Chapter 2 Organizational Diversity Michael A. Hitt C. Chet Miller Adrienne Colella Slides by Ralph R. Braithwaite

Diversity in the LAFD What are your thoughts about the opening scenario? Are there jobs that should be left to one gender or the other? Why or why not? Have you seen discrimination based on race? Were the consequences as a result of the Los Angeles Fire Department’s actions too lenient, too severe, or just right? Do you think the “steps to remedy the situation” are enough? Why or why not? Exploring Behavior in Action

Knowledge Objectives Define organizational diversity and distinguish between affirmative action and diversity management. Distinguish multicultural, plural, and monolithic organizations. Describe the demographic characteristics of the U.S. population and explain their implications for the composition of the workplace. Discuss general changes in the United States that are increasing the importance of managing diversity effectively. Understand why successfully managing diversity is extremely important for high-involvement work organizations. Discuss the various roadblocks to effectively managing a diverse workforce. Describe how organizations can successfully manage diversity.

Diversity Defined A characteristic of a group of people where differences exist on one or more relevant dimensions such as gender. Diversity is a group characteristic, not an individual characteristic.

Common Dimensions Gender Race Ethnicity Age Religion Social Class Sexual Orientation Personality Functional Experience Geographical Background

Quote “The effects of diversity can result from any attribute that people use to tell themselves that another person is different.” K. Y. Williams and C. A. O’Reilly Thoughts?

Examples of Definitions Thoughts? Texas Instruments – “Diversity is ‘all the ways in which we differ.’ This includes the obvious differences such as race, gender, age, disability, and more subtle differences such as education, sexual orientation, religious affiliation, work styles, and thoughts or ideas.” Microsoft – “[Diversity] means not only having a workforce balanced by race, ethnic origin, gender, sexual orientation, and gender identity and expression, but also having a workforce that embraces differences in approaches, insights, ability, and experience.” Banks of America – “Our commitment to diversity is … about creating an environment in which all associates can fulfill their potential without artificial barriers, and in which the team is made stronger by the diverse backgrounds, experiences, and perspectives of individuals.”

Strategic Importance of Organizational Diversity Improves Corporate culture Recruitment Relationships with clients and customers Builds competitive advantage Understand and serve diverse customer base Heterogeneous teams deal better with complex problems and challenging tasks More commitment to organization’s mission

Affirmative Action vs. Diversity Management Ongoing, permanent changes Temporary, until representation of disadvantaged groups Time Frame Attempts to uncover the root causes of diversity problems Does not address the cause of problems Cause of Problems Allows all associates to reach their full potential Recruitment, mobility, and retention Focus Assumes that managers and the organizations will change Assumes individuals will assimilate and adapt Assimilation Create an inclusive, empowered work environment Prevent and remedy discrimination Purpose Diversity Management Affirmative Action Adapted from Exhibit 2-1: Differences between Affirmative Action Programs and Diversity Management Programs

Organizational Diversity Multicultural Organization Plural Organization Monolithic Organization Multicultural organization - An organization in which the organizational culture fosters and values cultural differences Plural organization - An organization that has diverse workforces and takes steps to be inclusive and respectful of people from different cultural backgrounds, and diversity is tolerated but not fostered Monolithic organization - An organization that is demographically and culturally homogeneous

Forces of Change Changing workforce demographics – percentage by race, age and sex – Exhibit 2-2 Increase in the service economy Global economy Requirements for teamwork Service jobs will increase by 17% between 2004 and 2014 and by 2014 will make up 78% of all jobs Global – imports still outpacing exports, increase in the number of working relationships with other countries Teamwork – one way to provide better goods and services, requires individuals to work well together.

High-Involvement Organizations Individual Outcomes Commitment to the organization Job involvement Satisfaction Group Outcomes Decision making Creativity Complex tasks Graphic on the left on mouse click. Words on right – wipe in automatically after one second for each bullet. Issues wipe down after two seconds and hide on next mouse click. Organizational Outcomes Productivity Return on equity Market performance

Societal and Moral Outcomes $10.5M & $8M $176M $508M $250M $47M Ford Motor Company paid out $10.5 million for age discrimination and $8 million for sex discrimination Coca Cola paid out $192.5 million for race discrimination Texaco paid out $176 million for race discrimination CalPERS paid out $250 million for age discrimination Shoney’s paid out $132.5 million for race discrimination Rent-a-Center paid out $47 million for sex discrimination Information Agency and Voice of America paid out $508 million for sex discrimination $132.5M

Laws Preventing Discrimination Title VII of the 1964 Civil Rights Act, Civil Rights Act of 1991 Equal Pay Act of 1963 Age Discrimination in Employment Act of 1967 Title I of the Americans with Disabilities Act of 1990 Title VII of the 1964 Civil Rights Act, Civil Rights Act of 1991 – Employers – Private employers, state and local governments, education institutions, employment agencies, and labor unions with 15 or more individuals Employees – Everyone based on race, color, religion, sex, or national origin Equal Pay Act of 1963 – Employers – Virtually all employers Employees – Men and women who perform substantially equal work Age Discrimination in Employment Act of 1967 – Employers – Private employers, state and local governments, education institutions, employment agencies, and labor unions with 20 or more individuals Employees - Individuals who are 40 years old or older Title I of the Americans with Disabilities Act of 1990 – Employers – Private employers, state and local governments, education institutions, employment agencies, and labor unions with 15 or more individuals Employees – Individuals who are qualified and have a disability Adapted from Exhibit 2-3: Federal Laws Preventing Employment Discrimination

Experiencing Strategic OB The Case of France Religious discrimination Discrimination issues in hiring Promotional issues Thoughts on the policy of not collecting data on race and ethnicity or no affirmative action laws? Thoughts on what these companies are doing? Experiencing Strategic OB

Roadblocks to Diversity

Prejudice and Discrimination Modern Racism Prejudice – Unfair negative attitudes we hold about people who belong to social or cultural groups other than our own Discrimination – Behavior that results in unequal treatment of individuals based on group membership Modern racism – Subtle forms of discrimination that occur because people know that it is wrong to be prejudiced against other racial groups and believe themselves not to be racists

Stereotypes A generalized set of beliefs about the characteristics of a group of individuals What thoughts come to mind when you perceive the individuals in these photographs?

