Diversity management as an organizational need

Literature review

Abstract

As a result of globalization, it became more common for organizations that employees coming
from different cultures started working together. Diversity became a need not only for survival,
but for organizational success as well (Wentling, 2000). The purpose of this paper is to explore
how diversity management can enhance success in organizations and what tools can be used by
management teams to do so. Thus, the current paper provides a literature review on the topic
of diversity management and addresses the following research question:

How can diversity management enhance organizational success through diversity management
strategies?

In order to answer this question, the paper provides a systematic overview on diversity
management’s benefits, and on the strategies that can be used. The results demonstrated that
managing diversity is an inclusive process, and that it should not be seen as a problem which
needs to be solved, but a resource that needs to be managed (Thomas, 1991 as cited in Edewor
& Aluko, 2007). Through capitalizing workplace diversity, companies can gain significant
competitive advantage, therefore diversity is a key issue for organizations (Green et al., 2002).
Diversity management in organizations not only benefit the workforce, but results in enhanced
productivity, as it boosts positive attitudes for the organization as well (Ashikali & Groeneveld,
2015). However, today’s digitalized world would require further research on how diversity can
be managed in online work environments, therefore it is a direction for future research as well.
Introduction

Even though it became more common for people to interact with others coming from diversified
cultural backgrounds, the rapidly changing workforce demographics may enhance tensions
over cultural issues to rise, therefore there is a significant need to manage diversity in
organizations (Edewor & Aluko, 2007; Seymen, 2006). Since the 1980s, the topic of
organizational diversity became the centre of organizational discussions, as globalisation had a
significant impact on organizational environments (Seymen, 2006). The increasing importance
of globalization not only results in more diverse workforces, but business partners, target
markets and customers are becoming more diverse as well (Kühlmann & Heinz, 2017). This
correlates with Seymen’s (2006) finding, that there is a strong correlation between the growth
of the world population and the increasing diversity within workforces. Recent literature also
concluded that some industries are forced to hire internationally as a result of lacking labour,
therefore “the shortage of skilled labour is another reason why cultural diversity has received
increased attention over the last few years.” (Kühlmann & Heinz, 2017, p. 5.).

In order to successfully integrate international employees into new social environments, it is

essential for organizations to use effective diversity management strategies (Kühlmann &
Heinz, 2017). Furthermore, it became inevitable for management teams to consider the
challenges brought by diversity, especially because this is the most important trend in the 21st
century that is affecting organizations (Lavaty & Kleiner, 2001). Previous studies have found
that culturally diverse groups have significantly different dynamics than homogeneous groups
do, as these groups tend to face both increased opportunities, but challenges as well (Edewor &
Aluko, 2007). The purpose of this paper is to provide a literature review on strategies for
diversity management and how it can enhance organizational success. Thus, the current paper
addresses the following research question:

RQ1: How can diversity management enhance organizational success through diversity
management strategies?

To answer this question, a literature review was chosen as a method. The current paper
examines studies and articles chosen from GU library and SAGE Journals Online, from journals
such as Journal of Business Ethics and Journal of Organisational Behaviour. The main
literature that was initially chosen included fifteen papers, however other studies and books
been added later, that were mentioned in the initial papers, and were relevant to organizational
diversity. When filtering the most relevant articles, keywords such as culture, cultural diversity,
diversity management, diversity in organizations were used. The chosen time frame was the
period from 1990 until 2022.

Defining the main concepts

Due to the context of this paper, it is essential to define the terms ‘culture’ and ‘organizational
culture’ first. According to UNESCO’s (2002) definition, culture encompasses main features
of a social group, such as value systems, beliefs, traditions, and lifestyles. Therefore,
organizational culture can be viewed as a personality of an organization (Edewor & Aluko,
2007). Due to the context of this paper, it is essential to define ‘cultural diversity’ as well. This
term can be viewed as a “representation of people with distinctly different group affiliations of
cultural significance” (Powell & Persico, 1995 as cited in Edewor & Aluko, 2007, p. 190).

In previous studies, ‘diversity’ was described as a “mixture of people with different group
identities within the same social system” (Fleury, 1999 as cited in Seymen, 2006, p. 297). In
recent literature, the same term was described as a process of recognising and respecting
differences amongst individuals (Ohunakin et al., 2019). However, it is essential to highlight
that the term ‘diversity’ does not only mean race or gender, but can reflect to geographic
location, job position, sexual preference amongst other things (Edewor & Aluko, 2007). An
earlier study by Loden and Rosener (1991) suggested that diversity can be defined in two
dimensions. The primary dimension shapes fundamental worldviews and one’s self-image. This
dimension includes characteristics like age, gender, ethnicity, race, and sexual orientation. On
the other hand, the secondary dimension affects one’s self-esteem and self-definition, and
includes geographic location, income, religious beliefs, and educational background (Loden &
Rosener, 1991).

