Workplace diversity: leveraging the power of difference for competitive advantage.(2005 Research Quarterly)

Abstract

Workplace diversity has taken on a new face. Today, workplace diversity is no longer just about anti-discrimination compliance. Workplace diversity now focuses on inclusion and the impact on the bottom line. Leveraging workplace diversity is increasingly seen as a vital strategic resource for competitive advantage. More companies are linking workplace diversity to their strategic goals and objectives--and holding management accountable for results. Thus, HR plays a key role in diversity management and leadership to create and empower an organizational culture that fosters a respectful, inclusive, knowledge-based environment where each employee has the opportunity to learn, grow and meaningfully contribute to the organization's success.

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"Diversity represents a company's fundamental attitude that it not only 
respects and values the individuality of its employees but also 
understands how to tap the potentially significant contributions 
inherent in diversity." (1) 
Alexandra Groess 
Allianz Group's International Diversity Project 

Workplace Diversity--An Evolution

From compliance to inclusion, the concept of workplace diversity is evolving. Coming from an organizational viewpoint, this article explores the changing perception of workplace diversity, elements of an inclusive corporate culture, the business case and HR's leadership role to maximize the benefits of a diverse workforce in a changing marketplace. 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. In addition, workplace diversity is not strictly a U.S. concept: a brief discussion on the drivers of workplace diversity in the European Union is presented.

Diversity Defined Today

As predicted in the landmark study Workforce 2020, rapid technological change, globalization, the demand for skills and education, an aging workforce and greater ethnic diversification in the labor market have forever changed the employment landscape. (2) The definition of diversity extends well beyond the traditional view that once focused primarily on gender and race and reflects the broader perspective of workplace diversity today.

[FIGURE 1 OMITTED]

"A broad definition of diversity ranges from personality and work style to all of the visible dimensions such as race, age, ethnicity or gender, to secondary influences such as religion, socioeconomics and education, to work diversities such as management and union, functional level and classification or proximity/distance to headquarters." (3)

Integration and Learning: A New Paradigm for Managing Diversity

Diversity in the United States has evolved since the 1960s. As illustrated in Figure 1, diversity was first based on the assimilation approach, with everyone being part of the "melting pot." Compliance (e.g., affirmative action, equal employment opportunity) is important in diversity, and key legislation has been an effective tool for change (e.g., Title VII of the Civil Rights Act of 1964, Age Discrimination in Employment Act of 1967, Americans with Disabilities Act of 1990). Today, however, the impetus behind workplace diversity is that of inclusion and the business case: embracing and leveraging differences for the benefit of the organization. The collaboration of cultures, ideas and different perspectives is now considered an organizational asset--bringing forth greater creativity and innovation--with the result that many companies are increasingly focusing on corporate diversity initiatives to improve organizational performance. (4)

Diversity initiatives do not always meet expectations. The traditional schools of thought behind many diversity interventions are: 1) assimilation, based on the idea that "we're all the same" (promoting equal opportunity); and 2) differentiation, from the philosophy "we celebrate differences." Today, groundbreaking research goes beyond the historical framework of workplace diversity. The emerging paradigm is integration and learning. That is, companies promote equal opportunity and value cultural differences, using the talents of all employees to gain diverse work perspectives. To achieve this level of diversity management, however, organizational leaders must have a clear understanding of how they define diversity as well as what exactly the organization does with the experiences of being a diverse workforce. (5)

An Inclusive Corporate Culture

The concept of inclusion is increasingly important in the discussion of workplace diversity. In many ways, this evolution reflects societal values in the workplace. For example, two beliefs commonly held by Americans are that everyone deserves a chance (equal opportunity, sometimes referred to as the "level playing field") and that all people should be treated with dignity and respect. (6) The values of equality, respect and opportunity for all represent the cornerstone of workplace diversity. Inclusiveness is thus a win-win dynamic: it generates opportunities for growth, flexibility and adaptation in the marketplace for both the employee and the organization.

The Business Case for Workplace Diversity

Increasingly, the case for workplace diversity as a business imperative is gaining recognition by leaders in the business world. At a symposium sponsored by The Conference Board regarding diversity in the workplace, for example, 400 executives agreed that "diversity programs help to ensure the creation, management, valuing and leveraging of a diverse workforce that will lead to organizational effectiveness and sustained competitiveness." (7)

One of the major drivers behind the business case is the demographic changes that directly affect the labor pool and available talent (see Figure 2). These changes are significant. In an organization, human capital and workforce relationships are the backbone of success. The flow of information between colleagues, work teams, customers and suppliers, for example, depends on the quality of relationships and talent in the workplace. (8) Consequently, workplace diversity is increasingly viewed as an essential success factor to be competitive in today's marketplace.

Advantages

Six key reasons to tie workplace diversity to organizational strategic goals and objectives are: 1) greater adaptability and flexibility in a rapidly changing marketplace; 2) attracting and retaining the best talent; 3) reducing costs associated with turnover, absenteeism and low productivity; 4) return on investment (ROI) from various initiatives, policies and practices; 5) gaining and keeping greater/new market share (locally and globally) with an expanded diverse customer base; and 6) increased sales and profits.

Workplace diversity can be viewed as having both direct and indirect links to the bottom line. In business, the preferred equation for success is a single action that directly impacts financial performance. Workplace diversity, however, is a complex phenomenon. Consequently, the link of workplace diversity to financial success is not always immediately apparent, nor is it always linear. Two examples below illustrate scenarios with direct and indirect links of workplace diversity to organizational performance. (9)

* Direct link: Organizations that expand their customer base most effectively do so with a workforce that is reflective of their clients. DuPont, for …