3  Strategic Management of Diversity

Benefits and Challenges

Strategic Management of Diversity

One of the features of democracy is the rule of law, under which everyone must be dealt with in accordance with the law—although, in some cases, different groups enjoy different rights and duties. For example, rights and duties given to young people may differ in some respects from those afforded to adults. The main issue is that everyone is to be treated as stipulated by the law. There are three ways in which democracies vary. The first variation involves the method of voting for elected political representatives. In some countries, voting is a right (such as in the US) and the government has to provide conditions for individuals to practise this right. In contrast, in other countries (such as Australia), voting is considered a duty, and it is the individual’s responsibility to perform this duty. The second variation of democracy involves economic inequalities. However, the amount of money held by citizens is irrelevant, as long as they enjoy equal rights in the courts and political sphere. The third important variation is the management of cultural diversity, which is the focus of this book. Democracies have embraced different policies for managing cultural diversity, and these policies can be conceptualised as either complete assimilation—where all cultural differences are melded to create cultural and linguistic homogeneity—or full multiculturalism—where cultural differences and linguistic diversity are followed and supported (Moghaddam 2008).

This chapter considers the strategic management of diversity in the workplace as a means to determine organisational goals, roles, objectives and responsibilities, as well as the integration of a diverse labour force into the organisation. As detailed in the previous chapters, workplace diversity emerged onto the equality scene in the US in the 1990s, and spread its influence to encompass public and private organisations. In the 1990s, three types of organisations were described: monolithic, pluralistic and multicultural. Monolithic organisations employ and are managed by white males, with women and racial/ethnic minorities performing duties in stereotypical jobs, such as factory work and domestic employment. Pluralistic organisations encompass general diversity, yet lack structural and role integration (Motel 2016). However, in the 2000s, criticisms arose against the dominance of US diversity that did not align with other countries and their legislations, such as Denmark (Risberg and Soderberg 2008), Australia (Strachan, Burgess and Sullivan 2004) and New Zealand (Jones, Pringle and Shepherd 2000). This resulted in the current ‘country contexts’ perspective on workplace diversity (Klarsfeld 2010; Klarsfeld et al. 2014). As managing diversity was gaining momentum, criticism of the displacement of social justice began to emerge, led by two scholars—Liff (1997) and Dickens (1999), the ‘depoliticised and ahistoric conception of difference’ (Tatli 2011, 246) upon which diversity management was established.

Diversity approaches provide a pattern for success in the workplace in relation to thinking, feeling and interactions with employees from different backgrounds. The idea of a one-size-fits-all approach to discuss diversity is doubtful. The level of representation-based concerns experienced by individuals will determine whether diversity approaches that focus on differences (versus equality) will enhance performance and persistence. The diversity approach that minimises the prominence of social group membership, and instead concentrates on the importance of equality, is known as a value in equality approach, which improves representation-based concerns, and thus increases performance and persistence. It is expected that a diversity approach focusing on the importance of social group differences—which is referred to as a value in difference approach—will also increase performance and persistence (Apfelbaum, Stephens and Reagans 2016).

Diversity management is sometimes seen as a voluntary measure for organisations, and, without the support of legislation, tends to be ineffective (Ozbilgin and Syed 2015). Additionally, since domestic formulations of diversity cannot be transferred to other national contexts, attempts have been made to formulate global approaches for diversity to deal with management differences. Historically, labour markets have been riddled with inequality, which could be described today as discrimination. This inequality has been experienced in different countries and has changed over time (Jain, Sloane and Horwitz 2003; Kennedy-Dubourdieu 2006). In the nineteenth century, women and minority groups struggled for equality and social justice (Cassell 1996), until the Declaration of Human Rights 1948, which led to just conditions for work without discrimination. In addition, conventions by the UN and International Labour Organization made recommendations regarding the elimination of all discriminations. Such recommendations included the UN International Convention on the Elimination of All Forms of Racial Discrimination 1965 and the UN Convention of Discrimination on the Elimination of All Forms of Discrimination against Women 1979. In some countries, legislation was introduced to cover specific ethnic groups and women in the labour market (Klarsfeld et al. 2014).

The rise of diversity management has developed significantly in the history of the workplace, and the shift from equal opportunity to diversity management ‘meant a shift from the ethical and legal case to business case arguments’ (Tatli 2011, 242). The spread of diversity management was rapid and ‘by the late 1980s, equal employment opportunity/affirmative action (EEO/AA) specialists were recasting EEO/AA measures as part of DM [diversity management] and touting the competitive advantages offered by these practices’ (Kelly and Dobbin 1998, 972). The shift from equal opportunity to diversity management and beyond led to new terms being coined, with some researchers adding the concept of inclusion to denote a shift from removing obstacles to organisational belonging and full participation. When employees feel included, they tend to feel part of the organisation by having access to information and sharing in decision making. While diversity management is introduced in organisations voluntarily and implemented in various ways, it must be operated with appropriate and pertinent national legislation, such as anti-discrimination and industrial relations law (Klarsfeld 2010). In addition, managing diversity is different from AA because it is a voluntary corporate approach concerned with increasing heterogeneity in the workplace, instead of being imposed by the government (Ng and Burke 2005).

Strategic management of diversity in action shows how managers use diversity to manage the workforce and reinforce class relations. Strategic diversity management is broadly defined as a planned commitment by organisations to employ, retain and promote a heterogeneous group of employees (Henry and Evans 2007). Stuber (2009) conceptualised diversity management as a principle consisting of four main components: diversity, respect, inclusion and added value. Cox and Blake (1991) defined the concept as referring to various management issues and activities pertaining to the hiring and effective use of employees from different cultural backgrounds. The concept is also defined as:

Therefore, diversity management should be seen as managerially initiated programs and/or HRM policies and practices aimed at empowering the diverse workforce through effective integration to increase business productivity. Thus, diversity management is a process of managing people’s similarities and differences, and recognising that employees’ differences in the workplace represent a potential strength. At the same time, the existence of diversity among groups of people arises from differences in both culture and structure. These differences affect perceptions, feelings and attitudes. This adds to the needs and expectations of different management styles for different cultures, including language, custom, conventions and normative behaviour (DiTomaso 1999).

