Managing Diversity at Multi National Companies

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Globalization has allowed business to operate at higher international levels. The success of the business are depending on many factors of the employees such as geographical location, background from where they come, ethics etc., Despite of the organisation being small or large they have a human resource management department to deal with employee needs and maintain them in their concern to give a competitive advantage in the society. Recently, the diversity in working place has been the major criteria in the working environment. Keeping this in mind I have tried to give an overlook of the aspects like diversity in culture and gender in multinational companies of Japan and United States of America. The basic concepts like how it has been emerged, the problems which occur, and the solution for it has been discussed.

Concept of diversity always accepts that every workplace will consist of people from different and diverse ethnic groups of population. It also includes basic characteristics like age, sex, race, language, culture, personality and different working patterns. Which are visible and non-visible in their nature. Developing these differences will help in utilizing the talent and resources available in meeting organization goals to sustain in this competitive environment. Kandola (1994)

It is known that diversity of workplace will always have an impact on organization. According to Thomas (1992 "Managing diversity refers to a systematic and planned commitment made by the organisations, in the areas of recruitment and retention of the employees from different geographical setting." Apart from that it also emphasises on number of concepts pertaining to human resource as whole. However diversity is not only of having the people from different ethnic groups but also managing them with in parameters of organization culture. (Shirley Davis, SHRM director of Diversity initiative- US)

Conceptual Growth Of DIVERSITY:

It is very important to know the origin of the term diversity and its usage in the modern multinational companies. There are two prominent factors which gave rise to the practice of the term managing diversity. They are geographical trend and equal opportunity. (Radman and Wilkinson, 2006)

Change is irresistible. Change is something voluntary which cannot be stopped and often will have its impact on all sectors. The spark of diversity was initiated in North America which spread across the globe during the later period. (Prashad and Mills, 1997) According to the research done by Kanola (1995) in United Kingdom and rest of the Europe reveal that there is a constant increase in the participation and representation of women working in the companies which strengthen the fact that ethnic minorities have started to play a greater role within the limitations of the organization structure.

The term equal opportunity is often a matter of debate. Sufficient evidences suggest that there is a high level of misunderstanding amongst people about equal opportunity. (Redman and Wilkinson, 2006). Although it said that equal opportunity helps in eradicating discrimination and encourages equity in terms of religion, age, ethnicity, sex, demography etc., it is not completely true. Wilkinson (1995) argues that equal opportunity is not a new phenomenon because, even after practicing 30 years of equal opportunity law in Britain, a limited progress has been made in addressing the issues belonging to equal opportunity. However, the primary reason behind this under progress could be that people often associate the term equal opportunity with managing diversity (Maxwell, 2004).


To meet the shortage of skilled labour requirement and to accomplish organizational goals in competitive business environment, managing diversity was primarily introduced at workplace in North America. (Redman and Wilkinson, 2006). But, implementation of business case in diversity made the things more complicated. (Robinson and Dechant, 1997). The two specific reasons for the firms to adopt diversity management are appropriate exploitation of talent available and increase market place understanding. In a survey conducted by State of workplace diversity management in 2007 reveals that 96 % of respondent feel that diversity at workplace is essential to accomplish organization objectives. However, in this piece of paper a sincere effort has been made by me in describing the two broad areas of diversity i.e., culture and gender. Three different perspective of diversity like, integration and learning, action and legitimacy and the discrimination fairness which often help us in understanding the term diversity as a whole (Barinaga, 2007). Despite of enormous benefits, diversity is often associated with certain limitations which require adequate attention as discussed below.


The USA and Japan are two different countries which rely upon individualism and collectivism respectively. American workforce and managers associate themselves with individual performance whereas Japanese believe in collective force or working together towards achieving organizational goals. (Mead, 2005). However, over the years researches have proven that theory of motivation commitment and leadership are reflected from individualistic approach. (Adler et al, 1995). Individualistic approach applied by US firms in different countries could pose potential difficulties for employees working in the host nation while managing diversity. But, this imbalance can be balanced through proper structuring and controlled a system which leads to equality and leadership. For example Accenture has changed its hierarchical system and work place style to cope with cultural differences. It is hard to successfully implement diversity programmes without the support of top management. In the case of Accenture, it established Afro-American network, South-East Asian Network etc., to familiarise the working environment for the people of different region (Amla, 2008).

MNC's often encounter with two basic problems while addressing the issue of diversity. Firstly, the structure or the format that is used to manage culture and secondly, to what extent the implemented format will help in yielding the desired results. However, there is no proposed or uniform structure for the companies to manage diversity because American diversity programme can not be a standard or universally accepted for all the countries. Since the people working in these countries belong to different legal, geographical and ethnic groups they should be dealt in a separate way. (Egan and Bendick Jr, 2003)

According to Doz and Prahalad (1981) globally operating companies have to develop their own organization structure to address these issues of managing diversity .This rational method, if taken, will help the counterparts of MNC's in achieving organizational goals and increase performance. Accenture, Microsoft, Toshiba and IBM have their own diversity programmes to address the issues of multi-culture in their respective firms to gain competitive advantage.

People from different parts of the world are bound to different beliefs and customs and they remain same as long as they are retained within that cultural boundaries. But in case of diverse working environment it is very hard to cherish integrity and unity which leads to lack of consistency among employees. (Hodgetts and Luthans, 2000)

Proper induction and training and familiar working environment could help in solving this problem. It not only helps in creating peer groups but also avoid homesickness. In Accenture efforts are made to address these issues of importance through various diversity related programmes. For example, supplier diversity programme, cultural week programme and diversity induction for new employees etc. (Amla, 2008)

No doubt, that communication is one of the prominent factors in generating mistrust among employees at workplace. For example, American managers while working on a Japanese operation in US claimed that Japanese colleagues always talked in their native language rather than English which made us think suspicious where as Japanese workers defended saying that there is no need to use English in terms of private conversion. (Hodgetts and Luthans, 2000). However, Mead (2005) provides an example from the case study about Japanese students who participated in a workplace training in US. Where the students got shocked by looking at the workplace culture, behaviour and approaches etc. These sorts of problems can be solved through proper code of conduct for work place. For example, by entertaining single language at the work place to respect others culture tradition and building confidence and by helping to avoid discrimination and conflict.

