Embracing diversity in the modern corporation

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Diversity has been embraced by modern businesses as a strategy to achieve the long term goals of organizations. Diversity has necessitated the development of unique products which meet the different market segments. Globalization has led to the development of global markets which are diverse in various aspects including culture, gender, age and ethnicity. These market segments all demand unique products from business organizations. Managers across the world have recognized the importance of developing a diverse workforce in order to meet these market needs. Diversity has also been effectively used by multinationals when marketing their products.

The paper has examined diversity in relation to functions of HRM such as age, ethnicity, gender and culture. The importance of maintaining diversity in the workforce and challenges associated with diversity in HRM has also been discussed. The findings have shown that diversity is linked to HRM functions through innovation and creativity, problem solving, consumer relations and employee performance benefits which have been discussed in the paper. It also facilitates aspects of an organization which include reduction in organizational conflict, reduced legal liability, public image and goodwill and improved performance and productivity. The cumulative benefits which arise as a result of diversity result into improved performance and productivity by organizations with diverse employees.

The paper has recommended that managers should effectively handle its human resource while acknowledging the diversity present in the organization. Another recommendation is that the management should hire a diverse human resource depending on the needs of the target market. Finally, the management should avoid discriminating any employee on the basis of their age, sex, cultural, religious or ethnic backgrounds. Any organization which discriminates against employees on the basis of these grounds is likely to face legal action from the aggrieved parties. The implementation of these recommendations will enable global brands achieve their organizational goals and enjoy long term profitability.

Table of contents

1.0 Executive summary…………………………………………………………………..1

2.0 Introduction…………………………………………………………………………..4

2.1 Background…………………………………………………………………………..4

2.2 Aims and scope……………………………………………………………………....4

3.0 Diversity in modern organizations…………………………………………………,..5

4.0 How diversity is linked to other HRM functions…………………………………,…6

4.1 Innovation and creativity…………………………………………………………,….6

4.2 Problem solving………………………………………………………………………7

4.3 Consumer relations……………………………………………………………………8

4.4 Employee performance……………………………………………………………….9

5.0 Importance of managing diversity…………………………………………………....9

5.1 Reduction in organizational conflict………………………………………………….9

5.2 Legal reasons…………………………………………………………………………10

5.3 Public image and goodwill…………………………………………………………,..10

5.4 Improved performance and productivity…………………………………………..…11

6.0 Summary and conclusion…………………………………………………………….11

7.0 Recommendations…………………………………………………………………….12

2.0 Introduction

2.1 Background

Diversity is an issue of growing importance to businesses across the world. Business organizations and especially those which serve a diverse market segment have begun embracing diversity in the human resource as a strategy to better understand their target markets (Aaker, 2001). Modern organizations have moved from developing products for local markets to developing global products due to effects of globalization. As a result, they have been forced to deal with diverse markets which differ in certain attributes such as age, race, culture, gender and others. This diversity has necessitated the development of unique products which meet the different market segments. As a strategy to understand market diversity, managers have begun employing a workforce which is diverse in all these respects.

A diverse workforce has proven to be more effective in serving the needs of a diverse market. In addition, the empowerment of previously marginalized groups has dictated that employers implement diversity when developing the human resource. Discrimination against people on basis of age, gender, culture and ethnicity is illegal and employers have been forced to accommodate employees from different backgrounds. This has created diversity in many organizations which provide global products (Leuthesser et. al., 2005).

2.2 Aims and scope

This paper will discuss diversity in the workforce in business organizations. The paper will also examine diversity in relation to functions of HRM such as age, ethnicity, gender and culture. Finally, the importance of maintaining diversity in the workforce and challenges associated with diversity in HRM will also be discussed. The discussed issues will be summarized at the end of the paper. The paper will be limited to the US business environment and will focus on organizations which serve global markets.

3.0 Diversity in modern organizations

It has been discussed that modern organizations have begun embracing diversity due to changes in the business environment brought about by technological innovation and globalization. Globalization has led to the development of global markets which are diverse in various aspects including culture, gender, age and ethnicity. These market segments all demand unique products from business organizations. Managers across the world have recognized the importance of developing a diverse workforce in order to meet these market needs (Holt, 2004). A diverse human resource workforce enables workers from diverse backgrounds to better understand the needs of the diverse market. Diversity in HRM has enabled employees to develop different perspectives when understanding the market needs based on their unique traits such culture, gender, age and ethnicity. For instance, employees from a certain ethnic group are able to better understand the needs of clients from a similar ethnic or religious grouping.

