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Today, workforce diversity is no longer just about anti-discrimination legal compliance. The spotlight of concept of workforce diversity is the impact of inclusion and corporate performance. Corporations see diversity as a competitive advantage that brings economic benefits when diversity is realigned to the strategic business goals of the corporations.
This paper intends to discuss the concept of workforce diversity and approaches relevant in managing diversity. It also discusses the relevance of Human Resource Management (HRM) discipline in dealing with diversity management and the integration issues of diversity management in term of International Human Resource Management (IHRM) and Strategic International Human Resource Management (SIHRM).
Table of Contents
1. Introduction 2. Understanding Diversity 2.1. Diversity Defined 2.2. Diversity Management Paradigms 3. Managing Diversity: The Approaches 3.1. Practitioner/Consultant Approach 3.2. Mainstream Approach 3.3. Critical Approaches 4. Aligning Diversity to the Strategic Business Goals 4.1. Define Diversity 4.2. Establish Leadership Accountability 4.3. Develop and Operate a Diversity Scorecard System 5. Diversity, HRM and Organization Performance 6. Examining Global Diversity Management 6.1. MNCs’ Approaches to Global Diversity Management 6.2. IHRM and SIHRM Integration 7. The Challenges of Diversity Management 8. Conclusion References
In biology, a natural ecosystem needs diversity to thrive. In business, ditto.
Over the last few years, it is getting clearer that organizations commence to pursue workforce diversity as a competitive necessity. It is not only to avoid the heavy costs of litigation (often time involve equal employment opportunity (EEO) legislation), but to value and pursue workforce diversity well so that organizations could attract, retain and encourage the contribution from a diverse population of employees to serve diverse range of customers, work effectively with business partners and suppliers, and satisfy shareholders. This is in light with growing multiculturalism of workforce and market places.
The new concept of diversity goes well beyond the traditional EEO. It calls for recognition of contributions of the individuals with diverse background. It calls for management of organizations to embrace difference and inclusiveness, not just tolerating those who are different but celebrating those differences. It calls for opening of work opportunities to the men and women of different colors, races and religions. It calls for diversity beyond gender, values, or social norms that each individual lives.
Thus, the aim of this paper is to examine the concept of diversity and review the approaches to deal with diversity management, from the academic literature viewpoints. It also discusses the role of HRM, IHRM and SIHRM in implementing and integrating the diversity initiatives.
The next section of this paper attempts to define diversity. Section 3 discusses the approaches of managing diversity, establishing the reason behind the importance of putting diversity into workplace. In order to be successfully implemented, diversity must be realigned to the strategic business goals of the organizations. Section 5 examines the relationship between diversity and the Human Resource Management (HRM) discipline and tries to explore its connectedness to corporate performance. Section 6 confers the ideas of global diversity and this paper concludes after looking into the challenges of diversity initiatives implementation.
2. Understanding Diversity
2.1. Diversity Defined
There is no one definitive definition of diversity (Tomervik 1995). Diversity is a complex, multidimensional concept as a whole. It is a plural term with different perceptions in different organizations, societies and national cultures without any unitary meaning (Cassell 2001). Cox (2001) attempts to define diversity as “the variation of social and cultural identities among people existing together in a defined employment or market setting”.
Thomas (1995) acknowledges that diversity does not automatically mean “with respect to race and gender” and describes diversity as not synonymous with differences but encompasses differences and similarities. Wentling & Palma-Rivas (1997) propose the narrow and broad definitions of diversity (Mor Barak 2005). Narrow definitions tend to reflect Equal Employment Opportunity (EEO) law, and define diversity in terms of race, gender, ethnicity, age, national origin, religion, and disability. Broad definition may include values, personality characteristics, education, language, physical appearance, marital status, lifestyle, beliefs, and background characteristics such as geographical origin, tenure within the organization, and economic status. Even health, body size, family background and shape are also categories for grouping people (Humphries and Grice 1995). Diversity is simply “all the ways in which we differ” (Hayles 1992).
