinions are valuable to formulating innovative and creative ideas or for problem-solving and decision making tasks, diversity management may be effective. However, when quick decisions have to be made or quick solutions have to be revised, diverse workforces may not be as effective as it would take a longer time for heterogeneous groups to come to a consensus compared to the time taken for homogeneous groups to come to a consensus.
Being aware of the importance of the role of group identity to individuals is also crucial in managing diversity effectively. Other than that, the justifications and rationale behind diversity initiatives is an important factor determining the success of diversity management programs. In general, framing diversity programs in terms of a business necessity may help to alleviate negative conflict associated with identity groups in organizations. When individuals feel that they have more to gain than to lose, organizational change can take place more smoothly.
In conclusion, the way we perceive diversity may also determine whether it is managed effectively. So remember that the uniqueness of all individuals; includes everyone. Diversity is a palette of colours, and it is up to the artist to mix and match to find the colour that is most suitable.
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