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In the 21st century, the workforce diversity has become an essential business concern. In the information age, the greatest assets of most companies are now their employees. Undeniably, a talent war is raging. No company can afford to restrict its ability to attract and retain the best employees available.

The term "Workforce Diversity" refers to policies and practices that seek to include people within a workforce who are considered to be, in some way, different from those in the prevailing constituency.

When people think of diversity, they may think first of ethnicity and race, and then gender; however, diversity is much broader than that. Diversity is otherness or those human qualities that are different from our own and outside the groups, to which we belong, yet present in other individuals and groups. Dimensions of diversity include, but are not limited to: age, ethnicity, ancestry, gender, physical abilities/qualities, race, sexual orientation, educational background, geographic location, income, marital status, religious beliefs, parental status, and work experience. It's important to understand how these dimensions affect performance, motivation, success, and interactions with others. Institutional structures and practices that have presented barriers to some dimensions of diversity should be examined, challenged, and removed.

The diversity can be used as strength by the organization. The recent business trends of globalization and increasing ethnic and gender diversity are turning managers' attention to the management of cultural differences. The management literature has suggested that organizations should value diversity to enhance organizational effectiveness. The proper HR policies need to be in place for managing the diversity in the workforce. If it is not managed well, then it may lead to conflicts within and between teams.


The growing diversity of the workforce adds complexity - beyond individuals' personalities and team roles - to understanding team behavior and processes. The composition of the workforce is undergoing continued change in terms of age, gender, race , cultural values , physical wellbeing , lifestyle preferences , ethnicity , educational background , religious preferences , occupational background and the like. Team effectiveness will be hampered if members hold false stereotypes about each other in terms of such differences.

Although attitudes are changing, diversity all too often still is viewed more negatively than positively. This negative reaction may be due, in large part, to four underlying attitudes involving stereotypical false assumptions:

Diversity poses a threat to the organization's effective functioning

Expressed discomfort with the dominant group's values is perceived as oversensitivity by minority groups.

Members of all the groups want to become and should be more like the dominant group

Equal treatment means the same treatment

The goal of achieving diversity create unique challenges in making it work for rather than against the long- term interests of the individuals, teams and organizations. Once a we versus them distinction is perceived, people tend to discriminate against others who are different. Moreover, they tend to perceive these others as inferior, adversarial and competitive.

Diversity is classified into two types, Relation oriented and task oriented.


When examining the effects of diversity on team functioning, researchers have used a variety of indicators to assess intra-team dynamics. Although cooperation is seldom measured directly, inferences about the effects of diversity on cooperation can be easily drawn from studies that measure closely related constructs such as conflict and social integration. Following are the attributes of relation oriented diversity


The existence of actual differences between male and female managers has been challenged for some time in the research literature, but strongly held stereotypes are resistant to change. One reason for the limited but improving number of executive women is the glass ceiling.

The glass ceiling is a barrier so subtle that it is transparent, yet so strong that it prevents women and minorities from moving up in the management. There appears to be three primary causes of the glass ceiling. First, many executives and managers aren't held accountable for results in the areas of equal employment opportunity and affirmative action. Second, women and minorities aren't encouraged to apply for or even made aware of job openings at higher levels. Third, these group lack training and development opportunities that would allow them to improve their competencies and chance for promotion.

Many women with children hold full-time jobs and still bear primary responsibility for family care. An estimated 75 percent of working women are in their child-bearing years. Many organizations like DuPont, Eli Lilly, and Marriot International have family friendly policies and strategies. Such firms often offer child-care, flexible time (ability to arrive and leave work at varied hours), job sharing (two individuals, often women, who want to work part time and share a job), telecommuting (opportunity for certain groups of employees to work at home some or most of the time), and other types of flexibility in accommodating employee with urgent family needs.

Race and ethnicity

In addition to the glass ceiling, minority group members also face racism, the notion that a person's genetic group is superior to all others. Racism takes three interrelated basic forms:

Individual racism : the extent to which a person holds attitude, values and feelings and / or engages in behaviours that promote the person's own racial group as superior

Cultural racism : the arrogant elevation of the cultural features and achievements of one race as superior while actively ignoring or denigrating those of the other races

Institutional racism: organizational and/or social rules , regulations , laws, policies , and customs that serve to maintain the dominant status of and control by one racial group. Each form of racism may operate openly or secretly and intentionally or unintentionally.


