Journal of Chinese Human Resources Management

Managing diversity in Chinese and Indian organizations: a qualitative study

Fang Lee Cooke, Debi S. Saini,
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qualitative study", Journal of Chinese Human Resources Management, Vol. 3 Issue: 1, pp.16-32, https://
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JCHRM
3,1 Managing diversity in Chinese
and Indian organizations:
a qualitative study
16
Fang Lee Cooke
Department of Management, Monash University, Melbourne, Australia, and
Debi S. Saini
Management Development Institute, Gurgaon, India

Abstract
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Purpose – This paper aims to investigate diversity management (DM) practices in China and India
by analyzing formal DM policy (if one exists) adopted by the company and informal DM practices
adopted by managers. It also aims to discuss the appropriateness of the US-originated notion of, and
approach to, managing diversity in the Indian and Chinese contexts by exploring how local managers
make sense of diversity and manage it in a pragmatic way.
Design/methodology/approach – The authors adopted a qualitative approach. In particular,
through a semi-structured interview design, qualitative data were collected from 16 Chinese and
Indian middle and senior managers and four human resources (HR) director of regional headquarters
of foreign multinational firms. The data were supplemented by secondary data from a wide range of
sources, including government reports and media coverage to extend contextual understanding.
Findings – The paper reveals that most Chinese organizations do not see DM as an issue. Where
exists, its focus is on conflict avoidance rather than value-addition to the business. In contrast,
managing diversity in India is of greater significance for firms, both legally and financially. Compared
with their Chinese counterparts, the Indian managers are much more familiar with the notion of
diversity. They are more informed and articulate about diversity issues in their country and
organization. DM as a softer approach to human resource management (HRM) has yet to feature as an
espoused HR strategy in Chinese and Indian firms.
Research limitations/implications – The paper shows that the starting point and the process of
DM in the Chinese and Indian contexts are different from that in the Western contexts. Institutional
contexts and cultural traditions are essential to understanding DM issues and likely solutions. Small
sample size in the study may limit the generalization of the findings.
Practical implications – The paper has a number of implications for Western multinational
corporations that have operations in China and India and intend to adopt a global HR strategy and roll
out their DM initiatives to subsidiaries in different parts of the world. It also has implications for
Chinese and Indian owned multinational companies operating in the western contexts.
Social implications – Sources of discrimination and inequality at both macro and micro levels were
identified in China and India. The paper also highlights areas for DM to improve leadership skills and
organizational performance. The findings may inform policy making and the formulation of
organizational strategy, contributing to the elimination of inequality and enhancing employee
commitment and productivity.
Originality/value – The paper fills a gap in the DM literature on China and India through a
comparative lens. It highlights the contextual differences in political, economic, cultural and social
Journal of Chinese Human Resource
aspects between China and India and between these two and the Western contexts, including the USA
Management and the UK, where the concept of DM as part of the strategic HRM was originated and popularized.
Vol. 3 No. 1, 2012
pp. 16-32 Keywords Diversity management, Human resource management, China, India, Quality assessment
q Emerald Group Publishing Limited
2040-8005
Paper type Research paper
DOI 10.1108/20408001211220548
 Introduction Managing
Workplace diversity is becoming a core issue in management theories and practices in diversity
Western countries (Konrad et al., 2006), marked by a bourgeoning body of literature
that spans across a number of disciplines including psychology, sociology and
management, with different research methods such as interviews, case studies,
surveys, ethnographic studies and laboratory-based studies (Cox et al., 1991; Tsui et al.,
1992; Liff, 1996; Lau and Murnighan, 1998). Diversity management (DM) has been 17
recognized as one of the critical elements of business success in the strategic human
resource management (HRM) literature (Saini, 2007). According to Cox (1992, p. 225)
“the objective of DM is to create organizations in which members of all socio-cultural
backgrounds can contribute and achieve their full potential”. In fact, DM is regarded a
better approach than equal opportunity as it “focuses on valuing people as unique
individuals rather than on group-related issues covered by legislation” (Chartered
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Institute of Personnel and Development (CIPD, 2007, p. 6)).

