Business Diversity Defined - Literature review Example

? The Business Case for Diversity Literature Review Literature Review The current need of today to spread globally for organizations have increased the attention given to the concept of business diversity. It has become a hot issue in the corporate and legal sphere because organizations that succeed in managing and cashing diversity well also succeed in attracting the best personnel and workforce (Barker & Hartel, 2004). The concept of business diversity has thus been probed further and researched well. The liberalization and globalization basically worked to promote business diversity in early 1990’s. The liberalization of economies and adjustments and advancements in organizational structure further opened doors of business diversity (Ongori & Evans, 2007). The different theories and approaches of diversity management have been developed to understand the concept of business diversity in a better manner. These theories and approaches have been widely appreciated and supported by academics, managers and diversity consultants. Business Diversity Defined The business case for diversity management can be better understood if it is divided in three sections (Nicholas, Sammartino & Lau, 2007): 1. The HRM Business Case for Diversity Management According to the HRM business case of diversity management, unmanaged diverse human resource only results in increasing the business costs by reducing the job satisfaction, increasing turnover and absenteeism rate and creating conflicts in team members. The sound management of diverse human resource results in creating a competitive edge for the organization. 2. The Knowledge Case for Diversity Management The knowledge case for diversity management basically takes in to account the system of information and knowledge flow. It finds ways and strategies to facilitate knowledge creation and transmission. 3. The International Business Case for Diversity Management This business case works to determine how to exploit cross cultural capabilities in favor of the organization and business success. This business case illustrates that effective management of diversity has the potential to result in positive international orientation of a firm by strengthening international networks and improving mutual business decision making. Initially the diversity management was regarded as a tool to legally safeguard an organization that it is complying with the legal requirements of equality and not discriminating against any class (Ongori & Evans, 2007). However the recent years have seen a change in the perception of diversity by managers and recruitment agencies. It has evolved to become a more proactive concept with significant bottom line advantages. Many corporation and organization are making a point to make sure that their workforce is well diversified to facilitate unique, innovative and creative ideas for problem solving which translate in better overall performance of the organization (Allen et al., 2004). A case study of Botswana emphasized the need of business diversity. The society of Botswana is multicultural with a large number of immigrants coming from all across the world. It means that the organizations operating in Botswana does not have choice but to be work force diversified. Their competitiveness, level of innovations, profits and business success are all dependent on how well it manages its diverse workforce both within and across the organizational boundaries (Barker and Hartel, 2004). The issue of business diversity is gaining more interest of the researchers and politics because of the slow shifting of trend of economies from manufacturing to services. There is a greater need in the services market to communicate and network with different organization and people which have further emphasized the need of today to manage business diversity well (Wentling and Palma-Rivas, 2000). Advantages of Business Case of Diversity The business case for diversity works to provide a competitive edge for any organization (Karsten, 2006). The question that might be raised now is how the business case for diversity manages to achieve profits by providing a competitive edge for an organization. The literature about the business case of diversity provides substantial reasons for that. According to Kochan et al (2003), most of the businesses of today have a diverse customer base which consequently calls for a diverse employee base to cater them by a better understanding of their needs and wants. Robinson and Dechant (1997) were also of the view that ‘your work place should reflect your customer base’. The case study of Coors Brewing Company is a good example in favor of the argument of the business case for diversity. The Coors Brewing Company initially exclusively catered to the white male which were mostly of college and university students. As a result, their workforce was also homogeneous and only comprised of white people. Today, Coors brews 20 different kinds of brands for a diverse customer base and consequently their work force is also made up of a diverse customer base (MillerCoors, 2008). It was also found out through extensive research that a team which is composed of diverse members comes up with better solutions for workplace problems in comparison to a homogeneous team (Krasten, 2006). The reason behind this was illustrated through a case study of Ford Motor Company which was the access to more information, richer perspective and more number of proposed approaches to solve a problem (Thomas, 2005). The Ford Motor Company makes use of its diverse work team to come up with solutions for the problems