The increase in number of middle-aged employees has collided with the efforts of many companies, such as Kodak, Sanyo Electric, and British Petroleum , to reduce layer of middle management in order to remain competitive. Over time, the competencies that many of these employees have gained valuable only to the firms for which they work . Displaced, older employees who lose their jobs often have great difficulty matching previous levels of responsibility and salaries, even when they are able to find new jobs. Moreover, older workers often are less likely than younger workers to relocate or train for new occupations.

Most studies of age diversity within organizations have focused on top management teams, where age diversity is somewhat limited. Despite the restricted age ranges found in top management teams, there is some support for the predictions made by social identity theory.


Relations-oriented attributes are likely to influence perceptions of in-group and out-group membership in any social setting, even when there is no work task to be performed. By comparison, task-related attributes refer to characteristics that are made salient by the task setting. Two frequently studied task-related attributes are organizational tenure and educational background.


Whether due to the implicit knowledge that a person accumulates through experience or to specific on-the-job training, organizational tenure bestows knowledge, skills, and abilities that are job relevant. Furthermore, employees who enter an organization at about the same time will share similar experiences (Pfeffer, 1983) and may develop similar values and patterns of communication (Wagner, Pfeffer, & O'Reilly, 1984). Tenure diversity has often been assessed in studies of top management team composition, but seldom do such studies directly assess cooperation or conflict. Thus there is scant direct evidence concerning tenure diversity as a predictor of cooperation. Consistent with the predictions of social identity theory, Pelled, Eisenhardt, and Xin (1999) found that teams characterized by greater tenure diversity experience more conflict than teams characterized by less tenure diversity. Knight et al (1999) also found that tenure diversity was associated with greater interpersonal conflict and less agreement seeking, but in this study the effects of tenure diversity were not statistically significant.

Educational background

Like tenure, educational background bestows skills that are required or useful in one's job. Education may also serve to socialize members of a profession to use a common language, accept a common set of values, and adopt a common world view (Jackson et al, 1991; Jehn, Chadwick & Thatcher, 1997). Like organizational tenure, therefore, educational background is likely to trigger perceptions of in-group or out-group status. Both the content and amount of education received can serve as signals that trigger social categorization processes. In addition, differences in educational background are likely to be associated with substantively different perspectives about how to approach and solve work-related problems. Although substantive differences in perspective may actually be beneficial to the team's performance on some types of tasks (see Jackson et al., 1991; Jackson, May, & Whitney, 1995), educational diversity is also likely to stimulate conflict and reduce cooperation. Jehn, Chadwick, and Thatcher (1997) found that that when team members differed in terms of educational background they perceived greater conflict in the group. In a study of a household goods moving firm, Jehn and her colleagues found that greater informational diversity (which could be created by educational differences) in teams was associated with more task conflict (Jehn, Northcraft, & Neale, 1999). In their study of top management teams, Knight et al. (1999) found that educational diversity was associated with lower levels of strategic consensus.


The effects of team diversity are not limited to consequences for the internal functioning of teams. Although intra-team dynamics have been the focus of most attention to date, we believe that diversity also shapes inter-team relations. Specifically, members of diverse teams are more likely to build external bridges to other individuals and teams. That is, compared to more homogeneous teams, the boundaries of diverse teams are less rigid and more permeable. As a result, we expect diverse teams to have more cooperative relationships with other individuals and other teams in the organization. In order for team diversity to create this phenomenon of greater inter-team cooperation, however, certain other conditions must be met. A team and its members do not exist in a vacuum; they are embedded within a larger organization. To fully understand the dynamics of diversity and cooperation, these multiple levels of the social environment-individuals, teams, and organizations-must be considered together.