The term ‘diversity management’ began in North America and has now spread to other countries. The term is defined in reference to ‘the voluntary organizational actions that are designed to create greater inclusion of employees from various backgrounds into the formal and informal organizational structures through deliberate policies and programs’ (Mor Barak 2005, 208). Motel (2016, 332) defined workforce diversity as: ‘ways in which people in a workforce are similar and different from one another’, encompassing legally protected characteristics, such as race, gender and ‘background, education, language skills, personality, sexual orientation, and work roles’. However, as discussed before, defining diversity in the workplace is a challenging task because there appears to be no clear or commonly agreed definition of workplace diversity in the literature, as diversity is a concept that means many things to many people, with both positive and negative connotations. Cultural diversity constitutes the representation of groups and individuals, regardless of their racial, ethnic, linguistic, national and religious backgrounds and sexual orientation, in a community that consists of culturally diverse members of different groups (Amadeo 2013).

The categorisation-elaboration model defines diversity as ‘differences between individuals on any attribute that might lead to the perception that another person is different from self’ (Guillaume et al. 2017, 279). The model proposes that the positive or negative outcomes of diversity depend on three factors: (i) variables that highlight demographic differences, (ii) variables that create or hinder intergroup prejudice and (iii) variables that improve or impair information-elaboration (Guillaume et al. 2017). In the ‘integrating diversity’ approach, diversity is a reality inside and outside organisations, where companies voluntarily adopt actions to deal with social expectations. This approach improves both employee motivation and corporate image. Nevertheless, conflicts in the workplace which affects all employees’ levels of satisfaction and lead to resignation, may emerge between employees from different backgrounds, and, by dedicating opportunities to specific groups, reverse discrimination may eventuate. The ‘leveraging variety’ approach aims to achieve a competitive edge by learning from the various competencies and knowledge-related differences (Ravazzani 2016).

Therefore, workplace diversity is a multifaceted concept that includes people of culturally and linguistically diverse (CALD) backgrounds, and members of different religions and groups, who have their own languages and ethnicity. These are not mutually exclusive categories, as one employee might belong to more than one or even all of these categories at the same time. In addition, employees can belong to groups with political and personal affiliations, thus adding to the diversity of the workplace. In Western societies, workplace diversity can be seen as a natural reflection of diverse populations based on ethnicity, language, race, culture, religion, group affiliations and sexual orientation. Plurality is a stronger concept than diversity because it is more dynamic and less static. Plurality is the condition of human action, given that human beings are all the same (human), yet are all different from each other. In a sense, the one factor that all human beings share in common is their difference, which also applies to cultures (Gillespie 2007).

Diversity has richly added to the social fabric of migrant-receiving countries. The expression ‘managing diversity’ is a reminder that:

Strategic management requires all employees to understand the values and direction of the organisation to facilitate the passing of clear and effective strategic decisions to lower levels for implementation. The espoused values implemented by management as part of the corporate image enable employees to understand the organisation and how to perform daily duties. In this manner, the organisational culture is viewed as being the glue that holds employees together with shared values and common purpose (Chandler 2017). The relevant literature indicates that strategic management of diversity has different features that organisations must implement in the workplace. One of these features is the notion of training as a common activity adopted by organisations to enhance awareness of both diversity and management (Vickers-Willis, Connelly and Halliwell 2009). To ensure that organisations take full advantage of the positive aspects of cultural diversity, their training programs should focus on four areas: awareness, attitude, knowledge and skills (Ahmed et al. 2011). First, awareness is a skill that requires individuals to overcome stereotypes and learn about their own reactions to people who are different. Second, attitude enables people to scrutinise their values and beliefs about cultural differences, and understand their origins. Third, knowledge is an essential skill that deals with behaviour and how it relates to fairness and workforce effectiveness. Fourth, skills allow organisational leaders and employees to achieve cultural competence and create a new work environment based on understanding, communication and cooperation (Ahmed et al. 2011). These four areas form an integral part of cultural diversity and equip organisations with a competent understanding of employees’ positive contributions under efficient and capable management. The first three also require a certain level of acknowledgement and cooperation by employees, which might be seen as an important obstacle to implementing this training strategy successfully.

A potential benefit of diversity is a workforce of higher quality, leading to competitive advantages. Organisations that hire minority employees may recruit top-performing minorities, while newly employed non-minorities may not be subjected to similar performance standards, thereby resulting in better performance in organisations with minorities. It is expected that organisations that manage diversity well may also manage the workforce well, and minority employees tend to be attracted to organisations with better workplace practices. Racial diversity is valued favourably by shareholders, who recognise the organisation’s workforce and its potential benefits to improve returns in the marketplace. Ethnic diversity is considered at multiple levels within the organisation, such as the board level, managerial level and workforce level, with some implications affecting these three levels (Ellis and Keys 2015).

Apart from the recruitment, training and promoting of underrepresented groups, Hollwell (2007) added that the focus of strategic management of diversity should also be on taking full advantage of employees’ skills and abilities in the organisation. Similarly, Chinnery and Bothwick (2005) stated that diversity management aims to recognise that people are different, and to support their differences to enable them to achieve their best.