DM as a management concept has hardly been heard of by most people in
developing countries such as China and India, even less featured in their management
talks. This is not to suggest that the Chinese and Indian societies are not diverse and
that there is no legal provision to protect the basic rights of those socially
disadvantaged. Neither does it imply that managers in workplaces do not have the task
of managing the diverse needs of employees. Rather, diversity in these countries may
exist within a radically different historical, institutional, social and cultural context and
that organizations there have yet to realize the strategic importance of managing a
diverse workforce effectively to gain a competitive edge. In addition, low preference to
DM may well be linked to the low level of countervailing power possessed by the
disadvantageous groups in these countries (Cooke, 2011b).
To date, limited studies are available on DM in China or India (Cooke and Saini,
2010; Venkata Ratnam and Chandra, 1996) with a view to understand what
implications this may have for western firms operating in these countries. This paper
fills this gap through a qualitative approach. We select China and India for comparison
because they are two rising economic powerhouses in the global economy with
sustained high growth rates. Multinational corporations (MNCs) are attracted to these
two countries not just because of the cheaper resources for production activities, but
also because of the vast and diverse markets they possess. However, a major HR
challenge for MNCs operating in China and India has been the shortage of a
skilled/professional workforce. They are increasingly involved in a “war for talents”
and DM has been deployed by some as an important HR initiative to attract and retain
talents. Yet, few studies have been found that compare and contrast the context, the
need for (if any), the process and challenges facing managers in DM in these two
countries. Small-scale studies conducted by HR consulting firms are nevertheless
emerging (Nathwani et al., 2007).
This study seeks to contribute to the literature on the societal context of DM in
China and India by investigating ways in which managers in these countries
understand and manage diversity issues. Our study is guided by the following three
research questions:
RQ1. To what extent is the western approach to DM different from that of China
and India in terms of the DM concept, societal context, motives of DM?
 JCHRM RQ2. What are the key issues and challenges in DM from the management
3,1 perspective?
RQ3. What are the management perceptions towards DM and how, if at all, is
diversity managed at the organizational level?
For the purpose of this paper, we adopt a broad categorization of Western and oriental
18 countries, although we are aware of the significant political, legal, economic, social and
workforce demographic differences within each of the two categories of countries.

Literature review
DM: the western approach
The concept of managing diversity originates from the US as an HR intervention in the
mid-1980s. It is primarily a response to the demographic changes in the workplace (e.g.
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more immigrants and women) as well as the customer/client base (Agocs and Burr,
1996). It is also a response to the corporate discontent of the affirmative action
approach imposed by the US government (Mor Barak, 2005). DM has been considered a
way to address retention, integration and career development (Agocs and Burr, 1996).
The growing emphasis on the ethnic minority, women, the elderly, disabled and gay
and lesbian groups for equal rights and the consequent human rights legislation in the
1990s and 2000s gave further drive to the need for recognizing, accepting and valuing
individual differences in the workplace and society (Mor Barak, 2005).
In the UK, the concept of MD has undoubtedly become influential since the mid-1990s
not only because of the demographic change of the workforce, but also because it is seen
as a comprehensive and sophisticated approach to equal opportunities management that
adds value to business. The CIPD, a British national association for HR practitioners and
academics, defines diversity as “valuing everyone as an individual – valuing people as
employees, customers and clients” (CIPD, 2006, p. 2). CIPD argues that there are three
important reasons for managing diversity: effective people management, market
competition and corporate reputation. Creating an open and inclusive workplace culture
in which everyone feels valued helps to recruit and retain talents. A diverse workforce
can lead to developing new or enhanced products or services, opening up new market
opportunities, improving market share and broadening an organization’s customer
base. Adopting an effective DM policy also enables organizations to demonstrate their
commitment to corporate social responsibility (CSR) through engagement with local
communities (CIPD, 2006). CIPD believes that the social justice (equal opportunity) and
business (value adding) case arguments for diversity are complementary and that
organizations committed to DM out-perform those that do not.
The transition from the focus of equal opportunity to DM is to shift away from a
negative perspective on disadvantaged and discriminated staff to a positive one on
celebrating and valuing the differences amongst all employees and utilizing them in a
creative way to benefiting both the organization and individuals (Maxwell et al., 2001).
However, the normative view of valuing diversity as promoted in the USA and the UK
HR professional associations may not be necessarily shared by the employing
organizations. Nor may organizational initiatives aimed for DM be fully embraced by
the workforce, especially when organizations adopted the initiative in a shallow
manner (Thomas and Ely, 1996). Whether the goals are achieved or not depends on the
diversity climate of the organization concerned.
 The contexts of diversity in China and India Managing
There are significant differences between the Western and the oriental approaches diversity
such as China and India in the concept of diversity, the political and sociocultural
context under which diversity emerges, the way diversity should be managed (process)
and the motive of managing and valuing diversity (intended outcome). For example,
the Western definition of diversity is much broader than that found in China and India.
In Western countries, the broader focus of DM includes gender, race, ethnicity, religion, 19
age, disability, immigration status, social class, political association, marital status,
parental status, sexual orientation, ex-offenders, education, experience and so forth
(CIPD, 2007; Mor Barak, 2005). Many of these aspects are accepted by western societies
and protected by law and company policy. Even in the oriental countries, there are
significant differences. For example, caste, religion and gender are the main sources of
diversity in India (Kundu, 2003; Venkata Ratnam and Chandra, 1996), whereas age,
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gender and rural/urban divide are the main sources in China (Cooke, 2011a). Compared
to India, China is a much more homogenous country with 95 percent of the population
being from the same ethnic race (han) and the majority of people having no religious
belief. Inequality in the workplace and society is often accepted and internalized
without any serious challenge (Cooke, 2011a). In India, the talk of empowerment of the
socially disadvantaged groups is emerging as a powerful weapon to connect political
parties with their constituencies (Venkata Ratnam and Chandra, 1996; Cooke and Saini,
2010). China is a socialist regime with centralized control by the Communist Party.
Elimination of social inequality is intended to be achieved by introducing government
policies and regulations through a top-down interventionist approach (Cooke, 2011b).
In China and India, the demographic characteristics of the workforce are very
different from those in the Western countries. This gives rise to different needs and foci
in managing workforce diversity (Cooke and Saini, 2010). For example, discrimination
against rural migrant workers in China is widespread both in policy and in informal
practice, where one of the key issues in managing diversity is therefore the
harmonization of groups of workers from different geographical areas (Cooke, 2011b).
At the same time, globalization realities are leading to the emergence of cosmopolitan
cultures in many spheres of work and life across countries, leading to DM needs that
are similar to western employees. For example, younger workers, particularly those
who are highly educated and trained in the West, are oriented to performance-based
reward and career opportunity and not so much to loyalty and employment security.
Their expectation from the employers on work-life balance issues may be higher than
that of the previous generation (Gu et al., 2010).
In addition, China and India exhibit some cultural characteristics that are typical of
the oriental societies and may not be conducive to DM in organizations. For example,
both are highly hierarchical societies. People in these countries are highly conscious of
their status in the social structure which is in sharp contrast to a more informal and
egalitarian approach favoured by Americans (Lam and Graham, 2007) or a democratic
consensus culture found in the northern European countries. Both countries hold a
collectivist culture instead of individualism (Hofstede, 1991). The need for social
harmony through egalitarianism and mutual respect (to gain and save face) is an
important part of the Chinese culture under the Confucian philosophy (Crookes and
Thomas, 1998). This means that group-based equality rather than individual difference
is a key to managing workplace relationships. In addition, endurance, diligence and
 JCHRM devotion to the organization (as one’s family) are the cultural norms taken for granted
3,1 and expected by oriental employers (Aycan, 2006). In return, employees are expected to
be well-treated by employers.
Homosexuality is neither legally recognized nor socially accepted by most in China
and India. Divorce and co-habitation are generally far less common than in the West.
Childcare support is more accessible to working parents through extended family
20 network and low cost service (Cooke, 2011b). These characteristics diverge from the
western DM ideology that is founded on the need to respect group and individual
rights and the need to design organizational policy to accommodate their family
commitment (CIPD, 2006; Mor Barak, 2005). Nevertheless, social diversity does exist in
both countries and the need for harmonization and social inclusion is often talked
about in various fora.
It is clear that the political and cultural context for DM is very different in China and
India compared to that in the USA and the UK. In the rest of this paper, we investigate how
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issues of workplace diversity are perceived and managed by Chinese and Indian managers
and what implications this may have for western and domestic organizations in these
countries.

