The Importance of Managing Cultural Diversity - Assignment Example

1. Introduction Globalization has enabled firms to expand across national borders and at the same time it has also led to increased mobility in the global labor market (Groeschl and Doherty, 2000). Relaxation of immigration policies in many countries have enabled skilled and educated workforce to migrate overseas (Baum et al, 2007). Mobility of labor force has resulted in challenges to manage a diverse work force. The hospitality sector has particularly attracted migrant labor because of the steady growth of the sector (Gröschl, 2011). Being the world’s fastest growing industry, the hospitality sector is also a major employer (Pinilla, 2002). Factors such as direct foreign investment, management contracts, strategic alliances and joint ventures have enabled the growth of the sector which makes it imperative for firms to be cultural sensitive (Lee-Ross, 2005). Thus, a combination of rapid globalization and changes in immigration policies resulted in a culturally diverse work force but this impacts productivity unless effectively managed. With changes in the work force interest in managing cultural diversity has grown in recent decades. This is because culture affects technology transfer, management attitude and behavior, managerial ideologies and even government-business relationships (Kundu, 2001). The basic values, attitudes, beliefs and behavior or people differ across cultures. Managers need to recognize and respect the differences at work and utilize these differences to maximize contribution. Therefore, managing diversity is about accepting that the workforce consists of a diverse population of people (Devine, Baum, Hearns and Devine, 2007). National cultures are deep-seated in an individual and have more influence than the organizational culture. National culture has been defined as values, beliefs and assumptions learned in early childhood and this programming distinguishes one group of people from another (Hofstede, 1991 cited in Testa, 2004). However, as the firm expands multicultural forces interact to shape its overall culture (Roper, Brookes and Hampton, 1997). As different nationalities get involved orientation to management and work organization may differ. Roper et al, cite the theory of cultural divergence which states that organizations are culture-bound and not culture-free. However, with a “valuing-diversity” approach a diverse workforce can be turned into a source of competitive advantage for organizations (Cox and Blake, 1991) because ignoring culture is no longer an option (Richardson, 2005). Cultural diversity reflects the characteristics that make one individual cultural different from another. This implies that in a community, people from different ethnic and racial background coexist, each with their own values and beliefs, and with their own expectations (Richardson, 2005). Cultural differences can thus impact harmonious functioning of communities and the firm performance. There is not much evidence to substantiate the claim that managing diversity can improve financial performance, evidence from companies such as Coca-Cola and Publix suggest that not effectively managing racioethnic diversity can be detrimental to the organization (Friday and Friday, 2003). Managing diversity should be an integral part of the organization’s culture. Diversity has two constituents – internal and external development. This paper focuses on internal development which fosters a harmonious work environment, where workers feel valued, and their contribution recognized (Richardson, 2005). External development pertains to the flexibility and alertness to respond to the changes and challenges in the wider community but this aspect will not be covered in this paper. The benefits and challenges of a culturally diverse workforce in the hospitality sector have been discussed. The theoretical concepts of multicultural diversity and its implications of the hospitality sector have been reviewed. Based on the dilemmas identified, different approaches such as leadership and management have been suggested that can help overcome the dilemmas with particular reference to communication and top management intervention. 2. Challenges of a Culturally Diverse Workforce Managers within organizations hold assumptions, ideas and beliefs on how to manage human resources that differ widely across cultures (Groeschl and Doherty, 2000). However, assuming that differing groups share common purpose and values can be dangerous for the organization and this can create rather than diffuse tension at the workplace (Failte Ireland. 2004). Diversity is an attribute that is specific to an individual that makes the individual feel he/she is different from others (Friday and Friday, 2003). Cultural differences lead to differences in perception of goals, values, expectations and proposed course of action which can ultimately give rise to conflicts within the organization. Differences in culture also impact the love and esteem needs as well as the belongingness of people. Even subtle differences could impact decisions, outcomes and organizational effectiveness (Korac-Kakabadse and Kouzmin, 1999). A major dilemma of a culturally diverse workforce is communication. Both verbal and non-verbal styles vary across cultures and this can hinder working relationships as well as productivity (Devine, Baum, Hearns and Devine, 2007). These challenges in a culturally diverse environment are likely because different cultures imply different mental programming (Hofstede, 1984) and these differences govern activities, motivation and values (cited in Gilbert and Tsao, 2000). National cultures also influence how managers conduct performance