There are several reasons for organisations to manage diversity, which differ depending on the organisation’s culture, the structure of the organisation’s workforce and the organisation’s aims. It is assumed that cultural diversity management should improve the environment in the organisation, provide positive effects of cultural diversity and minimise possible conflicts. Diversity management is a measure taken by organisations to ensure equal treatment and equal opportunities for employees, and as a deterrent to discrimination. Shortage of skilled labour is driving organisations to be more concerned with cultural diversity and to recruit workers internationally to fill vacant positions. However, in an organisation where the owner is running the business and as such, holds multiple roles, he may not have primary focus on diversity in the workplace. This role is overloaded; thus, diversity management may not receive the attention it requires. Therefore, there should be a person in charge of diversity issues to ensure effectiveness. Additionally, managing cultural diversity effectively is a long-term approach that will include changes in the entire business (Kühlmann and Heinz 2017). In developing such a long-term plan, two primary strategies are required to incorporate diversity into the workplace, and they include ‘the creation and development of employee resource group and having women and minorities in decision-making and policy-making roles’ (Canas 2014, 54).

With the increased workforce diversity, contemporary organisations have increased the variety of their diversity management strategies. Different practices are adopted by organisations depending on their beliefs and expectations of diversity and its role (Kulik and Li 2015). The ‘identity blind’ option is the dominant approach to diversity management taken up by most organisations. Employees are encouraged to view people of different cultural backgrounds as the same, and to ensure that such differences ‘do not count’ (Kulik and Li 2015, 568). Under this approach, the decision-making procedure in human resources is the same for each individual. It evaluates people for their achievements and merit, rather than their social identities, and such principles of equality are greatly valued by employees. In a blind approach to diversity management, organisations do not refer to social group identity when making decisions in HRM. The identity blind approach perceives that members of specific groups can be kept away from the organisations because of prejudice; however, with equal access and fair treatment pursuant to the law, inequities can be rectified. Thus, organisations that are equal opportunity providers in recruiting and promoting employees inhibit prejudicial attitudes and eliminate discrimination in their operations. It has been reported that HRM practices reduce discrimination and bias, and provide equal opportunities for employees (Kulik and Li 2015).

In the ‘identity conscious’ approach to diversity management, organisations consider social group identity when human resource decisions are made. Such organisations take measures to eliminate discriminatory language from job descriptions and remove bias from their decision procedures, and replace them with other practices incorporating recruitment materials designed to appeal to members of underrepresented identity groups. Such practices are targeted to appeal to women, racial minorities, people with disabilities and other underrepresented groups in organisations, and to give them a voice in organisational decisions (Kulik and Li 2015). Organisations that adopt an identity conscious approach to diversity management are proactive and go beyond legal compliance. Organisations that adopt this approach believe that different employees bring different knowledge, which is relevant and important because it gives the organisation a competitive edge and different perspectives on how work should be undertaken. The identity conscious perspective acknowledges employees’ differences as potential valuable resources that can generate learning and adaptive change. It allows employees to use their skills and experiences gained by virtue of being members of an identity group (Kulik and Li 2015).

In addition to business-related benefits, which are examined more closely later in this chapter, in a political context, diversity management aims for social justice and supports equal opportunities and long-term sustainable employment (Bleijenbergh, Peters and Poutsma 2010). In addition, managing diversity in the workplace is often linked to EEO and AA initiatives. While diversity has evolved from these two concepts, it is significantly different because EEO aims to prevent discrimination in the workplace on the basis of characteristics such as race, colour, religion, gender, national origin, ability and age (Riccucci 2002). In contrast, AA embodies proactive efforts to redress past discrimination and diversify the workplace in terms of similar factors and characteristics. Riccucci (2002) provided a rather narrow definition of diversity management as a successor to AA or equal opportunities program. In contrast, the broader definition provided by Bleijenberg, Peters and Poutsma (2010) views it as a more inclusive approach to attracting new employees and involving a wider understanding of people’s differences, including sexual orientation, skills and experience. As discussed, diversity further encompasses several aspects of differences in the workforce, such as gender, ethnicity and culture, which need to be considered when examining the strategic management of diversity in the workplace. This book argues that there is a difference between managing diversity and EEO. While EEO requires the elimination of discrimination from the workplace, managing diversity goes beyond this process of management to recognise the differences between people as a source of strength and competition. In this sense, managing diversity supersedes EEO by addressing the organisational need to align organisational objectives with the objectives of diverse employees (Stone 2014).

The success of cultural diversity depends on various factors—one of which is the way diversity is managed, which can help organisations benefit by increasing productivity. The implementation of certain measures can minimise conflicts based on cultural differences due to insufficient integration of immigrant employees. Cultural diversity management involves both management of and management for a culturally diverse workforce. While management of cultural diversity promotes awareness and respect of cultural diversity at work and fosters intercultural competence, management for cultural diversity involves providing a diverse workforce and equal opportunities. In addition, cultural diversity management must ensure that immigrant employees can contribute their skills to the utmost and are afforded equal opportunities. Most measures have a positive effect on the organisational and individual levels. If the value of cultural differences is appreciated, then demographic changes will be an opportunity, rather than a challenge, for the organisation (Kühlmann and Heinz 2017). Table 3.1 provides detailed information on the differences between the principles of equal opportunity and diversity management.

Source: Greene and Kirton (2009).