Method
Empirical data used for this study came from semi-structured interviews as a pilot
study of a larger research project on DM in India and China. Due to the exploratory
nature of the study, we adopt a qualitative approach as it allows us to explore in detail
the views of the informants and capture emerging themes (Denzin and Lincoln, 2000).

Sample
In a purposive sampling process, we targeted 20 medium to large organizations in China
and India; research showed that larger organizations tended to have a more diverse
employee population with formal HR policy and function compared with smaller
organizations (Rynes and Rosen, 1995). This would also enable us to identify key issues
in DM with the intent to design replicable studies (Van Teijlingen and Hundley, 2001).
In selecting the organization, we included privately owned, state-owned, foreign-owned
and Chinese/Indian-owned multinational firms. The diverse nature of organizations in
major business sectors, including public administration, is likely to reveal key issues
specific to each type of organizations.
In selecting informants, we included both indigenous and foreign managers to elicit
more balanced views (Appendix, Table AI). Access to these informants was through
personal contacts via EMBA or executive training courses alumni. The indigenous
managers are mid-/senior managers of business organizations in the public or private
sector. Only two of the managers interviewed were HR managers (both Chinese), the
rest were in charge of business functions with HR responsibilities. The high proportion
of non-HR managers in the sample was based on the following two reasons. First, the
role of HR managers in the majority of Chinese and India firms remains administrative
and non-influential in organizational decision making (Budhwar and Bhatnagar, 2009).
In some multi-site organizations, HR managers are not on site. The second reason is
that business managers play an important role in managing people and in the effective
implementation of HR initiatives. Their perception on issues related to managing
diversity is a barometer in assessing the DM climate of the organization.
 Data collection Managing
A total of 20 interviews were conducted with nine Indian managers, seven Chinese diversity
managers and four Western HR regional (Asia) directors from the US and British
MNCs (see the Appendix for interview coding). Interviews with all Indian managers,
three HR directors and four Chinese managers were conducted face-to-face. The
remaining four interviews were conducted via tele-conference. All interviews with the
Indian managers were conducted by both authors and the remaining were conducted 21
by the lead author. Considering that the Western notion of DM may be novel to some
Chinese and Indian managers, we provided them with a list of questions prior to the
interviews. We also elaborated on the concept originated in the USA and explained the
purpose of our study at the outset to clarify any queries.
All interviews were conducted with the interviewees individually and lasted
generally between 40 and 60 minutes. Interviews with all Indian managers and western
HR regional directors were conducted in English. Interviews with the Chinese managers
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were conducted mainly in Mandarin Chinese due to their deficiency in English for an
in-depth interview. English was used occasionally when the interviewees felt more
expressive and precise in articulating the meaning. We conducted the interviews
between September 2006 and July 2007. All Indian managers are male, three of the HR
regional directors are female and three of the Chinese managers (one of them
HR manager) are female. The age of the interviewees ranges from late 20s to late 40s,
with the majority in their 30s.

