The Basics of Diversity Management

Subject: Management
Pages: 16
Words: 3339
Reading time:
13 min
Study level: PhD

Introduction

A literature review on diversity management was prepared based on the literature matrix comprised in preparation for the study. Overall, most articles on the topic contain contemporary perspectives on diversity management, including its challenges and benefits in modern organizations. Some information on the historical development of the topic was also found, and it confirms the view that diversity management is a relatively new subject that evolved as a result of sociocultural changes in America and other countries. Some gaps that should be addressed in future research were also located and discussed in a separate section.

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Historical Development of the Topic

Background

Historically, the topic of diversity management was tied to social and cultural shifts. This is particularly true in America, where centuries of slavery, racial segregation, and gender discrimination had a significant impact on vulnerable populations’ employment and education. For example, racial and gender inequality in the United States prevented companies from recruiting women and minority groups until the 20th century (Ayega & Muathe, 2018). Thus, the workforce of companies in the U.S. consisted primarily of white men, with little to no diversity evident. These companies had no need for diversity management, as the cultural, ethnic, and gender composition of the workforce was relatively homogenous.

Social Changes and Equality

The Civil Rights Movement and gender equality initiatives in the 20th century sought to address these issues, and they had a significant impact on the development of diversity management. By addressing ethnic and gender inequality and causing changes in the American legislation, these initiatives created opportunities for people from diverse backgrounds to work alongside white men in a corporate setting. This, in turn, created the need for diversity management, as more employees from various cultures were hired, employers had to establish fair working conditions and ensure a positive environment for every employee (Ayega & Muathe, 2010).

The Emergence of Diversity Management

At first, diversity management focused on preventing or addressing workplace conflict and ensuring equal working conditions for all employees. Little attention was paid to the benefits of diversity management and its theoretical foundations. According to an article by Ayega and Muathe (2018), “diversity began receiving attention in the scientific literature in the 1990s” when the need for effective diversity management became evident (p. 10). At this time, leaders and managers recognized diversity as an inevitable factor that could affect the company positively or negatively, depending on their approach. This enabled researchers to examine the concept of diversity management in greater depth to produce useful strategies and explore the effects of diversity on various companies.

Summary

All in all, diversity management is a new concept that emerged as a result of sociocultural changes in America and Europe. When managers experienced an influx of people from diverse backgrounds into the workplace, they needed methods to change working conditions and prevent tensions. Hence, the first efforts to develop a well-organized approach to workplace diversity began in the 1990s. As the next section will show, the research focused on promoting cooperation and reducing the incidence of conflicts, but also studied the benefits and challenges of diversity both for individuals and for companies.

Contemporary Perspectives

The development of scientific thought regarding diversity management has allowed researchers to produce many studies documenting the effects of diversity on various companies. As a result, contemporary perspectives on diversity acknowledge that this feature has a range of benefits for organizations. Nevertheless, some research studies suggest that diversity may result in organizational issues, thus presenting challenges for management.

Benefits

Human resources management

Many recent research studies on diversity management in corporate settings focused on the positive and negative aspects of workplace diversity. For example, diversity was linked to improved outcomes in a variety of human resources management outcomes. Foma (2014) notes that employees working in a diverse environment tend to have a higher level of job satisfaction, motivation, and engagement than those working in homogenous teams. Ayega and Muathe (2018) confirm that diversity is both an intrinsic and an extrinsic motivational factor since it boosts the staff’s attitude and their experiences in the workplace. Another critical benefit of diversity in the area of HRM is that it reduces turnover by lowering employees’ intentions to leave the company (Bačík & Turáková, 2018). This is particularly evident in sectors where collaboration between employees is essential since diversity management plays a critical role in fostering unity and reducing conflict (Freeman & Huang, 2014). Thus, research shows that the influence of diversity on human resources is mostly positive, as long as an effective diversity management strategy is in place.