Morrison (1992) categorize diversity in four levels (1) diversity as racial/ethnic/sexual balance; (2) diversity as understanding other cultures; (3) diversity as culturally divergent values and (4) diversity as broadly inclusive (cultural, subcultural, and individual). Griggs (1995) offers another classification of diversity. The author classifies diversity into primary and secondary dimensions. Primary dimensions of diversity (which are hard to change) are those human differences that are inborn and/or that exert an important impact on our socialization and have an ongoing impact throughout our lives. The six primary dimensions include age, ethnicity gender, physical abilities/qualities or race. Primary diversity shapes our basic self-image and has great influence on how we view the world. The secondary dimensions of diversity are those that can be changed and include, but are not limited to, educational background, geographic location, income, marital status, military experience, religious beliefs, and work experience. Norton and Fox (1997) argue that employee diversity and organizational change are inextricably linked, and that these two elements have rarely been integrated sufficiently to meet the demands of today’s fast-paced economy.
2.2. Diversity Management Paradigms
Researches specify that the management diversity initiatives has moved beyond legal compliance with equality legislations to accepting and valuing differences (Cassell, 2001), learning from diversity (Thomas and Ely 1996), and towards the full and equal utilization of capabilities through empowerment and inclusion (Cornelius and Bassett-Jones 2002). Thomas and Ely (1996) offer four paradigms, describing the efforts of management intervention in workforce diversity.
Organizations react to resist change due to diversity by maintaining the status quo in the absence of any pressures to increase diversity (Dass and Parker 1999) and by reproducing inequality without an equal opportunities or diversity policy (Kirton and Greene 2005).
Organizations focus on equal opportunities and fair treatment through legislative actions and by treating everybody the same (Thomas and Ely 1996). This is demonstrated by concentrating on staff recruitment as a means to increase the numbers of employees belonging to disadvantaged groups (Kandola and Fullerton 1998).
Organizations focus on a search for business benefits (Thomas and Ely 1996), maximizing every individual’s potential as a source of competitiveness by creating a culture and environment of respect (Kandola and Fullerton 1998).
Organizations emphasize the linkages of diversity with work and employee perspectives, moving from identity-groups towards learning opportunities in order to gain the benefits of diversity (Thomas and Ely 1996, Dass and Parker 1999). In this paradigm, egalitarian organizational culture is seen as a means to higher standards of performance (Thomas and Ely 1996) and in which employees are viewed as valuable resources, strategic assets and as an investment (Ely and Thomas 2001).
While moving beyond the discrimination-and-fairness paradigm, this paper continues to focus on both the access-and-legitimacy and learning-and-effectiveness paradigms as the key motivations for organizations to realize diversity management programs. The following section of this paper explores the business case for diversity intervention in organizations. As the implementation of diversity initiatives is not costless, thus, it is imperative for organization to develop a sound business case for adopting the concept of diversity as part of the overall corporate strategy.
3. Managing Diversity: The Approaches
Bairoh (2007) identifies three categories of approach that shape the theoretical and practical foundation of the discipline of diversity management. The approaches are classified as the practitioner/consultant approach, the mainstream approach and the critical approaches. These approaches also provide insights and rationale into the importance of incorporating diversity management as part of strategic goals and objectives of the organizations.
3.1. Practitioner/Consultant Approach
The paradigm presented by Thomas and Ely (1996) is an example of practitioner/consultant approach. Wilson (1997) offers a six level equity continuum ranging from “No problems”. (possible problems are not acknowledged nor attended to) to organizations being fully committed on maintaining and encompassing equity organization culture. Another common feature or this approach is based on business case logic i.e. to argue in favor of diversity management because of its positive impact on performance, effectiveness, as well as the anticipated economic benefits. Dietz and Petersen (2006) argue that there is an increasing shortage of qualified and talented staff and therefore organizations must exhaust all possible segments of the labor market, including minority employees. In addition, the customers’ demographic profile is increasingly diverse and thus ‘matching’ employees to fit the clients’ demographic profile is seen as an important determinant of organizational success. Diversity could also improve productivity and encourage innovation to problem solving, archiving competitiveness and mitigate associated costs related to litigation (Lorbiecki and Jack 2000). “Businesses should invest in creating a more effective diverse workforce not because it is the legal, ethical or moral ‘right’ thing to do, but because it is the savvy, bottom-line-focused, pragmatic, self-interested ‘right’ thing to do” (Litvin 2006).
