Invest Resources On Managing Diversity Commerce Essay

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The present essay discusses whether organisations should invest resources on managing diversity or not. It includes a number of arguments about the advantages and disadvantages of diversity management within the workplace and presents points of criticism. In addition, it presents two research papers, Herring's (2009) and Kochan's et al. (2003), in order to provide evidences about the relationship between diversity in race and gender, and organisations' business performance. The findings of the two research papers agree to the fact that diversity can contribute to the enhancement of their business performance. However, according to Kochan's et al. (2003) study, this can be achieved under specific circumstances such as the strong organisational commitment to diversity and its systematic application as a human resource practice. It is deduced that organisations in order to take advantage of the benefits of diversity, should take into consideration its potential for improving organisational and business performance through its proper management; thus, the investment on diversity management can evolve into competitive advantage for the organisation and worth's the devotion of resources.

Keywords: business performance, human resource practice, diversity management

Paper type: Essay


Since the labor mobility and minorities' fight for equal rights and fair treatment in the workplace took great dimensions, workplace diversity evolved into controversial issue (Henry & Evans, 2007). Being a multidimensional issue, because of the number of differences traced in individuals, i.e. gender, ethnicity, race, religion and others, there is confusion and ambiguity around its contribution to organisational and business performance. However, the implementation of diversity as a human resource practice has shown that it could be utilised by organisations to achieve better performance if it is properly managed and can evolve into a competitive advantage (Jayne & Dipboye, 2004).

The present essay argues if it worth's devoting resources to management diversity or not. Its main body is distinguished in three parts. The first part defines diversity, outlines the advantages and disadvantages and provides points of criticism that derive from diversity management within the organisational workplace. The second part focuses on the research that has been conducted in the aim of investigating the correlation between diversity in gender, diversity in race and organisations' business performance. The third part provides recommendations related to how the diversity management as human resource practice can turn out to be for the benefit of the organisations. Finally, it is concluded that organisations worth devoting resources to diversity management. It is essential to highlight that even though diversity embraces latent and non - latent types of "differences", the evidence provided via the research part, concern only the diversity in race and gender in the business case.

2. What is Diversity?

According to Kathy Daniels and Lynda MacDonald, diversity in an organisational environment is the acknowledgement of individuals' differences regarding the gender, the race, ethnicity and other (Daniels & MacDonald, 2005). "It is also about accommodating differences wherever possible so that an individual can play a full part in the working environment" (Daniels & MacDonald, 2005, pp1).

Its philosophy is based on the dynamics it provides to organisations for taking advantage of the differences in the available labor (Henry & Evans, 2007). It is defined as organisational strategy for maintaining and managing a wide range of differences in labor in an attempt to achieve effectiveness (Henry & Evans, 2007). According to Torres and Bruxelles (1992), effective diversity management means that all employees have the same opportunity to achieve career development and perform efficiently in the workplace without being advantaged or disadvantaged (Henry & Evans, 2007).

2.1 Why Diversity?

According to Corporate Leadership Council (2003), organisations invest resources in diversity management by implementing a number of related programs in an attempt to benefit from diversity in workforce (Jayne & Dipboye, 2004). Konrad (2003) in his article has underlined a number of reasons why diversity is beneficial for organisations' business performance (Jayne & Dipboye, 2004). The first reason is that diversity contributes to the attraction of a variety of talents and candidates. This stems from the organisational need to hire people with diverse skills and abilities in order to become more competitive. The second reason has to do with the fact that diversity in the workforce enables organisations to meet the diverse needs of consumers and customers and consequently contribute to the market broadness. The third reason involves diversity's contribution to the facilitation of creativity and innovation (Jayne & Dipboye, 2004). The last argument will be discussed further below.

Also, Wentling and Palma-Rivas (2000) support that "the new form of economy and business" is based on service delivery, which lies to individual's ability to form mutual relationships in order to perform business (Henry & Evans, 2007). Interestingly, according to Mueller (1998) the impact of diversity is beyond business; recruiting members of minorities and underrepresented groups, diversity management develops social dimensions with considerable impact on the community (Henry & Evans, 2007). He has also added that diversity should be considered as a social requisite (Henry & Evans, 2007).