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Organizational culture

Diversity also plays a critical role in fostering a healthy organizational culture where employees are supportive and appreciative of one another. As explained by Foma (2014), this is mainly because diverse organizations have lower rates of competitive rivalry among workers and can create an inclusive culture that benefits teamwork. Diversity was also linked to enhanced trust and openness in communication, which is considered to be building blocks of organizational culture (Hofhuis, van der Rijt, & Vlug, 2016). In the contemporary context, a company’s organizational culture is of ultimate importance because it affects how a company is perceived by partners and customers. By assisting companies in improving organizational culture, diversity management can become a competitive advantage because it would help to develop and maintain the company’s reputation and image.

Creativity and innovation

Another benefit of workplace diversity is its positive impact on talent development and knowledge exchange in a company. Research suggests that recruiting diverse employees increases the number of talents in an organization, which leads to an improved generation of ideas and helps to enhance problem-solving (Holtzman & Anderberg, 2011). A study by Harjo, Gibson, and Pudelko (2017) also found that multicultural teams were more efficient than homogenous groups in terms of exchanging knowledge, which contributed to their efficiency.

These beneficial influences of diversity play a critical role in organizations that rely on innovations for success. Bačík and Turáková (2018) show that “employees from diverse backgrounds imbue organizations with creative new ideas and perspectives informed by their cultural experiences” (p. 4). As a result, diverse teams can develop new innovative products and solutions that will place the company in an advantageous position in the market. This aspect of diversity is particularly beneficial for marketing companies in the age of globalization, as they can use diverse talents to create marketing campaigns that appeal to a variety of audiences.

Team and individual productivity

A variety of research studies also noted that diversity has a crucial role in promoting team and individual productivity. On the one hand, it enhances communication within groups, thus contributing to problem-solving and agility (Bačík & Turáková, 2018; Hofhuis et al., 2016). On the other hand, diversity management creates a positive organizational climate, which proved to enhance individual motivation and, consequently, productivity (Saxena, 2014). As a result, employees who work in diverse organizations have the opportunity to perform better in both individual and group projects.

Financial performance

The reason why diversity and diversity management are of pivotal importance to many companies is that they are linked to improved financial indicators. McMahon (2010) examines this connection in great detail by considering gender, age, and racial diversity separately. The results of the evidence synthesis show that high racial diversity is linked with improved financial performance in the long term and that this relationship was particularly strong in manufacturing and service industries (McMahon, 2010). Similarly, gender diversity resulted in improved financial performance and was also connected to improved customer satisfaction (McMahon, 2010). However, other studies note that the positive influence of diversity on business performance can only be achieved if a firm has an effective diversity management strategy (Senichev, 2013). This is mainly due to the effect of diversity management on collaboration, productivity, creativity, and other variables that are vital for achieving success in the modern business environment.

Challenges

Impaired communication

Despite the generally positive effects of diversity on many organizational variables, research shows evidence of some problems associated with diversity. For instance, Begeç (2015) indicates that diversity can lead to tensions in the workplace since individuals tend to prefer working in homogenous groups. These tensions are more likely to arise between individuals who come from cultures with significantly different worldviews. Cletus, Mahmood, Umar, and Ibrahim (2018) argue that workplaces employing persons with radical views are more likely to face conflicts and tensions in the workplace. These difficulties are likely to have a negative effect on communication, thus diminishing the benefits of diversity.

Misconduct and corporate culture

Discrimination, bias, or other examples of negative attitudes towards people from minority backgrounds can impair corporate culture, leading to losses in collaboration and productivity. Green et al. (2015) note that failure to recognize and respect cultural differences can lead to misconduct, which has an adverse impact on corporate climate and could make it more difficult for managers to achieve good HRM outcomes. According to Henry and Evans (2007), discrimination and misconduct in diverse workplaces cause employees from minority backgrounds to feel isolated, increasing their intentions to leave and absenteeism.