Diversity in modern organizations has also been encouraged as a means of ensuring that there is ethnic balance across different segments of the population as far as employment opportunities are involved. Before the 1960s, there was massive discrimination against the black community and minority groupings in the US. They had no political and economic rights and the white community prevailed in all spheres of society. Women too did not play an active part in political and economic fields. However, after the civil movement groups emerged during the 1960s, minority groups and women were empowered to hold economic and political power. As a result, policies which previously discriminated against these groups were abolished. Employers began integrating workers from different ethnic backgrounds and gender into their workforce (Keller, 2003). Over time, most HRM departments of major organizations had accommodated diversity and this was integrated into the organizational culture.

Diversity has been effectively used by multinationals when marketing their products. Multinationals usually select employees who identify themselves with their target market since this will facilitate easier communication between employees and customers. They have therefore recruited employees from similar cultural backgrounds as their target markets and since these markets are diverse, the workforce has also been rendered diverse. Other strategies which increase efficiency such as the outsourcing strategy have been readily embraced by modern business organizations. Benefits of outsourcing such as reduced costs and increased efficiency have been recognized as some of the most effective strategies to ensure organizations meet their goals (Robbins et. al., 2006). Organizations which focus on the global markets have therefore outsourced their human resource from different parts of the world. This creates diversity within the workforce and it is important to understand how to deal with such diversity in order to minimize organizational conflict.

4.0 How diversity is linked to other HRM functions

Diversity is related to various HRM functions including employee performance, innovation, problem solving, consumer relations and others. This relationship will be discussed according to various criteria upon which diversity is based. This includes age, gender, culture and ethnic backgrounds.

4.1 Innovation and creativity

Innovation and creativity among the HRM personnel is a very important aspect of any organization. The current market environment demands high levels of innovation in order to deal with the strong competition present (Bryson & Alston, 2005). Globalization and technological innovation has led to unprecedented levels of competition which threatens the long term survival of many business organizations. In order to cope with this challenge, it is necessary that organizations have employees who have strong creativity and innovation skills to produce high quality products which satisfy consumer utility. Diversity in the human resource affects the ability of organizations to meet this challenge.

Organizations with diverse HRM personnel have employees with different perspectives of thinking and creativity due to their different backgrounds. These organizations have strong innovative minds which arise from employees who possess diverse ways of thinking and innovation (Bryson, 2004). Members of different gender reason differently and when they interact with those of different cultural backgrounds, they share diverse ideas which facilitate innovation and creativity within the organization. Organizations which have diversity in the HRM personnel are therefore better at innovating and creating new products which can satisfy market needs.

4.2 Problem solving

Problem solving is another crucial aspect of any organizations which operates in the current business environment. There are many challenges present in the business environment which require strong creative minds which can formulate solutions to them. The modern business environment is also very dynamic and this creates many problems to business organizations as consumers trends change very frequently. Diversity has been successfully used to deal with this challenge by leading organizations (Keller, 2002).

It has been discussed that people from different ethnic, gender and cultural groupings have different forms of reasoning and thinking. The diversity in perception of thinking is very useful when developing solutions to challenges. The experiences which employees from different ethnic backgrounds and the knowledge possessed by people from different gender or cultural backgrounds cumulatively provides an effective "think tank" where solutions to organizational challenges lie (Hanson et. al., 2005). When employees have diverse backgrounds, they are able to think differently and pursue different solutions to challenges facing a firm. Diversity due to age provides long term experience which may be used to solve problems facing organizations. This is the most effective way of developing solutions to challenges facing organizations. Organizations which have diversity in the HRM personnel are therefore better at developing solutions to problems facing them.

4.3 Consumer relations

The relationship between employees and consumers affects the profitability of an organization in the long run. Customers who have good relationships with employees are likely to develop loyalty to the organization and this will translate to repeat purchases as well as high returns by organizations. Customers are highly influenced by the impressions they have with people they interact with and this influences their purchase decisions. When organizations have diversity, different employees are able to interact with consumers with similar cultural or ethnic characteristics and customers gain more value when purchasing products.

This is prevalent in multinational organizations which have a global presence. When selling products to customers from different cultural backgrounds, employees with similar characteristics with these customers are best suited to understand their needs and satisfy their utility (Lassar et. al., 2005). This is not only favorable for customers with similar cultural backgrounds with employees. Certain products are preferably sold by employees with similar gender or age to customers since they have better understanding of the client needs. Diversity allows an organization to possess employees with different cultural, age, gender and ethnic backgrounds who can identify with customers from diverse origins. This facilitates effective relationships between customers and employees.

4.4 Employee performance

Research has shown that organizations with employees from diverse backgrounds and characteristics function better than those with similar backgrounds and characteristics (Bateman, 2010). This has been explained by the diverse thinking perspectives, innovative and creativity skills as well as decision making skills. Employees from diverse backgrounds are able to share their experiences and skills in order to provide solutions to challenges which they face when undertaking business activities. This results into better performance by employees and the organization at large. Employees from different ages bring different experience to the workplace and this facilitates easy undertaking of tasks.

