© Farhan Mir 2012 IMS Current Issues in Management M Phil Managing Diversity 2 Some Further Research Findings Course Lecturer: Farhan Mir

© Farhan Mir 2012 IMS © Farhan Mir IMS Creating a Multicultural Organization Taylor Cox, Taylor Cox Jr and Paul O'Neill

© Farhan Mir 2012 IMS © Farhan Mir IMS Creating a Multicultural Organization How can organizations increase in cultural diversity without suffering significant adverse effects on performance? By managing diversity we mean - understanding its effects and implementing behaviors, work practices, and policies that respond to them in an effective way.

© Farhan Mir 2012 IMS © Farhan Mir IMS Diversity as Value-Added Activity Firstly Implementing the values of fairness and respect for all people (this could give immense advantages). Beyond just a value to fairness a well-managed diversity can add value to an organization by (1) improving problem solving (2) increasing creativity and innovation (3) increasing organizational flexibility (4) improving the quality of personnel through better recruitment and retention, and (5) improving marketing strategies, especially for organizations that sell products or services to end users

© Farhan Mir 2012 IMS © Farhan Mir IMS Diversity as Value-Added Activity Problem Solving The presence of minority views improved the quality of the decision-making process, regardless of whether or not the minority view ultimately prevailed Research also suggests that the effect of diversity on the quality of problem solving depends greatly on the extent to which the diversity is proactively managed

© Farhan Mir 2012 IMS © Farhan Mir IMS Diversity as Value-Added Activity Creativity and Innovation One of the research conducted proves that the diverse teams outperformed the homogeneous ones by about 10 percent

© Farhan Mir 2012 IMS © Farhan Mir IMS Diversity as Value-Added Activity Organizational Flexibility There is some evidence that women tend to have more tolerance for ambiguity than men Similarly, studies on bilingual and monolingual cultural groups in various nations have shown that bilingual individuals tend to have higher levels of cognitive flexibility and of divergent thinking than monolinguals

© Farhan Mir 2012 IMS © Farhan Mir IMS Diversity as Value-Added Activity Marketing Strategy A well-used, diverse workforce can facilitate selling goods and services in the increasingly diverse marketplace in several ways

© Farhan Mir 2012 IMS © Farhan Mir IMS The Failure of Diversity Management Efforts 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.

© Farhan Mir 2012 IMS © Farhan Mir IMS Failure and Lessons… The more significant problem is that most employers have an organizational culture that is somewhere between toxic and deadly when it comes to handling diversity. The result is that the presence of real diversity is unsustainable as a characteristic of the organization. The result is that the presence of real diversity is unsustainable as a characteristic of the organization. Avoiding the causes of failures and focusing on key Diversity Advantage Drivers could enable companies to yield greater overall advantage

© Farhan Mir 2012 IMS © Farhan Mir IMS Research by the Diversity Research Network THE EFFECTS OF DIVERSITY ON BUSINESS PERFORMANCE

© Farhan Mir 2012 IMS © Farhan Mir IMS BOLD Initiative Since 1996, a group of industry chief executives and human resource professionals have been working together under the auspices of a nonprofit organization called the Business Opportunities for Leadership Diversity (BOLD) Initiative to help American corporations learn how to leverage their cultural diversity for competitive advantage. These leaders espouse the now popular "business case" for diversity-the view that a more diverse workforce will increase organizational effectiveness

© Farhan Mir 2012 IMS © Farhan Mir IMS Effects of Diversity on Organization Performance Research tried to examine the relationships between gender and racial diversity and business performance.Diversity Gender Cultural Demographical Organizational Outcome Performance Satisfaction Turnover

© Farhan Mir 2012 IMS © Farhan Mir IMS

2012 IMS © Farhan Mir IMS Effects of Diversity on Organization Performance The Process within groups and teams were categorized into three types Team Focus Processes Commitment and team spirit Change Focused Processes Innovation and New Perspectives Career Focused Processes Career advancement and Professional Success

© Farhan Mir 2012 IMS © Farhan Mir IMS Effects of Diversity on Organization Performance… The Impact of an Organizational Context was used to get more meaningful results Model suggests that the relationship between diversity and performance may depend on the organizational context in which the work takes place The effects of diversity on organizational performance might be more favorable if group leaders and members build on team members' creativity and information

© Farhan Mir 2012 IMS © Farhan Mir IMS Effects of Diversity on Organization Performance Context variables are defined by business strategies (i.e., growth, stability, and customer-oriented), culture (i.e., people- and competition-oriented), and human resource practices (i.e., training- and diversity-oriented)

© Farhan Mir 2012 IMS © Farhan Mir IMS Effects of Diversity on Organization Performance HR practices may inadvertently result in teams that are diverse but unskilled in diversity management. Such organizations are more likely to experience negative outcomes, such as disruptive conflict and increased turnover, which can harm performance

© Farhan Mir 2012 IMS © Farhan Mir IMS Some Results There were no significant direct effects of race or gender diversity on either team performance- appraisal ratings or bonuses. Diversity had a significant effect on group processes, but the nature of the effect depended on whether the diversity was in gender or race. Specifically, gender diversity increased constructive group processes, while racial diversity inhibited them.

© Farhan Mir 2012 IMS © Farhan Mir IMS Results… Training- and development-focused HR practices (including coaching, open communications and interactive listening, and providing challenging assignments and opportunities for development) reduced the negative effects of racial diversity on constructive group processes.

© Farhan Mir 2012 IMS © Farhan Mir IMS Results… Diversity-focused HR practices enhanced the positive effects of gender diversity on constructive group processes. Constructive group processes, in turn, had a positive impact on performance ratings and group bonuses.

© Farhan Mir 2012 IMS © Farhan Mir IMS Results… Gender diversity was positively associated with group bonuses in business units with a people-oriented organizational culture, diversity-focused human resource practices, and customer- oriented business strategy but not in units that lacked those specific cultures, practices, and strategies.

© Farhan Mir 2012 IMS © Farhan Mir IMS Results… Racial diversity was negatively related to performance in business units with competitive organizational cultures, growth- oriented business strategies,

© Farhan Mir 2012 IMS © Farhan Mir IMS Conclusion In summary, results in this organization showed no significant direct effects of either racial or gender diversity on performance. Gender diversity had positive effects on group processes while racial diversity had negative effects. The negative relationship between racial diversity and group processes was, however, largely absent in groups that had received high levels of training in career development and diversity management.