The demographic make-up of the larger organization creates the opportunities for, or imposes barriers to, the building of cooperative relationships between teams. The probability that inter-team cooperation will arise out of intra-team diversity is greatest when two conditions are present: the organization as a whole is relatively diverse and the teams within the organizations also are diverse. A diverse team in a homogeneous organization will not be able to leverage its team diversity. Likewise, a diverse organization that segregates different social groups into homogeneous teams will not be able to leverage its organizational diversity. While social identity theory predicts that diversity in teams is related to conflict and lack of cooperation with the team, based on an extension of this theory, we propose that these negative outcomes can materialize only when the demographic context presents conditions that increase demographic identity-based salience in the team. When individuals find that their demographic traits are distinctive with respect to their immediate environment, identification based on that trait will be heightened (McGuire et al, 1978). Similarly, diversity will support the development of external team relationships only when the demographic setting presents opportunities for such relationships. Members of diverse teams will more readily form external relationships when there is diversity in their immediate setting.


When members of a work team view themselves as distinctive compared to others in the organization, team membership becomes a salient identity and intra-team cooperation should follow. Several different combinations of team and organizational demographics can create perceptions of team distinctiveness: for example, a demographically homogeneous team would be distinctive in a demographically diverse organization, while a diverse team would be distinctive in a homogeneous organization. For either team, the contrast between the team's composition and the larger organizational context leads the team to perceive itself as distinctive. Such perceptions of team distinctiveness should increase intra-team cooperation.

Conversely, when a team's demographic composition is similar to that of the larger organization, it is less salient. In such situations, the effects of team composition may be weakened. For demographically homogeneous teams in homogeneous organizations, demographic characteristics are not salient. They do not serve to define the team, and so do not create barriers between team members and their external environment. Similarly, for diverse teams in heterogeneous organizations, demographic cues are not particularly salient. When a team's demographic composition matches the organization demography, its demographic attributes are less likely to determine patterns of cooperative behaviour.

In other words, we propose that the context of organizational demography moderates the effects of team diversity.


Organizational policies of recruitment, selection, and promotions often perpetuate segregation based on gender or race. These characteristics of organizational demography reinforce identification on the basis of gender and race as well as the formation of segregated social networks within an organization. Network groups are likely to be of little value to their members if the network itself is small or if members of the network are marginal in Network groups are likely to be of little value to their members if the network itself is small or if members of the network are marginal in the larger organization. Thus, just as organizational demography may moderate the effects of team diversity on intra-team cooperation, so too is it likely to moderate the effects of team diversity on inter-team cooperation.


Diversity management is a human resources and corporate policy concept that human resources managers have been dealing with increasingly over the past few years. Diversity management basically concerns the central issue of whether - and to what extent - social diversity should be reflected in companies. People with different social and ethnic origins, cultures and beliefs are increasingly shaping the staff and management of companies. The task of diversity management is to overcome - in the positive sense of the word - this diversity and to derive advantages from it for the company. Human resources managers agree that the ever-increasing, multi-cultural aspects of society are having an impact on companies. It is important to deal with diversity in an active and creative way. On the one hand, there is consensus that better use should be made of the employee and management potential existing in the labour market. On the other, minorities are also target groups for products and services. Being able to understand and deal with diversity also enables companies to pinpoint and make full use of market potentials. Diversity management is thus a necessary response by companies to changes in the labour and sales markets. Human resources management that is able to cope with employee diversity or better still, to transform it into valuable impulses, will make a major contribution to corporate success. Ideally, diversity management should aim at creating a corporate culture that acknowledges and consistently utilizes the constructive and creative value of diversity.



In the battle for the best executive employees (the "war for talent"), companies must make use of all their resources, even if certain individuals are not part of the traditional mainstream on account of their ethnic origins, religion, nationality or sex.

Heterogeneous management teams tend to create greater innovative power than homogeneous groups. Corporate flexibility is increasing, also because homogeneous decision-making structures, which are under greater pressure to conform, tend to react less flexibly to external changes.

Companies with effective diversity management make better use of their markets and are thus more productive and profitable. The keyword here is diversity marketing.

