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Blackwell Publishing Ltd.Oxford, UK and Malden, USACAIMCreativity and Innovation Management0963-1690Blackwell Publishing Ltd, 2005.June 2005142169175ARTICLESDIVERSITY MANAGEMENT, CREATIVITY AND INNOVATIONCREATIVITY AND INNOVATION MANAGEMENT
This conceptual and discursive paper argues that diversity is a recognizable source of creativ-
ity and innovation that can provide a basis for competitive advantage. On the other hand,
diversity is also a cause of misunderstanding, suspicion and conflict in the workplace that can
result in absenteeism, poor quality, low morale and loss of competitiveness. Firms seeking
competitive advantage therefore face a paradoxical situation. If they embrace diversity, they
risk workplace conflict, and if they avoid diversity, they risk loss of competitiveness. The
advantages and disadvantages associated with workforce diversity put organizations in a
position of managing a paradoxical situation. To give support to this assertion, the paper
considers what is meant by diversity, how it is best managed, what its relationship with
creativity and innovation might be and how the problems created by the management of
diversity, creativity and innovation might be resolved.
tenure (Kossek & Lobel, 1996). Additionally, that it did. Kirton and Greene (2000) and
‘diversity’ in the workplace includes more Kossek and Lobel (1996) have suggested that
than employees’ diverse demographic back- the diversity paradigm evolved because it was
grounds, and takes in differences in culture perceived to be less threatening and contro-
and intellectual capability. It takes more than versial than affirmative action driven by
demographic or ethnic diversity to result in notions of equality of opportunity. Writers like
creativity that leads companies to perform Yakura (1996) have asserted that diversity
better (Leonard & Swapp, 1999). management was an attempt to enlist the sup-
The term ‘diversity management’ refers to port of disenchanted white males. Others,
the systematic and planned commitment on such as Prasad et al. (1997), have suggested
the part of organizations to recruit and retain that the diversity approach, with its emphasis
employees with diverse backgrounds and on corporate initiative and human capital the-
abilities. It is an activity that is mainly to be ories, resonated more harmoniously with
found within the HRM training and develop- American individualism than state interven-
ment domains of organisations (Betters-Reed tion imposed through policies of equality of
& Moore, 1992; Thomas, 1992). In the context opportunity.
of this paper, diversity management is defined Moreover, whilst the USA and the UK are in
as the aggregate effect of HRM sub-systems, the vanguard when it comes to recognizing
including recruitment, reward, performance that diversity constitutes a major management
appraisal, employee development and indi- challenge, commentators have noted that other
vidual managerial behaviours in delivering Western economies are confronted by dramatic
competitive advantage through leadership shifts in their demographic balance that will
and team work. push the effective management of diversity up
the management agenda. The United Nations
projects that the European population could
The Genesis of Diversity as a shrink by as much as 94 million or 13% by 2050
Management Concept and that, amongst the G8, only the USA,
Canada and the UK will have growing
It is worth noting that while the notion of man- populations. By 2020, it is estimated that the
aging diversity has evolved out of social poli- world’s population will consist of more than
cies designed to promote equality, and that 1,000 million people aged 60 and older.
while, historically, these policies in both the Governmental and organizational re-
UK and the USA have been focused on deliv- sponses to these challenges might include
ering equality of access to opportunity for dis- importing young skilled labour from those
advantaged social groups, the approach and regions of the world that are well-endowed
the agenda in each national context has been with skilled and educated young people, and
different. the development of social policies and taxa-
In the USA, policy has tended to be driven tion regimes that encourage child-rearing and
by a commitment to ‘affirmative action’. In the the retention of the skills of older workers for
UK, however, affirmative action has, to date, longer. Organizations with a high-commit-
been perceived as positive discrimination, and ment strategy and a largely homogeneous
has been effectively proscribed by law. workforce may well find that low staff turn-
To understand some of the dynamics that over fosters cultural inertia and inhibits the
gave rise to this divergence, it is necessary to creation of diversity.
review the demographic patterns of the two HRM sub-systems define the limits of man-
countries. America was first alerted to agerial discretion in managing what can be
impending changes in the demographic com- termed the spectrum of diversity. It is the
position of its labour market in a report aggregate effect of the attitudes, skills and
entitled Workforce 2000 (Johnston & Packard, behaviours of individual managers that deter-
1987). In the flurry of interest that followed, a mines the extent to which organizations are
range of data pointed to the extent to which able to sustain high commitment within a
the American economy was changing diverse workforce.
