As shown in Figure 2.1, a major reason for the emergence of diversity as an important real-ity is changing demographics. Older workers, women, minorities, and those with more edu-cation are now entering the workforce. The composition of today’s and tomorrow’s workforce is and will be much different from that of the past. For example, USA Today cal-culates a Diversity Index (based on population racial and ethnic probabilities) that shows now about 1 out of 2 people randomly selected in the United States are racially or ethnically different, up from 1 out of 3 in 1980. In addition, the U.S. Department of Labor estimates that the majority of new workers entering the workforce will be women or minorities. At the more micro level, assuming talent and ability are equally distributed throughout the popula-tion and that everyone has an equal opportunity, there should be diversity in every level of an organization. Unfortunately, such an assumption is not yet valid because diversity has not to date noticeably reached the top levels of most organizations. There is still only a handful of women who have broken through the “glass ceiling” of large corporations to become CEO, and only a small minority of Fortune 500 board directors or corporate offıcers are women.22In addition, the U.S. Bureau of Labor Statistics indicates that women on average continue to trail men in terms of pay for the same types of jobs.23However, prospects for the future may be better because women now make up more than half of all college students, about half of all medical and law students, account for over a third of MBA (Master of Busi-ness Administration) degree-holders, and now make up about half of middle managers.24 Also, outside of business organizations, about a quarter of university presidents are women (including currently half of the Ivy League schools) and they are well-represented in senior management levels in health care and NGOs (nongovernmental organizations such as the United Way).25
As shown in the accompanying OB in Action: Cracks in a Particularly Thick Glass Ceil-ing, the glass ceiling may be worse in other countries, especially in Asia. Yet, U.S. women executives also are facing a particularly thick glass ceiling when it comes to receiving desirable foreign assignments and experience.26In the global economy, not being able to obtain such international experience may be a major obstacle (i.e., contribute to the glass ceiling) in reaching upper management.
Increasing Diversity in Today‘s Organizations Changing Workforce
Demographics (age, gender, ethnicity,
and education) The Recognition
and Desire for Diverse Viewpoints
Legislation and Lawsuits
Competitive Pressures
Rapidly Growing Increase in International Business
FIGURE 2.1 Major Reasons for Increasing Diversity.
36
Although challenges facing women in the workplace receive relatively more attention in the media, the problems facing people of color, an aging workforce, and others fighting for equal opportunities and inclusion remain significant. As indicated, legislation going as far back as the Civil Rights Act of 1964 prohibited discrimination in employment on any basis.
The full effects of that landmark law and other more recent legislation, such as the follow-ing, are still being determined.
1. Age Discrimination Act of 1978. This law at first increased the mandatory retirement age from 65 to 70 and then was later amended to eliminate an upper age limit altogether.
2. Pregnancy Discrimination Act of 1978. This law gives full equal opportunity protec-tion to pregnant employees.
3. Americans with Disabilities Act of 1990. This law prohibits discrimination against those essentially qualified individuals challenged by a disability and requires organiza-tions to reasonably accommodate them.
OB in Action: Cracks in a Particularly Thick Glass Ceiling
South Koreans are a bit conflicted about career women.
Gender wasn’t much of an issue in the selection of a female astronaut to fly on the country’s first space mis-sion. But when women are seeking workaday corporate jobs, some South Korean men still resist change. Outer space is one thing, but a woman in the next cubicle is something else.
For years, most educated women in South Korea who wanted to work could follow but one career path, which began and ended with teaching. The situation started to change after the 1998 Asian financial crisis. Thousands of men lost their jobs or took salary cuts, and their wives had to pick up the slack by starting businesses in their homes or seeking part-time work. A couple of years later, the government banned gender discrimination in the workplace and required businesses with more than 500 employees to set up child care facilities. It also cre-ated a Gender Equality Ministry.
These days the government hires thousands of women (42 percent of its new employees last year), many for senior positions in the judiciary, international trade administration, and foreign service. Startups and foreign companies also employ (and promote) increas-ing numbers of Korean women.
ONE OF THE GUYS
But at the top 400 companies, many of which are family-run conglomerates, it’s hard for women to reach the upper ranks. In all, about 8 percent of working women hold managerial positions. In the United States nearly 51 percent do. “We have a long way to go,” says Cho Jin Woo, director of the Gender Equality Ministry.
South Koreans are grappling with traditional atti-tudes about women, a hierarchical business culture, and the need to open up the workplace to compete globally.
A senior manager at SK Holdings, which controls the
giant mobile phone carrier SK Telecom, says he avoids hiring women because he believes they lack tenacity.