If a corporate culture that promotes diversity succeeds in integrating the desired diversity of employees, this will increase the motivation and satisfaction of the employees and reduce internal frictional losses as well as fluctuation and opportunity costs.

Social and ethical correctness in dealing with social diversity makes a positive contribution to the corporate image and can be used to advantage in corporate communications.

Innovations through heterogeneity:

It is particularly companies having to keep one step ahead of their rivals by means of technical advancement that are giving more priority to diversity management. At Siemens, for example, the board chairman, Heinrich von Pierer placed the strengthening of innovation at the centre of corporate strategy. As a result, the group now ensures creative potential in the research and development units that create the group's future products and services by having teams that are as heterogeneous as possible. Siemens has noted that the diversity principle achieves good results in areas that are characterized by spontaneity and intellectual flexibility. Further evidence to support the theory that diversely assembled groups are very effective in breaking new ground is provided by the research done at universities and the education given by international business schools. It is precisely the diversity of cultures and individuals in these institutions that creates a particularly productive atmosphere. Diversity management thus offers good opportunities for students to broaden their organisational knowledge. The principle behind this is that diversity creates inspiration which, if used skilfully, will produce benefits. A popular example of the effectiveness of multi-cultural teams is the success of Ferrari's Formula One team. The four central figures, Ferrari president Luca di Montezemolo, team boss Jean Todt, technical director Ross Brown and racing driver Michael Schuhmacher, contribute different cultural experiences and corresponding personalities. In this case, the interplay between an Italian, a Frenchman, an Englishman and a German result in more than just an accumulation of individual abilities.

Diversity as an image booster:

Diversity management can promote the central objectives of a superior stakeholder value strategy. It increases profits, and consequently corporate value, because customer requirements are better satisfied. According to Professor Norbert Thom of the University of Berne, fund companies in the U.S.A. have established that firms with successful diversity concepts have better returns. Diversity management helps to recruit and retain staff because companies take account of the different circumstances of current and potential employees. It strengthens innovation because diversity produces more creativity. And it improves the corporate image because diversity reflects important social values.


Managing diversity is more than simply acknowledging differences in people. It involves recognizing the value of differences, combating discrimination, and promoting inclusiveness. Managers may also be challenged with losses in personnel and work productivity due to prejudice and discrimination and complaints and legal actions against the organization. The challenge of managing diversity is to create conditions that minimize its potential to be a performance barrier while maximizing its potential to enhance organizational performance.

The presence of diversity in an organization or work group can create obstacles to high performance for several reasons. To begin, diversity can reduce the effectiveness of communication and increase conflict among workers. Compared to more homogeneous work groups, workers in diverse work groups may also experience lower levels of social attraction and display lower levels of commitment to the group. In addition, diversity-related effects such as identity harassment and discrimination behaviours can increase organizations' costs.

The most widely used perspective for explaining the negative outcomes of team diversity is social identity theory. Social Identity Theory asserts that group membership creates in-group/ self-categorization and enhancement in ways that favour the in-group at the expense of the out-group. The examples (minimal group studies) of Turner and Tajfel (1986) showed that the mere act of individuals categorizing themselves as group members was sufficient to lead them to display in-group favouritism. After being categorized of a group membership, individuals seek to achieve positive self-esteem by positively differentiating their in-group from a comparison out-group on some valued dimension. This quest for positive distinctiveness means that people's sense of who they are is defined in terms of 'we' rather than 'I'. According to social identity theory, it is predictable that people will exhibit a favourable bias toward others who are viewed as members of their in-group, and they will view themselves as being in conflict with out-group members. Within work teams, the categorization of team members into those belonging to an in-group and out-group creates a barrier to cooperative behaviour and may even stimulate competitive behaviour among members of a team.

Social identity theory is clear in predicting that social categorization processes are important determinants of cooperation and competition. In addition, there is substantial empirical evidence showing that perceptions of in-group and out-group status can be formed on the basis of minimal information. People need not interact with each other in order to perceive that they share common interests. Simply knowing that another person is similar. e.g. knowing that the person belongs to one's own demographic group-is sufficient to trigger in-group categorization and cooperation (Oakes, Haslam, & Turner, 1994) . Furthermore, such categorization is more likely to occur in demographically heterogeneous groups (Stroessner, 1996). Theory predicts that diversity within a team is likely to result in competitive behaviour and conflict. Despite this clear prediction, empirical research has found mixed results.