Data analysis
Interviews were not recorded due to a lack of consent from the Chinese informants and
some Indian informants in doing so. Detailed notes were taken instead during the
interviews. The interview data was manually content analyzed (Miles and Huberman,
1994) guided by the research questions to identify key themes that have emerged. The
benefits of using researchers, rather than software programmes, to analyse qualitative
data to generate insightful interpretations have been well argued by Suddaby (2006).
As far as possible, we also checked the company web sites and other internet sources to
triangulate and complement the interview data (Denzin and Lincoln, 2000).

Findings
In this section, we report the findings based on the themes emerged from the data
analysis. They are:
.
managers’ understanding of the notion of DM;
.
perceived major sources of diversity;
.
the DM practice; and
.
perceived challenges in DM.

Understanding of DM
Most Chinese managers interviewed had not heard of, nor thought about, the concept of
“managing diversity”. They began to understand what it was about after our explanation
and were then able to reflect on and relate to the Chinese situation against the concept.
According to these managers, sources of diversity in China come from gender, age and
cultural diversity (mainly from MNCs). With the exception of Chinese-owned MNC1,
 JCHRM none of the Chinese firms have a formal HR policy or affirmative action plan to promote
3,1 gender equality or diversity. Discrimination against older and rural-origin workers
remains an issue. For example, Chinese Manager 7 (Chinese MNC2) disclosed that in order
to raise its corporate image further, his company dismissed all the rural migrant workers
who had low levels of skills and education and replaced them with young college
graduates. The company also dismissed all workers who were above 45 years of age. The
22 company were then able to boast of a young and well-educated workforce as all its
employees were below 35 years of age. However, this practice had actually caused bad
publicity for the firm in contrast to its aim of enhancing its reputation.
Compared with their Chinese counterparts, the Indian managers are much more
familiar with the notion of diversity. They are more informed and articulate about
diversity issues in their country and organizations. They adopt a broader notion of
managing diversity that may depart from that defined in the Western literature. For
example, in addition to the sources of diversity mentioned earlier, Indian managers
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identified workforce skill level, attitude, confidence, motivation level and people and
IT skills as diverse attributes that need to be managed.
The Indian managers interviewed also adopted a historical/long-time span
perspective to managing diversity. According to the managers, diversity has been part
of their cultural history and is nothing new, whereas it is a relatively new phenomenon
in the Western societies:
We have been managing diversity for thousands of years. If we make a big hype of it, it will
create more tension and more diversity within the country. If it is for foreign employees, then
it is OK. But we only have four or five foreign employees here, so no need for a diversity
management policy (Indian Manager 5, Indian MNC2).
Indeed, managers take a critical view on the hype of DM. They are cautious of the
potential impact of democracy and are concerned of the way political parties stir up
social diversity, demands and even hatred amongst different identity groups. Several
Indian managers pointed out, in some cases quite strongly, that the active promotion of
an organizational policy in DM may bring more trouble than good to the workplace, as
it intensifies differences instead of minimizing it. They highlight the danger of raking
up grievances, past and present, real and imaginary and the demand for group identity
and preferential treatment.

Perceived sources of diversity

Cultural differences. Chinese managers working in MNCs identified two aspects of
cultural diversity in the workplace. One is between expatriates and local employees.
The other is from the Chinese overseas returnees who are keen to work for and are
favourite candidates of, MNCs. According to a Chinese HR manager who had worked
in a number of large private firms including an international HR consulting firm:
All foreign employees [expatriates] emphasized their cultural shock when they come to China.
But [Chinese-owned] MNCs have not developed a formal policy to manage these cultural
shocks (Chinese Manager 4, Foreign MNC1).
A typical welfare measure offered by Chinese firms to their single employees is to
provide dormitory. In large cities where housing is expensive, this often takes the form
of a bedroom shared with two or three other employees of the same sex (for rural migrant
workers, this situation is far worse where ten or more people may be cramped in a room).
 While this arrangement is acceptable to the Chinese employees (Chinese students also Managing
share their dormitories in schools and universities), it is not acceptable to foreign diversity
employees due to privacy concerns, as was found in the case of Chinese MNC1. This has
led to the turnover of a few foreign employees and the company made no efforts to retain
them, perhaps due to the reluctance to create precedence and cause differential
treatment between Chinese and foreign employees (Chinese Manager 3, Chinese MNC1).
According to the Chinese managers working in MNCs, they employ a large number 23
of overseas graduate returnees. These self-repatriated Western-trained graduates
bring with them different life styles and expectations. They expect high salaries and
fast promotions. How to recruit and manage overseas returnees is an important issue
for MNCs operating in China. Companies are now reportedly more cautious in
recruiting and managing these returnees because they are seen as “demanding”
employees and are difficult to retain. Similar situation is reported in India.
Regional differences. Regional diversity is another source of diversity amongst
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employees observed by the managers. In general, it is believed that employees from

