Chapter 4: Diversity in the Workplace

Warm Up Questions

• Think about an organization that you are involved with, such as school, work, or a club. Does the organization have people with a wide variety of different ages, personalities, and backgrounds? Or are most members of the group similar to one another in personality, age, and cultural background?
• How important do you think cultural diversity is within an organization? What are the benefits of cultural diversity? What are the challenges?
• Do you think cultural diversity is important in the workplace? Why or why not?

Key Terms

accommodation

a method used to remove barriers that prevent individuals who are disabled from fully participating in the workplace

similarity attraction phenomenon

the tendency for people to be attracted to individuals who are similar to them

stereotype

a commonly held belief about a person or a group of people which is highly oversimplified and often inaccurate

Reading

Benefits of Diversity

1. Canadian workplaces are becoming more diverse as organizations realize what a diverse workforce can bring. Let’s explore the benefits of having a diverse workforce:

Higher Creativity in Decision Making

2. An important potential advantage of having a diverse workforce is the ability to make higher-quality decisions. In a diverse work team, people will have different opinions and perspectives. In these teams, individuals are more likely to consider more alternatives and think outside the box when making decisions. Therefore, having a diverse workforce may have a direct impact on a company by increasing creativity in decision making.

Better Understanding and Service of Customers

3. A company with a diverse workforce may create products or services that appeal to a broader customer base. For example, PepsiCo Inc. planned and executed a successful diversification effort in the recent past. The company was able to increase the percentage of women and ethnic minorities in many levels of the company, including management. A company with a diverse workforce may understand the needs of specific groups of customers better, and customers may feel more at ease when they are dealing with a company that understands their needs.

More Satisfied Workforce

4. When employees feel that they are fairly treated, they tend to be more satisfied. On the other hand, when employees perceive that they are being discriminated against, they tend to be less attached to the company, less satisfied with their jobs, and experience more stress at work (Sanchez & Brock, 1996). Organizations where employees are satisfied also often have lower turnover.

Market Reputation

5. Companies that do a better job of managing a diverse workforce are often rewarded in the stock market, which indicates that investors use this information to judge how well a company is being managed. Ekta Mendhi is the senior director of corporate strategy at CIBC in Canada. They found through their research that creating a more diverse board of directors can enhance the decision-making process and improve an organization’s performance and market reputation (Mendhi & Dart, 2018).

Lower Litigation Expenses

6. Companies doing a particularly bad job in diversity management face costly litigations. When an employee or a group of employees feel that the company has violated equity laws, they may file a complaint. The Ministry of Labour acts to mediate between the company and the person in cases where litigation is claimed due to unfair or unequal hiring practices, and they may sue the company on behalf of the complainant. Regardless of the outcome, these lawsuits are expensive and can reach millions of dollars. The resulting poor publicity also has a cost to the company.

Higher Company Performance

7. As a result of all these potential benefits, companies that promote diversity in the workplace more effectively tend to outperform others. Research shows that there is a positive relationship between the racial diversity of the company and company performance. Companies ranked in the Diversity 50 list created by Fair360 magazine performed better than their counterparts (Slater et al., 2008).

Challenges of Diversity

8. If managing diversity effectively has the potential to increase company performance, increase creativity, and create a more satisfied workforce, why aren’t all companies doing a better job of encouraging diversity? Despite all the potential benefits, there are also a number of challenges associated with increased levels of diversity in the workforce.

Similarity-Attraction Phenomenon

9. There is a tendency for people to be attracted to people who are similar to themselves (Riordan & Shore, 1997). Research shows that individuals communicate less frequently with those who are perceived as different from themselves (Chatman et al., 1998). They are also more likely to experience emotional conflict with people who differ with respect to race, age, and gender (Jehn et al., 1999; Pelled et al., 1999). The similarity-attraction phenomenon may explain some of the potentially unfair treatment based on demographic traits.

Stereotypes

10. An important challenge of managing a diverse workforce is the possibility that stereotypes about different groups could lead to unfair decision making. The problem with stereotypes is that people often use them to make decisions about a particular individual without actually verifying whether the assumption holds for the person in question, resulting in unfair and inaccurate decision making. For example, a hiring manager may prefer a male candidate for a management position over a well-qualified female candidate. The assumption would be that management positions require assertiveness, and the male candidate would be more assertive than the female candidate. Being aware of these stereotypes is the first step to preventing them from affecting decision making.

