Diversity Management in Contemporary Organization
The contemporary business environment is a complex mechanism of relationships on organizational, group and individual levels, where the trend of internationalization and blurring business and economic boundaries between the countries places more emphasis on adaptability and unique competitive advantage, based on intangible assets. For many companies, growth and profitability mean organic and inorganic expansion to foreign markets and, thus, there is an increasing concern about diversity and management of cross-cultural differences within and outside of the companies. The reality of such retail giants as Tesco, Walmart, Starbucks Coffee Company and many others demonstrates that in order to build on a sustainable competitive advantage, strategic management teams should focus on change management and adaptability. These elements are particularly complex in an organization with the diverse background in terms of business as well as internal culture. That said, diversity strategy is an increasing importance element of long-term planning in forward-thinking organizations. Many companies that have becomes examples of success in the past years reflect the special and unique "people story", where organization bets on human resource management as its strategic advantage and core competency. Among others, IBM in the technology sector, A.P.Moller-Maersk Group in shipping and transportation, Starbucks Coffee Company in retail and several others (Gummings and Warley, 2015).
Rather than deliberately attempting to eliminate the differences or simply ignore them, companies develop internal training and research programs that aim to uncover the potential of work groups by understanding and utilizing diverse from cultural and professional perspective background of its individual members.
Problem Statement
Diversity in many contemporary companies is a way to expand its talent pool and build on competitive advantage through building on unique expertise and knowledge within the market. This focus on Human Resource Management (HRM) as the strategic element of organizational development is recently new as this function until very recently was seen more as a facilitator of change rather than its leader (Sims, 2007).While it is possible to argue that many modern organizations recognize the importance of diversity and implement diversity strategy at the highest levels, it is also evident that one of the most challenging tasks of the contemporary HRM organization is bringing this diversity down the organizational ladder to operational levels, where regular employees understand that utilizing the differences can become an effective tool.
Bendick et al (2001) argue that the past two decades transformed organizational thinking and behavior in many international players from simple anti-discrimination compliance to organizational development through workforce diversity training. Many great leaders demonstrate high levels of commitment to diversity and inclusion, making an organization more open to its increasingly heterogeneous customer base (Groysberg and Connoly, 2013). And yet, there are numerous issues that prevent companies from becoming truly effective in managing internal and external diversity. The problem statement for this work is: "In spite of the recognition of diversity as an essential part of organizational strategies, many large international players, do not have effective tools and systems in place that would "translate” high-level strategy into operational plan”. With that in mind, there is a lot of room for studies, related to the optimization and effectiveness of Performance Appraisal and Key Performance Indicators (KPIs) systems and training in such organizations.
Types of Diversity within Organization
There is the variety of ways to look at diversity. The vast majority of business literature recognizes three core elements to the diverse workforce: gender, extroverts and introverts mix, and learning styles, such as analytic, cognitive, social interaction and other approaches (Cassidy, 2004). At the same time, academic literature takes the much wider view on possible elements of diversity that affect organizational and group behavior. Hofstede (2001) outlines eight major cultural dimensions within organization: means as opposed to goal-oriented; internally as opposed to externally driven; easygoing as opposed to strict work discipline;local as opposed to professional; open as opposed to closed system of organization, employee-oriented as opposed to work-oriented working cultures; degree of acceptance of leadership style; and degree of identification with the organization. The above outline the environment that builds on common culture and creates the feeling of belonging to the company.
On the other side of any diversity strategy is the individual culture, which, according to Hofstede (2001) is built of six elements: power distance, individualism as opposed to collectivism, masculinity, uncertainty avoidance, long-term orientation, and indulgence. Hofstede´s model, therefore, provides a complete overview of the possible influences on diversity and effectiveness of internal teams within the company. Many organizations use this model to build on its diversity training program and create tools for improvement and optimization of group work and working environment. It is important to note that diversity management and training should be based upon cultural as well as professional dimensions as the combination of both allows better planning of teamwork and understanding of individual needs within teams.
Benefits and Challenges of Diverse Teams
Three decades ago may professionals and academics would argue that diversity within a company and working teams are a stumbling block for the management and the way to deal with it is to facilitate learning to ignore differences and build on the culture that does not accept differentiation and discrimination on the basis of gender, culture or personal views. The reality of the international organizations at that point in time is the rapid organic expansion to the new market and the need to face the challenges associated with differences in consumers and workforce behavior, related to cultural and social aspects of the business. The companies had to respond to the market and adapt themselves in dealing with labor issues, environmental and social regulations in different countries and the behavior of the majority of organizations was based on reactive measures. As such, over a decade it was possible to see the that the majority of international players managed to develop internal culture and build their brand and image on strong anti-discrimination policies internally as well as externally. Little companies two decades ago realized the potential of transforming diversity from obligation and burden into a competitive asset. One of the first success stories is IBM, which placed numerous financial as well as intellectual resources into the development of team-building programs and research on diversity within the company. As a result, back 90s the company was recognized as one of the most innovative and effective organizations with HRM and intellectual assets in the core of its business strategy. Similar diversity management program was implemented in A. P.Moller-Maersk Group (APMM), where the company placed diversity in the core of its talent pool development program back in the 1980s.