northern China are easier to manage. They are more diligent and more able to endure
hardship than their counterparts from the south. Firms also like to recruit university
graduates from rural origins because they are believed to be easier to manage and retain.
Their rural living habits get diluted after years of university education and living in the city,
so these [rural-urban] cultural differences will not cause any conflict at workplace (Chinese
Manager 2, Private Firm IT).
Interestingly, managers also believe that regional differences may be reduced and
become less of a source of tension amongst highly educated employees. This is partly
because years of higher education and living away from their hometown have diluted
the regional habitual style of the individuals.
Organizational changes. Indian managers identified that organizational changes and
the implementation of new business strategy have created workplace diversity and the
consequent need to manage it. As reported by India Manager 6, the privatization of a
public firm was seen to have led to greater diversity in the organization due to very
different culture between the public and private sector and different employment
contracts. Old plants employing public sector employees have eight-hour workdays,
whereas new plants employing private sector employees have 12-hour workdays due to
staff cut back:
They [private firm senior management] want employees to be more creative and responsible.
They set stringent targets. Work has been intensified. No mercy. The new business strategy
creates diversity and you need to manage that. Younger employees are promoted fast; older
people will be side-lined eventually (Indian Manager 6, Indian MNC3).
The outsourcing part of the business process (e.g. cleaning, agency engineers and
airport ground handling agencies) creates further diversity, or more precisely, disparity,
between in-house staff and employees from the outsourcing suppliers working
alongside each other.
A multi-level perspective. The Indian managers took a multi-level perspective to
managing diversity that included diversity issues at global, regional and operational
levels. This is with specific reference to corporations that operate at the international or
national level. They highlighted the divide between the corporate and operational level
and organizational politics as the main issues in DM. For example, Indian MNC3 was
 JCHRM a public sector firm with operations nation-wide. This gives rise to regional power
3,1 wrestling and organizational diversity because “local managers prefer to employ local
employees” (Indian Manager 6, Indian MNC3). Over centralized corporate power can be
a source of constraint. As commented by another manager:
Public sector has lots of constraints because everything is centralized at the corporate level.
There is very little leeway, but we need to manage the situation in the field which is very
24 different (Indian Manager 4, National Public Utility).
Policy inconsistency between the corporate and field level is yet another source of
grievance voiced by the informants.

The DM practice
All Chinese managers interviewed felt that diversity was “not an issue” in their
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organizations and therefore there was little need to manage diversity. Some of them are
insensitive to diversity issues and hold biased perceptions of women (e.g. women are
seen as less productive and family oriented). Not surprisingly, hardly any activities on
DM in their organizations were reported. This included one of the Chinese-owned MNCs
that took over a large section of a highly reputable foreign business two years prior to
the interview. Nevertheless, the manager from this MNC had a better understanding of
DM compared with other managers interviewed. This MNC is also more advanced in its
DM thinking in part because of the influence of its foreign business unit. Avoiding
conflicts and cultural clashes seems to be the reason for managing diversity by Chinese
managers. In other words, they see the need for DM from a problem solving point of view
instead of a value-adding HR function to the business.
By comparison, Indian managers displayed a relatively more proactive and
somewhat business-oriented, view towards the need for DM in that they are aware of
the implication of the need to manage a diverse customer community for HR practice.
For example, private utility firms have a long standing practice of recruiting
employees from diverse backgrounds to reflect their customer base. The public sector
is now beginning to adopt this practice due to market competition:
We need employees who are able to speak the dialect used by the local community and to
understand the local culture and customers’ needs [. . .] The culture [of our company] is not
about managing diversity of employees but that of the customers because of their diverse
backgrounds (Indian Manager 4, National Public Utility).
The Indian managers generally reported that there is no official DM policy in their
organizations beyond what is required by laws. As India Manager 2 remarked, “Firms
will only comply with the law on diversity issues. They will not go an extra mile to
implement anything else” (Indian MNC1). For a small number of them, nevertheless,
diversity issues may be covered in their HR policy. The absence of a DM policy does
not necessarily mean that diversity is not managed or managers have not developed
the skills to manage it:
Although there is no company diversity management policy, we have long practiced the skills
of managing diversity. For example, each new post we are assigned to, we try to learn the
language, culture and hobbies of the local communities to make better connection with the
local employees and customers (Indian Manager 4, National Public Utility).
 Nevertheless, diversity issues may not be at the forefront of their daily business. “Staff Managing
are too busy to think about conflicts or diversity issues” (Indian Manager 1, Foreign diversity
MNC1). There is a strong consensus amongst the Indian managers that they and their
colleagues at work tend to adopt a contingent approach to dealing with diversity
requests and to managing conflicts amongst staff. They are pragmatic in their
approach to managing different groups of employees. For example, the highly skilled
and motivated employees are given more encouragement and training that are typical 25
of the soft approach to HRM. Five Indian managers agreed that having an official DM
policy will help managers to develop a more strategic approach to managing the issue
instead of managing it in a subconscious way.
The Indian managers also took a trans-organizational boundary approach to
highlighting the importance of being engaged with the diverse community
to understand employees’ diverse needs outside and within the workplace. The
former is important to understand the latter. Family is paramount and group identity
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runs strong in Indian workplaces. Families of employees are treated as part of the
company to gain employees’ commitment. Efforts are made to establish emotional ties
with the employees’ families, such as inviting them to visit the company and having
social activities for emotional bonding. The blurred boundary between family and
workplace and the less emphasis on privacy in the Indian culture makes the context for
managing diversity very different from the western organizations.