Suggestions for Managing Demographic Diversity

Build a Culture of Respect for Diversity

11. In the most successful companies, diversity management is not the responsibility of the human resources department. Starting from top management and including the lowest levels in the hierarchy, each person must understand the importance of respecting others. If this respect is not part of an organization’s culture, no amount of diversity training or other programs are likely to be effective. In fact, in the most successful companies, diversity is viewed as everyone’s responsibility. This enables employees with vastly different demographics and backgrounds to feel a sense of belonging (Chatman et al., 1998; Fisher, 2004).

Make Managers Accountable for Diversity

12. People are more likely to pay attention to aspects of performance that are measured. In successful companies, diversity metrics are carefully tracked. For example, PepsiCo in recent years, half of all new hires had to be either women or minorities. Bonuses of managers partly depended on whether they had met their diversity-related goals (Yang, 2006). When managers are evaluated and rewarded based on how effective they are in diversity management, they are more likely to show commitment to diversity that in turn affects the diversity climate in the rest of the organization.

Diversity Training Programs

13. Many companies provide employees and managers with training programs related to diversity. However, not all diversity programs are equally successful. A study of over 700 companies found that programs with a higher perceived success rate were those that occurred in companies where top management believed in the importance of diversity, where there were explicit rewards for increasing diversity in the company, and where managers were required to attend the diversity training programs (Rynes & Rosen, 1995).

Review Recruitment Practices

14. Companies that want to increase diversity may try targeting a pool that is more diverse. By building relationships with Indigenous and other marginalized groups, organizations may attract a more diverse group of candidates to choose from. The auditing company Ernst & Young Global Limited increases the diversity of job candidates by mentoring undergraduate students (Nussenbaum, 2003). Companies may also benefit from reviewing their employment advertising to ensure that diversity is important at all levels of the company (Avery, 2003).

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Comprehension Questions

1. There are several benefits of diversity within the workplace listed in the article. Name 3 of these benefits.
2. What is the overall result of all these benefits of diversity within the workplace?
3. What are two of the challenges of diversity in the workplace?
4. There are several suggestions given for managing cultural diversity in the workplace. What four suggestions are provided?
5. For one of the suggestions listed above, explain why this approach would be beneficial to the company.

Chapter 4 Answer Key

Key Vocabulary

Vocabulary Practice

Definitions Chapter 4

Fill in the Blanks Chapter 4

Collocations Chapter 4

Chapter References

Avery, D. R. (2003). Reactions to diversity in recruitment advertising: Are differences black and white? Journal of Applied Psychology, 88(4), 672–679.

Chatman, J. A., Polzer, J. T., Barsade, S. G., & Neale, M. A. (1998). Being different yet feeling similar: The influence of demographic composition and organizational culture on work processes and outcomes. Administrative Science Quarterly, 43, 749–780.

Fisher, A. (2004). How you can do better on diversity. Fortune, 150(10), 60.

Jehn, K. A., Northcraft, G. B., & Neale, M. A. (1999). Why differences make a difference: A field study of diversity, conflict, and performance in workgroups. Administrative Science Quarterly, 44, 741–763.

Mendhi, E & Dart, B. (2018, February 18). More work must be done to boost gender diversity in Canada’s boardrooms. The Globe and Mail. https://seneca.libguides.com/c.php?g=20762&p=121151.

Nussenbaum, E. (2003). The lonely recruiter. Business 2.0, 4(9), 132.

Pelled, L. H., Eisenhardt, K. M., & Xin, K. R. (1999). Exploring the black box: An analysis of work group diversity, conflict, and performance. Administrative Science Quarterly, 44, 1–28.

Riordan, C. M., & Shore, L. M. (1997). Demographic diversity and employee attitudes: An empirical examination of relational demography within work units. Journal of Applied Psychology, 82, 342–358.

Rynes, S., & Rosen, B. (1995). A field survey of factors affecting the adoption and perceived success of diversity training. Personnel Psychology, 48, 247–270.

Sanchez, J. I., & Brock, P. (1996). Outcomes of perceived discrimination among Hispanic employees: Is diversity management a luxury or necessity? Academy of Management Journal, 39, 704–719.

Slater, S. F., Weigand, R. A., & Zwirlein, T. J. (2008). The business case for commitment to diversity. Business Horizons, 51(3), 201-209.

Yang, J. L. (2006). Pepsi’s diversity push pays off. Fortune, 154(5), 15.