Furthermore, diversity complies with the legislation for promoting equal employment opportunities; it contributes significantly to the elimination of illegal discrimination within the workplace in an attempt to protect human rights (Henry & Evans, 2007).

According to Cox and Blake (1991), diversity management can result in the enhancement of decision making process and in the achievement of creativity, productivity and innovation (Henry & Evans, 2007). Watson et al (1993) in their study concluded that groups that consist of individuals with different cultures are more effective, innovative, creative and perform better than the homogeneous groups after their co - existence for a period of time (Henry & Evans, 2007). Hence, diversity is crucial for enhancing overall performance that cannot be achieved with homogeneity (Henry & Evans, 2007). Also, Cox and Blake (1991) claim that diversity management when is effectively applied can heighten organisational flexibility towards various changes that take place at the external and internal organisational environment (Orlando & Johnson, 2001). Under these circumstances, the organisation enhances its ability to deal with environmental insecurity, leading to overall better performance (Orlando & Johnson, 2001).

Thus, diversity functions like a spark that ignites organisational competitiveness (Jayne & Dipboye, 2004).

However, Jayne and Dipboye (2004) in their article argue that there is a number of factors that can determine the success of diversity initiatives.

Suffice to say, that the benefits of diversity are situational. In other words, if diversity can lead to effective organisational performance depends on a wide range of factors such as organisational environment, culture and other (Jayne & Dipboye, 2004).

Yet, the effectiveness and success of diversity initiatives are determined by the achievement of the goals that address to, and the feedback provided for their successful implementation. It is required to underline that the achievement of goals should be strongly linked to its relative outcomes. Furthermore, the goal is essential to align with the legal frame for employment issues. But, in an attempt to take advantage of the goal setting process, organisations should take into consideration the real outcome so as to enhance their strategy accordingly. Thus, organisations that set feasible goals regarding diversity issues and evaluate the feedback can achieve effectiveness in diversity programs application (Jayne & Dipboye, 2004).

Nevertheless, the success of diversity initiatives is determined by the way it is communicated and supported. This entails that the way of interpreting them is correlated with their potential success e.g. diversity in managerial positions indicates supportive attitude towards diversity and could be considered as an effective way to promote it within organisational workplace (Jayne & Dipboye, 2004).

Gaertner, Rust, Dovidio, Bachman and Anastasio(1994) note that the effective application of diversity within the workplace needs time, patience and interaction. However, this is not adequate (Jayne & Dipboye, 2004). Jayne and Dipboye (2004) in their article suggest that setting tasks and the reward provided for their successful achievement within the workplace, function as a sound motivation for interaction and collaboration among individuals. Thus, employees focus more on the successful achievement of tasks than on the "differences" among them. But, this kind of organisational strategic tactic might result in being considered as a manner of achieving success ignoring the beneficial role of diversity (Jayne & Dipboye, 2004).

2.2 Why No Diversity?

Except for the limiting factors of diversity's success, others claim that it also amplifies the feeling of threat among employees with different gender, race, educational background, resulting in conflict. White (1999) notes that sometimes people fail to accept the "different" due to the prejudice and the attitude of superiority towards "different" individuals that can lead to conflict (Henry & Evans, 2007). However, according to Watson et al. (1993) there are evidence which show that the communication gaps that might occur from conflict, evaporated as time flows (Orlando & Johnson, 2001).

Another disadvantage of diversity for organisations is the cost required for training (Henry & Evans, 2007). Training involves a number of seminars and programmes which are addressed to employees of all levels of hierarchy in an organisation. Even though these programs teach to employees how to behave and cooperate with different people with different personalities and values, the cost related to these programs prevents the organisations from implementing them within the workplace (Henry & Evans, 2007).

Nevertheless, "absenteeism and increase in the labor turnover" are considered to be considerable disadvantages of diversity (Henry & Evans, 2007). According to research, since the turnover rate for women in professional jobs has been doubled from 1980 until 1987 in US, a 58% of greater absenteeism was noted (Henry & Evans, 2007). White (1999) states that "absenteeism and turnover can cost a US company up to $3 million annually..." (Henry & Evans, 2007).

