Benefits and Challenges in Diversity Management and Diversity in Organisations

Dass and Parker (1999) argue that the diverse workforce has been variously viewed as “opportunity, threat, problem, fad, or even nonissue”. That leads to several different diversity management styles and that way results are different costs and benefits. (p. 68) According to Ely and Thomas (2001) some types of diversity seem to be beneficial and the research based on race and gender show that there are both, positive and negative outcomes (p. 229). This chapter begins by addressing the benefits of diversity management and diversity in organisations and ends with presenting the challenges of diversity management and diversity in organisations.

3.4.1 Benefits of Diversity Management and Diversity in Organisations

Thomas and Ely (1996) state that diverse workforce increases organisational effectiveness, lift morale, make new market areas more accessible and improve productivity. According to them, business can benefit from diversity. Even if it increases profitability too, it also has its own effect on the “soft” measures: it enhances “learning, creativity, flexibility, organisational and individual growth and the ability of a company to adjust rapidly and successfully to market changes.” To be able to achieve these benefits, attitudes and behaviours in an organisation’s leadership need to be modified. (p. 79)

The right kind of diversity management is important because it allows businesses to be successful and grow. Also the following advantages can be achieved with proper diversity management:

 ability to attract top talent

 competitive advantage by attracting diverse knowledge

 problem-solving ability and increased innovation

 the achievement of minority clients

 improved teamwork and communication

 increased equality in the workplace practices and working methods

 compliance of the equality legislation. (Cox & Blake, 1991, pp. 46-51;

Robinson & Dechant, 1997, pp. 22-27)

According to Bagshaw (2004) in an effectively managed, diversified atmosphere in the workplace, employees feel valued because the skills they have are effectively used. When managed effectively, diversity may bring in new ideas and innovation. Employees may learn from themselves. That way diversity makes the environment of the organisation productive and strategic goals may be reached. (p. 153)

In Finland the research area of diversity management advantages at the organisational level have been examined by Forsander (2001). Her study shows that the benefits are: increase in labor, new skills and knowledge, cheaper and more flexible workforce, the growth of market as well as improved opportunities for the access to the international market. (p. 146) Forsander et al. (2001) state that immigrants’ resources which enhance employment are for example language skills, professional skills, intercultural competence and existing networks (p. 64). Sippola (2007) has defined the benefits of diversity in the workforce. Organisations which would like to search and find the best quality employees need to widen their perspective concerning the recruitment. Competitiveness with having different skills and capabilities may bring certain benefits. Organisations which implement a diversity strategy or policy, may expect short or long term benefits. An organisation may get a better image by having a good repute as a multicultural

workplace. Improved cultural competence is a significant benefit. Market knowledge may become better by having employees from the same cultures as the customers. In different market areas for example promoting and advertising need to be different and through diverse workforce the creativity and innovation concerning advertisement may increase. Also problem solving skills and flexibility are the possible benefits among the diverse workforce. (pp. 114, 120-121) Also Kreitz (2008) defines benefits similar to the ones listed by Sippola (2007) above. In her opinion successfully managed diversity promotes customer service and organisational activities, for example problem solving, innovation, flexibility and creativity. (p. 105) Bagshaw (2004) states that productivity, innovation, variety of skills, experience and ideas are better among the diversified workforce. He has also found other benefits, like workforce motivation, market competitiveness, teamwork and customer loyalty. (p. 152)

According to Cox (1993) diversity affects the work performance and job satisfaction of an individual. The effects extend to the organisation’s efficiency through individuals. The first visible effects may be noticed in productivity, work quality, efficiency of recruitment, participation, sales and through all those in the market share, profitability and achieving the organisational goals. (pp. 6-9)

Rana (2013) states that businesses have noticed that it is important and crucial for their activities that they invest in diversity. She defines the advantages of diversity in the workplace: increased productivity, creativity and problem solving, attracting and retaining talents, helping to build synergy in teams and enhancing communication skills, saving money on litigation expences, increasing market share and creating a satisfied diverse customer base. (p. 1)

Table 1. Benefits of diversity management and diversity in an organisation has been formed based on the benefits mentioned in this chapter (Bagshaw, 2004, pp. 152-153; Cox, 1993, pp. 6-9; Cox, 1997, pp. 6-9; Cox and Blake, 1991, pp. 46-51; Forsander, 2001, p. 146; Forsander et al., 2001, p. 64;

Kreitz, 2008, p. 105; Rana, 2013, p. 1; Robinson and Dechant, 1997, pp. 22-27;

Sippola, 2007, pp. 114, 120-121; Thomas and Ely, 1996, p. 79). Many of the benefits in the table have been mentioned in several sources.

