The Issues Of Diversity Management To Companies

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Diversity management is a human resources and corporate policy concept that human resources managers have been dealing with increasingly over the past few years, in Germany as elsewhere.

The discussion on diversity is particularly relevant today. In 1999,the European community

Stipulated as part of the treaty of Amsterdam that EU council may 'take action to combat discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation.'

2. Background

Anderson and Metcalfe (2003) recently reviewed the evidence for managing diversity. They suggested that, while there are claimed benefits for diversity, and similarly, there are suggested disadvantages, the 'paucity of robust research examining the impact of diversity upon business' has raised questions about the existence of any connection. The business benefits of diversity have been widely contested, ever since the idea was conceived. And, even now, there is an ongoing debate as to whether there is indeed any discernable business benefit.

3.Definning Diversity

1.The CIPD defines diversity as 'valuing everyone as individuals - as employees, customers, and clients'.

2. Others, like Zurich are more specific, stating: 'At Zurich Financial Services we believe that managing diversity is about valuing people as individuals. The scope of this definition includes age, colour, disability, ethnicity, economic status, family/marital status, nationality, religious belief, sexual orientation, spent convictions, part-time working, political opinion/affiliation and gender reassignment.'

4.Past Efforts on diversity management

Although recognition of the potential problems and benefits of

diversity has increased in recent years, many organizations have

been disappointed with the results they have achieved in their

efforts to meet the diversity challenge. A case in point is Alcoa

Inc. When I was asked in December of 1996 to begin working

with Alcoa's corporate diversity committee, the message to me

went something like this:

We have been working on improving our company to include

and utilize the full skills of people who are different from our

traditional workforce for many years, but despite what seems to

us like a lot of effort, we still have a workforce that is dominated

by white, U.S.-born men, and our progress in moving people of

other backgrounds into top positions in the company has been

very slow. In addition, we continue to get feedback from the

workforce, including some of our highest-ranking women and

non-white men, that the company is not very hospitable to people

who come from different social and cultural backgrounds

than our traditional workforce. What are we doing wrong?

How can we move this to another level of accomplishment

5.Impact of diversity on customers, market and employees

5.1Customer focus

As a public sector provider Aberdeen City Council is very sensitive to the community it serves, both in terms of the demographics of the population and the consequential impact this has on its own recruitment practices. Aberdeen City Council, like many employers, is increasingly aware of the ageing population and the reducing talent pool at the younger end, and to overcome difficulties of recruitment and skills shortages, has adopted an 'age-neutral' employment policy that encourages application from all ages and this includes those aged 65+. Aberdeen City Council have benefited from a more positive perception from their consumer, who is in turn their future employee

5.2Age no limit at Tesco

'It is attitude, not age, that makes for great service for our customer,' says Tesco, and this opinion is shared by its staff. Margaret Spencer, employee (age 76) says, 'I enjoy working and I meet new people each day. My job keeps my mind active and stops me from growing old. Tesco didn't care how old I was. I wanted to work and they gave me the opportunity.' Recent research has taught us that, not only do shoppers like dealing with staff of all ages, but employees from all age groups

5.3DisabledGo and Marks & Spencer make accessibility accessible

'Ten million people shop at Marks & Spencer a week. Keeping abreast of customer profiles is therefore critical. Yet, despite increasing awareness of disability and the 1995 Disability Discrimination Act, the 9 million disabled people in the UK are still largely invisible.' To change this, Marks and Disabled Go worked in partnership to make information available to disabled customers about town-centre access to business, goods and services, via a disabled access information database.

6.Impact of diversity on an organization or business

Diversity initiatives can improve the quality of your organization workforce and can be catalyst for a better return of your investment in human capital.

One of the biggest budget items in your organization is the amount it spends on human resource in the form of salaries, benefits, training, development and recruiting. In order to get healthy return on your investment s(ROI) in human capital and maximize your competitive advantage, it is important to recognise that the workforce will grow in the no of women, people of colours and immigrants each year.

Also, employee of all groups expect more from organization-from non-discriminatory, hostile-free work place to flexible schedule and benefits, childcare and family-friendly policies. Your ROI Is reduced when commitment and productivity are lost because employees fell disregarded, time waste with conflicts and misunderstandings, and money spent on legal fees and settlement

7.Advantages of diversity Management in an organization or business


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 fl exibly to external


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

8.Managing workforce diversity as a HR manager

Diversity enhances employee relations and reduces the cost of labour

Several studies indicate that employers who successfully manage diversity are better at attracting and retaining skills and talent 'because many workers are drawn to companies that embrace diversity' (Woods and Sciarini 1995 p19).

As well as recruiting the best people in the labour market by embracing diversity, such employers can also benefit from cost savings by having a more cost-effective recruitment process. McEnrue (1993) found that the recruitment expenditure of organisations that value diversity is 40 per cent less than that of those that don't and that they suffer less from high costs of labour turnover, absenteeism and discrimination lawsuits (Fernandez 1991, Cox 1993, Morrison 1992).

Another frequently cited benefit of diversity is improved quality of management due to the effects of anti-discrimination policies (Cox 1993, Fernandez 1991, Morrison 1992).

Additionally, McEnrue (1993) found that embracing diversity leads to decreased levels of frustration among supervisors who gain the skills to understand and manage groups with diverse backgrounds.

Similarly, at top management level, several studies indicate that teams composed of diverse members outperform homogeneous teams and have more capacity for problem-solving and decision-making (Bantel and Jackson 1989, Hambrick et al 1996, Smith et al 1994).


Clearly, managing diversity well is providing greater opportunities to organisations, and businesses are experiencing better performance, greater market awareness and are more innovative and responsive. The financial performance is a consequence of good business practice and market conditions. There is growing evidence linking cost reductions, efficiency improvements and a more effective business philosophy to the management of diversity.

The results of the study showed that women and ethnic-minority employees were more receptive to diversity management initiatives, perceived greater discrimination and reported less job satisfaction and less satisfying interpersonal relationships than their whitemale colleagues.