Perceived challenges to DM
The Indian managers have identified a number of challenges in DM. The biggest
challenge is seniority, both in terms of age of the employees and organizational status
of managers. It is widely reported that younger employees cannot challenge elder staff.
They find it difficult to convince the latter to accept their ideas:
Age is respected in India, but not in the West. These are emotional issues. If the young ones
are not showing respect to the elder employees, that may cause grievance (Indian Manager 3,
Public Telecom).
Line managers also felt that they were powerless in decisions making without
obtaining the approval of higher authority:
A good performer who is junior may not get promoted because the line manager needs to
report to the headquarters for permission. He may have to wait for six months for the decision
and during this period, the person is demotivated and may leave the company (Indian
Manager 1, Foreign MNC1).
Another challenge is the nature and location of the business. For example, employing
female telecom engineers to work in the field may be problematic because they may not
feel safe to work on their own in rural areas at night or they may encounter difficulty in
renting accommodations. This problem was also reported in Venkata Ratnam and
Chandra (1996). Equally, mining businesses are normally based in remote locations,
where retaining young talents is quite difficult:
Younger employees always want to search for better places to work. No matter how much
soft HR policy you implement, they will still leave. We use devices for talent management,
fast promotion, job rotation and other similar schemes to manage regional diversity, but they
are not sufficient to retain everybody (Indian Manager 5, Indian MNC2).
 JCHRM Barriers to implementing DM policy for MNCs. The importance and difficulties for MNCs
3,1 to maintain a coherent corporate culture and values has been widely noted (Brewster et al.,
2005; Evans et al., 2002; Sparrow et al., 2004). Given the highly contextual nature,
managing diversity for MNCs appeared to be more challenging due to the contextual
differences and varying management priorities. The managers reveal a number of issues
on DM in MNCs. One is that there seems to be limited efforts from the indigenous MNCs to
26 establish an integrated corporate HR strategy and DM policy, although arguably this
problem is not unique to them. Indian Manager 5 (Indian MNC2) reported: “the overseas
operations will have their own diversity management policy. We do not deal with it”.
Another manager articulates more integration efforts: “We [Indian MNC3] have initiated a
mutual learning/sharing approach to HRM with our overseas operations. They need to
send people to work in India to see how we operate and what our culture is like and vice
versa”, Chinese MNC1 is in a similar situation, emerging efforts were made but budget
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constraints and staffing shortage prevent further activities.