It appears that globalism and diversity go beyond the tolerance of cultural differences which is considered an ethical and political issue by organisations—not only in theory, but also in practice. Therefore, the way to manage the workforce depends on many factors, including the degree to which an organisation is prepared to accept culturally diverse employees’ social identities. It has become apparent that managing diversity is underpinned by an acceptance that the workforce consists of a diverse population, and that diversity includes visible and non-visible differences, such as sex, age, background, race, disability, personality and work style. Such differences create a productive environment in which employees feel valued and have their talents fully used, while organisational goals are being met (Kandola and Fullerton 1998). In this context, the relationship between race and diversity becomes essential. While race is considered a function of physical or biological variations, ethnicity may not be connected with these variations. There is no evidence of the use of ‘race’ in science. However, the fact is that the external appearance of individuals—such as skin colour and facial features—is associated with treating people differently, based on what is assumed to be racial identity (April and Syed 2015).

Racial and ethnic discrimination relates to ongoing stereotypes in society, which are described as ‘beliefs about the characteristics, behaviour and attributes of members of certain groups’ (April and Syed 2015, 135). Such beliefs may affect employment, promotion and other decisions, leading to sophisticated discrimination in the workplace. Adverse generalisations can result from discrimination, such as ‘Indian people have poor time management’, ‘Americans are domineering’, ‘Black Caribbean people are lazy’, ‘French people are obnoxious’, ‘Nigerians are aggressive’ and ‘Singaporeans are uncreative’. These generalisations may affect employers or managers to make decisions that: (i) do not adapt to the law or spirit of equal opportunity; (ii) discriminate against individuals during recruitment and career advancement; and (3) affect the selection of offices, plants and manufacturing sites (April and Syed 2015).

While diversity involves hiring minorities and foreign nationals because of the workforce demographic trend, in addition to demographic differences, cultural differences are also important in managing diversity in the workplace. With respect to cultural differences, Querling, Stuart and Butler (2008) stressed that Western society is not divided by differences, but by an inability to respect and learn from these differences. Being exposed to diversity has the power to bring people together; however, diversity can create fear if people focus on differences and ignore similarities. Fear is further increased by the inability to communicate effectively with other people who tend to disagree about certain issues—political, religious, cultural and so forth. Thus, fear of the unknown can damage the strategic management of diversity in the workplace (Saxonhouse 2001). Given the seriousness and potential effect of fear on diversity, other cultures must be understood and the barriers of difference should be overcome. Thus, it seems that one of the central issues that must be analysed in contemporary studies is the effect of fear and how it becomes a challenge to management.

Around two decades ago, Prasad and Mills (1997) stated that the management of diversity is under-researched and under-theorised in the management literature. Despite the increasing number of studies in the field, the gap in the literature still seems to exist. This book attempts to address the ways leaders are beginning to realise the organisational benefits and competitive advantages of diversity management by discussing the benefits and challenges of strategically managing diversity.

Benefits of Strategic Management of Diversity

The relevant literature provides rich insight into the benefits of diversity management. For example, DiTomaso (1999) argued that diversity creates positive results for organisations when differences among people lead to more qualified workers, creative problem solving, productive human resources and a better understanding of markets and competitors. Business leaders are beginning to realise the organisational benefits, potential competitive advantage and importance of different views leading to improved organisational performance, decision making, creativity and innovation. As an attempt to deal with the increasing levels of diversity in the workforce, diversity management has become a positive tool in organisations that can solve and prevent negative group dynamics. According to De Cieri and Kramar (2007), strategic management of diversity creates an environment that permits all employees to contribute to organisational goals and experience personal growth in the process. Another supporting element is the view that managing diversity recognises that employees’ differences in the workplace are a potential strength that can enhance business results (Kelly and Dobbin 1998).

Diversity management aims to provide tangible benefits to the company. It is viewed as a business strategy that aims to use the full potential of employees in the organisation to achieve a competitive advantage. In contrast, employees of different backgrounds (such as race/ethnicity or gender) were previously considered unqualified by managers if they failed to adhere to the values of the majority. Diversity allows members of organisations to bring to the workplace their unique perspectives for the benefit of the organisation (Mor Barak 2017).

Benefits of diversity to organisations can be featured in three main points. First, the voluntary nature of diversity management means that it may not last during economic difficulties. It has been reported that, if organisations must choose among competing expenditures, diversity programs may be reduced or removed because it takes too long to reap their benefits. Second, the broad definitions of diversity mean that vulnerable people—such as racial minority groups, people with disabilities and women—may not enjoy the protection they merit because the resources have to be divided among many groups. Finally, the practical benefits denote that, once it is realised that diversity is no longer of any benefits to organisations, it will disappear. Thus, diversity must be established on the principle of giving tangible benefits to organisations, as well as based on moral and ethical obligations to diversity (Mor Barak 2017).

Further benefits of strategic management of diversity include improved employee relations and securing new sources of talent (Gordon 2007). Similarly, McLauren (2009) argued that an organisation with a good reputation for workplace diversity has a higher chance of attracting and retaining the best available talent in the market. Strategic management of diversity can also lead to a work environment in which conflicts are less likely to arise. McLauren (2009) further claimed that strong strategic management of diversity results in effective problem solving and efficiency for organisations because management can use the diverse workforce as a pool of multiple solutions and ideas to address problems and challenges.

The literature indicates that international organisations take advantage of the linguistic and cultural backgrounds of their employees to enhance communication and product alteration. In addition, language plays an important role in diversity management. Responsible written and verbal communication is imperative to ensure understanding and identification of key cultural differences. Thus, training employees to be aware of these differences is vital. Diversity is no longer only about fairness or imposing moral, ethical or legal rules, but also about valuing diversity and the diverse workforce, and managing these well for the organisation’s advantage (Litvin 2006). These views suggest that diversity management offers mutual benefits to both employers and employees. For this reason, it is imperative to study whether organisations are aware of these mutual benefits, and whether they effectively manage their diverse workforces to maximise these benefits.

