Competitiveness Achievement In A Multi Cultured Workforce Commerce Essay

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As international trade is on the increase and organizations are departing from their national boundaries to obtain competitive advantage (Canen &Canen, 1999) they become diversified; due to their presence in different locations, organizations become comprised of a diverse work force. Diversity can concisely be defined as a mixture of people with different group identities within the same social system ( Fleury, 1999).

Diversity covers a whole range of issues like gender, sexual orientation, religion, age ,physically disability, national origin, culture amongst others. These are issues that are common debate today, government of different countries realize this and they have taken steps to address these issues. In the United Kingdom for example, three separate commissions were set up to promote and monitor equality issues related to gender, race and disability. (

For the purpose of this report cultural diversity will be discussed in the workforce; this is not to underemphasize the importance of the other dimensions of diversity but in the field of cross-cultural management, cultural diversity is seen to impact every facet of life from work to motivation to leadership styles to mention a few.

This report will access causes of conflicts which are prevalent in multi-cultural workforce; theories will used to explain the conflicts, and the impact of these on both the employees and the organizations will be accessed. If there are any benefits associated with such a workforce, can organizations that experience conflicts later enhance individual and organizations performance?

A factor for the diverse workforce as experienced today can be attributed to the Access and Legitimacy Paradigm which explains why organizations hire people from different ethnic groups. This is to gain access to the different demographic markets these employees belong to (Thomas & Ely, 1996).

In addition many organizations are moving into the services industry; this is evident in developed countries like the United Kingdom where two third-thirds of the economy is in the service sector (BBC news online) .Therefore the need arises to hire people that can fit into the necessary roles despite their backgrounds because in a service economy effective interactions and communications between people are essential to business success ( Wentling and Palma-Rivas, 2000).


A diverse workforce has it setbacks for the individuals and the organization as a whole.

These setbacks include conflicts, poor communication and slow decision making processes within an organization. People have different cultural values, norms and out look to life; these values influence their attitudes about the form of behavior considered most appropriate and effective in any given situation (Miroshnik, 2002) which is inclusive of their working environment.

Social theories can be used to explain this further; these theories include Social Identity Theory (Tajfel &Turner 1979), Distinctiveness Theory (McGuire, 1984) and the similarity attraction paradigm (Byrne, 1971).

Social Identity Theory ( Tajfel &Turner 1979)

This applies when people identify with a particular group, they share the same attitude with members of the group ,they identify with and strongly are attracted to their groups which sometimes brings about discrimination against people outside their groups .

Tsui et al. (1992) found this in organizations during a survey they carried out , it was noticed that this detracted the employees from seeking a common ground, employees see themselves to belong to the groups they belong to in the organization and not members of a team who should work together to implement organization's policies and achieve organizational goals. This resulted in a decrease in their overall performance and had adverse effects on organizational measures of productivity, absenteeism and turnover.

Distinctiveness Theory (McGuire, 1984)

Distinctiveness theory explains that in ethnically diverse organizations, members of the smaller ethnic groups in relative to members of the larger ethnic groups to tend to identify and form friendships within their own ethnic group (Leonard, 2007).

Employees tend to form friendship and build networks among the people with the same cultural values as them. This creates tension in the organization which sometimes leads to mistrust amongst employees; dissatisfaction also arises which impedes job functions.

Various academic literature has shown that employees from a different in racial or ethnic backgrounds tend to be less inclined to stay with the organization . (Tsui 1992).

Montagliani & Giacalone(1998) relates this to expatriates on foreign assignments who are from a different ethnic background from their host countries "communication impediments can pervade every facet of life for expatriates and their families, producing unhappiness in their current surroundings and hindering adjustment to the host country and its culture. As a result, expatriates can become inefficient in the workplace, resulting in diminished career progress, psychological stress, and ultimately failure" .

Similarity Attraction Paradigm (Byrne, 1971)

Employees tend to be attracted to people they perceive to share the same value, beliefs and concepts with them. As humans this can be done consciously or unconsciously and this bring the feeling of exclusion or inclusion in employees. This can bring about unfair treatment in relation to other employees and can hinder the progress in job functions.


The various theories discussed explains why organizations with a diversified workforce have found diversity to be problematic and performance is not always at the level required or expected, lack of communication especially among top management all bring about conflicts, slow decision making and slow growth of the organizations (Higgs,1996,Cox& Blake,1991,Kandola &Fullerton 1998). There is an increase in conflict among the workforce as differences in opinion result in difficulty to agree on solutions which brings about poor internal communication because levels of knowledge and comprehension differ between the employees, and this increases management costs that arises from dealing with potential conflict and communication problems.(CIPD Diversity: stacking up the evidence).These findings reveals that homogenous teams bring hostility ,lack of confidence and stress on the employees hence employees tend to stay away from work .It impedes the growth of the organization because different people with different values have their own idea of how the organization should be run ,information is disseminated and task should be assigned.

An organization that does not have any synergy among the team cannot growth and it cannot be profitable which is not in the best interest of all the stakeholders involved. This is an issue that needs to be addressed in order for organizations to achieve their goals and develop.


