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Workforce diversity recognises the fact that individuals vary in numerous ways, evident or inevident, primarily age, gender, marital status, social status, disability, sexual orientation, belief, behaviour, traditions and culture (Kossek, Lobel and Brown 2005) Managing the workforce is an intricate and sensitive process. It is about understanding the similarities and the distinctiveness of individuals and teams and utilising them for the accomplishment of organisational goals, that is to manage diversity. The key for organisations isto make diversity an advantage within the workplace. The case study ‘Does Diversity Pay ‘focuses on finding the outcomes and advantages of diversity in an organisation and the need for an analytical approach towards attaining optimum benefits from diversity. This report focuses on the importance of diversity management in an organisation and provides a detailed analysis of the need for diversity management in contemporary organisation. It also illustrates the link between diversity and organisational performance and the relationship between HR practices and diversity.
The Need for Diversity Management
Managing diversity comprises a process of producing and preserving a surrounding that naturally permits all individuals to attain their complete potential in pursuit of organisational goals (Jenner, 1994; Thomas, 1994). Diversity management stresses on building specific talents, create strategies and draft practices that get the superlative from each employee.
To promote Equal employment opportunity
EEO is the government's attempt to ensure that all individuals have an equal opportunity for employment, regardless of characteristics such as race, religion, sex or national origin. Organisations can be penalised to a great extent for discriminatory practices. In Australia managers in the public sector are expected to induct new workers, process events, and handle equal employment opportunity and occupational health and safety matters (Morehead, Steele, Alexander et al., 1997).An Australian worker said that diversity says that, whatsoever background you are from, you must be treated similarly. The chief reasons known for establishing diversity management initiatives in Australia are commitment to equal opportunity policy; the need to attract and retain staff. The primary benefits from diversity management as identified by HR professionals are enhanced EEO outcomes. Diversity management includes a commitment to EEO and AA (Kossek et al.2005). Thus it becomes vital to manage diversity in order to promote EEO in every organisation. Equal employment opportunity initiates outwardly and is imposed through legislation and diversity management starts internally through the efforts to produce an environment of fairness and a completely inclusive organizational culture at work (Gordon 1995).
To manage the changing workforce characteristics
In Australia, current demographic drift points out that the composition of the workforce is changing. Australians now consist of people from more than 130 diverse language settings. More than 220 nationalities are characterised in the population. Over 42 per cent of Australia's inhabitants were either born abroad or have at least one blood relation who was born abroad. About 17 per cent of the population in Australia speak a language other than English at home.
About 21 per cent of Australia's small companies are run by individuals of non-English speaking environment. In addition, it is anticipated that 20 per cent to 25 per cent of the Australian population will be of Asian origin by the year 2030 (Nankervis et al., 1999).
The working age inhabitants will increase by just 125,000 for the whole decade of the 2020s, in contrast with about 170,000 individuals a year currently. The amount of people aged 55 to 64 is predicted to enhance by more than 50% over the next two decades. Mature aged employees will be the main focus of private and public segment strategies reacting to the ageing of the workforce not only because of the present business understanding and association of these workers, but because they characterize the only section of the workforce where chief enhancement in contribution rates can be attained. Early exit through resignation or retirement has been a major area of concern for the Australian employers (Management Advisory Committee, 2003).Through Workforce planning which is a continuous process of shaping the workforce to confirm that it has the ability it needs to convey organisational objectives now and into the future, organisations can effectively manage its diverse employees who are ageing. As suggested in the case study employment and training practices should be reviewed to retain older employees .It is a necessary first step for retention of valued mature aged workers, and for strategic people planning in general (Access 2000)
To provide opportunities for Women
Employing more female or minority board members resulted in greater diversity in recruitment (Burbridge et al. 2002). It has been discovered that there exists a positive association between stressing on employee growth and promotion, and the representation of women (Goodman et al.2003). Many world class firms have been successful in hiring women and minorities to mirror the progressively more diverse markets and achieve many new customers (Perlman 1992). It has been argued that the minority representation in middle and senior management positions in Australian organizations is inadequate (Allen et al. 2004).Australian organisations have to manage the gender diversity and provide opportunities for women to participate in the senior management levels in order to claim to be good corporate citizens and to avoid anti discrimination as mentioned in the case study by Jack Noble, CEO of Diversity@work.