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Productivity

Ineffective diversity management can also lead to decreased effectiveness of communication and job dissatisfaction, affecting firm performance and employee productivity. For example, in cases of repeated misconduct, organizations are forced to fire employees causing the problem, which might lead to losses in productivity due to increased turnover or inadequate staffing (Hudson, 2014). Even if there is no apparent misconduct, tensions in the workplace might hurt individual and team productivity, resulting in performance losses (Martin, 2014). As a result, it is essential for managers to focus on preventing interpersonal conflicts and addressing poor attitudes to diversity (Bah, 2015). This, in turn, could take up a significant share of their time and effort, causing losses in productivity and performance due to other organizational problems.

Factors Influencing Diversity Management

Another important field of research on the topic is concerned with creating a positive environment for diversity management. This includes addressing the factors that can improve or undermine the effectiveness of diversity management strategies applied in a particular case. The first variable that proved to be necessary for overcoming the challenges and yielding the benefits of diversity is the presence of corporate policies that aim at promoting inclusivity (Shin & Park, 2013). These policies could also set diversity and inclusivity as some of the primary values of the organization, which would contribute to a culture of diversity (Shin & Park, 2013). Understanding that the management is committed to promoting inclusivity would help to prevent discrimination, misconduct, and resistance to diversity.

Secondly, studies suggest that there are particular aspects of leadership linked to diversity management. For example, leaders with high cultural empathy, communication skills, and emotional stabilities were found to be better at diversity management than those who lacked these competencies (Visagie, Linde, & Havenga, 2011). Moreover, leaders’ approach to communication in the workplace was also critical, with transparent, friendly, two-way communication having a positive influence on diversity management (Visagie et al., 2011). These results imply that leadership is a significant predictor of success in diversity management and form the foundation for some diversity management theories and frameworks identified further in the paper.

Lastly, studies point to the importance of certain aspects of organizational culture to diversity management. Companies that excel in diversity management and can benefit from having a diverse workforce are usually adaptable and have a strong focus on corporate social responsibility (Syed & Kramar, 2009; Visagie et al., 2011). High flexibility and adaptability allow the workforce to accustom to changes in the cultural make-up of the organization fairly quickly, thus welcoming employees from minority backgrounds. Similarly, the corporate social responsibility of a company determines its values and stance on prominent social issues (Syed & Kramar, 2009). Organizations that have a strong corporate social responsibility profile consist of employees sharing their values, which limits the possibility of workers discriminating against others or engaging in misconduct.

Summary

As shown in this section, the impact of diversity on an approach can be both positive and negative. In the former case, diversity leads to improved teamwork and collaboration, while also promoting creativity and innovation. In the latter case, diversity could create a threat of discrimination, bias, and misconduct, leading to the deterioration of corporate culture and environment. Whether or not a company benefits from diversity depends on a variety of variables, including corporate culture and leadership styles. Therefore, before implementing the chosen diversity management strategy, leaders should evaluate the corporate climate for barriers.

Historical Development of the Theory

Dynamic Team Diversity Theory

As the topic of diversity in the workplace evolved, new theories emerged to support managers in leading diverse organizations. Diversity management theories are largely focused on creating a positive working environment for diverse teams, where each team member can contribute their ideas and thoughts. For example, the dynamic team diversity theory by Li, Meyer, Shmla, and Wegge (2018) views diverse teams as systems that largely depend on internal changes, such as member addiction or subtraction. The theory states that managers should seek to promote stability in diverse teams and ensure that any changes are smooth and gradual to reduce their negative influence on team members. It is also crucial to identify individual members or groups who have an adverse impact on working processes and to target them in human resources initiatives, such as training or motivation improvement efforts.

Framework for Diversity Management

Other researchers also attempted to put forward theories and frameworks to assist in diversity management. An example of such a framework is the Pragmatic and Holistic Diversity Management Framework offered by Rijamampianina and Carmichael (2005). According to this framework, diversity and its effect on an organization depend largely on the general management system. The authors propose managers use a four-process model consisting of motivation, interaction, visioning, and learning (Rijamampianina & Carmichael, 2005). During the first process, leaders should share positive and negative business outcomes with employees, thus promoting transparency and creating an open culture. During the interaction process, managers should seek to create shared mental models in employees, regardless of their background. This goal can be achieved by improving the internal communication of messages and establishing principles for avoiding or mediating conflicts successfully (Rijamampianina & Carmichael, 2005).

