1 Why manage Diversity? –State of Canada’s businesses & population –Disadvantages of mis-managing diversity –Advantages of managing diversity well What is Diversity? Learning Goals for today

2 Highly skilled labour is a major contributor to labour force growth bec. of technology, globalization, etc. Existing Canadian population is not replacing itself with skilled labour –Need to import skilled labour from Asia & S. America –Canada competes w/Europe & the US for skilled labour Why Manage Diversity Current State of Canadian Businesses Oliver

3 54% of immigrants are highly skilled labour Immigrants will contribute to 100% of labor force growth in 2011 Immigrants & Labour Force Conf Board of Canada, cited in Oliver

4 Immigration –70% of 200,000 immigrants/year are Visible Minorities Census in % of Population is Visible Minority Projections for % of Canadians will be Visible Minority Why Manage Diversity State of the Canadian Population Oliver

5 VMs accounted for 33.3% of Labour force’s contribution to GDP for even though they made up only 11% of labour force Visible Minorities (VMs) will account for over 10% of the gains in GDP growth Why Manage Diversity Visible Minorities in the Labour Force Conf Board of Canada, cited in Oliver

6 Immigrants Visible Minorities Skilled Labour

7 Wage gap –VMs earn less than Canadian average 11% less in % less in 2000 –Asian men immigrating to Canada earn 10-15% less than immigrants to US (even after controlling from experience & schooling) Why Manage Diversity? VMs in the workplace Conf Board of Canada, cited in Oliver

8 Wage gap –Male, foreign born, visible minorities earn 15% less Indo Pakistani 15% less Chinese 16% less Blacks 21% less All others 23% less –Even after controlling from experience & schooling Why Manage Diversity? VMs in the workplace

9 Unfair Treatment –1 in 5 VMs report discrimination and unfair treatment in the last 5 years (Stats Can) 4 times more than for non-visible minorities –Poor representation of VMs in key decision making positions (Conf Board of Canada) 3% of respondents have VM CEOs 3% of 900 senior executives were VMs 9 in 10 org do not have a plan to recruit VM to Board even though they believe it is important to have such representation on Board (New Racism) Why Manage Diversity? VMs in the workplace Oliver

10 Cost of Employee Withdrawal –E.g., Replacing employee, days absent, sick days Mental health care costs e.g., costs for coping w/stress Lowered employee productivity Health care costs e.g., negative effects on health from stress Legal costs –E.g., costs of settling/contesting discrimination and harassment lawsuits Lowered stock value Physical Consequences of Mis-managing Diversity Stephan & Stephan, Cox

11 Increased conflict Lower social attraction to work group Lower commitment to work group Increased & discrimination Poorer communication Lower cooperation & cohesiveness (Pelled et al 99) Higher Turnover (Cox) Higher stress (Stephan & Stephan) Psychological Consequences of Mis-managing Diversity Williams & O’Reilly 98

12 Improves/increases Problem solving & decision making quality Creativity & innovation Interpersonal skills among employees Organizational flexibility Quality of human resources Marketing strategies Higher annualized returns Fulfils organizational values of fairness Advantages of Diversity Stephan & Stephan, Cox, Oliver

13 Improves Problem Solving because… Problems are approached from broader & richer base of experience (cox) Increased critical analyses bec. there were more differences in opinion (Cox, Oliver) Generates more range of perspectives and more alternatives (Conf Board) Limiting factor Only when diverse groups are trained on how to understand each others’ attitudes (Triandis et al) Advantages of Group Diversity

14 Improves Creativity/Innovation More ideas generated (Oliver) E.g., In demographically diverse top management teams in the banking industry Improved performance in task requiring marketing to different cultures (Cox) Advantages of Group Diversity Member diversity Differences in perspective Better Quality ideas

15 Better interpersonal skills among employees Visible Minority group members score higher on collectivism Collectivists were more cooperative ( cox et al ) But increased employee diversity can also reduce cooperation (Pelled et al 99) Advantages of Diversity in Groups

16 Organizational Flexibility Different people have different ways of organizing info, responding and reacting to info, and are more or less flexible in their ways of thinking E.g., Women score higher on tolerance for ambiguity which is linked to cognitive complexity & ability to perform ambiguous tasks E.g., Bilinguals show more cognitive flexibility & more divergent thinking than monolinguals Advantages of Employee Diversity Cox

17 Quality of Human Resources When diversifying implies enlarging the pool of potential employees, it increases organizational performance Restricting selection of employees to one group reduces pool to choose from and therefore the range of talent –Assumes full range of ability/skill in all groups of employees (e.g., physical strength range in men vs. women) Advantages of Employee Diversity Cox

18 Expand to Global Markets Hiring new immigrants with knowledge (of business norms of markets) & connections to home countries (via personal relationships w/individuals in those countries) helps expand company’s operations to such countries Public relations advantage of managing diversity well (Cox) Assumes: That perceptions of organizations w/ predominantly vm employees is also favorable Marketing Advantages of Employee Diversity

19 When employees match the composition of the market, they –E.g., secure more business from those ethnic groups (e.g., BMO; cited in Oliver) –Understand how people of those ethnic groups buy goods enabling orgs to market to them (Cox) –Are better at providing service to those customers bec. they know better how to do so E.g., If employee speaks language of non-English speaking customer (Leonard et al, 2004) Marketing Advantages of Employee Diversity

20 Match b/w employee & customer’s group membership increases likelihood of customer sponsoring organization –Due to customers’ preferences for similarity Supported in sports memorabilia purchases Not supported in other retail environments (Leornard et al) – Note: Argument of customer-service provider match was used to discriminate against vms when customer base was white & is now being used as rationale to attract vm customers Marketing Advantages of Employee Diversity

21 Employee’s cultural group membership implies s/he has knowledge about own culture and cultural group members’ preferences –But see Cultural circles exercise! Marketing Advantages of Employee Diversity

22 Differences in social & cultural group memberships among people (cox) E.g., religion, ethnicity, gender, nationality, sexual orientation, –Exercises illustrating these differences: Pie Chart exercise; Cultural circles exercise; Twenty Statements Test Individual differences on any measurable & valid dimension E.g., cognitive complexity; cooperativeness; skills –Value of using such dimensions vs. social/cultural group membership differences for »Fairness »Positive organizational outcomes What is Diversity?