Gender and race are also considerable factors in addressing the issues of equality and diversity. In both USA and Japan men occupy most of the dominant positions in the society due to higher masculinity rate. The recruitment, selection process and organization culture also have been great barriers for women in decorating higher positions in these countries (Linehan and Scullian, 2001). In Japan, only 30 percent women are involved in full time employment (Japanese Ministry of HLW, 2004). Moreover, racism also has been one of the problems which prevail even in developed countries. (Pelled, 1996)

While working together employees tend to groom their own set of values. Perception and prejudice of each employee differ from another based on their tradition and culture. This ethnocentrism approach often gives rise to certain differences. Managers from developed countries could think that they are more advance and equipped than that of their counterparts. For example, technical works are assign to Japanese engineers due to their technological background but quite often they develop a negative notion that others employees are not capable of doing that particular job (Hodgetts and Luthans, 2000).

Human beings are made of culture, tradition and norms. They not only play a greater role in determining human behaviour but also demonstrate their attitude and communication. For example, in some culture ( Indian ) is very hard to say directly 'NO' so the managers generally use 'WE WILL SEE' but when the promises are not fulfilled, managers are blamed for the response (Hodgetts and Luthans, 2000). Japanese usually talk in a polite manner by nodding their head but that doesn't mean that they accept everything that is being told.

Working patterns and decision making of managers and employees vary depending on their background, region and ethics etc. When managers from different ethnic groups work together it becomes very hard to make decisions. For example, Americans prefer to take spot decisions due to their aggressive and individualistic nature where as Japanese believe in collective decision making (Hodgetts and Luthans, 2000). Leadership style, education, training, and communication etc of Americans are different than that of the Japanese which creates problems for both firm and employees (Wentling and Palma-Rivas, 2000).

It is very hard to measure the success and failure levels of diversity management on an organization. Significant efforts have been made by various researchers to reveal the mystery behind diversity and bottom line organization performance. However, was found insignificant (Dreachslin, 2007). The study pertaining to evaluation and performance was completely based on a particular company and country (Banking and USA) which might be different from other country and industry (Richard, 2000). In banking sector it was found that the relationships between race and growth were very positive but was not the same during bad situations (Richard, 2000). It was also found that the Japanese MNC's cultural control and evaluation was more common and followed by the culture of the organizations.


Problems and challenges are the two factors faced by organizations while adopting diversity.

Diversity is a very crucial factor in a modern era due to globalisation. Studies suggest that managing diversity is not fully defined to bring equality it often emphasis on ethics and sex (HR focus-September, 2002). According to Frank McCloskey, (Survey Contributor and VP in diversity at Georgia Power) "The field is stuck with little innovation in how we are tracking diversity".

To implement managing diversity and to assess its success, J.Howard & Associates (Boston) and Society of HRM have suggested five areas of evaluation to make diversity programme successful and to get more benefits from it (HR focus- September- 2002). They are, Organisational charts, reporting structures, job assignments, career development path, international assignment and turnover. Developed strategic implementation model focused on all employees was more profitable for organization than that of the one which concentrates on explicit groups.

Kandola and Fullerton, (1994)

Dressler (1998) Framework

Understanding uniqueness of individuals will always help in managing diversity. Answering two set of questions related to different cultures like, who are we? What do we believe in? How do we behave? And knowing our own bias, behaviour, attitudes and respect for others culture and traditions will always help in effectively managing diversity (Dreachslin, 2007). Homogeneity is an essential factor in attaining equality (Williams and O'Reilly, 1998). Customization highlight uniqueness and plays a greater role in satisfying shared needs of diverse population making the organization objective or goal achievable (Dreachslin, 2007). In this piece of paper it is proved that Japan is a recognised homogeneous country with respect for ethnic and gender background (Magoshi and Chang, 2009)

Examples of diversity management of the companies ( USA and Japan)

Accenture (USA) diversity programme - The core value of this company is to attain high performance which require best people with an inclusive diverse culture that can acknowledges all the employees individuality. Accenture has diversity programme for maintaining and strengthen relation with minority owned and women own.

Toshiba(Japan) diversity programme-Increased employment opportunity for non Japanese people. Special attention for female employees. Apart from this Toshiba has given very good chances of employment for disable people.


Managing diversity at workplace is a refreshing concept which is entirely different from bringing equality or equality opportunity. But, these two broad areas of an organization are completely interlinked and largely depend on one another. In fact, to manage diversity one should provide equal opportunity but to attain equality diversity should be managed. However, from last two decades managing diversity is gaining popularity due to the benefits that are associated along with its implementation, both for the employees and the management. In practicing diversity USA plays a prominent role but even Japan is not far behind. Although they certainly differ from one another in the way it is practiced in respective countries due to the differences that exist in their culture, language, race, tradition and workplace environment etc. the MNC's in these two countries do have diversity strategies as per the needs and requirements of the organizations. According to SWDMR (2007), high awareness if is found more in (96%) HR professionals believe that diversity is essential to achieve organizational goals. Nevertheless, government policies, benefits and awareness also play a greater role in harnessing workplace diversity. Although, there is only 30% of workplace has witnessed diversity (Witham, 2008), it is believed that there is more to come in future.