Moreover, many organisational psychologists claim that the diversity as a management practice does not always have a positive effect on organisational performance (Jayne & Dipboye, 2004). This is reasoned by the fact that the increase of diversity in applicants does not guarantee the attraction of talents. Research has shown when the effort for attracting skilful candidates is followed and determined by the appropriate "assessment tools" is more likely to lead to positive outcomes (Jayne & Dipboye, 2004). According to Michele E. A. Jayne and Robert L. Dipboye (2004), the term "assessment tools" involves "the effective measurement of knowledge, skills, abilities, experiences and other characteristics..." These tools are in position to act as an indicator of job performance. In order to achieve the desirable outcome, is essential to take into consideration the interaction of the assessment tools and diversity's potential (Jayne & Dipboye, 2004).

Yet, research has shown that sometimes diversity holds the responsibility for the increase of demotivation and dissatisfaction among colleagues with diverse characteristics. According to Riordan (2000), Williams & O'Reilly (1998), increased heterogeneity in the workplace results in the appearance of discrimination and in lower commitment, which spoils group cohesion (Jayne & Dipboye, 2004).

Nonetheless, according to Goetz (2001), most of diversity disadvantages such as conflict and demotivation, derive from organisations' attitude towards the diverse workforce; the ignorance for diversity's role within the workplace leads to its mismanagement and this in turn to poor performance both for employees and organisations (Henry & Evans, 2007). Consequently, diversity mismanagement is considered to be the "core" of most disadvantages, as allow to stereotypes and prejudice for individuals' differences to cast a shadow over diversity's significance within the workplace.

3. Research on diversity in race and gender and organisations' business performance

3.1 Herring's (2009) research on diversity implications on business performance

Cedric Herring (2009) in his research paper, explores the relationship between racial, gender diversity and business performance. For this purpose, he made use of data from 1996 to 1997 of the National Organisational Survey, which is a national sample for-profit-business U.S. organisations. The data derived from 506 organisations involving information about the composition of their workforce, the organisational structure and their business performance. Also, he had at his disposal significant information about the organisations' "identity" given by the "Dun and Bradstreet's Market Identifiers Plus service". He tested eight different hypotheses in terms of sales revenue, number of consumers, market share and profitability. Moreover, he took into consideration and other factors that might affect his research results such as the size of the organisation, its legal type and others (Herring, 2009). For measuring diversity he used the indicator RID (Racial Index of Diversity) and AID (Asymmetrical Index of Diversity). Business performance was measured via the use of qualitative methods i.e. questionnaires (Herring, 2009).

He suggests that diversity is positively correlated to better organisational performances as far as the business organisations are concerned; promoting diversity policy entails greater profitability and add financial value to the business organisations. Cedric Herring (2009) notes a number of paradoxes that emerged from his research. The first concerns the fact that diversity can lead to greater profitability while the conflict among members of heterogeneous groups increases. The second paradox is referred to the fact that the greater degree in diversity, the greater organisational performance. These paradoxes are reasoned by the fact that conflict unleashes people's creativity; this means that the development of competition among members of a group generates more innovative ideas and flexibility than the complacency developed by cohesion among "similar" people. He found that diversity allows to the organisations to be more innovative by embodying to their workforce people from minorities groups. What is more, he underlines that even though diversity can entail a number of negative implications such as conflict among the members of the groups within the organisation, the overall "net" outcome is totally positive. Interestingly, the link between successful business performance to diversity stems from the fact that successful organisations invest on diversity management field (Herring, 2009).

3.2 Kochan's et al. (2003) research on diversity implications on organisations' business performance

From another point of view, Kochan et al. (2003) in their study found that the positive correlation between business performance and diversity in gender and race in the workforce is ambiguous in terms of profitability (Jayne & Dipboye, 2004).