Additionally, international organisations are more affected by the globalisation of management, and will adopt diversity management for flexibility. Organisations that aim for equal opportunities and have recently included diversity management have revealed a lack of competencies and resources, compared with organisations seeking competition and foreign multinationals (Ravazzani 2016). With the globalising economy, diversity management refers now to the workforce within other nations. International diversity management deals with managing a diverse workforce of citizens and immigrants in a single national organisational context, such as an Australian organisation implementing policies and training programs for its employees to offer employment to minority groups and immigrants in the workforce. The second type, cross-national diversity management, refers to the management of a workforce of citizens and immigrants in another country, such as a Canadian organisation with branches in China and Malaysia introducing diversity policies and training that will also apply in its headquarters and subsidiaries in these countries. Each of these types requires different policies and programs, and cross-national diversity management requires employers to comply with the legislation in different countries. For example, while US organisations may provide training and promotion to young women in accordance with anti-discrimination legislation, its Korean subsidiaries may consider this a waste of time. Thus:

White (1999) discussed some common themes that support diversity in the workplace. The first theme is that multicultural organisations attract and retain the best human resources from diverse cultural backgrounds, and subsequently gain competitive advantage. Similarly, several other authors (Carrell, Elbert and Hatfield 2000; Hollwell 2007; Silk et al. 2000) have claimed that organisations that successfully manage diversity tend to attract the best personnel, thereby leading to organisational benefits and improvements. The second theme indicates that a multicultural organisation is able to understand and penetrate more widely into improved markets, employ diverse workforces internally and serve diverse external clients. In this context, a potential benefit of diversity is in marketing customer relationships, and diverse organisations will gain market share, especially if customers prefer dealing with diverse employees. It has also been revealed that ethnically diverse upper management have better knowledge of marketplace factors and create new product markets. Thus, racial diversity is important to organisations and can generate more customers, more sales income and increased market share (Ellis and Keys 2015).

Kandola and Fullerton (1998) also explained that managing diversity offers great benefits to organisations by enabling them to make better use of their employees. This can include developing an improved understanding of the political, social, legal, economic and cultural environments of the countries from which employees originated. Therefore, a potential benefit lies in the increased interaction between management and employees at other levels in the organisation, and diverse organisations tend to have organisational flexibility and improved problem solving. It has been suggested that positive benefits related to diversity are a result of improved workforce practices (Ellis and Keys 2015).

In Western developed countries, language (both oral and written) is used in work interactions and has become a skill required of workers. Knowing a particular language represents an added economic value of communication skills in the workplace. Communication allows workers to achieve their goals and control their destinies. Language has been placed at the forefront in the service sector, especially in the industrialised world. The interactions of migrants and minority groups in the workplace provide opportunities in the workforce. In addition, knowing more than one language or being competent in English is a valued skill that must be possessed by individuals to obtain specific types of employment. The ability to write well in two or more languages has also emerged as a criterion for recruiting employees, and serves as a protection of one’s job in times of crisis (Moyer 2017).

The third theme supporting diversity in the workplace states that multicultural organisations display higher creativity and innovation, and that the talents of gender and ethnically diverse organisations are invaluable. The fourth theme argues that multicultural organisations have a better ability to problem solve (Adler 1991). The fifth theme states that multicultural organisations are more adaptable to change and more flexible than non-multicultural organisations (White 1999). These themes provide the basis of useful steps to support workplace diversity to build stronger and more competitive organisations. However, the effectiveness of the ways these features have been acknowledged and internalised in organisational management activities is an open question that this book attempts to address.

Organisations should be aware of the importance of employees and their communication skills by encouraging them to be part of the decision- making team and to use their communications skills to improve productivity. Kuga (1996) argued that diverse work groups can be a source of new ideas and opportunities, a means of growth for individuals and a new challenge for people who lead and manage diversity. In addition, enhancing communication skills and productivity can increase a team’s effectiveness. Further, Kuga (1996) added that the communication process may be influenced by cultural and religious background, age, gender and first language. Therefore, creating an organisational environment where management converts diversity from a challenge to a source of productivity and communication is a critically important task, which can only be achieved through the successful strategic management of diversity.

It has been suggested that support for diversity is an economically sound business practice that results in competitive advantages, including increased innovation and creativity in the workplace. Organisations that require specific skills and experience may benefit from a diverse workforce at upper levels because managers and directors decide on innovations by virtue of their authority (Ellis and Keys 2015). Businesses that embrace their nation’s changing demographics will gain the economic benefits of diversity and inclusion in the workplace. It is claimed that ‘a diverse economy is a strong economy’ (Burns, Barton and Kerby 2012, 1) and organisations that hire a diverse workforce are likely to find the best talent to compete in the competitive economy. Combining different backgrounds, skills and experiences breeds creative solutions. In addition, the adoption of diversity significantly increases productivity and job performance (Burns, Barton and Kerby 2012).