Similarly, post merger and acquisition (M&A) integration has been widely
recognized as the most challenging task in part due to organizational culture differences
(Cartwright and Cooper, 1993; Morrison and Robinson, 1997; Schuler et al., 2003). These
differences are amplified when cross-border M&As take place between western and
eastern countries. Managers from Chinese MNC1 and Foreign MNC2 in India have
pointed out that cultural clashes were the biggest problem in their post-acquisition
integration. This problem was worsened by frequent turnover of senior managers who
commonly brought their own people and HR initiatives with them that would be
displaced by their successors when the senior manager parted. Cultural problems are
further intensified when the senior managers come from a third country, bringing with
them yet another set of cultural values and management style.
The second finding under this theme is that foreign-owned MNCs may encounter
resistance from the host country in their DM efforts, as noted in other studies
(Ferner et al., 2005). The DM literature asserts that each individual in the organization,
particularly those with people management responsibilities, plays a vital role in
influencing the progress of DM. Given the low level of awareness of the concept and the
needs for managing diversity in China, MNCs seeking to enhance their recruitment and
retention outcome by promoting DM initiatives may face big hurdles. A regional HR
director of a large MNC interviewed revealed that the recruitment agency firm they
contracted in China systematically screened out female candidates, even though their
quality was as high as and in some cases higher than, that of their male counterparts.
The MNC has a global corporate policy of equal opportunity and imposes a gender
ratio in recruitment. As a result, the Chinese subsidiary’s gender ratio statistics
consistently fell below the corporate target. When the intervention of the recruitment
agency firm was discovered, the HR director drew the attention of the staff from the
agency to the corporate policy and requested them not to discriminate against female
candidates. This request was brushed aside by the Chinese recruitment staff, who tried
to convince the HR director that this was a common practice in China as women
employees were deemed less productive due to their family commitment. This incident
triggers an important question: how should the responsibility of DM, like other aspects
of the CSR (e.g. labour standards) of Western MNCs, be extended beyond the
organizational boundary to influence, or even govern, the behaviour of supplier firms
in the business networks in developing countries?
 The third finding relates to the perceptions on work-life balance, which is one of the Managing
key components in western DM literature (Mor Barak, 2005; CIPD, 2007). However, diversity
neither the Chinese nor India managers are receptive to the idea of having a formal HR
policy on flexible work arrangements for employees. They prefer to deal with it
informally on a case-by-case basis rather than institutionalizing the arrangement.
Managers offered examples for discretionally accommodating individual employees’
family commitment such as looking after a sick family member. They see this as a moral 27
commitment that is informed by their societal culture. Compared to China, work-life
balance is more pressing in India for retaining talent. Excessively long work-hour is the
norm for many fast developing firms in India. This situation is exacerbated by hours of
commuting due to the outdated infrastructure of the country, unnecessary workload
generated by the bureaucratic system and the need to be available to communicate with
international colleagues based in Western countries (Nathwani et al., 2007). These
problems are less prominent in China where employees spend more time to pursue their
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hobbies and would be ready to leave the company if work pressure is perceived to be too
high (Nathwani et al., 2007). However, work-life balance alone may not be sufficient to
retain talent. Well-educated younger employees in both countries are ambitious and are
eager to reach to the top of their career. They not only expect lucrative financial
packages, but also demand early promotion and overseas career development
opportunities from their employers. When these demands are not met, or when there are
better offers elsewhere, they are ready to switch employers.

Discussion
Popular DM literature recommends that organizations develop an overall strategy to
managing diversity that is integrated with other aspects of the organizational strategy
and supports overall business goals (CIPD, 2007). Communication, training, employee
involvement and senior management support are seen as important for the initiative to
succeed (CIPD, 2006). It is clear that neither Chinese nor the India firms studied have
reached this level in their DM, although arguably few western firms have, judging from
existing research findings (CIPD, 2007). Generally speaking, our findings confirmed that
Chinese and India firms have not yet adopted a systematic approach to managing HR
(Budhwar and Bhatnagar, 2009; Rowley and Cooke, 2010). In particular, Indian line
managers have been heavily involved in people management and have to devise their
own “policy” on an ad hoc basis to deal with individuals as and when situations arise.
They prefer to grant employees’ requests discretely. From this point of view, the line
managers’ approach is individual-based (characteristic of DM perspective) rather than
group-based (characteristic of equal opportunity perspective). On the other hand,
Chinese managers prefer to adopt an egalitarian approach to all employees to avoid
resentment of differential treatments and demand for the same. This finding is similar to
that of Nathwani et al. (2007).
To a large extent, the findings show that the approaches adopted by the indeginous
managers are paternalistic in dealing with diversity, often following a case-by-case
practice. Particularly, paternalism is a salient characteristic in the Asian culture
(Pye, 1986; Aycan, 2006). It is a form of relationship and an indication of the quality of
the relationship between employees and managers in the workplace. The working of
paternalism requires several behavioural ingredients: authority, hierarchy, care,
obedience, loyalty and dependence. According to Aycan (2006), paternalism in the
 JCHRM Asian culture is of benevolent (dictatorship) nature. It focuses on the well-being of the
3,1 employees, whereas the paternalism emerged in Western HR policies as a means to
elicit enhanced employee commitment and performance is of exploitative nature. From
this point of view, DM in the oriental context is relationship driven and may be a
means as well as an end in itself. By contrast, the agenda of DM dominated by the
western approach is outcome driven and therefore a deliberate means to an end. It must
28 be noted that some Indian firms are aware of the business needs for managing
diversity and are adopting a business case approach to DM. Given the different
motives of DM and levels of awareness of the need to manage diversity, it is not
surprising that there is little DM evaluation effort in both the Chinese and Indian firms.
According to CIPD (2007, p. 12), there is a wide range of measures that organizations
may use to monitor diversity. These include: employee attitude surveys, number of
complaints and grievances, labour turnover, employee performance appraisals,
absenteeism, ability to recruit, number of tribunal cases, impact assessment, level of
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customer satisfaction, employee commitment surveys, business performance, balanced

scorecard, diversification of customer base, improvements to problem-solving and
decision making and psychological contract issues. None of the Chinese and Indian
managers interviewed believe that their firm has a formal mechanism in place to measure
the effect of DM. This is not surprising given the low priority afforded by the organizations
and the absence of a formal DM policy. It is worth noting, however, that the positive impact
of DM on productivity enhancement is not definitive. Studies on diversity-performance
relationships in the western context have so far yielded non-conclusive results (Cox et al.,
1991; Lau and Murnighan, 1998; Richard et al., 2004).