People with Disabilities Common Stereotypes Women People with Disabilities White Men Black People Japanese Men Jewish People Athletes Accountants Arab People Adapted from Exhibit 2-4: Common Stereotypes

Stereotyping – Difficult to Stop Tough to dispel Guide what information we look for, process and remember Seems to be an enduring human quality – everyone has some stereotypes

Women, Work and Stereotypes While things have improved, are there still gender issues in the workplace? Are the issues faced by the women in the text unique and unusual? What are your thoughts about the survey conducted by Elle and MSNBC.com? Experiencing Strategic OB

Social Identity A person’s knowledge that he or she belongs to certain social groups, where belonging to those groups has emotional significance. Key Points: Person’s social identity becomes more salient and noticeable when in the minority on an important dimension Having a social identity different than the majority may make people feel they have to behave in ways that are unnatural for them in certain contexts Minority group members often fear losing their social identity People often evaluate others based on their membership in social groups

Sample Self-Identity Structures Adapted from Exhibit 2-5: Sample Self-Identity Structures

Control Rewards and Resources Sources of Power Expert Knowledge Formal Position Control Rewards and Resources Being Irreplaceable

Ascribed Status Status and power that is assigned by cultural norms and depends on group membership High-status individuals speak more and use stronger influence tactics than members of low-status groups People belonging to groups with different amounts of power and status may avoid interacting with one another and may form cliques with members of their own groups

Communication Problems Different languages Different levels of fluency in the dominant language Excluding those who don’t speak the language

Communication Disagreement Among Cultures Willingness to openly disagree Importance of maintaining “face” or dignity The way “agreement” is defined Time devoted to establishing personal relationships Willingness to speak assertively Mode of communication - written or verbal Personal space and nonverbal communication

Structural Integration The degree to which minorities and women are represented in all occupations within an organization. Two levels exist – poorly integrated and well integrated. The next two slides show examples of each – both organizations have approximately 35% of the employees being female and/or minority.

Poor Structural Integration Middle Management 0% 2% 1% 10% 5% 15% 25% 40% 26% 60% 65% 80% 75% 0.5% 3.25% 6.25% 29% 70% Finance Marketing HR Sales Average All Functions Top Management Supervisor Staff Line Worker Percentage of people who are female and/or racial and ethnic minority group members Adapted from Exhibit 2-6: Examples of Poorly Integrated and Well-Integrated Organizations

Good Structural Integration 35% Top Management Supervisor Staff Middle Management Line Worker Finance Marketing HR Sales Average All Functions Percentage of people who are female and/or racial and ethnic minority group members Adapted from Exhibit 2.6: Examples of Poorly Integrated and Well-Integrated Organizations

Roadblocks Poor integration creates power and status differentials – become associated with gender and race Poor integration fosters negative stereotypes Women and minorities who are successful may be perceived to have token status Women and minorities perception – impossible to move up

Commitment of Leaders Communicate through multiple channels Personally lead all diversity efforts Sponsor employee councils Ensure cross-cultural communication Be accountable for advancing diversity initiatives High-ranking leaders send relevant communications through multiple channels, such as intranet postings, policy statements, formal newsletters, meetings, speeches, and training programs. One high-ranking leader personally leads all diversity efforts. He or she holds town meetings and eats lunch in the cafeteria to talk about diversity. Multiple high-ranking executives sponsor employee councils devoted to fostering cross-cultural communication. The councils are all-inclusive – anyone who wants to join can do so. Therefore, anyone can “have the ears” of executives on diversity issues. Managers at all levels are held accountable for advancing diversity issues.

Promoting a Positive Diversity Environment Managerial Advice Promoting a Positive Diversity Environment Principles Pause to short circuit the emotion and reflect Connect with others in ways that affirm the importance of relationships Question interpretations and explore blind spots Obtain genuine support that doesn’t necessarily validate initial points of view but rather helps in gaining a broader perspective Shift the mindset Thoughts?

Integration With the Strategic Plan Common measures of diversity effectiveness include: Increased market share and new customer bases External awards for diversity efforts Associates’ attrition rate Associates’ work satisfaction Associates’ and managers’ satisfaction with workplace climate

Associate Involvement Discussion groups from a cross-section of staff Employee satisfaction surveys Cultural diversity audits Informal employee feedback hotlines Develop and support affinity groups – groups that share common interests Provide training

Diversity Initiatives at Denny’s Recruiting Retention Development External partnerships Communication Training Staffing and infrastructure

The Strategic Lens How does organizational diversity contribute to an organization’s competitive advantage? What actions are required to create diversity in an organization, particularly in one that has homogeneous membership at present? How does diversity in an organization affect its strategy?

Questions