The supporters of a business case for diversity argue that diverse organisations can: (i) achieve cost savings, (ii) recruit the best talent and (iii) have high rates of growth (Canas and Sondak 2014). Regarding cost savings, it is suggested that embracing the value of diversity and diversity management enables organisations to reduce costs and have competitive advantage. If employees feel they are respected, they will remain longer in the organisation and maintain productivity. The Society for Human Resource Management (quoted in Canas and Sondak 2014, 18) stated that an organisation’s return on investment ‘is reduced when commitment and productivity are lost because employees feel disregarded, time is wasted with conflicts and misunderstandings, and money is spent on legal fees and settlements’. Reducing these expenses will lower costs and increase profits in the organisation (Canas and Sondak 2014). Cost savings is crucially important because it refers to the organisation’s bottom-line. Insecurity among employees causes absenteeism, and diversity initiatives tend to have a positive effect on both absenteeism rates and labour turnover. Another element of cost-savings concerns are lawsuits regarding sexual preference, age and race discrimination, and the importance of investing organisational efforts to prevent the occurrence of such lawsuits. Organisations must comply with laws related to discrimination and ensure that proper policies are implemented to deter legal actions instigated against them (O’Donovan 2017). The attraction, retention and promotion of diverse employees are referred to as the ‘talent war’, which is another argument for managing diversity. Further, customers, suppliers and the marketplace are becoming increasingly diverse; thus, a diverse workforce is needed to respond to their needs and penetrate new markets. Similarly, organisations can benefit by matching their sales force with their customer base (O’Donovan 2017). The concept of winning the competition for talent, as a benefit of diversity management, relates to the assumption that organisations that enjoy a strong reputation for managing a diverse workforce will appeal more to talented workers. Based on this assumption, it is an advantage to be ranked in one of the ‘top diversity lists’, such as Fortune’s ‘Best Companies for Minorities’ or DiversityInc’s ‘Top Companies for Diversity’. Further, when considering which organisation to join, talented recruits often ask about the company’s diversity programs, and this has a significant bearing on their decision to consider that organisation for employment (Canas and Sondak 2014).

In relation to high rates of growth in the diverse workforce, the assumption is that, when employees from diverse backgrounds in an organisation feel that their viewpoints are considered, creativity and problem solving are likely to be enhanced. In addition, the skills of flexibility and adaptability acquired from a diverse workforce will improve employees’ ability to communicate successfully in a complicated and global economy (Canas and Sondak 2014).

Another benefit of productive diversity is that it establishes better relationships between management and employees (Silk et al. 2000). However, to make these factors an essential element of the strategic management of diversity, organisations must value and pursue diversity effectively in the workplace. This will lead to attracting and retaining employees, and encouraging their contributions to better serve their customers and suppliers and satisfy their shareholders. Gandz (2001) indicated that there are two processes needed to achieve diversity in organisations: (i) moving from a non-diverse workforce to a diverse workforce and (ii) managing diversity by realising its benefits at a minimal cost. However, this requires acknowledgement of the costs associated with a diverse workforce and an effective strategy to address them. Gandz’s study did not directly address the question of how these processes can be achieved.

Challenges of Strategic Management of Diversity

While the benefits are clear, diversity and its management are not without challenges. Just as the opponents to diversity have been vocal, the challenges must also be considered to provide a balanced perspective. The literature on managing diversity in the workplace provides extensive insights on the benefits and challenges associated with managing a diverse workforce. According to Bhadury, Mighty and Damar (2000), the effect of diversity management on organisations does not depend on diversity itself, but on the type of diversity climate that exists in organisations. Hence, organisations that have well-designed diversity management strategies can effectively manage the challenges derived from the diversity climate in which they operate. These approaches can also convert diversity into a strategic tool to increase organisational effectiveness.

The other side of diversity in the workplace encompasses negatives and risks, which may lead to misunderstandings, suspicions and conflicts, resulting in absenteeism, low work morale, loss of competitiveness and problems in employees’ social integration. Immigrants may also have a language barrier that can weaken communication in the organisation or increase risks emanating from cultural differences. The European public has a negative attitude towards immigrants. Based on these problems, the task of diversity management involves eliminating the negative elements of diversity in the workplace. Increasing the diverse workforce in an organisation and acquiring special skills by executives who can manage diversity provide an environment for respect and equality for all employees. Therefore, among executives, it is essential to increase awareness of diversity and the importance of cooperation to ensure the organisation’s success. The executives can then manage diversity from the top down, where a change in the culture will affect all levels. Training at all levels is also necessary for all individuals, and organisations should implement policies and programs in the field of HRM to incorporate steps against bullying, and monitoring the organisation’s goals in relation to equal opportunities. The measures taken by the organisation should increase respect and understanding and eliminate discrimination throughout the organisation (Urbancová, Čermáková and Vostrovská 2016).

In relation to gender participation in the workplace, Jamieson and O’Mara (1991) observed that, in the early twentieth century, white males dominated the workforce in the US. In Australia, the workforce was similarly male dominated during this period, as shown by the 1911 labour participation rates published by the ABS (2000). These data show that the participation of women in the workforce was below 50% between the ages of 15 and 64, and below 20% at the age of 35 and onwards (ABS 2000). However, today, both women and various cultural groups are now more visible in the labour force in Western societies, including Australia, and employees of different cultural backgrounds have a variety of values, work ethics, and ethnically and culturally rooted behaviour. Thus, it is argued that, in managing the diverse workforce, the challenge for an organisation is to integrate, not assimilate, the rapidly growing number of employees from diverse cultures into the workplace. As Henry and Evans (2007) stated, diversity can be an important source of conflicts in organisations. These conflicts are mostly triggered by prejudice, derogatory comments and feelings of superiority. To tackle such challenges, organisations should manage diversity to benefit the organisation; otherwise, conflicts can prevent the realisation of the full potential of both organisation and employees (Henry and Evans 2007). In relation to challenges in the workplace, Jamieson and O’Mara (1991) also proposed several organisational strategies, such as rethinking communication techniques by considering employees’ unfamiliarity with the English language, or providing rewards that are valued by different cultural groups. However, these strategies do not present clear-cut solutions to the challenges associated with a diverse workforce, as the climates of diverse organisations differ from each other. As a result, organisations need to introduce specific solutions tailored to the type of diversity in their operations.

Furthermore, exclusion is one of the substantial problems faced by today’s diverse workforce, where the reality experienced by many individuals and perception of many employees is that they are not considered part of the organisation. The inclusion–exclusion continuum is defined as follows:

Therefore, the concept of inclusion–exclusion considers how employees perceive their experience and position in the organisation in relation to its ‘mainstream’ group. Traditionally, human beings depend on one another for livelihood and basic needs, such as food, shelter, clothing and social inclusion, which have been essential survival functions for many years (Mor Barak 2005).