(Latimer, 1998; Watson, 1996). The United
Kingdom is different. Whereas in America,
ethnic minority populations accounted for The Interrelationship of Diversity,
26% of the total, in the UK, it was 5.5%. Creativity, Innovation and
It is hardly surprising, therefore, that equal- Competitive Advantage
ity of opportunity was perceived as an issue of
greater political urgency and social conse- The recognition of the relationships between
quence in the USA. Opinion differs on why diversity, creativity, innovation and competi-
diversity management emerged in the way tive advantage has stimulated both academics
and the business community to search for fac- HRM as a device for improving systems and
tors and situations that give rise to creativity driving down costs. At the same time, Hamel
in individuals, and for the catalysts of creativ- and Prahalad (1994) provided considerable
ity in teams (West & Anderson, 1996). impetus to the resource-based view of the
Creativity is a necessary precondition for firm by demonstrating that Japanese cor-
successful innovation. King and Anderson porations sought to sustain their leadership
(1995) highlighted the problematic nature of position by forging and exploiting strategic
defining creativity. The growth of interest in alliances.
the field has been accompanied by a prolifer- Both of these responses can be seen as
ation of definitions that have polarized around strategic moves towards the management of
four themes: the creative person, creative pro- diversity. In the case of the Western corpora-
cess, creative product and the creative envi- tion, Japanese techniques for the management
ronment (Isaksen et al., 2000). of functional diversity, such as quality func-
It is difficult to separate process from prod- tion deployment, were embraced, whilst Japa-
uct because products can be intangible, and nese corporations used strategic alliances to
processes often result in the creation of prod- infuse new ideas and know-how into their cul-
uct. There is, however, considerable consensus turally homogeneous corporations.
around what constitutes a creative product. There is conflicting evidence as to the extent
King and Anderson (1995) define its key char- to which diversity can deliver competitive
acteristic as novelty, i.e. the conception must advantage. On the one hand, exponents of the
differ significantly from what has gone before. information decision approach (for example,
It should also be appropriate to the situation it Cox and Blake, 1991; Iles & Hayers, 1997;
was created to address, be public in its effect Richard & Shelor, 2002) argue that when diver-
and deliver a perceived benefit. Competitive sity is managed well, it can enhance creativity,
advantage is as much about incremental sys- resulting in increased commitment, job satis-
tem and process innovation, therefore, as it is faction and a better interface with the market
about radical product innovation. place. In contrast, advocates of social identity
The link between innovation and competi- theory (for example, Ely and Thomas, 2001;
tive advantage has long been understood. Ibaarra, 1993; Kanter, 1977; Tafjel, 1982) are
Interest in the field was first given impetus more pessimistic. They argue that diversity
by researchers like Abernathy and Utterback damages cohesiveness, reduces communica-
(1978). They demonstrated that industry out- tion and produces in-groups and out-groups.
siders usually adopted radical innovation as a This results in discord, distrust, poor quality
strategy for overcoming barriers to entry. In so and lack of customer focus and market
doing, they created a situation in which the orientation.
dominance of particular players, either within If innovation results in a product, system or
an area of the industry or across the industry process that is new to a context, and delivers a
as whole, began to lose their hegemony definable benefit to a social constituency, then
because of an inability to innovate quickly the antecedent lies in the creativity of individ-
enough to respond to the competitive chal- uals, whether working independently or in
lenge. In the ensuing confusion, many of the teams. Cummings (1998) has shown that the
established players found themselves too psy- delivery of a successful innovation involves
chologically and financially committed to three stages – conception (which includes cre-
the preservation of the status quo to embrace ativity), successful development and success-
change. ful application.
Whilst innovation in the West has tended The closer the concept comes to the market-
to be defined in terms of breakthrough tech- place, however, the greater the number of peo-
nologies and products, the kaizen philosophy ple involved. This results in the emergence of
encouraged Japanese manufacturers to think two distinct types of challenge – technical and
more broadly and to devise strategies for human. Technical problems require the cre-
promoting involvement, not only across the ative energy of teams, whilst human problems
organization, but also across the supply arise because of the need to promote diffusion
chain. and buy-in to the new idea, initially across the
During the late 1980s and early 1990s, organization and sometimes across the supply
Western organizations came to recognize that chain.