However, this benefit is only enjoyed if the management effectively handles its human resource while acknowledging the diversity present in the organization. The management has to respect the beliefs and culture of different employees if employees are to work without organizational conflict arising. When the management treats all employees equally irrespective of their backgrounds, employee performance levels will rise due to increased motivation.

5.0 Importance of managing diversity

There are various benefits which are enjoyed by organizations which manage diversity within the HRM resource. Some of these will be briefly discussed below;

5.1 Reduction in organizational conflict

When the management manages diversity there will be lower cases of organizational conflict which arise from differences between employees' backgrounds. When employees from different ethnic, cultural, economic and religious backgrounds work together, there is bound to be conflict especially if they are not tolerant of each other's cultures (Beach, 2007). When the management manages diversity through treating employees equally and respecting their beliefs and culture, there will be less conflict between employees. The development of conflict resolution mechanisms will also serve to solve any conflicts which are present between employees. This will ensure that employees are not distracted by conflicts and that they have high motivation levels required to improve their productivity and output.

5.2 Legal reasons

The law requires that organizations treat all employees equally irrespective of their cultural or ethnic backgrounds. The law makes it illegal to discriminate against employees based on age, sex, cultural, religious or ethnic backgrounds (Bratton et. al., 2004). Any organization which discriminates against employees on the basis of these grounds is likely to face legal action from the aggrieved parties. When employees sue their organization for discriminatory practices, heavy fines are likely to be paid by such organizations and this will adversely affect the financial position of such firms. It is therefore necessary for the management to manage diversity in order to prevent legal liability from arising in the course of business transactions and operations.

5.3 Public image and goodwill

Public goodwill is one of the strongest tools which are used to develop brands and ensure long term profitability is achieved. A firm which has strong goodwill from consumers generates customer loyalty and repeat customers. This ensures that it has a steady flow of clients throughout its financial year. Firms which manage diversity have s strong public image and goodwill since there are not adverse reports on unethical practices by the organization (Drucker, 2000). Customers also appreciate the diversity present in such organizations which interacting with employees. However, firms which do not manage diversity are likely to face adverse publicity and this will reduce public goodwill and support. When this happens, the sales revenues are likely to decline and the firm may face losses in the long run. It is therefore important to manage diversity in order to maintain strong public image and goodwill.

5.4 Improved performance and productivity

It has been discussed that research has shown that organizations with employees from diverse backgrounds and characteristics function better than those with similar backgrounds and characteristics. It has also been discussed that organizations which implement diversity have employees with different perspectives of thinking and creativity due to their different backgrounds. These organizations have strong innovative minds which arise from employees who possess diverse ways of thinking and innovation (Aaker, 2000). Organizations with diverse employees also possess benefits in terms of problem solving. The experiences which employees from different ethnic backgrounds and the knowledge possessed by people from different gender or cultural backgrounds cumulatively provides an effective "think tank" where solutions to organizational challenges lie. Finally, diversity helps improve consumer relations. It allows an organization to possess employees with different cultural, age, gender and ethnic backgrounds who can identify with customers from diverse origins. The cumulative benefits which arise as a result of diversity result into improved performance and productivity by organizations with diverse employees.

6.0 Summary and conclusion

The issue of diversity in an organization has been discussed in detail. Business organizations and especially those which serve a diverse market segment have begun embracing diversity in the human resource as a strategy to better understand their target markets. A diverse workforce has proven to be more effective in serving the needs of a diverse market. In addition, the empowerment of previously marginalized groups has dictated that employers implement diversity when developing the human resource. Diversity has also been effectively used by multinationals when marketing their products. Multinationals usually select employees who identify themselves with their target market since this will facilitate easier communication between employees and customers.

Diversity is linked to HRM functions through innovation and creativity, problem solving, consumer relations and employee performance benefits which have been discussed in the paper. It also facilitates aspects of an organization which include reduction in organizational conflict, reduced legal liability, public image and goodwill and improved performance and productivity. The cumulative benefits which arise as a result of diversity result into improved performance and productivity by organizations with diverse employees. It is therefore important that business managers implement various recommendations to manage diversity at the workplace.

7.0 Recommendations

The first recommendation is that managers should effectively handle its human resource while acknowledging the diversity present in the organization. The management has to respect the beliefs and culture of different employees if employees are to work without organizational conflict arising. When the management treats all employees equally irrespective of their backgrounds, employee performance levels will rise due to increased motivation. Another recommendation is that the management should hire a diverse human resource depending on the needs of the target market. For instance, the management should ensure that employees who directly interact with customers have similar characteristics in terms of diversity so that customers are comfortable when purchasing products from the firm. Finally, the management should avoid discriminating any employee on the basis of their age, sex, cultural, religious or ethnic backgrounds. Any organization which discriminates against employees on the basis of these grounds is likely to face legal action from the aggrieved parties. It is also likely to face adverse publicity which will negatively affect its operations.

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