Common business case benefits of diversity are:
Increases understanding of different customers (since these are also diverse). Boosts creativity and innovation as different viewpoints are brought forward. Improves utilization of the competencies of all employees. Strengthens commitment towards the employer/organization and decreases employee turnover. Awakes more interest towards the organization among competent applicants. Boosts image of the organization among various stakeholders. Greater adaptability and flexibility in a rapidly changing marketplace. Attract and retain the best talent. Reduce costs associated with turnover, absenteeism and low productivity. Return on investment (ROI) from various initiatives, policies and practices. Gain and keep greater/new market share (locally and globally) with an expanded diverse customer base. Increased sales and profits.
3.2. Mainstream Approach
Social Identity Theory and Self-Categorization Theory
Social identity theory can be described as a theory of group membership and behavior (Hogg et al., 1995). It is developed with the purpose of understanding how individuals make sense of themselves and other people in the social environment Korte (2007). Self-categorization exists when people stereotype themselves by attributing to themselves the attitudes, behaviors and other attributes they associate with membership in a particular group Kulik and Bainbridge (2006). According to Korte (2007), social identity theory and self-categorization theory are complementary theories explaining social identity, in term of its elements and processes. Through self-categorization and group membership, individuals develop a social identity, which serves as a social-cognitive schema (norms, values, and beliefs) for their group-related behavior. “The perceiver is likely to see these characteristics as central to his or her own identity and therefore these characteristics are used to categorize others (Kulik and Bainbridge 2006)”. Stereotyping, prejudice, and conflict are critical consequences of social identity and self-categorization (Tajfel, 1982).
As the theory of social identify could provide a conceptual foundation for researchers in the examination of diversity, however it tends to lead diversity researchers to the study of power and inequality termed as “minimal inter-group paradigm” (Prasad et al. 2006). This paradigm suggests that all identity groups at all times engage in in-group bias and the bias is stronger in a high status group than a low status group. Furthermore, in-group bias practiced by highly privileged groups is likely to be decidedly more costly to historically disadvantaged groups than the reverse could ever be (Prasad et al. 2006). Prasad et al. (2006) suggest that while in-group bias and out-group discrimination are natural phenomenon of organizations, organizations should try to mitigate its effects.
Macro and Micro Models of Diversity Management
In their paper, “Managing Diversity”, Dietz and Petersen (2006) categorize diversity approaches to the macro or organizational-level approach and the micro approach that is based on psychological models of discrimination and inter-group relations.
At the macro level (organizational or business unit level) of analysis, diversity management is hypothesized to moderate the relationship between workforce diversity and performance. The leading models are Cox’s model and Thomas and Ely’s model. Cox (1991, 2001) states that diversity management emerged in the late 1960s in pluralistic organizations and later evolved into multicultural organization. Pluralistic value minimizes prejudice, discrimination and inter-group conflicts. This model is further extended to include a five-step model toward becoming a multicultural organization. These are leaderships, research and measurement, education, alignment of management systems and follow-up. They are assumed to be more positive--or less negative--as the degree of diversity management increases.
The Thomas and Ely model focuses on the processes that diversity management affects the relationship between workforce diversity and organizational outcomes variables. They argue for three types of perspectives: discrimination-and-fairness, access-and-legitimacy and integration-and-learning. Workgroup functions the best under the integration-and-learning perspective where the positive effect is generated by the quality of inter-group relations, feelings of being valued and respected and the positive effect of employees’ racial identity at work (Thomas and Ely 1996).
However, Dietz and Petersen (2006) criticize that empirical research testing these macro level hypothesis remains sparse and the quality of the existing research lags behind that of the theoretical work. Instead, they propose to scale down the models to test only the core assumptions or components tested or to improve the empirical procedures.
At the micro level, based on social psychological theories, advocates that a critical component of diversity management is to understand and manage stereotypes, prejudices and discrimination (Dietz and Petersen 2006) and stereotypes and prejudices are considered immediate antecedents of discrimination. Dietz and Petersen (2006) argue that other social psychological processes e.g. the development of social identities and social categorizations, experience of realistic group conflict, contact with demographically different persons, and individual differences in social dominance orientation are more distal antecedents of discrimination than stereotypes and prejudices.