In addition to the inclusion and exclusion duality, Wrench (2015) elaborated that racial/ethnic discrimination occurs in the workplace surreptitiously, without the victims always being aware of it. Employers may exhibit a ‘no problem here’ attitude in relation to discrimination. Reluctance to acknowledge the existence of discrimination at work drives employers to make these statements to deny employment opportunities driven by hostility towards some groups. Some employers may state that although they are different, there should be no discrimination. However, ethnic discrimination can exist without racist motives. There are various ‘types’ of discrimination, and direct discrimination is just one of them. Surveys indicate the existence of discrimination deriving from the achievements of immigrants and their descendants, compared with the majority population (identified as ‘ethnic penalty’), taking into account age, experience, educational level and other pertinent factors. The ethnic penalties are identified as only indirect indicators of discrimination, and have specific relevance to the dominant ‘no problem here’ assumption (Wrench 2015). One direct indicator of ethnic discrimination at work is the documentary evidence given by tribunals and court cases, and so any discrimination in employment is outlawed by legislation introduced by the government. Formal complaints by victims about discrimination are rarely made because of the financial costs and difficulties of obtaining evidence. The cases that reach tribunals and courts present strong indications of the nature and forms of ethnic discrimination, yet these complaints and cases do not constitute a good indicator of the extent of discrimination (Wrench 2015).

Cultural diversity in the workplace is now a reality, and culturally diverse work groups form an integral part of organisations around the world. Interaction between multiple cultures requires intercultural understanding to manage and avoid conflicts, and reach employees’ performance potential. Conflict is detrimental to organisations and requires attention to determine the causes and find resolutions (Korovyakovskaya and Chong 2016):

Additionally, research on cultural diversity reveals that members of culturally different groups are not attracted to each other and have more communication problems with each other than do members of a culturally homogenous group (Korovyakovskaya and Chong 2016).

The relevant literature indicates that communication-related problems seem to be an important source of challenge for organisations with diverse workforces. Good communication skills are vital if the workplace is to operate effectively and avoid misunderstandings. The failure to ensure effective communication between management and employees and among employees will lead to suspicion, lack of confidence and even hostility (Aytemiz Seymen 2006). These feelings present differing challenges to be managed by organisations. It has also been shown that the most common type of conflict in diverse workforces is conflict between employees (Kuusela 2013). The ways in which organisations deal with such conflicts are dictated by the types of diversity management they have in place. If these conflicts are seen as being merely due to character differences, while ignoring the cultural factors, the underlying cause of the conflict cannot be addressed effectively by management. The skill level of managers plays an important role, given that managers lacking the required skills may not be able to arrange conversations between employees to resolve conflicts.

Kuga (1996) suggested that communication in the workplace can be made more effective through knowledge of people’s backgrounds. Based on their varying perspectives and experiences, employees might have different interpretations of words and phrases, and this can be seen as a significant workforce challenge. Diverse work groups have different communication styles, and the challenge is to acknowledge these differences and choose the right approach to avoid the escalation of conflicts. Another challenge identified by Kuga (1996) concerns feedback, which is discouraged in some cultures, especially in the case of a younger person having to communicate feedback to an older person. However, feedback is important because it is an indication of effective communication and a confirmation that the message sent was received as intended. Therefore, feedback mechanisms implemented in an organisation constitute one of the most important aspects of diversity management. Stuart (2013) recommended points for effective communication, such as listening to others to know what they are thinking, and having empathy to help oneself be open to others’ opinions. Stuart further recommended being patient with others and ensuring clarity to help them get to the intended message. A further recommendation is maintaining a positive attitude at work, and being aware that self-improvement is necessary, with practice to improve communication skills (Stuart 2013). These recommended points are a challenge to any organisation with a diverse workforce because they require management to introduce implementation and monitoring policies.

Similar to Stuart (2013), Edewor and Aluko (2007) argued that, to manage an effective and harmonious diverse workforce, organisations should introduce specific strategies in the workplace. These strategies include setting a good example to address issues such as myths and stereotypes, and communicating in writing to prevent prejudice and discriminatory behaviours. Further strategies include implementing training programs, recognising individual differences and actively seeking input from minority groups (Edewor and Aluko 2007). Additional recommended strategies include revamping reward systems, making room for social events, creating a flexible work environment and conducting continuous monitoring. Each aspect of the effective management of a diverse workforce presents further challenges for organisations, based on various factors, such as the willingness to bear the associated costs and continuous commitment to implement these measures consistently.

In relation to diversity in the workplace, a major difference—commonly described as the ‘hearable difference’—is one of the core issues upon which this book focuses. Language is a means of communication that enables workers to know what their managers want or what other colleagues say. In their empirical study, Zanoni and Janssens (2004) examined an international automotive organisation in Flanders, the Dutch-speaking part of Belgium, which employed Moroccan workers who could not speak Dutch. As a result of the division of tasks, workers were dependent on each other to perform tasks, and this could only be done if they understood each other or employed someone who could speak their language to work with them, thereby creating teamwork. The organisation solved this problem by employing someone who spoke Moroccan to provide the necessary communication (Zanoni and Janssens 2004). In the Australian context, this suggests the need for a language other than English in the workplace to facilitate communication with clients and between employees. The literature further indicates that international language management in transcultural organisations is an indication of successful diversity management, since language is one of the strongest indicators of group identity and is a powerful element of ethnic conflicts (Christiansen and Sezerel 2013).