On the other hand, a 'business case' has been made for diversity in various academic literatures; this means that some organizations that found their highly diversified teams to be of immense benefits to their organizations in terms of profit and growth. Managing diversity can create a competitive advantage; potential benefits include better decision making, higher creativity and innovation, greater success in marketing to foreign and domestic ethnic minority communities, and a better distribution of economic opportunity with rapid response and adaptation to change. (Cox, 1991; Cox &Blake, 1991; Adler, 1997; Cascio, 1998 ;Jackson et al., 1992).

A European Union Commission Report; The Costs and Benefits of Diversity (2003). The writers are of the opinion that '… the most important benefits arising from the implementation of diversity policies arise from strengthening organizational and human capital. Along with knowledge capital, these are the principal intangible assets used by companies in a wide range of sectors to establish competitive advantage and to create value.'

From afore, diversity is seen to enhance creativity and create innovation because different people with different outlooks and different experiences can come on board and use their skills to the benefit of the organization by analyzing and solving problems and also to come up with new ideas that will create value to their clients better than the competitor.

An example is Hewlett Packard, a knowledge intensive firm based in the United States; its products which are mainly computer systems can be seen in virtually every country. Most of its products in the markets are produced in its subsidiary in China; sometimes the components are produced and shipped back to the United States to assemble. There is no doubt that language will be a barrier for employees including the executives of Packard company in China where a different language is spoken from theirs and they have different values but they have been able to find ways to overcome this by managing the differences between them.

Apart from the profit associated with this, it creates goodwill for companies that have a diversified workforce because people will know the organizations to recruit the right candidate for the job and the employees are not recruited based on their back ground or skin color.

On one hand there seems to be conflict, miscommunication, mistrust, lack of confidence for employees that find themselves working in highly multi cultural teams, and slow growth for organizations; on the other side of the coin there seems to be better decision making process for organizations, high profit margin, high level of creativity, better performance for organizations.

This brings about the question of how to reconcile these two. The approach for organizations is to manage their diversified teams effectively in order to gain the necessary edge has indicated above, this approach is regarded as 'managing diversity'.


According to Kandola &Fullerton (1998) 'The basic concept of managing diversity accepts that the workforce consists of a diverse population of people consisting of visible and non-visible differences including factors such as sex, age, background, race, disability, personality and work style and is founded on the premise that harnessing these differences will create a productive environment in which everyone feels valued, where all talents are fully utilised and in which organisational goals are met.'

This definition is holistic because it takes into account the differences which exists between the people, talks about the organisation and the people which has been discussed in this report.

For diversity to be effectively managed, it has to be a trickledown effect from the top, the management of organizations should incorporate structures that can manage diversity after employees have been recruited. Employees should be seen as individuals and not a means to an end with which they can gain access into their markets; employees should re recognised for their skills and knowledge which is of value to the organization.

Trainings on managing diversity should be done, the contents of these trainings should include acknowledging the diverse work force which will bring to fore hidden assumptions and myths, this will lessen the tension. The benefits of a diversified work force and how cultural synergy can improve organization performance should be emphasised.

If the trainings are structured around the benefits for the organization, employees will see themselves as team players who all have a common goal and they can work effectively towards this .A CIPD report(2006) indicated that people that received diversity training welcome the idea of managing diversity and they work on this.

Kossek & Zonia (1992) carried out a survey and reported that diversity initiatives were embraced more by women and ethnic minorities, white male feel victimised because they feel the trainings are tailored towards them .This is a shortcoming on diversity management that can be overcome by proper training and awareness and integration programmes which the organizations can engage in.

Two reasons are seen by academics (Bassett-Jones, 2005; Cox, 2001; Galagan, 1993; Moore, 1999) to be responsible for difficulty in diversity management in the workplace are firstly human beings prefer working in homogeneous groups and secondly, human beings and the organizations they are a part of, generally avoid and resist change.

Another factor why organizations might be reluctant to train employees is due to the resources that will be committed to this in terms of time and financial resources. If the benefits are weighed, organizations will realize that this is necessary. Globalization has made the world a global village and there will continue to be movement of people within different countries for trade or otherwise therefore organizations have to engage in this in order to operate in the contemporary business environment.

It has been argued by diversity specialists and business leaders that businesses and organizations interested in surviving and thriving in the twenty-first century need to take competitive advantage of a diverse workplace (Soutar, 2004).

In conclusion, as rightly said by Kandola et al.(1995), 'this implies that organizations market share, efficiency, human capital, international competitiveness ,and level of innovation will dependant in part upon their ability to effectively manage a diverse workforce both within and across organizational boundaries'.

Similarly, Dadfar and Gustavsson (1992) suggest that 'there seems to be a general

agreement that if cultural diversity is managed well, it can be an asset to performance,

and if it is overlooked or mismanaged, it may diminish the performance'.

Diversity is a phenomena that will be around for a long time ,it has been seen from this report that it has its advantages as well as it challenges but this challenges can be overcome by managing these differences and making the workforce assets for the organization, if diversity is properly managed, diversity will become blurry.