industry leadership through radical innova- Diversity, combined with an understanding
tion was being ceded to fast-followers, skilled of individual strengths and weaknesses, and
in reverse engineering and cost reduction working relationships that are founded upon
through process improvement. Their sensitivity and trust, have been shown to
response was to promote greater involvement enhance creativity and problem-solving capa-
from their people through the application of bility (Hennessey & Amabile, 1998). Indeed,
Isaksen and Lauer (2002) identified key factors and Tushman (1997) found that work units
that contribute to creativity and provide a col- characterized by diversity have the capability
laborative climate. These are trust, team spirit, to access broader networks of contacts. This
unified commitment, principled leadership, enables them to acquire new information that
an elevating goal, a results-driven structure, informs decisions, increases commitment to
standards of excellence, participation in deci- choices and enhances responsiveness to envi-
sion-making, external support and recogni- ronmental turbulence.
tion, and an aptitude to adjust roles and Latimer (1998) argued that diversity in
behaviours to accommodate new emergent terms of ethnicity, age, gender, personality and
values. educational background promotes creativity
Employees either work in teams, defined by and problem-solving capability. He suggests
Katzenbach and Smith (1993) as ‘people with that groups have been found to be less risk
complementary skills who are committed to a averse than an individual’s ‘risky shift’.
common purpose, set of performance goals, Increased diversity leads to lower levels of
and approach, for which they hold themselves risk aversion and better decision-making
mutually accountable’, or they work in and problem-solving capability. This arises
groups. The latter are differentiated as ‘people because diversity promotes a more robust crit-
working together who are not as coherent or ical evaluation of the first solution to receive
purposive as team members’. Teams are com- substantial support.
posed of individuals who have the ability to One of the objections to diversity is that it
recognize the personal strengths and limita- damages cohesiveness. Cohesiveness, how-
tions of their colleagues. They adjust their ever, makes groups vulnerable to ‘group
behaviours so as to respond to the needs of think’. Diversity acts as an impediment to this
their peers. These patterns of mutual adjust- phenomenon. Conflict is perceived to damage
ment result in reduced levels of interpersonal cohesiveness; however, when it is effectively
tension and conflict. It falls to the HRM func- channelled, it can lead to improved creative
tion to promote significant investment in problem-solving and decision-making,
developing managers and encouraging them because the diversity of perspective generates
to accept the emotional labour inherent in more alternatives and greater critical
managing diversity within the organization evaluation.
(Ruscio et al., 1995). Results pointing to ‘value in diversity’ have
been countered by theorists who have shown
that heterogeneous groups experience more
Managing Diversity conflict, higher turnover, less social integra-
tion and more problems with communication
The literature on diversity highlights a range than their homogeneous counterparts (Knight
of responses to the challenge of diversity man- et al., 1999; O’Reilly et al, 1989; Williams and
agement. Dass and Parker (1999) identified no O’Reilly, 1998). Other studies have suggested
fewer than twelve strategic responses to the lower levels of attachment to employing
challenge of managing diversity. Moore (1999) organizations on the part of individuals who
reduced the number of behavioural stereo- perceive themselves to be different from their
types to four – the diversity hostile, the diver- co-workers (Mighty, 1997; Tsui et al., 1992).
sity blind, the diversity naïve and the diversity These studies give a clear indication of the
integrationist. Whilst the first three behav- nature of the challenge confronting those
ioural stereotypes fail to recognize that differ- seeking to promote commitment amongst
ent management skill sets are required to diverse work groups.
respond effectively to different diversity chal-
lenges, the fourth stereotype is proactive in its
approach. Moore’s stereotypes recognize that Appropriate HRM for
neither functional nor cultural diversity Diversity Management
automatically leads to positive or negative
outcomes. However, different patterns of High-commitment organizations will tend to
diversity present different managerial chal- prefer an outcome-driven approach to manag-
lenges, to which some organizations respond, ing people. The required levels of quality and
whilst others do not. output are seen to result from employee skills
Thomas and Ely (1996) showed that cogni- and knowledge, rather than high levels of
tive and experiential diversity adds to the per- supervision.
spectives available to the organization and Suitable conditions to promote creativity
encourages clarification, organiation and com- and innovation in diverse contexts are associ-
bination of new approaches for the accom- ated with the management of work routines,
plishing of goals. Similarly, Donnellon (1993) and the creation of appropriate teams. Indeed,
currently, an increasing amount of work within set of HRM sub-systems that focus on con-
an organization is accomplished through stantly reinforcing these processes. The litera-
groups or teams, rather than by individual ture suggests that the greater the diversity, the
action. greater the collectivist orientation needs to be.