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The third process is defining and sharing a vision with employees to inspire them to work together towards a shared goal. This step draws on the principles of the transformational leadership theory, which seeks to maximize effectiveness by uniting employees’ efforts. This step is useful for enhancing motivation and providing a sense of accomplishment (Rijamampianina & Carmichael, 2005). It also supports inclusivity by preventing the isolation of employees from the process. Lastly, management should promote organization-wide learning by sharing and expanding knowledge and competence. Rijamampianina and Carmichael (2005) note that it is critical for employers to provide equal learning opportunities for their employees, as it will foster trust and reduce disparities. The application of this model could be useful to managers working with diverse teams or looking to improve diversity in their workplace.

Summary

To sum up, there are two key types of theories of diversity management. The first type of theory considers team dynamics and its influence on diversity, and this approach is particularly useful for middle management and team supervisors. The second type of theory seeks to promote and apply diversity successfully in all aspects of organizational functioning by changing the whole management system. Depending on the circumstances, leaders in marketing can use both theories or choose the one that appears to be more suitable for their organization.

Importance of the Study and Implication for Practice

As evident from the literature review, there are still some gaps in the literature that will be addressed as part of this study. The first important gap is that there is little information available on diversity management in marketing companies. Studies that were discussed in this literature review focus on companies in various sectors, but the marketing industry has not received the attention of researchers yet. The first chapter of the project explains that diversity is essential for marketing firms in the age of globalization, as it enables them to be more successful in delivering messages to diverse customers. The benefits of diversity for knowledge-sharing, creativity, and idea generation also make it a crucial factor in this business environment.

Another gap is that, while many scholars have analyzed the benefits and drawbacks of diversity and suggested theories of diversity management, not enough research has been done on employee attitudes to diversity. Since discrimination and other forms of negative attitudes towards diverse workers are still prevalent, it is critical to study their effect on diverse employees’ experiences. The present research will seek to address both gaps to enable managers of marketing companies to reap the benefits of diversity.

Contribution to the Literature

By helping to eliminate the gaps discussed above, the study will contribute to the current literature on diversity management in three ways. First, it will enhance the available scholarly knowledge about differences in diversity management in various types of companies by focusing on the marketing industry. The study will point out diversity-related problems that are specific to marketing firms or shared by organizations in various business sectors. Secondly, the study will add more depth to the current knowledge about attitudes toward diversity in the workplace, possibly identifying new areas for future research. Lastly, the study will complement the current information on the topic of diversity management by defining the needs of managers and leaders of diverse organizations.

Contribution to the Practice

Researching employees’ attitudes and experiences in marketing companies would make a useful contribution to practice by determining important issues to be addressed by the management. On the one hand, it would explore the experiences of employees in marketing companies, thus suggesting whether the current approach to diversity management used in these companies is effective. On the other hand, the study will describe the attitudes of employees to diverse workers and then compare them to those workers’ experiences. As a result, the research will provide leaders with information on how attitudes to diversity affect the success of diversity management and identify areas for improvement. For example, if the study found that employees generally have poor attitudes toward diversity, and this affects the experiences of employees from vulnerable groups, the company would benefit from training in cultural diversity. However, if the general attitudes are positive, but diverse workers still experience negative feelings, the problem might be caused by other human resources variables, such as job dissatisfaction or poor organizational culture.

Directions for Future Research

Regardless of the results of the study, it would be beneficial for future research to consider the factors shaping employee attitudes to diversity. This knowledge would help to create theories, frameworks, and models that can be used by the management to improve the organizational climate for diversity. Studies should also seek to test these theories and models in organizations experiencing poor attitudes to diversity, thus adding more practical knowledge to the topic of diversity management (Pitts & Wise, 2010). Additionally, researchers should look beyond diversity management to create opportunities for addressing the issue from a holistic viewpoint. For instance, an article by Subharwal (2014) introduces the concept of organizational inclusion, which can be used in all organizations irrespective of their sociocultural composition. Considering other forces and strategies influencing the experiences of diverse workers could help in developing a comprehensive plan for companies facing diversity-related problems.