Table 1. Benefits of diversity management and diversity in an organisation.

Benefits of diversity management and diversity in an organisation

variety of skills

creativity and innovation problem solving

promotes customer service flexibility

motivation more experience customer loyalty better profitability

efficiency of sales and market share better participation

efficiency of recruitment work quality

enhances the ability of a company to adjust rapidly and successfully to market changes increases organisational effectiveness

ability to attract top talent

competitive advantage by attracting diverse knowledge the achievement of minority clients

improved teamwork improved communication

increased equality in the workplace practices and working methods compliance of the equality legislation

new ideas

strategic goals may be reached better image

improved cultural competence market knowledge

increase in labor

cheaper and more flexible workforce the growth of market

improved opportunities for the access to the international market enhances job satisfaction and work performance of an individual productivity

3.4.2 Challenges of Diversity Management and Diversity in Organisations Diversity management can be difficult and challenging for organisations.

According to Cox (1991) those organisations that are not able to make the appropriate changes concerning diverse workforce, may suffer substantial competive disadvantage in comparison with the organisations that are able to amend their activities. (p. 47)

Benefits of diversity are not obvious - diversity may also cause problems. Similarity contributes to the formation of the group and firmness, but group cohesion does not necessarily improve its performance. A group’s performance can suffer from misunderstandings caused by communication problems. A possible rise of conflicts and anxiety may cause that the members of the group do not feel comfortable with the group. That way decision making may become difficult and it may take more time than is necessary. In some cases, culturally homogeneous workgroups are easier to manage effectively than culturally diverse workgroups. (Cox, 1993, pp. 36-39) Also Kikoski and Kikoski (1996) raise the issue of increasing problems in communication when groups become more heterogeneous (pp. 16-17).

Robinson and Dechant (1997) and Cox (1991) state that staff turnover may be high when diversity in the workplace increases (p. 23; p. 34).

Cox (1991) states that interpersonal conflicts and communication breakdowns may also exist (p. 34). To minimize opposition, organisations should commit to comprehensive change of mindset, when diversity of the workplace could be seen improving the competitiveness of their own (Totta & Burke, 1995, p. 32).

Guirdham (1999) states that organisations and managers are mainly well aware of the disadvantages of diversity, such as difficulties in reaching agreement and standardizing procedures (p. 35).

In Finland, migration and multiculturalism research has found disadvantages concerning multi-ethnic workforce at the organisational level.

Forsander (2001) mentions the potential disadvantages are: growing need of diversity management, increase of the necessity of the job training, growing dependence on foreign labor in some sectors (p. 146).

According to Post and DiTomaso (2004) the following challenges may be met by organisations which are not able to manage diversity well:

 larger costs in production of goods and services

 diverse customer base is not attracted

 talented people are not as attracted as they could be

 organisation is not able to generate that kind of creativity which is needed to stay ahead of the competition (p. 3).

Table 2. Challenges of diversity management and diversity in organisation below includes the challenges presented in this chapter (Cox, 1991, pp. 34, 47;

Cox, 1993, pp. 36-39; Forsander, 2001, p. 146; Guirdham, 1999, p. 35; Kikoski

& Kikoski, 1996, pp. 16-17; Post & DiTomaso, 2004, p. 3; Robinson &

Dechant, 1997, p. 23; Totta & Burke, 1995, p. 32).

Table 2. Challenges of diversity management and diversity in organisation.

Challenges of diversity management and diversity in an organisation

Misunderstandings Communication problems Rise of conflicts and anxiety

Difficulties in decision making and reaching agreement Management difficulties

Staff turnover

Interpersonal conflicts

Difficulties in standardizing procedures Growing need of diversity management Increase of the necessity of the job training Growing dependence on foreign labor

Larger costs in production of goods and services Diverse customer base is not attracted

Talented people are not as attracted as they could be Organisation is not able to generate that kind of creativity which is needed to stay ahead of the competition