To promote multiculturalism
Multicultural companies value diversity and promote cultural pluralism. Diversity is managed to reduce inter-group clashes and eradicate institutional bias in their HR systems (Cox 1993) and Multicultural refers to those organisations that accomplish the purpose of managing diversity (Erwee & Innes 1998). Through the strategic exploitation of a diverse workforce, organizations look to attain competitive advantage (Storey 1995). There are a range of objectives that organizations can wish to achieve through effective HR diversity management. There is the often frequent debate that Australia is a multicultural society and as a result the understanding of living in a culturally diverse environment means that cross-cultural tensions do not exist. As mentioned in the case study a report has indicated that businesses can use diversity to enhance relationships with their current customers and also win new customers, forge new market opportunities and access new skills which Australia highly lacks. Through diversity management organisations can take advantage of the growing cultural pluralism that is an outcome from the internationalization of business, expansion of world markets, growing workforce mobility, and the increasing awareness of individual differences (Lawler 1996).
To reduce Conflicts
Diversity should be managed to reduce inter-group clashes and eradicate institutional unfairness in the HR systems (Cox 1993).When people from different cultures work together there are many conflicts that take place. This disrupts the work environment of the firm. Inter group clashes cause a negative impact on the functioning of the organisation. Thus it becomes very important for HR managers to understand the need to bring about harmony among groups and abolish unfair dealings so that they can work together, exchange ideas, share information and all this in turn will bring a positive impact on the organisations and the employee's productivity. It will facilitate knowledge building rather than inter-group clashes and discrimination.
To be Competent in the market
Firms are rooted in national cultures, but those firms that have the capability to recognise and reason the rigidity of the nationwide cultures which figure their firms' actions will be better positioned to innovate, to create, and to reformulate policy and training (Nicholas, 2000). Such intellectual flexibility arises from diverse workforces, Nicholas argues, because they add new levels of understanding about firms' structural and performance rigidities. Out of such new levels of understanding will emerge some important core competencies. As stated in the case study by Gary Hardgrave, Citizenship and Multicultural Affairs Minister, Australian companies must embrace cultural diversity to increase exports and create workforces who are better equipped to meet the challenges of the highly competitive market. The firms with diversity management structures will therefore be in a better position to adjust to unfamiliar cultures. By utilising workforce diversity, many organizations can try to develop marketing potential to imitate and to be more receptive to customer demographic change (Cox and Blake 1991).
To facilitate better team performance
Diversity management is vital to every organisation. When significant decisions have to be made, organizations frequently go to teams because teams are likely to have additional and better informational resources than individuals (Ilgen, Hollenbeck, Johnson et al., 2005). Teams in organizations have become more diverse with regards to their demographic composition over the years and will continue to become more diverse in years to come (Triandis, Kurowski, Gelfand, 1994). Every organisation has teams and departments in contemporary workplaces and thus managing diversity become a principal issue as it leads to quick and reliable decisions based on the recommendations that are attained from teams composed of diversity. In the Australian context, firms have started accepting diversity positively and thus we see people from different cultures, different age groups and religious backgrounds come together and work as teams which has led to a need to manage diversity in order to benefit from it. (Van Knippenberg & Schippers, 2007)
To preserve talent
Diversity has potential value for teams because diverse teams generally possess more diverse information and knowledge, which may enhance team performance. Effective diversity management, is not just a practice of identifying and addressing the diversity proportions of individuals such as age, gender, race or cultural dissimilarities. In reality, it is a complete move or plan to produce opportunities to draw, improve and conserve the talent from the total employees (Nankervis et al., 2002). Through effective diversity management, diverse teams aim at attaining
greater innovation and creativity, which enables them to do better than homogenous teams (Cox and Blake 1991; Richard 2000).
To obtain diverse information and perspectives
Diversity can develop the growth of work-relevant information and insight within a firm which is the exchange, debate, and absorption of thoughts, information, and insights applicable to the firm's mission (Van Knippenberg et al., 2004). The potential positive result of diversity thus remains in the inclusive and vastly planned dispensation of diverse information, mainly for tasks that need the combination and incorporation of diverse perspectives and opinions. Thus, the existence of diverse perspectives within a work group can lead to enhanced team functioning through information elaboration. Gary Hardgrave, the Citizenship and Multicultural minister suggests in the case study that Australian companies should capitalise on language skills, cultural experiences and personal networks of employees from diverse environments.
