In the course of their five-year research project on the effects of diversity on business performance, researchers studied four large firms (two in information processing, one in financial services, and one in retail). 99 Further, in an effort to develop a valid picture of the current state of practice in managing diversity in large organizations, they discussed the state of practice with more than 20 large, well-known firms. With appropriate caution, they offered the following implications for practice:
1. Modify the business case. Start by recognizing that there is virtually no evidence to support the simple assertion that diversity is inevitably good or bad for business. Rather, focus on the conditions that can leverage the benefits from diversity, or at the very least, lessen its negative effects.
Recognize that while diversity is a reality in labor markets and customer markets today, success in working with and gaining value from that diver- sity requires a sustained, systemic approach and long-term commitment.
Organizations that invest their resources in taking advantage of the opportunities that diversity offers should outperform those that fail to make such investments.
2. Look beyond the business case. While there is no reason to believe that diversity will translate naturally into better or worse business results, it is both a labor-market imperative and a societal expectation and value.
Human Resource Management in Action:
Conclusion
SUMMARY
More than half the U.S. workforce now consists of racial and ethnic minorities, immigrants, and women. White, native-born males, as a group, are still domi- nant in numbers over any other group, but today women comprise nearly half the entire workforce. The labor force will continue to age, with the annual growth rate of the 55-and-older group projected to be 4.1 percent through 2014, 4 times the rate of growth of the overall labor force. By contrast, the annual growth rate of the 25-to-54-year age group will be 0.3 percent, and that of the young age group consisting of 16-to-24-year-olds will be essentially flat.
Managing diversity means encouraging a heterogeneous workforce—which includes white men—to perform to its potential in an equitable work environ- ment in which no one group enjoys an advantage or suffers a disadvantage. At
Managers should therefore focus on building an organizational culture, HR practices, and the managerial and group-process skills needed to translate diversity into positive results at the level of the organization, the work group, and the individual.
3. Adopt a more analytical approach. If firms are unable to link HR prac- tices to business performance, then their ability to learn how to manage diversity effectively will be limited, as will their claims for diversity as a strategic imperative that justifies financial investments. More sophisti- cated data collection and analyses are necessary to understand diversity’s consequences and to monitor the effects of diversity on attitudes and per- formance. Questions such as the following will be most useful: Under what conditions do work units that are diverse (e.g., with respect to gender, ethnicity, and other characteristics) outperform or underperform work units that are more homogeneous? What conditions moderate the potential negative or positive effects of diversity?
4. Experiment and evaluate. Doing this requires that senior executives commit to learning and experimentation within their organizations. One of the reasons it is difficult to identify simple cause-and-effect relations between diversity and important business outcomes is that many other factors can affect those relationships. Examples include the nature of the task and the behavior of the leader, the degree of heterogeneity and the diversity characteristics of the work group, the extent of organizational support for diversity, and the effects of time. That is, some work groups function over long periods of time, while others work together for only short periods of time. Observers might draw different conclusions about the effects of diversity as a result of variations in these characteristics.
5. Help managers and team members develop skills in conflict resolution and effective communications. Training to develop group process and leader- ship skills like these is essential. Managers who attempt to make diversity a resource for learning, change, and renewal will inevitably confront chal- lenges in these areas. Training alone, however, is not likely to be sufficient.
Organizations also need to implement management practices and HR poli- cies that promote cultures of mutual learning and cooperation.
least five factors account for the increasing attention companies are paying to diversity: (1) the shift from a manufacturing to a service economy, (2) the globalization of markets, (3) new business strategies that require more team- work, (4) mergers and alliances that require different corporate cultures to work together, and (5) the changing labor market. Each of these factors can represent opportunities for firms whose managers and employees understand what culture is and who appreciate cultural differences among other employees and managers, and especially the firm’s market.
To attract and retain women, as well as persons with disabilities, compa- nies are making available to them alternative career paths, extended leaves, flexible scheduling, flextime, job sharing, and opportunities to telework. In addition, many companies now offer the same benefits to same-sex couples as to heterosexual couples.
A different aspect of diversity is generational diversity—important differ- ences in values, aspirations, and beliefs that characterize the silent generation, the baby boomers, Generation X, and Generation Y. To manage older workers effectively, managers should develop an age profile of the workforce, monitor job-performance requirements for the kinds of characteristics people need to do their jobs well, develop safeguards against age bias in performance manage- ment, conduct workforce-interest surveys, provide education and counseling, and consider modifying the structure of jobs.
Finally, to manage diversity effectively, do the following things well:
focus on bringing in the best talent, not on meeting numerical goals; establish mentoring programs among employees of same and different races; hold man- agers accountable for meeting diversity goals; develop career plans for em- ployees as part of performance reviews; promote women and minorities to decision-making positions, not just to staff jobs; and diversify the company’s board of directors.
ethnic minorities managing diversity affirmative action culture
EEO for women silent generation baby-boom generation Generation X
Generation Y
alternative career paths extended leave
flexible scheduling flextime
job sharing teleworking age grading
mid-career plateaus obsolescence
KEY TERMS
DISCUSSION QUESTIONS
4–1. In your opinion, what are some key business reasons for emphasizing the effec- tive management of a diverse workforce?