Dietz and Petersen (2006) state that empirical research indicates that prejudice still affects the treatment of demographically different employees in organizations although in more complex ways than 30 to 50 years ago. Subtle prejudice only leads to discriminatory behavior and inter-group conflict if justification factors are in place. In organizational settings, such justification factors often are readily available. Therefore, diversity management interventions against stereotypes and prejudices could aim at eliminating or reducing (1) negative stereotypes or prejudices, (2) justification factors, and (3) discrimination.
3.3. Critical Approaches
Prasad et al. (1997) complain that much of the management literature on workplace diversity tends to ignore or gloss over these dilemmas while continuing to stress the potency of workshops and training to accomplish the goals of workplace diversity. The discipline of diversity management is “inadequately theorized and characterized by partisan approaches and universalist frameworks that render an adequate understanding of inequality and discrimination in the workplace problematic” (Dick and Cassell 2002).
Foucault, Fairclough and other discourse theorists inspire researches on diversity to be discursive-focus.
Definition of Diversity Management. According to Lorbiecki and Jack’s (2000) critical discourse analysis in examining certain definitions of diversity management (especially the notion of difference), they find that managers tend to see diversity as an object to be managed. Managers start to draw a boundary around the “managed diverse” group allows diversity to be identified and controlled as it is located in one space (the ‘different’ group). Lorbiecki and Jack’s (2000) state that masking out the diversity of those who manage is also a control mechanism because it helps to erase any questionable human differences within this powerful group.
The essentialist assumptions of the mainstream theories. Litvin (1997) claims that exposure to managerial diversity discourse encourages individuals to view their co-workers in particular ways. She laments that socially constructed demographic categories are portrayed as obvious, natural and immutable and thus preclude any consideration of mechanisms for change. Lorbiecki and Jack (2000) also agree with this point that diversity is presented as being about fixed differences, implying no movement either within or across visible or invisible boundaries.
The Business Case arguments. Lorbiecki and Jack (2000) argue that diversity management has become programmable and it can be incorporated into the routines and procedures of HRM. Litvin (2006) even argues that the Business Case discourse derives its strength and position from the economical Mega-Discourse that “enshrines the achievement of organizational economic goals as the ultimate guiding principle and explanatory device for people in organizations”..
Power. Prasad et al. (2006) contend that mainstream researchers often neglect the study of power as part of diversity discussion. Foldy (2002) points out that managing diversity means managing identity and focusing too extensively on business case discourse businesses can ignore other imperatives such as the pursuit of fairness, and ignore persistent problems of discrimination and dominance.
Social Context. Prasad et al. (2006) point out that “Crucial aspects of the context for understanding workplace diversity include the history and relative oppressive actions toward different groups, the legislation around access to education, work and health, human rights, the societal placing of diversity groups and the shifts in the salience of issues at different times, caused by the activism internationally and the local level” Moreover, European researchers start to question the relevance of the Anglo-Saxon understanding of diversity management and its applicability in their own countries (e.g. Risberg and Søderberg (2004)) where multicultural societies e.g. the US, Canada, UK and Australia tend to have a greater tolerance and appreciation for diversity whereas same may not be true in less multicultural society.
Prasad and Prasad (2002) research diversity management in term of a postcolonial argument. They argue that the study of “otherness” and diversity in a globalized environment involves paying attention to “the nexus of shifting identities and alignments that are brought together in the process of constituting the “other”, and the current geopolitical realities and global hegemonies that mediate the formation of identity spaces in organizational and institutional locations”. Prasad and Prasad (2002) point out that neo-colonial and neo-imperial discourses of otherness continue to exist in diverse organizational environment, and that these discourses are produced both within and by organizations. For example, training programs that intend to assist organizational members in appreciating internal and external cultural differences may turn into sites for the systematic and problematic production of otherness.
4. Aligning Diversity to the Strategic Business Goals
In order to leverage the full potential benefits of diverse workforce, organizations are urged to realign the diversity management strategy to the overall business strategy and objectives of the organization. Described below are three steps required and necessary in aligning diversity to strategic business goals:
4.1. Define Diversity
Hubbard (2004) states that organizations need to clarify the role of workplace diversity, including leadership roles and expectations for diversity initiatives. In vision and mission statements, highlight the importance of diversity. Corporate websites could be used as a mean of communication, revealing its public statement of the organization's commitment to workplace diversity. It is also equally important to communicate commitment by allocating the necessary resources--staff, budgets and time--to move the diversity process forward.