Management of diverse teams is significantly more difficult and demands high levels of investment in people training and diversification of the leadership within the organization. It is important to recognize that investment into diversity is a long-term commitment, which, if properly implemented and managed can bring significant financial and operational benefits to the company. At the same time, diverse teams, where the intellectual and emotional backgrounds of individuals are not understood and properly directed can turn into a significant liability and cost for the organization.
Change Management and Diversity Training in Modern Companies
As it was previously mentioned the diversity strategy is in the core of the organizational long-term planning for much international planning. Some of the good examples can be seen the companies, where internationalization is seen on both, upstream and downstream of the business. Companies in transportation and logistic industries, for examples, are subject to high levels international mobility and interdependence between its geographic locations. With that in mind, these organizations are often ambassadors in innovative diversity strategies and training.
Feldman's study (1996) on diversity training within the organizations demonstrates that the focus on this organizational development mechanism started to become increasingly important for the companies already in the late 90s. According to the author, 79% of 409 companies, which participated in a survey, were using planning for diversity training. This number grew 35% over four years, since 1991.
Bendick et al (2001) argue that may empirical studies outline the variety of approaches to diversity training within contemporary organizations. Training that focuses on individual attitudes only proves to be only partially effective and demands adjustments. Diversity programs that address individual behaviors and organizational systems, and performance goals on different organizational levels, however, prove to be increasingly effective. Bendick suggests that specific approach that is based on the organizational development theory brings forward and can be identified by the nine major training practices. The point that should be made here is that in spite of the wide knowledge that this approach is the most effective in building on diversity as an asset, only about 25% of the large international corporations implement it on the organizational level.
Diversity training models should be able to answer the following questions: why? what? and how? There are several legal and social pressures, moral imperatives and business potential that explains the need for diversity training. The objective of diversity training initiatives in the companies should be able accurately to address the level of change, such as individual, interpersonal, group, intergroup, organizational or community. Moreover, to achieve best results it is critical that diversity training programs recognize the following objectives as an integral part of the diversity strategy:
Increased awareness and understanding on lower organizational levels;
Change behaviors;
Develop people skills;
Change organizational culture;
Build on comprehensive organizational Performance Management system;
Implement and drive change externally in community and society.
Developing further on Bendick´s observation about the lack if the focus in organizational development approach, it is evidenced companies in many situations look only at some of the objectives and levels of change that make diversity training incomplete. One can argue that while organizational development and high-level strategy relies strongly on the benefits of a diverse working environment and combined knowledge and intelligence, based on different individual backgrounds, operational and, moreover, tactical levels continue seeing diversity as the obligation rather than the asset (Swanson and Elwood, 2009).
Observations and Recommendations
A delegation of diversity awareness and change in organizational culture is only possible if diversity training is brought all the way down the organizational level. An insight into the diversity training within contemporary companies illustrates the increasing attention of the strategic management levels to diversity as one of the core assets of contemporary organizations. Diversity management is the key to adaptability and changes management for modern companies. Many forward-thinking companies recognized the potential of diversity training two or even three decades ago and implemented performance management systems and KPIs training in a way to delegate the responsibility for diversity management on tactical organizational levels. IBM and APMM are some of the examples and there are, surely, more companies that share this success story.
Empirical studies demonstrate that in spite of the popularity of “diversity thinking”, many organizations did not implement or just partially adopted diversity management training and proper planning in this area. It is important to recognize that diversity management and training is not only the opportunity for the organizations to build on intangible assets and improve their competitive positions. The reality is that the companies that do build on diversity and adopt reactive positions with regards to diversity training may become subject to higher operational costs and will not be able to adapt and change at a pace of the international market environment.
References
Sims R.R. (2007). Human Resource Management. Contemporary Issues, Challenges, and Opportunities. Charlotte: Information Age Publishing.
Gummings T.C. and Worley C.G. (2015). Organizational Development and Change. 10th Edition. Stamford: Cengage Learning.
Groysberg B. and Connolly K. (2013). Great Leaders Who Make the Mix Work. Harvard Business Review [Online]. Retrieved 18 April 2016, https://hbr.org/2013/09/great-leaders-who-make-the-mix-work
Cassidy S. (2004). Learning Styles. An Overview of Theories, Models, and Measures. Journal of Educational Psychology. Vol. 24, Issue 4: 419-444. Print.
Swanson R.A. and Elwood F.H.. (2009). Foundation of Human Resource Development. 2nd Edition. San Francisco: Barret-Koehler.
Ferdman B. (1996). Models of Diversity Training. In Handbook of Intercultural Training. 2nd Edition: 282-303. San Francisco, CA: Sage publishing [Online], Retrieved 19 April 2016, http://bernardoferdman.org/Articles/Ferdman_Brody1996_models_of_div_training.pdf
Bendick M., Egan Jr., Lou M. Lofhjelm S.(2001). Workforce Diversity Training: From Anti-discrimination Compliance to Organizational Development. Human Resource Planning. Vol.24, Issue 2: 10-25. Print.
Hofstede G. (2001). Culture Consequences. Comparing Values, Behaviors, Institutions and Organizations Across Nations. London: Sage Publications.