The history of diversity management

The history of diversity management has been thoroughly discussed by Özbilgin (2008), where
it was found that the field traces back to the 1990s, as there was an emerging need for the
eradication of discrimination, especially within organizational environments. Therefore, this
field was known as an initiative for improving equal opportunities (Özbilgin, 2008). The
concept of diversity management was introduced by Roosevelt Thomas (1990), who found that
changing organizational cultures and embracing differences can significantly contribute to
organizational goals (Ashikali & Groeneveld, 2015). Seymen (2006) also found that this new
perspective emerged as organizations started to realize that cultural differences can add value
to businesses.

On the other hand, there were scholars who were concerned about these efforts and argued
whether this discourse could effectively improve equality (Kirton & Greene, 2000; Gilbert et
al., 1999). Seymen (2006) suggested that the main problem is that there is still a division of
opinion whether diversity can be seen as a source of power, or it is just a challenge that should
be resolved. On the other hand, Edewor and Aluko, 2007 argued that organizational literature
is consistent and clear on the potential of culturally diverse organizations.

Diversity management in organizations

As culture is becoming more complex and fluid, an immense need for diversity management
within organizations is evolving (Seymen, 2006). According to Fleury’s findings (1999),
diversity management can be considered as an organisational answer to the increasing diversity
within organizations. Another approach to diversity management defined it as a collective of
human resource management practices, programmes, and policies, which promote equality
among organizational members. These also ensure that diversity does not have a negative
impact on organizational goals (Olsen & Martins, 2012 as cited in Ohunakin et al., 2019;
Denissen et al., 2020).

It is common that organizations include diversity management as part of their corporate social
responsibility programme (Kühlmann & Heinz, 2017). A recent study (Ashikali & Groeneveld,
2015) found that diversity management can be used in human resource management, to attract
and retain workforce. Even though diversity management aims the inclusion of diverse groups
within the organization, it has been criticized for mainly supporting minority groups (Ashikali
& Groeneveld, 2015).

Although significant number of studies have examined diversity management as a concept, the
research on which practices are the most efficient is rather limited (Denissen et al., 2020).
Previous research has emphasized that there are still organizations, whose diversity
management practices are from the previous century, and no improvement had been made on
them, despite the progresses in the research field (Nkomo & Hoobler, 2014 as cited in Denissen
et al., 2020). Through not paying attention to the current and future market demographics,
organizations may exclude significant profits (Edewor & Aluko, 2007).

Diversity management as an organizational need

It has been argued in previous literature (Lorenzo et al., 2017) that diversity often means the
biggest advantage in organizations, as it can generate new sources of revenue, and encourages
implementing new perspectives in work environments. Therefore, it can be concluded that
diversity is not only beneficial for employees, but for employers as well (Rabl et al., 2020).
Through hiring employees with diverse cultural backgrounds, organizations can capitalize on
various language skills and a thorough knowledge on respective markets (Kühlmann & Heinz,
2017). As a result of that, diversity management initiatives at organizations are often criticized
for only having profit motives (McKay & Avery, 2005 as cited in Rabl et al., 2020).

The literature on diversity management has mainly examined the benefits it holds for
organizations, and its effect on organisational performance. In most recent studies, a positive
correlation was found between diversity management and organizational performance
(Ohunakin et al., 2019), as changing organizational practices can reveal the potential of a
diverse workforce (Ashikali & Groeneveld, 2015). Kirton and Greene (2000) also concluded
that diversity management values differences between employees and enables them to turn
them into a competitive advantage. Nevertheless, the effects of diversity management are
dependent on various factors, such as how cultural diversity is managed, and how does top
management approach this topic (Kühlmann & Heinz, 2017).

Diversity in an organization can also be interpreted as a possibility to widen horizons and

develop organizational knowledge (Kühlmann & Heinz, 2017). This finding is in correlation
with earlier literature: Fleury (1999) concluded that diversity management’s holistic approach
has a positive effect on employees, specifically in reaching their full potential. However, one
can not only assume that effective diversity management improves organizational performance
– it can also reduce the possibility of conflicts (Kühlmann & Heinz, 2017). A study by Edewor
and Aluko (2007) found that organizations that establish diverse organizational culture through
educating workforce on multicultural issues can enjoy several benefits. The main benefits
include reduction in interpersonal conflicts, enhanced work relationships and higher
engagement in achieving organizational goals. Furthermore, management teams have to spend
less energy on interpersonal conflicts and cultural clashes, therefore diversity management can
significantly improve organizational productivity as well (Edewor and Aluko, 2007).