It is the most difficult diversity based conflicts to resolve in organizations as it relates to issues of race, gender, ethnicity and religion. Leading organizations adhere to the letter and spirit of the laws and regulations related to the non-discrimination and affirmative actions to reduce diversity-based conflicts. In addition, the leading organizations are proactive in other ways to prevent, minimize, surface and resolve diversity -based conflicts.

One of the ways leading organizations are attempting to be proactive in preventing or resolving diversity based conflicts is through the acceptance and support of the affinity groups-sometimes called employee networks, advocacy groups, support groups or resource groups. Within the organizations, affinity groups are typically voluntary, employee-driven group that are organized around a particular shared interest, background or goal. These groups are usually initiated by employees and typically focus on a shared interest or characteristics, such as race, ethnicity, gender or sexual orientation. Each group's main goal is to create an open forum for idea exchange, strengthen the link to and within diverse communities and represent their employee-related interests and goals to higher management. Affinity groups may be composed of African American , Indian , Hispanics, Asian American , older workers , workers with disabilities , gays and lesbians, transgender people , women or members of the religious groups, and other classifications. They frequently serve as advisory groups to higher management. They are open to all employees of the organization. Each group usually has a structure with leaders, periodic meetings, and goals.


Research has revealed some common characteristics that are present in organizations having effective diversity management programs. Certain cultural, structural and organizational requirements must be met in order to implement diversity successfully within a company. Diversity automatically cannot be an advantage for every company, particularly if the concept is limited to implanting certain representatives of minority groups in isolation. Observing a few general rules, which we have grouped, will help to increase the prospects of success for applied and inspirational diversity. These characteristics have been distilled into the following helpful guidelines:

Managers and employees must understand that a diverse workforce will embody different perspectives and approaches to work and must truly value variety of opinion and insight.

Creating a suitable conflict-free environment is necessary for managing diversity. If the present corporate culture does not meet this requirement, the company must set its course in accordance and initiate the change process. Diversity must also be strongly established in the guiding principles of the company.

Managers must recognize both the learning opportunities and the challenges that the expression of different perspectives presents for the organization. Diversity is an on-going process that has to be incorporated into the company's procedure. The people involved should be aware that there are potential obstacles to the really deep-rooted implementation of the concept. Diversity management increases the competitive pressure on the existing management.

Communication difficulties and a lack of identification with the company can lead to stress. Diversity management must constantly identify and steer clear of these and other stumbling blocks.

The organizational culture must create an expectation of high standards of performance and ethics from everyone.

The organizational culture must stimulate personal development

The organizational culture must encourage openness.

The organizational culture must make workers feel valued.

The organization must have a clear stated and widely understood mission.

Changes if required in corporate culture:

The culture should be such that, it should support diversity. If not. Then it needs o be changed gradually.

Incorporating diversity into Human Resource Management:

Companies should incorporate diversity into their HR policies. Each company should have a diversity strategy which should be implemented while recruiting. The diversity should be implemented at senior managers' level as well. HR managers should have the precise knowledge about the company's diversity status and the areas which need to have diverse teams. A systematic analysis of this status must be conducted to get an information about how various groups are represented at various levels in the organization.


Demographic differences within work groups have been typically linked to conflict and lack of cooperation. This project discussed that the negative relationship between work team diversity and teamwork or cooperation needs to be revisited. We extended past research to emphasize the positive influence of diversity on cooperation between teams. A discussion of diversity and cooperative behaviours in organizations is incomplete without acknowledging the role of the broader organizational context in shaping these behaviours. This project attempted to make a contribution to the understanding of cooperation and teamwork in organizations by suggesting a cross-level approach to studying the outcomes of diversity in work teams. Also, after studying how managing diversity helps improve teamwork, it attempted to propose that, if diversity is managed well in the organization, it helps the organization to gain a competitive advantage.