appraisal, how they interact with their subordinates and how their subordinates respond (Ely and Thomas, 2001). Certain cultural groups may enjoy greater power positions, status and prestige than other groups. According to the social categorization perspective, certain diversity members may form in-group and view the out-group members negatively (Garib, 2013). To change such mindset may be a bigger challenge for an organization than valuing and managing diversity. Communication becomes difficult in a diverse cultural environment as migrant labor is unable to comprehend and understand the nuances of the local language (Kundu, 2001). This also stems from lack of understanding of shared symbols and experiences (Celaya and Swift, 2006). Mis-communication across cultures may make it difficult for organizations to reach out on a single agreement on any issue of concern. Therefore cultural diversity can lead to confusion and ambiguity. This occurs because of lack of knowledge and experience in understanding how an employee from a different culture would interpret or respond to communication (Devine et al, 2007). For instance, “slow” service is the norm in France but if the waiter provides such service in another culture, it is likely to be misunderstood as inefficiency (Devine et al, 2007). Such unfamiliar situations can threaten workers and diversity training can help create a more culturally enriched environment. Failure to manage cultural diversity can impact innovation, service quality, leader innovation and financial performance (Testa, 2004), and lead to breakdowns in communication, interpersonal conflict and higher employee turnover (Friday and Friday, 2003). 3. Benefits of Cultural Diversity The concept of diversity management has therefore been acknowledged as an effective managerial response to challenges of managing increasingly diverse workforce (Gröschl, 2011). Besides, migrant workers and workers from different cultural backgrounds can be beneficial to the economy in several ways as they are able to fill gaps in the labor market as well as alleviate skill shortages (Baum et al, 2007). Cultural diversity might lead to enhanced performance, higher growth and productivity and consequently higher income levels because people from different cultural backgrounds bring with them different skills and problem-solving abilities (Longhi, 2011). This may generate knowledge spillovers, which suggests that a cultural diverse group outperforms a homogeneous group. Flexibility and reduced response time to change (Kundu, 2001), improved decision-making (Friday and Friday, 2003), competitive edge, better public image and increased productivity (Devine et al, 2007) are other benefits that can be derived from a culturally diverse workforce. Cultural diversity can also help reduce wastage, reduce recruitment costs, lead to improved team work and communication, and reduce complaints and grievances (Richardson, 2005). In addition, cultural diversity might provide learning opportunities and creativity benefits as individuals are exposed to diverse routines embedded in culture (de Jong and van Houten, 2014). Management of cultural diversity can create advantages and help achieve competitive edge (Kundu, 2001). Managers must value diversity because cultural diversity promotes creativity and innovation, while it also helps firms to venture overseas. In fact the most innovative companies deliberately establish heterogeneous teams “create a marketplace of ideas, recognizing that a multiplicity of points of view needs to be brought to bear on a problem” (Kanter, 1983 cited in Cox and Blake, 1991). Cultural diversity can also be used as a mechanism for ensuring equal opportunity, fair treatment and end to discrimination (Ely and Thomas, 2001). However, this becomes difficult to achieve unless the managers or leaders have been trained to manage a culturally diverse work force. Thus diversity should not be viewed as a problem but as an exploitable asset (Richardson, 2005). Diversity benefits the employees as well as the organization in several ways. A study by Forbes (n.d.) explains the importance of diversity in innovation which benefits the organization. Diversity has become a strategic imperative for global companies to compete successfully. For instance, companies such as L’Oreal need to have employees and executive representative of different regions and ethnicities as it helps them understand different cultures, guide business practices and develop products as required by different cultures. To gain competitive advantage organizations have to include as many consumers as possible (Forbes, n.d.). A diverse workforce therefore helps in building consumer brands and offerings that are specific to certain ethnic groups. L’Oreal is able to harness the ideas and talent of its diverse workforce to address the needs of a multitude of consumers. Similarly, Credit Suisse realigned its global diversity strategy which enabled regional CEOs and regional managers to create programs that addressed the needs of that region (Forbes, n.d.). Cultural diversity benefits the organization in other ways because when they operate in different cultures they have the opportunity to pick up ideas from the outside and apply them to the business. If an organization has an environment that encourages diversity people would feel free to come forth with their views and suggestions, thereby enhancing the competitiveness of the company. Such corporate cultures are able to attract top talent and provide an environment that helps retain talent, all of which are essential to gain competitive advantage. Cox and Blake (1991) reviewed six ways in which the presence of cultural diversity and its effective management can help firms achieve competitive advantage. The six areas include cost, resource acquisition, marketing, creativity, problem-solving and organizational flexibility. Consciously creating multicultural organizations can help minimize the drawbacks of diversity. Firms need to evolve from being a monolithic (domination of one culture group) and plural (diverse membership but without valuing diversity) to a multicultural organization where members from diverse cultural backgrounds can contribute and achieve to their fullest potential. In a multicultural organization all cultural groups would respect, value and learn from one another. All the cultural groups should be represented at all levels of the organization and the minority culture group should be fully integrated in the informal networks of the organization. 