Conclusions
This study identified some of the key issues in DM in China and India and explored
how they were similar to, as well as different from, those in the western DM
environment. Whilst China and India share many similar societal cultures, they also
have distinct features in their political regimes, levels of education and economic
development, gender policies, religious beliefs, policies of affirmative action and
reservations in public jobs for certain disadvantaged groups, racial relations, strengths
in employee representation and voice and legal frameworks on employment and
human rights. These differences directly influence organizational decisions on the
priority of DM and the subsequent approaches, if at all, to be adopted in managing
diversity in the workplace. Therefore, we conclude that the starting point and the
process of DM in the Chinese and Indian contexts are different from the US approach
and that an awareness of the host country’s institutional context and cultural traditions
is essential to understanding DM issues and likely solutions.
Most Chinese organizations do not see DM as an issue. Where exists, its focus is on
conflict avoidance rather than value-addition to business, as prescribed in the western
popular DM literature. Compared to China, managing diversity in India is of greater
significance for firms, both legally and financially. India has a complex set of legislation
especially in relation to the discrimination against certain disadvantaged groups, which
can have serious consequences for those violating these laws (Venkata Ratnam and
Chandra, 1996). In effect, however, existing legal protection against discrimination is
far from satisfactory in the hierarchy-ridden Indian society. In such a situation, DM is
bound to be an important workplace issue. Thus, for Western MNCs that are keen to use
 DM initiatives to attract talent, there is clearly more scope to do so in India than China Managing
in part because India is a much more diverse nation and in part because recruitment and diversity
retention of talent seems to be a much more pressing issue there.
Managerial implications
This study offers a number of managerial implications. First, Chinese and Indian
organisations need to adopt a more systematic approach to managing diversity, not as a 29
popular discourse, but as a social justice. The study reveals considerable gaps between
management awareness and competence in DM and areas needs to be managed. Second,
Western MNCs are likely to face additional challenges in implementing DM initiatives in
developing countries like China and India. It has been widely noted that strategic HRM is
generally lacking in India (Grossman, 2006). Similar is the situation in China, although
improvements are taking place in both countries. Managing diversity is a softer
approach to HRM and has yet to feature as an espoused HRM strategy of Chinese and
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Indian organizations. While DM has become an important topic in management research

in Western literature, it remains largely unfamiliar to Chinese managers. In most cases,
DM is practiced informally by Indian managers who make sense of their managerial role
by reflecting on the social expectations of the employees from them. Enforcement of laws
to achieve a greater level of social equality in these countries remains precarious at
times. Third, given the low level of awareness of and priority afforded to DM by
indigenous firms and managers in China and India, Chinese and Indian MNCs wishing
to expand their operations in developed countries may face additional challenges.
Limitations and future research
Whilst filling an important research gap, this study has a number of limitations. First,
as is usually the case in comparative studies, a level of over-generalization and
over-simplification is unavoidable. For example, for comparison purpose, we had put
the USA and the UK in one category to represent the Western approach, despite major
institutional and cultural differences between the two countries. Similarly, there were
significant differences between China and India which might lead one to question if
there was something like an oriental approach to DM. Another limitation was its
relatively small sample size due to the fact that the data was drawn from a pilot study.
More nuanced studies of each country are needed to enrich our knowledge in this area.
In particular, detailed case studies can be carried out at the organizational level to
identify barriers encountered by Western MNCs in their recruitment and retention
efforts through DM and work-life balance initiatives. Given the fact that both China
and India and indeed many other developing countries, are large countries in both
geographic and population terms, in-depth studies in this area will be beneficial not
only to advance knowledge, but also to inform HRM practice. This is especially the
case when an increasing number of MNCs are expanding in these countries and
domestic firms are spreading their businesses across regions within the country.

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Corresponding author
Fang Lee Cooke can be contacted at: fang.cooke@monash.edu

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3,1

32

Table AI.
JCHRM

Interviewee coding
Appendix

India China Western MNCs

Coding of manager Coding of company Coding of manager Coding of company Coding of manager Coding of company

Indian Manager 1 Foreign MNC1 Chinese Manager 1 Public Administration HR Director 1 MCN1 (Mftrg)
Indian Manager 2 Indian MNC1 Chinese Manager 2 Private Firm IT HR Director 2 MNC2 (Consltg)
Indian Manager 3 Public Telecom Chinese Manager 3 Chinese MNC1 HR Director 3 MNC3 (Consltg)
Indian Manager 4 National Public Utility Chinese Manager 4 Foreign MNC1 HR Director 4 MNC4 (IT)
Indian Manager 5 Indian MNC2 Chinese Manager 5 Public shipping
Indian Manager 6 Indian MNC3 Chinese Manager 6 Private Electronics
Indian Manager 7 Public Engineering Chinese Manager 7 Chinese MNC2
Indian Manager 8 Foreign MNC2
Indian Manager 9 Public Administration
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