Drawn by this ambiguity, they applied the "Diversity Research Network". Their study concerns the investigation of the relationship between racial and gender diversity and business performance; it was applied to four large organisations with strong commitment to implementing diversity initiatives i.e. two information processing companies, financial services company and a large retail company. The model they developed is associated with group functions and implies that the influence of diversity on business performance is followed by organisational culture and practices; specifically, whether the outcome of diversity is positive or not for the organisational performance, depends on the organisational attitude towards diversity. Moreover, the model takes into consideration the hypothesis that the greater diversity in the workforce, the more likely to meet successfully the diversified consumers' needs (Kochen & al., 2003).

Through this study, Kochen et al. (2003) attempted to add stronger empirical value to this hypothesis. It was found that the organisational practices followed by methodical approach to diversity are likely to affect positively group performance and subsequently organisational performance, cancelling partly its negative impact. Furthermore, they underline that the outcomes of their research due to the limited sample in spite of their validity, it is wise not to be generalised as the nature of the effects depends on many variables (Kochen & al., 2003).

Their research acknowledges the beneficial aspect of diversity; however, they suggest that it worth's investing resources on it, only if organisations maintain a strong commitment to diversity value aligned with organisational goal for effectiveness. Under these circumstances, diversity could turn out to be a sound competitive advantage (Kochen & al., 2003).

4. Managing Diversity: Diversity as a Human Resource Practice

In order to eliminate the disadvantages of diversity as mentioned above, it is necessary the organisation's "defence system" be reinforced through its proper management so as to benefit from it.

A company that needs to get the most of diversity benefits and manage it effectively, it is essential to plan a diversity strategy which will be complied with organisational goals and culture. This plan will allow to the organisation to achieve lasting efficacy of diversity initiatives with the intention of better management of human resources (Friday & Friday, 2003). According to CIPD, gaining value from diversity is not an easy case (Emmott & Worman, 2008). This is reasoned by the fact that managing diversity requires a sequence of drastic measures and steps implemented within the workplace by employers who acquire managerial positions (Emmott & Worman, 2008).

The implementation of training programs will assist in promoting diversity as a key function for facilitating creativity and innovation, especially through group processes (Kochen & al., 2003). Diversity training programs involve a number of human resource practices and policies that are proactively implemented in the workforce of an organisation to increase commitment and awareness about diversity's importance (Jayne & Dipboye, 2004). These concern the reconstitution of active workforce through recruitment, retention and development programs i.e. mentoring programs (Jayne & Dipboye, 2004). According to Orlando & Johnson (2001), training and development programs compose the "Diversity Orientation". This term is referred to the interaction of human resources practices and how it is driven towards diversity management within the organisational environment (Orlando & Johnson, 2001). In order to contradict opponents' point of view about their cost, it is essential to highlight that the benefits gained from their implementation are beyond cost.

Other practices involve the development of external partnerships with minority groups, relative publications on their official web pages to diversity programs, the effort of increasing diversity awareness among employees and generally the establishment of positive attitude towards diversity effects in the workplace (Jayne & Dipboye, 2004).

Kochen et al (2003) in their research paper, encourage executives to examine and investigate more thoroughly the link between diversity and performance within their own organisation in an attempt to achieve more valid and accurate results. What matters most, is the development of those human resource practices, that will allow to different cultures, genders and generally heterogeneous groups to interact within the workplace in the name of effective collaboration and organisational performance (Kochen & al., 2003).

5. Conclusion

This essay presented arguments about diversity's contribution to the organisational performance by highlighting the two sides of the "double - edged sword" as Milliken and Martins (1996) named diversity (Jayne & Dipboye, 2004). Drawn by the research results on the relationship between diversity in gender and race and organisations' business performance, it is concluded that diversity is in position to enhance their performance but does not guarantee that this can take place without the contribution of a number of factors. Increased awareness about diversity, strong commitment and attempts for embodying diversity initiatives in human resource practices can establish it as a "dynamic tool" for achieving organisational competitiveness. This change is essential to be driven by the top of the pipeline, by implementing the appropriate human resource management practices, so as organisations can benefit from diversity's advantages and cancel the negative impact of its disadvantages. Under these circumstances, it worth's investing on managing diversity as its benefits are beyond time and financial cost.

Word count: 3,177

Dimitra Gkiontsi