4. Practices and Policies to Manage Culture Diversity As organizations comprehend the benefits of a diverse workforce, sound diversity management policies and concrete practices have to be developed which require intervention and commitment by top management (Gröschl, 2011). Transparent policies and practices provide guidance for management and employees to develop a workforce that is motivated, and that benefits the organization as well. Long-term intervention strategies can help firms sustain competition. Cox and Blake (1991) suggest five key components that would help organizations to become multicultural organizations. These include leadership, training, research, change in human resources management and follow up. A critical issue for effective practice in the cross-cultural context is to avoid parochialism whereby only one management perspective and approach is considered appropriate for all situations and locations (Lee-Ross, 2005). Workers should not be categorized in one cultural group with stereotypical values, attitudes and beliefs. Thus, managers should seek discrete, culturally-based attitudinal information about their workers. Such information could help managers minimize cultural differences and manage cultural diversity (Kundu, 2001). Managers must be able to tie the issues of managing cultural difference to the needs of the business. Thus organizations should train their managers and employees to recognize the cultural differences and use the cultural differences to create advantage for the organization. Managers need to recognize the benefits of cultural diversity, value the difference between individuals, and be sensitive to their contrasting needs (Kundu, 2001; Baum, 2007). Managers should be aware of the significance of communication and determine ways to enhance it. Managers must have the ability to simultaneously code and decode verbal and non-verbal messages (Ting-Tommey, 1999). This is possible through inclusive language, communication behavior, cross-cultural training, effective communication processes, language courses, listening and feedback mechanism, and rewards and recognition (Baum, 2007). Managing and valuing diversity (MVD) training are essential for starting managing diversity (Cox and Blake, 1991). Two type of training are considered necessary – awareness training and skill-building training. Awareness training helps employees understand the meaning of and need for MVD. Employees should also be made aware of stereotyping and cross-cultural sensitivity. Skill-building training educated employees on cultural differences and how to respond to such differences at the workplace. Gröschl (2011) suggests policies and diversity management activities for hotel companies can be communicated effectively through the corporate website. Such communication would help in recruitment efforts and serve to attract talent from different educational and cultural backgrounds. This should be a key priority for organizations that consider global demographic changes, along with the labor intensive nature of the industry and the global presence of hotels. 5. Conclusion Cultural diversity at the workplace is inevitable as a consequence of globalization and firms venturing across national borders. Diversity development can be both internal and external. Only internal diversity management has been explored in this paper. In the hospitality sector particularly, members converge from diverse backgrounds posing challenges for the management. Cultural diversity is considered an asset and is preferred over homogenous groups. However, challenges of cultural diversity can impede progress unless effectively managed. Challenges range from formation of in-groups to communication challenges, from perceptions to problem-solving. Challenges of a diverse cultural group would vary across regions and hence the management too, would have to be different. National cultures are deep-seated and difficult to be replaced. National cultures have a stronger influence over the individual’s values and beliefs than organizational culture or even the host country culture. Challenges are not insurmountable and can be managed if the organization has the culture to manage and value diversity. The benefits of cultural diversity far outweigh the challenges, which enhance the importance of managing cultural diversity. It has become a strategic imperative for organizations to evolve from monolithic or plural organizations and become multicultural organizations. A positive proactive management system is essential to meet the challenges of a culturally diverse workforce. This requires ongoing commitment of the top management in valuing and managing diversity. Training has been found to be the key element in managing diversity. Training creates awareness of the meaning and purpose of diversity; training also enhances skills to manage diversity. 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