encountered by the organizations. They found out that the teams which comprised of women and other minority members provided more sound solutions for the organizational problems as compared to the homogeneous teams (Cox, 2001). Another reason behind this can be the characteristic of a diverse team to be able to apply divergent thinking approach by looking at the differences in order to propose solutions instead of convergent thinking by looking at the same thing and not taking in to account the differences (Thompson, 2003). A diverse team has seen to carry out a better critical analysis of situations because they have a wide experience and access to wider vistas of knowledge as compared to the traditional teams. The ability of a diverse team to evaluate different situations from different perspectives puts it at par from the homogenous teams (Konrad, 2003). Additionally, a diverse team is also more tolerant of diverse views and values. An organization which comprises of a diverse work force typically has a friendly and open environment where the divergent views, ideas and values are not only tolerated but also encouraged and appreciated (Cox, 2001). Hays Thomas (2004) provides more arguments in favor of the business case for diversity through a case study analysis of Bank of America. The Bank of America succeeded in gaining substantial profits through partnering with La Raza Hope Fund to support the low income Hispanic community because of its increasingly large Hispanic customer base. The diverse organizations are finding new ways to be innovative and better serve their customers and thus gaining more strength and profits. The business diversity can help the businesses enter the international market (Cascio, 1998), increases its ability to create and innovate (Jackson et al., 1992), become its competitive advantage (Jackson et al., 1992), enhances its organizational flexibility and makes it adaptable to environmental changes (Jackson et al., 1992). There are many other studies published in renowned journals which support the business case for diversity. There has been substantial proof of all kinds of diversity aiding the business financial performance. According to Keller (2001), functional diversity worked to improve the technical quality of organizations while Kochan et al (2003) was of the view that racial diversity specifically in financial services companies’ works to positively influence the business performance. Additionally, Frink et al (2003) through their extensive research found out that the market performance of a business was seen to be very positively increased when the gender diversity and ratio in that organization was 50%. So, all the different kinds of diversities are working to enhance and positively influence the businesses. The literature from the research studies indicates that the diversity can be one factor in the overall success of an organization. However it cannot be concluded that diversity works across all spectrum of different professions (Kochan et al, 2003). The diversity can get in the way of organizational processes and job performance if not amply cashed (Svyantek & Bott, 2004). The context of the organization is an important determinant of whether the diversity will work for an organization or not (Jackson et al, 2003). To clarify the point, if one of the value of an organization is ‘innovations’ then diversity can help flourish this value by bringing about more resources of knowledge and information, rich perspectives and its wider range of experiences. In the same manner if an organization values status quo and it needs to come up with quick solutions for problems through its inflexible procedures and the overall organization environment is unchanging and stable then diversity might not work to positively influence that specific organization (Konrad, 2003). Additionally, organizations in which the group members do not actively network and communicate with each other and the jobs assigned to each individual are routine work and simple then the diversity cannot produce a competitive advantage. Therefore various factors in the context of an organization including; type of strategy, degree of complexity of work, relationship amongst employees work to determine if diversity can be a competitive advantage for a firm. Disadvantages of Business Case of Diversity Mor Barak (2005) showed concerned regarding the fair treatment of the individuals working in a diverse team. He was of the view that if an organization wants to cash its diverse team, it should work to establish a fair environment where the individuals feel that their inputs are equally regarded and valued. The fair environment is not only the morally correct stance to deal with a diverse work force but it also works to enhance the output of the diverse teams and deliver better results (Mor Barak, 2005). There are many diversity climate instruments which are working to measure the perceived fairness in an organization. These diversity instruments take in to account many aspects of the organizations including but not limited to; perception of the employees regarding the fairness in the organizational procedures, the reputation of the organization regarding the treatment of its diverse workforce, the commitment of the management regarding promoting and encouraging diversity and the specific efforts and measures taken by the organization to include all employees in its decision making (Avery and McKay, 2006). Holvino, Ferman and Merrill Sands (2004) proposed more items that should be included in the diversity climate survey to increase its significance. These items enlisted by Holvino, Ferman and