When selecting individuals to join a team, it Systems like the Kaplan and Norton’s bal-
helps if managers not only consider functional anced scorecard (1996) and 360-degree feed-
competence, but also the preferences that peo- back, when combined with reward systems
ple have for different types of work and dif- that empower managers to implement
ferent types of work context. The ways in employee ideas on their own initiative, help
which individuals like to work, and the activ- create the supportive infrastructure necessary
ities within their job roles that give them great- to deliver results.
est satisfaction, will shape the way in which
they choose to discharge their responsibilities,
working individually or in teams. Concluding Remarks
These manifestations of personal style are
important in a team context. Individuals with In the context of this paper, diversity manage-
similar styles may well establish trust early; ment is defined as the aggregate effect of HRM
their homogeneity of approach, however, may sub-systems, including recruitment, reward,
become a significant blind spot. In building a performance appraisal, employee develop-
high performance team, there is not only a ment and individual managerial behaviours in
need to match functional competence and per- delivering competitive advantage through
sonality against the requirements of the job, leadership and team work.
there is also a need to produce a balance of The combustible cocktail of creative tension
work preferences, attitude to risk and an inclu- that is inherent in diverse organizational con-
sive orientation to social identity. In high- texts must be contained within a multilayered
commitment team contexts, a strong case can vessel. The outer layer must be composed of
be made for blind selection to the shortlist carefully crafted HRM sub-systems that are
stage, based on a minimum threshold of func- both vertically integrated with the business
tional competence and the results of a range of objectives and horizontally integrated one
personality and work preference measures with another (Bamburger & Meshoulam,
that are blind to age, ethnicity and gender, and 2000). The inner layer consists of effective
that are designed to ensure balance and diver- leadership, which can only be provided by
sity within the team. suitably trained managers. They need to
Garvin (1998) has shown how functional understand the challenges of diversity man-
diversity gives rise to a potential conflict. He agement, and to have the emotional intelli-
observed that those versed in a particular dis- gence and commitment necessary to build a
cipline or function, perceive and define quality personal relationship with each individual, or
in different ways. To those tasked with pro- group/team member.
curement of resources, quality is perceived to In support of the view that the existence of
be value for money. Those involved in design diversity in a firm can lead to competitive
see it as intangible and transcendent. Those advantage, the paper considered questions
working in production define it as conforming such as ‘What is meant by diversity? ‘How is it
to requirements. Marketers suggest that it is managed, especially from an HRM point of
relative perceived value, whilst sales people view?’ ‘What is its relationship with creativity
argue that quality is for the customer to define. and innovation?’
Historically, these tensions produced compart- It has been argued that embracing diversity
mentalized management practices, because of management is a risky business. Organiza-
an absence of tools to reconcile differences of tions that embrace high-commitment HRM
perspective. strategies do so because the systems and pro-
Teams with diverse membership and a col- cesses through which they add value are
lectivist orientation are likely to have a deeper too complex for managers to control directly
well of resource upon which to draw when through supervision. Instead, they adopt an
generating ideas, combining them and subject- output orientation. This approach demands
ing them to critical evaluation. The likelihood that they delegate authority to individuals and
of adopting a sub-optimal trajectory, therefore teams to make operational decisions. Organi-
is reduced, especially if the team’s approach to zations that adopt an output orientation need
systematizing creativity and problem solving innovation and continuous improvement in
is highly developed. both products and processes to support a strat-
Whilst early success and recognition help to egy for delivering high-perceived value to the
cement a sense of identity and belonging, peo- customer. Diversity facilitates the process
ple and processes need to be supported by a when managed well.
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diversity amongst groups at work: Key issues for Nigel Bassett-Jones is currently a principal
organisational training and development. Journal lecturer at Oxford Brookes University Busi-
of European Industrial Training, 23(4), 208–218. ness School, where he lectures in HRM,
O’Reilly, C.A., Caldwell, D.F. and Barnett, P. (1989) strategy, and innovation and change mainly
Work Group demography, social integration, and to post-graduate students. Current research
turnover: Administrative Science Quarterly 34, 21– interests include, creativity and innovation,
37. creativity and diversity management and
Prahalad, S. and Hamel, G. (1990) The core compe- systems perspectives on diversity mana-
tence of the corporation, Harvard Business Review, gement. He is also an experienced OD
May–June. consultant.
Prasad, P., Mills, J.A., Elmes, M. and Prasad, A.
(1997) Managing the Organisational Melting Pot: