In this chapter the researcher will provide review theories relevant to the stated research questions. The culture is the important subject that can be explained and defined in many ways. The Hall (1976) explains the culture as a man’s medium that forms the human life of an individual. Accordingly there is not one phase of human life that is not influenced by culture. This means personality, how people behaves to others and express themselves, how they move and solve the issues, how their critics are planned and put forward, as well as how government and economic systems are put together and function. According to Hofstade, (1997) culture is the collective programming of the mind based on values.
Stark (2001), suggested that diversity not only includes race and gender, but also goals, values, role expectations and thoughts. Thus there is an infinite range of individual’s characteristics and experiences that can be labelled diverse. They can include elements such as age, sexual orientation, religion, physical disability, life style, physical appearance, economic status, education, family type and geographic orientation
Thomas (1991) credits the emergence of diversity, as an issue, to three factors: the global market which makes doing business intensely competitive, the changing composition of the workforce (Toosi, 2002), and the increase in individuals celebrating their differences instead of contesting what makes them unique. A broader definition and the emergence of diversity as an important issue, helps set the stage for diversity being recognized as a potential source for competitive advantage
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Perry and Mankin (2004) identified the importance of perception in influencing trust in management. They identified that staff perception of management turnover increases difficulty in attaining employee trust as it instils feelings of insecurity. Lee and Brand (2005) found a positive correlation between perceived personal control over the physical environment and self-reported job satisfaction. They also found that perceived personal control was positively related to workplace satisfaction. The perception of management support will positively impact upon trust. Research has found (Stokols et al., 2002) that greater perceived support for creativity at work is associated with lower stress and greater job satisfaction
Cultural diversity has an important place in the communicational problems in multinational or global business. Informing incompletely about cultural structure and properties of an employee group causes wrong estimations in the period of performance evaluation, measurement and, in general, the decision making of management (Akova, 2000; Deniz, 2000); in most multinational or global businesses difficulties are encountered in the performance evaluations of employees because of cultural needs of showing diversity. For instance, Americans prefer the announcement of their performance results directly to themselves, whereas Asians generally indirect ways. Thus, development of a standard performance evaluation system applicable in all departments of most multinational or global businesses would not be realistic (Arslan, 2001). From an employee perspective, research has shown that individuals who perceive that diversity is supported and encouraged in their workplace are likely to hold positive attitudes towards their organization, their job and their career (Hicks-Clarke and Iles, 2000). Such workplaces are characterized as having a positive atmosphere or “climate for diversity”, where this term is conceived of as the extent to which “human resource diversity is valued and in which employees from diverse backgrounds feel welcomed and included” (Hicks-Clarke and Iles, 2000, p. 324). Conversely, other studies have found that employees who do not feel valued because of their race and ethnicity consider that this negatively affects their job and career satisfaction and job involvement (Cox, 1993) and their ability to interact with others (Kossek and Zonia, 1993).
West and Mayor (1997) in their study concluded that characteristics of top management team members affect the organisation’s capability to seek out and concentrate to compelling information about future conditions and competitive environments.
2.2 Different approach in managing the culturally diverse organization:
The basic concept of managing diversity accepts that the work force consists of a diverse population of people. By realising the difference between the employees and if it is properly managed this will become a great asset for the organisation and work to be done will be more efficient and effective. Race, culture, ethnicity, gender, age and disability are examples of diversity factors. (Bartz, Hillman & Lehrer, 1990:321)
There are many definitions diversity management, but the essence of the concept contents that;
“Diversity management is founded on the premise that harnessing the differences of a diverse population of people, will create a productive environment in which everyone feels valued, where their talents are being fully utilised and in which organisational goals are met” (Kandola & Fullerton, 2000:8)
Social scientists have been trying for long to identify the relationship between culture and behavior of the people in different regions. In many ways culture is no longer a terminology but it is interpreted as the set of guidelines for a society to live in (Venken 2002). On reflecting on this view the organizations can be viewed as the minor social institution.
In general, culture is a vague concept and many scientists have tried to define it in many ways and measurement of this concept related to the definition (Perks and Sanderson 2000). Human resource management have tried to put forward the importance of the cultural diversity in business while the research exists only in the areas of human resource management such as recruitment, organizational socialization and in service training, it is widely viewed that there is a deep study needed in the field of cultural issues.(McGuire et al, 2002).
The diversity movement is hailed by many as a positive change, in which organizations voluntarily engage in a process of systemic cultural transformation designed to eliminate any further forms of exclusion. This development coincides with a general change in the political climate seeking to reverse many of the legal mandates of the previous decades, most notably affirmative action. To reinforce the desired state of managing diversity at the organizational level, revised recruiting, appraisal, development, and reward systems, as well as an enforceable diversity policy need to be implemented (Allen and Montgomery, 2001; Hemphill and Haines, 1998; Miller, 1998).
Ingley and Van der Walt (2003) have developed the two different frameworks to describe the diversity related to decision outcomes in firms. The decision outcomes can be related to the performance outcome of the firm because all decisions affect how a firm can use its resources to reach its performance goals. Thus, the frameworks can be useful to understand the connection between diversity and firm performance.
The first framework in figure 1 shows how the outcomes of the decision process in boards are mediated by varying amounts of diversity. If the board is diverse then the outcome, according to this framework, can be unintended which may lead to the outcome that was originally intended. Moreover, the framework shows how diversity on the other hand can lead to an unintended but a more creative outcome than was intended, or lead to a situation where an agreement cannot be reached because of irresolvable conflicts (Ingley and van der Walt, 2003). The framework has the title “Intended, unintended, and realized outcomes of diversity and board dynamics” and is illustrated in figure
The second framework is displayed in figure 3.2 and it shows diversity related to the strategic context and the quality of the decision process of the board. The framework shows that in a stable and safe business environment, more diverse boards may produce low quality decisions in contrast to more homogeneous boards. The literature points out that diversity in boards suits firms which operate in a more turbulent and changing environment where the strategic complexity is high (Ingley and van der Walt, 2003). The framework can be helpful in explaining differences between industries. The framework is called “Diversity, strategic context, and board decision quality” and is illustrated in figure 3.2.
There are numerous studies that implicate that diversity in firms is a positive and maybe even necessary aspect to consider when the members of the BoD and TMT of a firm are appointed.
Five arguments for diversity are presented by Wang and Clift (2009). First, the market is becoming more diverse. Thus, the firms could benefit from adapting to the customers different needs, and from creating a deeper understanding for the market and the customers. Second, an individual’s beliefs, attributes and cognitive functioning are varying with variables such as age, gender, and race; this implicates that creativity and innovation is enhanced by diversity. Third, the variety of perspectives that emerge from diversity could lead to a wider range of alternatives for the decision makers to evaluate, which enables them to get a more effective problem solving process. Forth, diversity may lead to an improved understanding of the surrounding environment. Finally, diversity may enhance business in a global marketplace due to the cultural and ethnical dimensions of diversity, thus, enhancing the understanding of different cultures (Wang and Clift, 2009).
Furthermore, Martell and Caroll (1995) say that creativity and innovation are closely related to a diverse group of people, which in turn makes it easier for the TMT to be flexible in a changing and dynamic business environment (Carson et al., 2004).
2.3 EFFECTIVENESS OF DIVERSITY MANAGEMEMNT:
It has been in the discussion among the researchers about the effectiveness of the diversity management in the organization or business. The researchers and management guru’s have argues various benefits of the diversity management of the different organizations that have increased the diversity measures of their organization. But the important parameter to be found is under what condition the diversity measure of the organization at its maximum.
According the Haas (2008) the diversity measurement is methodologically complicated. And due to the variety of factors and situational outcomes of different studies are not able to complete. Hass distinguishes three main theories focusing on the role of gender, ethnicity and age factors to find out the firm’s performance. He used social identity theory based on Festinger’s work(1954) to study the individuals comparing themselves with the others in the organization. this comparison causes the team members to reflect on their performance level and it will lead to positive or negative level of self image to belong the other group. This will cause to increase the overall performance of the group. This comparison can be of individual level or on group level to increase the performance. The group comparison will make the group strong and it will ease the communication among the group members.
Another perspective of the Hass is the similarity-attraction theory (Byrne, 1971). Based on the demographic characteristics the individuals perceive that they belong to similar groups and which nurture the trust, mutual cooperation and interaction among the group. It will lead to the formation of the subgroups thus causing the less functioning of the team at large.
The third perspective distinguished by the Haas is information processing and decision making theories (Gruenfeld et al 1996). According to this view the heterogeneity within a group causes the improvement in information exchange and it enables the decision making. Normally the different group members have great variety of resources using more diverse networks than the homogeneous networks would do. It is to be noted that the this perspective pertains with the positive outcome of the diversity where as the other is more looking to the negative outcome of the group structures and processes.
In Haas’s study of diversity and team performance linkage the first two perspective are much more supported by the results of the empirical studies reviewed than the third one. Most of the studies conducted by others gave negative results of the diverse groups and structures. So it can be conclude here that the elegance of the information processing and knowledge diversity perspective is defined by the messy reality and of the interpersonal and group process in the organizations. In other words the power of diversity is meets the reality of diversity of power and interest (Klein and Harrison, 2007).
The context of the diversity and the effectiveness is addressed by the Lopez Fernandez and Sanchez Gardey. For this the diversity is defined in the multidimensional point of view associating the democratic diversity and human capital diversity. In the theoretical framework the Lopez and Gardy stress that the diversity doesn’t influence the organizational or group performance directly but it is more influenced by the process like decision making process. Also the different configuration of human resource practices may affect the organizational dynamics differently, and at the end the group may have different affects on workgroup performance and sustainable competitive advantages. So in order to extract the benefits from the diverse work force the companies need to strategically place the human resource operations and systems. Lopez and Gardy found three different HRM orientations.
- The Individualistic control orientation
- The group development orientation
- The group control orientation
The individualistic control orientation is referring to an orientation which is characterized by the
- Focus on individuals rather than on the work groups.
- Rigid control mechanism and little self control within the work groups
- Strong market orientation for achieving human capital rather than emphasizing the intra organizational development of human capital
The group development orientation is characterized by the
- A strong focus on the work force rather than on individuals
- A system of open and flexible Human resource practice which allow self control within the work groups
- A focus on the intra organizational development of human capital
The group control organization is characterized by the
- A strong emphasis on groups
- Rigid external control mechanism and a little self control
- Preference for external markets to recruit employees and no stress on intra organizational development of human capital
According to the study conducted by the Hardy and Lopez it is found that the individual pattern hinders the decision making process in the diversified groups. The study also conclude that the to foster the cognitive benefits of the diversity, a collective and interactive HRM orientation suffices to benefits from the work group diversity.
2.4 ADVANTAGES OF DIVERSITY IN WORKPLACE:
In many ways the culturally diverse organization is considered as the asset and resources. The diverse workforce is increasingly helpful when the organization is practicing new ideas or expanding the business plans, if the organizations are able to recognize the diverse potential on the work force then the greater advantage can be obtained (Iles 1995). There are a plethora of literatures claiming the performance advantages of the diverse work force over the homogeneous work structures (Cox, Lobel and MacLeod, 1991; Cox and Blake, 1991).
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one of the advantage is the redundant options for the multi cultural organizations in attracting and retaining the best talent. the capabilities and skills of the minorities and women offer a wide labor pool. The organizations that are able to attract and retain the minorities and offer the gradual career advancement treatment in the formal way gain competitive advantage and high quality human resource individuals.
Researchers suggest that diversity provides benefits to organizations, including: the capability to attract and keep the best talent available; reduced costs due to lower turnover and fewer lawsuits; enhanced market understanding and marketing ability; greater creativity and innovations; better problem solving; greater organizational flexibility, better decision making; and better overall performance (Cox, 1993; Cox andBlake, 1991; Cox, 1991; Robinson and Dechant, 1997; Carlozzi, 1999; Griscombe and Mattis, 2002; McAllister, 1997; Watson et al., 1993). These benefits have the potential to influence organizational performance and the bottom-line. Also the diverse work force is more important to meet the demands and skills for competing and to satisfy the clientele in the extremely competing global marketplace. Such diverse organizations have a strong understanding of the requirements of the legal, political, social, economic and cultural environments of foreign nations (Adler, 1991). Second in hi-tech industries the wide range of talents generated by the ethnic and gender diverse organization becomes a huge advantage (Morgan 1989). The diverse organization are seems to be brilliant in the problem solving and have better ability to extract the meanings this will help to reflect the multitude of meaning regardless the group thinking. The diverse organizations tend to possess more organizational flexibility, and are better able to adapt to changes. Women, for instance, are said to have higher tolerance for ambiguity than men (Rotter and O’Connell, 1982).
2.5 DISADVANTAGES OF DIVERSITY AT WORK PLACE:
As in the many system the diverse organization has also its disadvantages over its moderate advantages. In problem solving situations the extraordinary cost in the financial and time resources may nullify the benefits of the diversity and it can lead to the dysfunctional conflicts. Diversity is not suited for the situations in the uncertainty and complexity which may lead to the frustration and confusion. Some time diversity can make difficulties to come to a decision on a particular course of action and it may result in developing the negative synergy and cultural clashes in within the team or organization. Traditionally the cultural conflicts within the organization between the minority and majority groups are solved in the favor of the majority groups this will cause the delivering full performance by the minority members in the critical situations. O’Reilly (1992) found diversity to be associated with lower level of psychological identification with group members which would tend to detract from overall performance and result in adverse effects on organizational measures of productivity, absenteeism and turnover. Homogenous groups have been found to outperform culturally diverse groups particularly where there are serious communications issues which make it more difficult for everybody to make optimal contributions to the group effort (Sheridan, 1994).The absenteeism and higher turnover are the two main problems identified in the multicultural organizations. Several researches shows that since 1960’s the absenteeism among the minorities and woman is consistently higher on absenteeism and turnover than their majority counterparts O’Reilly(1992).
There are also downsides with diversity. Ingley and Van der Walt refer to a study conducted by Milliken and Martins (1999) where some of the findings are pointing on the negative aspects of diversity. First, there could be problems with integration. Second, the turnover of members is higher in more diverse groups. Third, diversity could lead to affective costs (Ingley and van der Walt, 2003). Another issue regarding the negative effects of diversity is communication and coordination between members in a group as heterogeneity could inhibit the effective use of skills and knowledge (Van der Walt et al., 2006). Groups that are more diverse have a lower level of member satisfaction although this effect diminishes when the group stays together for a longer time (Ingley and van der Walt, 2003).
2.6 CHALLENGES WHILE PURSUING THE IMPLEMENTATION OF THE ORGANIZATIONAL DIVERSITY
Nonetheless the success of some organizations when deciding to manage their diversity, there are also some that have failed while attempting the same. There are several reason to be linked for the failure of in the initiatives of the diversity initiatives. One of the reasons is the lack of top management involvement. The long term effectiveness of the organizational culture is limited in these organizations where the lack of top management initiation mainly predominant (Konal, Prasad, Pringle, 2006). Some organizations are still viewing the diversity in the legal and compliance aspects only and are not addressing the important management/leadership qualities needed for the implementation at the hand. According to Susan Meisinger (2008) many organization concentrates their diversification completely on the issues around representation and compliance. If the organization include the “diverse” workforce and they use hiring policies that are in strict compliance with the law they believe that their diversity strategy is a success. Mullins(2008) also states that the diversity strategies in order to be successful must also focus on achieving strategic business results and look for ways to leverage diverse groups of workers to create new opportunities for success. Others are avoiding to address the specific cultural definitions that are present in each country’s specific needs and develop a diversity strategy around those needs to ensure that the organizational goals will be fulfilled. Another view is the pay for performance developed by the Trompenaars(1994), according to him many managers around the world are in favor of this principle but they translate differently the terms pay and performance. The culture is a time depended term and it will undergo changes due to the economic trends or migratory trends among the others. This will affect the organization and as in like the culture. The cultural values changes as the country’s value changes. This phenomenon will cause the new challenges for managers that needed to adapt their management styles in order to meet the organizational goals. It is to be noted that the all changes in the employees cant be addressed by the management in the same manner. (Cross,2000)
While developing the successful diversity initiatives managers may come across different barriers and challenges. Superficial or not properly implemented diversity initiatives will cause the negative affects causing the harm to the organization structure. Mutton and Hernandez (2004) brought some of these barriers after conducting a deep study on a variety of industries and they conducted series of conversations with the participants that shows the barriers to these initiatives.
Organizational culture: while trying to amplify diversity issues to all parts of the organization, diversity managers need to carefully explore the organization’s culture in order to be able to frame and communicate the issues of workplace diversity in an effective manner. For example, taking a subjective approach while explaining diversity issues to an analytical and linear type of culture, might become a barrier when trying to get the desired point across
Middle management and employee buy-in: Lower levels of management and the general employee population do not know what it is they are dealing with when addressing these diversity initiatives, thus resulting in lower levels of buy-in.
Kreitz (2008) identifies three elements that are vital when implementing diversity initiatives, but have proven to be challenges for some organizations:
- Top management commitment
- The skilled training and breadth of organizational knowledge HR possesses
- Shared understanding that managing diversity is not an isolated problem to be solved but an ongoing and lengthy process
Stockdale and Crosby (2004) provide a list of mistakes to avoid while implementing diversity initiatives. This list is the result of what various authors call, “Common diversity traps”:
- assuming that short-term training will be enough
- failing to relate diversity to the organizational mission and key products
- waiting to collect all possible data and ignoring employee perceptions as data for taking action
- waiting for everyone important to be thoroughly behind the effort
- not paying attention to the impact of resistance people in important positions
- isolating the effort in one department (such as human resources) or under one person
- not differentiating between good intentions, usually contained in verbal expressions of support of diversity, and the impact of specific institutional actions that go against diversity
- not building coalitions and support with different stakeholders who may fear that the diversity effort will not include them
- assuming that managing diversity is just “good common sense and people skills”
- measuring success by the quantity and magnitude if diversity activities and events, rather that the impact on the work and people
Tjoswold and Leung (2003) identifies decision making to be negative impacted because of problems with communication in a cultural diverse organization. Since the spoken word is interpreted differently conflict could arise from differences in values and norms. Even written communication is interpreted differently depending on your values and norms.
One very interesting finding is from the article “Managing Functional diversity, risk taking, incentives for teams to achieve radical innovations” from Cabrales, Medina, Lavado, Cabrera (2008) where they have found that the multifunctional teams has some disadvantages in reaching consensus due to the diversity of perspectives
2.7 HOW TO ACHIEVE SUCCESSFUL IMPLEMENTATION OF DIVERSITY IN ORGANIZATIONS
Some researchers as well as experts have mentioned different ways that can help organization’s success in their diversification methods. Out of the many in the plethora of literatures the researcher found a few that come in line with the research domain. Below the researcher present a few of them which are divided in different categories for the easier understandings.
Clear definition of what diversity means to the organization: by this definition itself we understood that the need of clear picture and reason in the diversification process. Each organisation should have their clear rationale in doing the diversity initiatives. As Schmidt(2004) mentioned, organizations should separate between diversification that are based in facing the legal implications and of policy character between those that are really invested into achieving the recruitment of people and talents that they identify as beneficial to the initiatives. Also according to the Helms, Dye and Mills (2009) there should be clear understandings between the management of diversification and the notion of equal employment opportunities initiatives. Stockdale and Crosby (2004) suggest the need of integrated human management systems at the corporate strategy level for the diversification process.
Top management support: an effective diversification process has 100% supports from the top management (Schmidt 2004). Basically it is to be understood that there should be strong vision of diversification goals and the ways in which it attains the goals. The goal should be organised to monitor through the top level of management and this support should be consistent in the diversification process and should address the importance of the initiatives. Stockdale and Crosby (2004)
All around employee involvement is necessary: apart from having the top leadership support it is to be noted that the support from the employees at all levels of organisation is important in the diversity initiatives. Mutton and Hernandez (2004) suggest that having a strong diversity/compliance professional help in delivering the high level of commitment to the rest of the organisation. One of the other method in ensuring the employee commitment is developing the performance measures, accountability initiatives and evaluation initiatives. Creation of the work groups is important where the discussion about the diversity is carried out and a group leader will be needed to report the employee concern to the top management periodically. This method of employee initiation will help to develop the diversity in to the core culture of the organisation.
Assign a reasonable growth period: the diversification cannot be taken from a quick point of view, they should be viewed as the long transformational process instead. The organisation and management need to understand diversification process need time before reaping the benefits can be appreciated. As in any system the integration of new methods and process to the organisation culture will take time. With diversity initiatives the organisation must considered a trial and error period until the stated benefits of the diversification can be found. So this is the reason why the organisation do not give too early in the process of diversification process. Stockdale and Crosby(2004) suggest to pilot and experiment the situations and encourage an environment of learning from experience where errorless implementation is not expected.
In general, clear and integrated management practices also can be observed during the implementation of the diversity initiatives. All managers should put their maximum efforts to achieve the vast meaning of what it means diversity. Both the structural and cultural changes are needed to implement the successful diversity strategies. Managers of the organization must execute and follow certain number of processes to reap the benefits of the diversity. Some of the management practice includes target recruitment, education and training program intended for the underrepresented individuals or groups, career development, flexible work arrangement, mentoring, workshop among the others (Helms 2009). Helms also mentioned the other success factor that must be present at the moment of an organization decides to execute diversity.
2.8 Managing Diversity in the work place
The term diversity management have emerged in the recent time as a voluntarily corporative initiative directed at the systematic recruitment and retainment of employees belonging to the diverse social identity groups.(Prasad,Pringle and Konrad, 2006). The voluntary organizational actions are intended to develop the greater inclusion of the employees from various domains into the formal or informal organizational structure through special policies and programs. Further to this notion some view the diversity management and their contribution will add competitive advantages to the organizations thus improving its business performance. The managers of the organization need to develop different skill sets to achieve the success of their organization and their own benefits. These developments causing many initiatives can cause the ideal environment that works naturally for the total diversity within the organization.(Thomas 1992).
A good practice for the organizations that aim to manage the diversity would be to investigate what are the practices required for a good diverse workplace environment. Taylor Cox (1993) suggests that organizations need to undergo the transformation to accept the multiculturalism within the organizations. According to Taylor the objective of managing the diversity is to absorb the all socio cultural backgrounds to the organizational core culture to amplify the organization’
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