"Diversity policies lie as close to IBM's core as they have throughout our heritage," says Sam Palmisano, IBM chairman and CEO. "Today we're building a workforce in keeping with the global, diverse marketplace, to better serve our customers and capture a greater share of the on demand opportunity."
In Mitsubishi Electric, “hiring a diverse array of people with respect for human rights and without regard for gender, age, nationality or race is essential to the ongoing business development of a multinational corporation. Based on this thinking, Mitsubishi Electric not only complies with the Labor Standards Law and the Equal Employment Opportunity Law, it provides equal treatment to all employees regardless of nationality, creed or social status, uses the same pay scale for men and women, and determines working conditions with equal standing given to employers and workers. These employment policies also apply to Group companies.”
4.2. Establish Leadership Accountability
With the commitment of the senior management, HR diversity leaders should develop challenging yet realistic goals for diversity interventions (Hubbard 2004). Organization commitments need to be demonstrated through:
Appoint senior executives to diversity task forces for succession planning, education and training initiatives. Recruit diversity candidates for senior leadership positions. Establish diversity goals and objectives for all leadership levels in the performance management process and reward programs.
Reichenberg (2001) states that accountability for the results of diversity programs is an attribute of diversity best practice organizations. Accountability is determined through the use of metrics, surveys, focus groups, customer surveys, management and employee evaluations, and training and education evaluations. Diversity competencies may be incorporated into management systems so that organizations can determine how employees deal with people of different cultures and styles, support workplace diversity, include diverse people in work teams, and understand the impact of diversity on business relationships. In the best effort to achieve the goals of diversity, organizations must use measurable criteria to evaluate the progress of the initiative..
4.3. Develop and Operate a Diversity Scorecard System
The scorecard is an important tool to manage diversity (Hubbard 2004). The scorecard includes financial and non-financial recognition of diversity ROI initiatives as well as relevant feedback. The diversity scorecard shall include measures aligned with the organization's strategic business goals, or be part of the overall organization’s balanced scorecard. When determining measures, these four themes are required to be considered:
Key deliverables that leverage the role of diversity in the organization's overall strategy. Utilization of diversity in the development of a high-performance work environment. Ways in which the corporate culture is aligned with the organization's strategy. The efficiency of the diversity deliverables.
5. Diversity, HRM and Organization Performance
Diversity and HR
Organization diversity initiatives and diversity programs pose serious challenges to the HR practitioners (Porter 1995). In order to meet these challenges, it is essential to acquire top management commitment, the skilled training and breadth of organizational knowledge HR possesses, and a shared understanding that managing diversity is not an isolated problem to be solved but an ongoing and lengthy process. All three of these elements are needed to sustain people's willingness to work together when they do not share values, experiences, culture, and ways of interpreting meaning and solving problems (Zane 2002)
Bassett-Jones (2005) reveals the reason why workforce diversity is difficult to implement. It is mainly due to human beings prefers working in homogeneous groups and human beings and the organizations to which they belong resist change. Diversity's focus on changing human thought and behavior requires and defines HR's role in diversity management. Successful diversity management requires HR managers to possess skills in leadership, organizational development, change management, psychology, communication, measurement, and assessment (Kreitz 2008).
Diversity, HRM and Organization Performance
As HR often appears as an undifferentiated and homogeneous category, thus researches are more focus in the management, diversity business case and potential economic value that diversity could bring into the organization rather than HR. It can even be argued that diversity is excluded from the HRM domain, because notions of the abstract ideal worker, who has no body and therefore no gender, color, age and nationality (Acker, 1992), still prevail in HRM. However, such ignorance does not prevent the researchers from re-thinking HRM from the perspective of diversity, ultimately influencing the performance outcome of the organizations.
The HRM model presented by Paauwe and Richardson (1997) states that HRM activities give rise to HRM outcomes that will influence the performance of the firm. As a causal relationship, this works vice versa. Contingency and control variables, such as age, size, sector and technology, may influence the HRM activities, outcomes and performance in the model.
The other model suggested by Kossek and Lobel (1996) states that traditional HRM models foster workforce homogenization and similarity, and that this hinders the organization’s ability to respond to important environmental changes. This prescribes that strategic decision on diversity management objectives should be built in before the design and implementation of HRM policies are decided.
