The Advantages and Disadvantages of Diversity to a Multinational Organization - Coursework Example

Evaluate the advantages and disadvantages of diversity to a multinational organization, in a rapidly changing global market. Illustrate your answer with examples from business practice: A multinational organization in the present times is not restrained by geographical boundaries and thus needs to embrace diversity in order to conduct business throughout the world. Diversity in multinational organizations occurs mainly due to the collaboration of people form different races, regions, customs, gender and due to migration. Diversity in multinational organization needs to be managed efficiently in order to secure as many benefits to the organization as possible. Diversity or multiculturalism has many advantages as well as disadvantages. A research paper titled, “The Effects of Diversity on Business Performance: Report of the Diversity Research Network,” appears in the spring 2003 issue of Human Resource Management. After examining four Fortune 500 companies in depth, the researchers find that “a variety of contextual variables, including an organization’s culture, strategy and human resource practices, help to determine whether diversity boosts performance or drags it down.” (Kwak & Gwynne, 2003, p.1). Diversity in multinational organizations is a sensitive issue and thus needs to be handled efficiently through proper training of the workforce. Before adapting diversity in its system, every organization should understand the advantages and disadvantages of the same. Advantages of diversity to multinational organizations: 1. Provides the organization a global outlook: Diversity in organization mainly occurs when people from different countries work together for that entity. Individuals have their own race and custom habits. Diversity can only be promoted in an organization if there are no clashing interests among different groups in the organization. When people from different culture work together then the organizations exists between different classes of society and thus assumes a global outlook. The organization can attain a global perspective when people from diverse regions and backgrounds work together. The organization becomes globally known when it adopts a diverse attitude. IBM is a very good example of a company which practices diversity in its organization. Because of its diverse operations the company is known world wide and has become a household name in all those countries. This gives the company a positive image. The talent pool that IBM has created over the years through its diverse venture is a proof of development due to diversity. The adoption of diversity in IBM has led to the minimizing racial and cultural differences and also in enhancing the company’s global image. 2. Boosts the performance of the organization and increases its profits: Diversity in an organization increases its performance because the workforce being combination of people from different parts of the world leads to a good mixture of efficient and diverse human resources which increases the productivity of the firm. A very good example is the Harvard Business School where diversity has led to an increase in team work and has increased the efficiency of the organization. When Harvard Business School accepts diverse students it leads to the creation of managers of a diverse mix who are more confident about diversities in the workplace. When students from different nationalities come to study in Harvard then it increases the performance efficiency of the organization because the brains of different students from different parts of the world combine together to increase the efficiency and this, in turn, results to an increase in the image and popularity of the organization. 3. Innovative learning: Diversity or multiculturalism leads to innovative learning in organizations. When people from different cultures with different specialist skills work together in a single company then it becomes possible to share diverse information and this leads to the development of innovative learning. A very good example of where diversity in organization can lead to innovative learning is the case of Cell-Pro. It is better to have diverse human resource who will deliver innovative ideas than to borrow copyright or patent principles which has strict norms and may prove costly. 4. Broad selection: The practice of diversity in an organization facilitates a variety of options to choose from. For a multinational organization to become global it needs to practice diversity in all spheres of its operation and this should not be restricted only within the company but also outside the organization such as diversity in supplier selection. This will provide ample opportunity for the organization to choose the best supplier from the various available sources. This becomes apparent in the case of Royal Dutch shell. This company selects its suppliers globally and diversely and this enables the organization to procure best supplies for them which increases both its productivity and profits. Also, being diverse, Royal Dutch Shell has the option of ample and diversified range of suppliers to choose from. 5. Diversity – a tool for measuring working performance: Diversity creates competency in the workforce and thus the increases the efficiency of the organization. In this context also IBM can be seen as a perfect example which has used diversity to measure the working efficiency of its workforce and also this has proved suitable to measure competency in the workforce. Disadvantages of diversity to multinational organizations: Diversity is a positive trait but at the same time it also suffers from certain disadvantages. However, the disadvantages are caused due to the use of diversity without proper understanding or appropriate training in organizations. The major disadvantages are as follows: 1. Under utilization: Diversity in organization should be adopted in all levels that is both in the domestic level as well as in the international level. Otherwise it leads to confusion and diversity will have negative impact on the organization. When diversity is not adopted at all levels then it becomes sensitive and does not get a strong hold in the organization. This may to miscommunication and harms the efficiency of the firm. An example which can be provided is of the Finnish company, Transco which has diverse relations globally but its domestic transactions are not diverse. Therefore, its domestic background is sensitive and situational. Thus, its interests globally as well as domestically do not match and this creates imbalance and under utilization of resources in the organization. This implies that the theory of diversity, is practiced in an organization, needs extra care and specific training. 2. Clash of interests between male and female employees: Diversity in organizations sometimes creates a platform for clash of interests between male and female employees or other specific groups of an organization which affects the harmony and working efficiency of the company. Even though male and female employees work together in organization, there is a difference in the incentives being provided to both sectors of employees which disrupts the working balance between the employees. Examples of such organizations are Cisco in San Jose and Pfizer in New York where differences in the incentives paid to women employees has led to clash of interests and has affected the working efficiency of the firm. Conclusion: Diversity in multinational organizations has several advantages as compared to disadvantages. Many companies have adopted diversity in their organizations and yielded good results in terms of large amount of profits and increase in their efficiency. There cases where, as a result of net acknowledging the significance of diversity, companies have suffered as in the case of GEC whose owner Arnold Weinstick could not implement diversity in order to keep the organization running. Despite some of the limitations, it remains a fact that diversity is a positive aspect for a company. If one takes a closer look, it becomes apparent that the advantages outweigh the disadvantages. Also, with proper care, understanding and appropriate training the limitations of diversity can easily be overcome. Reference List Kwak, M., & Gwynne, P. (2003). Human resources: The paradoxical effects of diversity. Intelligence, p.1. Read More