Summary

To conclude, the literature review considers the basics of diversity management, from the historical development of this concept to future research direction. The chapter highlights that despite significant progress inequality and civil rights, some workplaces still experience issues of underrepresentation, tensions, and discrimination. Diversity management can help companies to overcome these problems and will result in improved workforce performance, job satisfaction, and collaboration when implemented correctly. The review also highlights two major theories that can assist leaders in improving diversity management. The present research project will have a positive influence on theory and practice by providing more details on the relation of diversity management to other variables, such as employee attitudes to diversity.

References

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Bačík, R., & Turáková, A. (2018). Diversity management as a competitive advantage source of the successful company. Journal of Global Science, 2018, 1-6.

Bah, A. (2015). The impact of a diverse workforce on an organization: Challenges and opportunities. Web.

Begeç, S. (2013). Effective diversity management initiatives. International Review of Management and Marketing, 3(2), 63-74.

Cletus, H., Mahmood, N., Umar, A., & Ibrahim, A. (2018). Prospects and challenges of workplace diversity in modern day organizations: A critical review. Sciendo, 9(2), 35-52.

Foma, E. (2014). Impact of workforce diversity. Review of Integrative Business & Economics, 3(1), 382-390.

Freeman, R. B., & Huang, W. (2016). Collaboration: Strength in diversity. Nature, 513, 305.

Green, K., López, M., Wysocki, A., Kepner, K., Farnsworth, D., & Clark, J. (2015). Diversity in the workplace: Benefits, challenges, and the required managerial tools. Web.

Hajro, A., Gibson, C. B., & Pudelko, M. (2017). Knowledge exchange processes in multicultural teams: Linking organizational diversity climates to teams’ effectiveness. Academy of Management Journal, 60(1), 345-372.

Henry, O., & Evans, A. (2007). Critical review of literature on workforce diversity. African Journal of Business Management, 2007, 72-76.

Hofhuis, J., van der Rijt, P. G., & Vlug, M. (2016). Diversity climate enhances work outcomes through trust and openness in workgroup communication. SpringerPlus, 5(1), 714.

Holtzman, Y., & Anderberg, K. (2011). Diversify your teams and collaborate: Because great minds don’t think alike. Journal of Management Development, 30(1), 75-92.

Hudson, S. (2014). Diversity in the workforce. Journal of Education and Human Development, 3(4), 73-82.

Li, J., Meyer, B., Shemla, M., & Wegge, J. (2018). From being diverse to becoming diverse: A dynamic team diversity theory. Journal of Organizational Behavior, 39(8), 956-970.

Martin, G. C. (2014). The effects of cultural diversity in the workplace. Journal of Diversity Management, 9(2), 89-91.

McMahon, A. (2010). Does workplace diversity matter? A survey of empirical studies on diversity and firm performance, 2000-09. Journal of Diversity Management, 5(2), 37-48.

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Saxena, A. (2014). Workforce diversity: A key to improve productivity. Procedia Economics and Finance, 11, 76-85.

Senichev, V. (2013). Human resource diversity and performance within the frame of organizations, teams and individual. Business: Theory and Practice, 14(4), 337-345.

Shin, H., & Park, H. (2013). What are the key factors in managing diversity and inclusion successfully in large international organizations? Web.

Subharwal, M. (2014). Is diversity management sufficient? Organizational inclusion to further performance. Public Personnel Management, 43(2), 197-217.

Syed, J., & Kramar, R. (2009). Socially responsible diversity management. Journal of Management & Organization, 15(5), 639-651.

Visagie, J., Linde, H., & Havenga, W. (2011). Leadership competencies for managing diversity. Managing Global Transactions, 9(3), 225-247.