Integrating Paauwe and Richardson and Kossek and Lobel models, Benschop (2001) proposes a new model that asserts that diversity strategy is driven by environmental factors, it influences HRM activities, and may therefore affect HRM outcomes and performance, whether for the individual, group or organization. However, she also notes that there is existence of debates in the HRM literature about the impact of HRM activities on organization performance (Guest 1997) and so is the discussion concerning the effects of diversity on performance (Cox, 1993).
6. Examining Global Diversity Management
While the literatures on workforce diversity cover a wide range of diversity issues in term of theoretical frameworks and empirical studies and how organization should approach the management of diverse workforce, the same may not be true about literatures in an international setting. With increasing impacts of globalization on organizations’ workforce, it is thus imperative to give an international perspective to managing diversity. It is now common to find multinational corporations (MNCs) plan, implement or evaluate some forms of diversity initiatives, not only in the US, but increasingly on an international scale (Wentling and Palma-Rivas 2000).
In essence, global diversity management is defined to relate to the management of workforces (citizens and immigrants) in different countries (Mor Barak 2005). It is management discipline that concern how effectively a global workforce can be managed in achieving competitive advantage and business benefits, while being influenced to a large extent by organizational strategy and pressures from local labour and product markets (Florkowski 1996). Mor Barak (2005) recognizes that the cultural dimension of diversity program has strong sensitivity when corporations faced different type of customers and markets and it could be used to solve problem related to multicultural teams, gaining new market shares and product development. This, effectively managing a global workforce is considered to be critical in achieving benefits for business and in sustaining international competitive advantage (Florkowski 1996) as well as workforce mobilization (Konrad 2003).
As the proportions of MNCs’ workforces located outside of their “home” country increases, the key challenge is how to leverage the diversity of a global workforce whilst maintaining consistency throughout the organization (Rosenzweig, 1998). In other words, cross-border diversity initiatives need to be locally meaningful (Schneider & Barsoux 2003). MNCs ought to focus on the impact of domestic and overseas legislation, languages, religions, ethnicity and cultural dimensions that affect working habits, labor composition, industrial relations and cross-border interaction as a whole.
6.1. MNCs’ Approaches to Global Diversity Management
Whilst empirical studies concerning how MNCs have approached global diversity management is scant, this section intends to discuss the MNCs’ strategies within the perspectives of strategic approaches, designs (“what”) and delivery (“how”) of global diversity management.
As the Strategic International Human Resource Management’s (SIHRM) and International Human Resource Management (IHRM) model suggests, MNCs tend to adopt approaches that could reflect their overall international orientation, strategy and structure when dealing with global diversity management. This is supported by research of Egan and Bendick (2003) where they find that both global and multi-domestic strategies have been effectively applied, despite acknowledging that most of the surveyed US MNCs in fact adopted a strongly multi-domestic approach to diversity management. In such cases, corporate headquarters only offered broad guidance, resulting in differentiated diversity activities amongst foreign affiliates. This preference for multi-domestic approach is contended to due to the reluctance to identify global diversity management with American management practices, as well as the perceived complexity involved in developing and imposing globally uniform diversity programs.
The case study of Ferner et al. (2004) points out the shortcomings and weaknesses of an ethnocentrically-oriented approach (from the host-country perspectives) to integrating global diversity management policies. Jones et al. (2000) and Ferner et al. (2005) both agree that how US-derived models of diversity management have been perceived as inappropriate, resulting high levels of culturally- and institutionally-based resistance. Wentling and Palma-Rivas (2000) distinguish between the approaches of US MNCs in terms of “macro-level” activities which comprise the planning, goal‐setting and prioritizing at corporate headquarter, and “micro-level” activities whereby host subsidiary managers implement their own version of diversity initiatives which reflect their subsidiary-specific needs. This follows that the global integration of diversity management cannot be effective and successful without significant local modification.