Riccucci (2002) raised a key point by referring to the ability of senior management to develop programs and strategies to accommodate and manage diversity in their workplaces. This involves the ability to harness the diverse human resources available to create a more productive and motivated workforce (Riccucci 2002). Similarly, El Shearif (2013) claimed that organisations today face the challenge of accommodating reasonable adjustments, maximising and harnessing the potential of all employees, and recognising and valuing the cultural and linguistic diversity in the workplace. These are all important challenges faced by organisations that employ diverse workforces. Programs to address diversity in the workplace should be designed in a way that makes them sensitive enough to address various factors, such as culture, ethnicity, gender and age. For example, Simlin (2006) indicated the negative relationship between age and perceptions of diversity openness. To address this challenge, management must conduct training and workshops for older employees regarding the presence and necessity of diversity in organisations. Whether and to what extent organisations can reap the benefits of a diverse workforce and address the challenges associated with this workforce depend on how differing values, beliefs and work practices derived from the diverse workforce are managed by organisations. The following section focuses on the implementation of diversity programs to shed more light on the strategic management of diversity.

Implementation of Diversity Programs

The purpose of diversity management is to direct organisations towards attaining diversity in the workplace. Diversity management programs come in various forms, yet have one purpose—to appeal to and develop a multicultural workforce by focusing on women and ethnic minorities. Moreover, a common component of diversity management programs is to educate and train employees (Madera, Dawson and Neal 2016). There is no single uniform method for implementing a successful diversity program for all companies. Diversity efforts vary and must be tailored to suit each organisation’s needs and goals. In implementing a diversity program, pragmatic programs and policies consisting of strategic management tools used by organisations are essential to achieve job satisfaction and the optimal performance of diverse employees. Such programs and policies aim to achieve the effective integration of employees from diverse backgrounds. They are also used as tools in both pre- and post-hiring processes by introducing opportunities, such as flexible working hours and collaborative working arrangements (Pitts et al. 2010). These policies constitute a good example of one of the three diversity management program types, managing for diversity, which focuses on ‘pragmatic management policies for helping employees to succeed at work’ (Pitts 2007, 1578). The other two types of diversity management programs are AA (focusing mainly on the legalistic side of diversity) and valuing diversity (with an emphasis on norms and values in creating an inclusive and tolerant work environment) (Pitts 2007). Both the type and nature of the program and policies adopted are open to interpretation by management, based on individual needs and targets.

Organisations that promote themselves as valuing diversity appeal to members for being egalitarian, with equal opportunities offered to all employees in an environment that maintains an unbiased, inclusive, multicultural workforce. Employees wish to feel they are looked after by the organisation, that they are safe at work and that their organisation endorses egalitarian values and evaluates workplace fairness, which will yield positive outcomes for all its employees. Thus, it is claimed that investing in diversity management will increase organisational attraction and people will want to work there (Madera, Dawson and Neal 2016).

The recruitment and development of human resources forms an integral part of diversity management. Growth of workforce diversity places pressure on managers to develop an organisational culture that helps employees from different environments to succeed. To be competitive, organisations seek talented workers, even among students, and target groups, such as women on maternity leave. Supporting mothers is a part of supporting equal opportunities and providing temporary employment positions shortens the period of unemployment and helps lead to long-term employment, which helps mothers returning from maternity leave transition back into the workforce (Urbancová, Čermáková and Vostrovská 2016).

In terms of maximising and sustaining employee effectiveness, diversity training has been used as an important element in the implementation of diversity programs. Diversity training refers to a set of programs and activities that show the differences between employees and offer strategies and ways to handle them. Robbins (1998) claimed that diversity training helps participants learn how to value their differences, increase cross-cultural understanding and overcome stereotypes. The important issue for organisations is to develop a diversity training strategy tailored to the organisation’s specific needs and targets, and to implement the training activities effectively as a supporting tool of an overall diversity management strategy. However, some diversity management initiatives are more effective than others, and the key to success lies in the implementation itself.

Regarding diversity training, it has been found that training is important for managers and corporate-level executives because the latter influence personnel policies. Frontline managers constitute a vital link between diversity management and employees, since the selection, training, appraising and rewarding of frontline employees are the responsibility of frontline managers. It is also argued that managers’ different views can affect the acceptance of diversity management programs, and influence members’ attitudes towards the organisation. It is assumed that individuals and organisations become more effective when the values of both the individual and organisation are harmonious. In addition, diversity practices lead to a competitive advantage in three particular areas: ‘attraction, increased productivity, and a reduction in turnover’ (Madera, Dawson and Neal 2016, 22).

Romanenko (2012) warned that there is a gap between what organisations are doing and what they should be doing. The literature indicates that the way most organisations are presently acting regarding the management of diversity involves mere compliance with government legislation. However, as argued in the following chapters, more effective implementation of diversity policy requires a self-tailored policy that is sensitive to the benefits and challenges associated with organisations’ own diverse workforces.

Summary

Strategic management of cultural diversity is investigated in this chapter showing how workers are treated and enjoy equal rights in accordance with the law. Diversity approaches emphasise the importance of equality and performance, and the need for legislation to support diversity management in organisations. The discussions further include the historical development of diversity management in the workplace, how it differed from AA and the subsequent emergence of inclusion. In the absence of a clear definition of workplace diversity, the need for various management styles for different cultures is presented in this chapter and the way to deal with similarities and differences of a diverse workforce is discussed. Issues have been covered regarding the measures that organisations can take to eliminate discrimination, attract employees and provide equal opportunities.

Furthermore, the extent of globalism and diversity, the benefits and challenges in the workplace and what constitute competitive advantages in organisations are considered with the impact of interaction with visible and non-visible minorities. This chapter considers the concept of inclusion-exclusion, the importance of communication and the implementation of diversity management in the organisations as well as the process involved for an effective policy.