The Link between Organisational performance and diversity
In addition to the full utilization of the skills and potential of all employees, diversity can leadto attaining high organizational performance by enabling admission to a changing marketplace by reflecting rising diverse markets (Cox and Blake 1991; Iles 1995; Gardenswartz and Rowe1998) and help in improving corporate image (Kandola 1995).Jack Noble CEO of Diversity@ workplace has mentioned in the case study that an organisations reputation is highly important. Incorporating diversity will help them in building a good corporate image and lead to better performance. The principal aim is to utilise the employee's abilities as a whole to the benefit of the organisation. This implies the preserving of all the resources, of the employees physical, creative, productive and interpersonal elements to guarantee attainment of organisational goals, workplace styles, disabilities, and other variations (Nankervis et al. 2002)
Valuing diversitybecomes a source of competitive advantage, boosts the quality of organizational performance and is ultimately good for business (Cassell 1996). By utilising workforce diversity, many organizations can try to develop marketing potential to imitate and to be more receptive to customer demographic change (Cox and Blake 1991). A diverse workforce has an improved enlightenment to brainstorming, exhibits more cooperative behaviour, relates to homogenous groups, and can raiseorganizational effectiveness, performance and profitability (McLeod, Lobel and Cox 1996).
While regarding employees as the most significant asset of every firm, it is in the same way essential for HR strategists to identify individual inequalities, in other terms workforce diversity and handle these efficiently. Beyond the most important diversity proportions e.g. age, gender, race, or physical capability, secondary proportions such as education, family status, work experience and even religious beliefs of workforce are influential factors for an organisations performance. Principally, in the framework of development where interactions among communally and ethnically differing people is preferred and also inevitable, HR managers could improve individual and group commitment to organisational goals by producing favourable diversity environment (Cox, 1993). So it is also sensible to conclude that successful HRM and diversity management practices add to develop the on the whole organisational performance which in turn is essential for supporting competitive potency. Diversity management does not only recognize but also values and harnesses workforce differences, such as individual characteristics, backgrounds, orientations and religious beliefs, so that individual talents are being fully utilized and organizational goals are met which maximise the organisations performance
The link between HR practices and Diversity
Diversity management has a place in HRM and should be at the heart of human resource practices and policies. As strategic associates, HR managers interpret the business strategy into act (Ulrich, 1997).
This SHRM model highlights the responsiveness of the organisations to the dynamic external and internal environment while emphasising the structural link between HR strategy and strategic business plan. Depending on the strategic requirements of the business, HR strategy shapes the HR plans and policies which in turn represent the guiding framework of HR practices and functions of the organisations. Beyond the traditional HR functions (job design, recruitment and selection, development, remuneration and reward, performance management, career development and employee relations), this model places diversity management as an integral part of HR functions thus addressing the societal and cultural attributes of human resources to a greater extent than earlier SHRM models. The overall business outcomes result from the effectiveness of the HR functions in terms of performance, productivity, profitability and cost effectiveness of the organisations.
HR practices could add to produce significance by increasing intellectual capital within the organisation (Ulrich, 1997). Managing growth in workforce diversity and increasing the representation of women and minorities is a critical HRM strategy of recruitment and selection for most organizations (Thomas and Ely 1996).
A survey of 396 employees from an extensive diversity of companies in Australia to inspect 13 separate diversity practices and found that there is widespread unfairness in employment in Australia (Allen, Dawson, Wheatley et al., 2004).99% of the companies testified a zero-tolerance point of workplace discrimination in recruitment (Bennington and Wein 2000). Managerial attention to increased work force diversity has been mandated in IBM, Xerox and J. C. Penney (Ted 2005). Digital, Esso and Westpac all set EEO targets in their HR practices (Kramar 1998). Alcoa recruits and retains high calibre people through harnessing the creative capacity of its employees. Alcoa creates a work environment and culture where this creativity will flourish (DIMIA 2002). Beyond recruitment hard work focusing on external candidates, companies may also look out for qualified minorities already within their organizations.