Merrill Sands (2004) were appraisals and reward systems, easy access to required information, say in decision making and opportunities to grow and network. Ongori & Evans (2007) worked to identify the disadvantages of diversity at workplace and answered the crucial question of how the diversity can be utilized for maximum benefits of the organization. The cost of training which includes costs associated with seminars, programs and lectures given to employees to help promote and support the workplace diversity. This kind of training is typically incurred on all the employees to help them accept and consider the divergent ideas, thoughts and personalities of the rest of the employees. These kinds of seminars also work to teach the approaches to deal with work place conflicts and prejudices in a civilized manner (White, 1999). A diversified work force is also seen to be encountered with more number of work place conflicts as compared to a homogenous team. Ignorance and lack of acceptance further deteoriates the situation and these issues translates in to ethnocentrism, stereotyping and wider cultural clashes (White, 1999). A diversified workforce witnesses an increased labor turnover and absenteeism rate. The turnover rate of African American in an American organization has seen to be 40% more than the whites working in American organizations. In the same manner the turnover rate for women has also seen to be two times higher than men (White, 1999). There is also evidence of decreasing these turnover and absenteeism rate disadvantages by flexible timings and other corporate benefits; however these absenteeism and turnover do costs $3 million annually to different organizations (White, 1999). Additionally mismanaged diversity also works against an organization’s benefits. The minority group in an organization’s diverse workforce often feels neglected and less valued which results in inhibited abilities and lower job performance of the individuals. Therefore the mismanaged diverse workforce has to encounter unnecessary conflicts which get in the way of full realization of the potential of the workforce (Ongori & Evans 2007). How to Manage Diversity Companies can achieve effective diversity management if they initiate and create different diversity management programs (Hayes, 1999). There have been various approaches and theories which help aid corporations achieve diversity management. According to Jackson et al., (1992) a corporation that works to align its diversity of human resource management along with recruitment, selection, placement and rewards system can possibly achieve diversity management A working environment which facilitate motivation and commitment of its diverse workforce also further aids in establishing effective workforce which is committed to excellence (Bach, 2005). Another approach to manage diverse workforce is through standardized performance criteria’s. The performance standards which are clearly established and communicated aids and works to increase the motivation and job performance of all the employees. The management also identifies desirable and undesirable behaviors which the diverse workforce adheres without any discrimination and favoritism (Beardwell & Claydon, 2007). Furthermore the strategy of utilizing training and development programs to train and educate the workforce to deal with day to day diversity dilemmas has also been proved to be very effective. Some organizations are also taking up mentoring programs which involves hiring a third party consultant or mentor to manage the amply workforce diversity. He mentors the employees and helps them understand the concept of workforce diversity and advise them about techniques and approaches that should be used to manage diversity. These mentors, training programs and performance standards basically create a support system for the diversified workforce and act as a formal and in some cases informal network of support. Conclusion An organization’s positive approach to managing a diverse workforce can be gauged through the importance, emphasis and time they invest in recognizing, managing and taking measures to manage diversity (Allen et al., 2004). It is evident from the literature above that business diversity is the call of the day and it is not possible to survive without diversity in today’s globalized organizational world. The management works to critically analyze the extent of workforce diversity in their organizations and takes measures to make it beneficial for the organization through specific strategy formulations and implementations. The most of present literature focused on the issue of getting the workforce to value diversity. There is a need to come forth with ideas, strategies and ways to utilize and exploit diversity in favor of the organization. The successful organizations of today take business diversity as a norm instead of an option (Lawrence, 2001) which calls for further research and probation on the concept of business diversity. References: Allen R, Dawson G, Wheatley K, White,C (2004). Diversity Practices: Learning Responses for Modern Organization, Development and Learning in Organizations, The Academy of Management Executive. Avery, D. R., & McKay, P. F. (2006). Target practice: An organizational impression management approach to attracting minority and female job applicants. Personnel Psychology, 59, 157-187. Bach, S. (ed.) (2005) Managing Human Resources, Blackwell Publishing  Beardwell, J & Claydon, T (2007) Human Resource Management – A Contemporary Approach, 5th Edition, FT Prentice Hall  Boxall, P, Purcell, J and Wright, P. 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