It has been empirically tested that whilst individual contents of diversity initiatives in MNCs can vary, there is often a close relationship between domestic and international agendas. For instance, Egan and Bendick (2003) attest to the similarities of domestic and international diversity agendas with four common features i.e. (1) a broad definition of diversity which incorporates the notion of “inclusion”, (2) motives for diversity management centering on the “business case”, (3) administrative structures used to facilitate diversity, and (4) the integration of diversity initiatives into wider organizational change programs. Wentling and Palma-Rivas (2000) report a similar relationship, identifying the shared features of firstly, the inclusion and full utilization of people as guiding principles, secondly the development of understanding and appreciation for cultural differences, and thirdly the adaptation of products and services to satisfy diverse customer needs. Ferner et al. (2005) state further that global diversity structures tend to develop out of existing domestic structures. Whilst they also acknowledge the broad definition of diversity, they also go on to identify the setting and monitoring of targets as well as the regular collection of diversity metrics, as part of the performance management process. Nevertheless, the collective similarities between domestic and international diversity initiative designs identified above still arguably represent distinctly US approaches to conceptualizing and managing the diversity of a global workforce.
The growing scale and complexity of diversity management programs within MNCs would warrant sophisticated organizational mechanisms to implement them. A multiplicity of “administrative structures” has been reported in MNCs attempts to internationalize diversity management (Egan and Bendick 2003). The most common administrative structure is a “diversity council” which typically serves as an overarching taskforce, often at the corporate or global level, with the mandate of leading diversity efforts and providing guidance and support where necessary. Often time, the creation of the post of “Chief Diversity Officer” or “Diversity Coordinator” is not uncommon. These structures are also supported by organization-wide training interventions. Finally, in order to complement the top-down approach of diversity management, “affinity groups” for women or ethnic minority groups and broader “diversity networks” are formed to represent the voices of the employees.
6.2. IHRM and SIHRM Integration
When cross-border human resource issue is concerned, the roles of IHRM and SIHRM become important. The aim of IHRM is to contribute to the success of the MNCs by implementing its global strategy in parallel with creating “sufficient flexibility” to meet local conditions (Tayeb 2003). Schneider and Barsoux (2003) indicate that adaptation of HRM policies, practices and organizational culture to local environments is seen as crucial in managing local diversity to be locally fair and bias-free. However, in terms of global HR integration, locally differing and culturally contextual HR practices, philosophies or policies can make the integration of global diversity management complex due to its demographic, cultural and institutional embeddedness (Tayeb 1998).
Kim et al. (2003) find that MNCs use a combination of mechanisms with different levels of intensity in order to integrate, control and coordinate business functions on a global scale. They classify integration modes as people-based, information-based, formalization-based and centralization-based and find that people-based and information-based modes generally emerge as being most effective mechanisms. Besides, mutually supporting integrating mechanisms have been found useful in facilitating better acceptance of diversity (Gilbert & Ivancevich 2000). In practice of global diversity management, it is unclear which modes would be most appropriate. Indeed, it is also ambiguous whether HR should own this role of world-wide integration or should it be an overall business initiative (Sippola and Smale 2007).
7. The Challenges of Diversity Management
Many organizations are finding that the goal of creating a multicultural work culture that both welcomes and leverages diversity remains elusive. However, efforts of promoting workforce diversity has been challenging in the practical way. Why past efforts have failed? There are three main reasons why many past efforts have been disappointing: (1) misdiagnosis of the problem, (2) wrong solution (that is, failure to use a systemic approach), and (3) failure to understand the shape of the learning curve for leveraging diversity work.
In addition, Metzler (2003) lists the ten reasons why diversity initiatives fail: 1. Failure to address the deeper issues of discrimination and marginalization. 2. Failure to view diversity as organizational change. 3. Failure to examine how much change an organization can accommodate and in what increments. 4. Failure to address systemic issues such as organization's practices, policies, procedures and unwritten informal rules. 5. Failure to clearly and comprehensively articulate why an organization is devoting time, effort and resources to a diversity initiative. 6. Failure to engage white men in diversity discussion involving blacks or minority group. 7. Poor diversity training and education. 8. Lack of authentic diversity leadership. 9. Selecting incompetent consultants. 10. Lack of accountability.
It is acceptable to state that there is no "best way" to manage diversity. The execution of the workforce diversity concept could be vastly different from country to country, from company to company. The very success of its implementation is depending on business needs and workforce issues as well as situational factors, such as the organizational culture and workplace environment. While a broad range of issues is covered, it should be noted that "one size does not fit all" as organizations are in different stages of development regarding workplace diversity. Ultimately, the strength of commitment by the CEO, senior management and HR leadership will determine whether the organization successfully leverages workforce diversity, in achieving competitive advantage.
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