Training and Development
Diversity training can be defined as the method by which a workforce is knowledgeable about cultural, socio-economic, racial and religious dissimilarity among employees and trained how to hold close those dissimilarities so as to generate and preserve an efficient work environment (Lai and Kleiner 2001). Diversity training, therefore, equips and educates employees to hold close differences, regardless of gender, age, race, religion, sexual orientation, class or any other associated aspect. Training and education are an additional significant piece to develop minorities already at an organization. The primary goal of diversity training is assisting the incorporation of minority group into the workplace by challenging to grant on the workforce, the skills, knowledge and motivation to work effectively together with diverse people and interrelate efficiently with a diverse client population (Pendry et al., 2007). The intention of diversity training is, therefore, to decrease and end workplace discrimination and harassment of minority groups (Hemphill and Haines, 1997).
Diversity management must fit into performance management systems to achieve organisational goals (Erwee 2003). Many organizations, such as Digital, Esso and Westpac, take account of AA and EEO in their performance appraisal systems (Kramar 1998). Australian companies largely outline and apply objective principle and are fair in the performance appraisal process. Diversity management is a vital element of HRM and HRM is associated to performance management system (Millett, 1999). Since there is a affiliation between efficient HRM practices and performance levels of workforce (Carroll 1995; Dessler 2002; Nankervis et al. 2002) it can be concluded that enhancing the efficiency of HRM practices can radically add to meet the terms of organisational objectives (Phatak,1992). In the context of expansion of organisations to culturally and socially differing destinations, effective diversity management can make substantial contributions to overall performance. SHRM integrates diversity management as a chief element (Erwee, 2003).Strategic human resource policies that uphold diversity have emerged as significant success elements that guarantee feasibility and adaptability against organisational internal inertia and external competitive forces.
By bringing equality to employment relations, organizations tend to draw and retain satisfactory and qualified workforce. Australian organisations need to frame policies in order to retain the older employees. HRM plays an important role in retaining the employees by motivation and healthy work environment. The benefits of effective diversity management include reducing turnover, absenteeism and attracting the best candidates as the labour market shrinks (Cox and Blake 1991)
Organizations can be fortified by leveraging dissimilarity that reflects the diversity of its workforce. A diverse workforce also can progress organizational productivity and creativity. Managing a diverse workforce can be a challenge. When people from dissimilar backgrounds come together in the workplace, there is a prospective for great achievement. Organizations should ensure providing equal opportunities for promotion and personal development to all employees. Minorities should be regularly included on panels that evaluate, select and promote managers. Diversity fosters a new point of view in organisations through capitalising on the perceptions of all employees and giving right to be heard to the silenced minorities.Research by the Australian Centre for International Business (ACIB) indicates that diversity improves the quality of management's decisions, and provides innovative ideas and superior solutions to organizational problems (ACIB 2000).The outcomes of efficient diversity management are effective problem solving, promoting of equal employment opportunities, avoiding discrimination at workplace, high organisational performance, exchange of diverse information, opportunities to venture into new markets, to achieve competitive advantage, preserve talent. This clearly reflects that diversity does pay. Organisations have to realise the need to manage diversity effectively and integrate the HR functions with diversity for better outcomes.
Diversity culture should be emphasized in organizational vision, mission and business strategy and the HRM strategy. The formation of a diversity culture requires a significant commitment of resources and leadership. Formalization of HR diversity policies is also necessary (Reskin and McBrier 2000). Workplace integration is important to make diversity work. Training and development of ageing employees in order to retain them is of great significance. Australian organisations must incorporate diverse employees and their thoughts and ideas in order to be competent in the global market. Organisations can boost productivity significantly through effective management of diversity in the workforce. Considerable positive changes need to be made in the areas of recruitment and selection and training and development. While organisations seek several benefits from their multicultural workforce, they do not appear to give adequate attention to the issue of diversity as migrant employees are very compliant. However, proactive diversity management practices are essential to realise the true benefits of a multicultural workforce. Diversity encourages inaccuracy detection (Davis, 1969), information dispensation (Phillips, Mannix, Neale et al., 2004), group problem resolving (Tjosvold and Poon 1998), and team effectiveness (Gruenfeld, Mannix, Williams et al., 1996).