4–2. Why is there no simple relationship between diversity and business perfor- mance?
*Sources: Adamson, J. (2000). The Denny’s story: How a company in crisis resurrected its good name and reputation. NY: Wiley; White, E. (2006, March 20). Fostering diversity to aid business.
The Wall Street Journal, p. B3. Mitchell, R. & Oneal, M. Managing by values. BusinessWeek, Aug.
1, 1994, pp. 46–52; Rice, F. How to make diversity pay. Fortune, Aug. 8, 1994, pp. 78–86
Case 4–1 The Challenge of Diversity *
Talk, talk, talk. As Ken Hartman, an African-American midlevel manager at Blahna Inc.
recalls, that’s all he got from the white men above him in top management—despite the fact that Blahna had long enjoyed a reputation as a socially responsible company. But that reputation didn’t mean much to Hartman as he watched other African-American managers he thought were highly qualified get passed over for plum jobs and as his own career seemed stalled on a lonely plateau. Top management always mouthed diversity, Hartman said, “but in the end, they chose people they were comfortable with for key positions.”
Meeting the Challenge
Is this situation uncommon? Not at all. In the last decade, however, it has become increasingly apparent that appropriate management of a diverse workforce is critical for organizations that seek to improve and maintain their competitive advantage. Focusing on diversity and looking for more ways to be a truly inclusive organization—one that makes full use of the contributions of all employees—is not just a nice idea; it is good business sense that yields greater productivity and competitive advantage. Although Denny’s Corporation had to experience and settle several costly discrimination cases to begin to see the value in managing diversity, today Denny’s serves as an example of what other organizations should strive for in the way of diversity. Half of its Board of Directors as well as half of its senior-management team members are women or other minorities, along with 14 percent of African-Americans and 33 percent of Hispanics among its 25,000 company employees. As of 2008, 123 minority franchisees collectively own 44.3 percent of all Denny’s restaurants, representing 43 percent of all Denny’s fran- chise restaurants. 100 The company has won many awards and justifiable praise from numerous media outlets for its genuine efforts to make diversity a part of the very fabric of its business.
The Strategy at Blahna Inc.
Ken Hartman’s firm, Blahna Inc., has finally gotten the message. The company is now using diversity-management strategies to head off conflict and reduce turnover among employees it can ill afford to lose.
Several years ago, Blahna formed a 20-member Committee for Workplace Diversity, chaired by a vice president. The committee was chartered to consider why women and 4–3. How would you respond to someone who has questions or concerns about
diversity?
4–4. What would be the broad elements of a company policy to emphasize the man- agement of diversity?
4–5. What are some possible sources of intergenerational friction? How might you deal with that?
4–6. Suppose you were asked to enter a debate in which your task was to argue against any special effort to manage workforce diversity. What would you say?
APPLYING YOUR KNOWLEDGE
minorities weren’t better represented at all levels of the organization. Although the com- pany had a good record of hiring women and minorities, the committee discovered that turnover was two to three times higher for these groups than it was for white males.
Sample exit interviews revealed that women and minorities left for culture-related reasons—for instance, because they didn’t feel valued in their day-to-day work or in their communities, didn’t have effective working relationships, or didn’t sense that the work they were being given to do would lead to the fulfillment of their career goals.
White males, on the other hand, left for business-related reasons, such as limited opportunities for future advancement.
As a result of this initial investigation, Blahna formed a 25-person diversity advi- sory committee. The committee developed a multi-pronged approach for dealing with diversity issues—including building bridges with the broader community outside of the company. Within the company itself, a key strategy involved training conducted by diversity consultants, Hope & Associates.
To date, 60 percent of Blahna’s 11,000 employees have gone through a two-day diversity seminar; 40 percent have gone through a more extensive six-day training pro- gram as well. “The premise of the training is that the more different you are, the more barriers there can be to working well together,” explains Blahna’s Chief Diversity Officer.
Training sessions do not offer advice on how to get along with Asian Americans, women, or other specific groups. Rather, the emphasis is on learning skills that will make it easier to relate to and communicate with others.
A key part of the training offered by Hope & Associates is the implementation of a
“consulting pairs” process. The consulting pairs approach is designed to help trainees take what they’ve learned in training and apply it on the job. When a conflict—which may or may not be related to diversity—first arises between two peers or between a manager and employee, a consulting pair is called in to facilitate discussion and prob- lem solving. The unique feature of this approach is that the consulting pair is selected to match as closely as possible the backgrounds of the individuals who are involved in the conflict. Of course, all proceedings are strictly confidential.
The result? Ken Hartman is a happier guy these days. As president of one of Blahna’s divisions, the 48-year-old executive is a step away from joining the ranks of senior man- agement. Life has changed for him since Blahna “stopped talking about values like diver- sity and began behaving that way.”
Questions
1. Why do many companies find increasing and managing diversity to be difficult
challenges?
2. What were the key elements in Blahna’s successful diversity strategy?
3. Under what circumstances might the consulting pairs approach be most useful?
4. What steps should management take to ensure that the consulting pairs approach
is working?
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