When deadlines are tight, he says, “you need people prepared to put in long hours at the office.” Park Myung Soon, a 39-year-old woman who is in charge of business development at the carrier, says, “Many men are preoc-cupied with the notion that women are a different species.” To get ahead, Park says she had to achieve 120 percent of what her male colleagues did—as well as play basketball and drink with them after work. “Luckily, I like sports, and I like to drink,” she says.
When Choi Dong Hee joined SK’s research arm in 2005, she was the only woman there and had no major assignment until she created one. After conducting a year-long study, Choi, 30, proposed changing the com-pany’s policy to allow subscribers to use any wireless por-tal. Her managers ignored her. She persisted. Finally, they agreed to let her brief the division head, who agreed to let her make her case to the company chair-man. Choi worked on the presentation for three weeks straight, sometimes alone in the office overnight (to her boss’s horror). In the end, the company did adopt the open policy she advocated. Now her managers are quick to say that women’s perspectives can help SK better serve its customers.
Sonia Kim, who is in charge of TV marketing at Sam-sung Electronics, says her male colleagues rarely argue with the boss, even if they think he’s wrong. Kim, though, persuaded her manager to let her develop a promotional campaign rather than rely on an ad agency she thought had lost its creative edge. Kim also says some of the men used to overturn decisions made dur-ing the day while out drinkdur-ing after hours. Since she and other women at Samsung complained, Kim says, the practice has mostly stopped.
Chapter 2 Environmental Context: Globalization, Diversity, and Ethics 37
4. Civil Rights Act of 1991. This law refined the 1964 act and the reinstated burden of proof falls on employers to eliminate discrimination and ensure equal opportunity in employ-ment to employees. It also allows punitive and compensatory damages through jury trials.
5. Family and Medical Leave Act of 1993. This law allows employees to take up to 12 weeks of unpaid leave for family or medical reasons each year.
These laws, along with lawsuits and the threat of lawsuits, have put teeth into diversity. Indi-viduals and groups that have found themselves excluded from organizations or managerial positions can bring and have brought lawsuits in an effort to overcome discriminatory barri-ers and ensure themselves equal opportunity in employment. For example, successful law-suits with resulting multimillion dollar penalties have in recent years been brought against many well-known firms.
Still another reason for the emergence of the importance of diversity to organizations is the realization that diversity can help them meet the competitive pressures they currently face. Firms that aggressively try to hire and promote women and minorities are going to end up with a more talented and capable workforce than those that do not take such a proac-tive, affırmative action approach. For example, a large study by the American Management Association found that the more accurately the senior team of a company represents the demographics of its market, the more likely it is that the company will design products, market services, and create ad campaigns that score a hit.27Moreover, companies that gain a reputation for “celebrating diversity” are more likely to attract the best employees regard-less of age, gender, or ethnicity. The most talented and qualified people will feel that oppor-tunities are better with these firms than with others. In other words, diversity can provide an organization with competitive advantage.28For example, one study examined the rela-tionships among racial diversity, business strategy, and firm performance in the banking industry.29It was found that racial diversity interacted with business strategy in determin-ing company performance as measured in three different ways: productivity, return on equity, and market performance. This study concluded that the results demonstrated that diversity not only adds value but, in the proper context, also contributes to a firm’s com-petitive advantage. Such research findings are not limited to U.S. firms. For example, a recent study found that the percentage of women on the boards of Spanish firms was posi-tively related to their value.30
Stimulated by competitive pressures, organizations now recognize and strive to obtain diverse viewpoints in their decision-making processes and teams. Recent academic research points out the complex linkage between work group diversity and work group functioning,31 but there is also growing practical evidence that diversity leads to innovation and often breakthrough competitive advantages. For example, women working for Reebok pointed out that there was no good shoe available for aerobics. The firm took this advice and began mar-keting aerobic shoes, which became very profitable and served as a breakthrough for Reebok in the very competitive athletic shoe industry. Another example occurred at the giant chemical firm DuPont, which used input from African American employees to develop and successfully market agricultural products for small farmers in the South.
A final major reason for the emerging challenge of diversity is that more and more organizations are entering the international arena. A natural by-product of going interna-tional is increased diversity, in this case cultural diversity. If domestic organizations have and promote diversity, then, as they expand globally, they will be accustomed to working with people who have different cultures, customs, social norms, and mores. For example, a multicultural team at DuPont is given credit for gaining the firm about $45 million in new business worldwide. Among other things, this diverse team recommended an array of new colors for countertops that was very appealing to overseas customers.
38 Part One Environmental and Organizational Context
The international arena is not a threatening place for diverse firms, a fact that is partic-ularly important because of the major role that international operations and sales will play in the growth, and even survival, of companies in the global economy. The percentage of overall revenues from international operations and sales continues to increase dramatically.
The advantage of multinational companies that have and value cultural diversity becomes abundantly clear in this global environment discussed in the previous section.