Diversity management strategies

Diversity management does not only mean acknowledging differences, but recognizing the
value culturally diverse workforce can bring, promoting inclusiveness and combating
discrimination (Green et al., 2002). It has been discussed in earlier literature that prejudice and
discrimination can result in loss of workforce and a decrease in productivity, therefore diversity
management can be a preventive measure within organizational environments (Devoe, 1999 as
cited in Green et al., 2002).

In order to take advantage of a culturally diverse organization, it is essential to let organizational

members contribute to organizational culture and achieve their full potential through their skills
(Edewor & Aluko, 2007). Organizational leaders are supposed to find and maintain the balance
between the objectives of an organization and the employees’ individual cultures. On the other
hand, it has been found in previous literature (Green et al., 2002), there is no single, granted
solution for success, as every organization is unique. When it comes to creating a harmonious,
diverse work environment, Edewor and Aluko (2007) highlighted the most important tool –
setting organizational values by being an example. Leaders should be heavily committed to
addressing myths and stereotypes when it comes to cultural differences. This approach should
also be communicated to organizational members in written forms and should be included in a
company’s mission statement as well (Edewor & Aluko, 2007).

When it comes to additional effective tools that can be used as part of diversity management, it
is essential for managers to understand the prejudices and cultural biases they hold (Green et
al., 2002). Organizations should provide a “safe space” for employees to engage in dialogues
in these topics, and implement policies which provide additional information (Flagg, 2002).
Management teams should actively seek out inputs from minority groups, not only for their
beneficial contributions, but because it confirms that they are being valued organizational
members (Edewor & Aluko, 2007).
Furthermore, it is the organizations’ responsibility to provide trainings and implement strategies
regarding this issue (Green et al., 2002). Training programmes focusing on diversity
management are usually designed to engender appreciation for other organizational members
through raising awareness and educating employees on workforce demographics. Skill-building
trainings were also found to be effective, as they provide specific information on how different
cultural backgrounds can affect work behaviour (Edewor & Aluko, 2007).

Impact of Diversity on Organizational Behaviour

It has been stressed in earlier literature that a distinction in attitudes and performance has
emerged in work environments. This is a result of differences in backgrounds, attitudes, values
and norms between organizational members (Cox et al., 1991 as cited in Edewor & Aluko,
2007). Diversity management can have significant effects on processes which are vital to any
organization. Diversity management can either complement these or enhances overcoming
them (Edewor & Aluko, 2007). Problem solving is a key aspect when it comes to these
processes, especially because diverse groups can provide a wide range of perspectives and
differing analyses of available alternatives (Cox, 1994 as cited in Edewor & Aluko, 2007). On
the other hand, it is essential for group members to understand the differences they hold in their
perspectives, otherwise the process of problem solving would result in conflicts (Edewor &
Aluko, 2007).

As Edewor and Aluko (2007) suggested, mixing employees coming from collectivist and
individualist cultures have a significant impact on organizations. This study also found that
affiliations as age, gender and race can also influence productivity and work quality as well,
and they can affect organizational outcomes on individual, group, and organizational level as
well. Earlier research (Cox, 1994 as cited in Edewor and Aluko, 2007) stressed that how
employees feel individually in an organization is vital, due to the fact that if one feels valued in
an organization, it will result in more contribution is achieving organizational goals.

Ashikali and Groeneveld (2015) found that the feeling of belongingness heavily depends on
how diversity management is perceived by other groups within the organizations. If the
majority of groups’ perception is that they have less to gain from diversity management (or they
even lose with it), than those within minority, they tend to respond with negative attitudes
towards the organization (Ashikali & Groeneveld, 2015). Therefore, a recent study (Ohunakin
et al., 2019) suggests that diversity management and inclusion should not be separated if the
goal is to improve employee satisfaction and performance. This has been discussed in earlier
literature too (Ashikali & Groeneveld, 2015), as inclusive organizational environments enable
organizational members to maintain their differences, meanwhile identifying with
organizational values. Through encouragement to express individual “uniqueness”,
organizations not only create economic benefits alone, but contribute to sustainable
organizations (Ashikali & Groeneveld, 2015).

Conclusion

After examining the literature on diversity management, it can be concluded that managing a
diverse organization is a complex issue, and organizational leaders may face significant
challenges when it comes to building an organizational culture that truly values diversity. As
people tend to be more comfortable with people they are highly similar to, not everyone values
diversity, and some may be uncomfortable when it comes to emphasizing the importance of a
diverse environment (Edewor & Aluko, 2007). As a result of globalization, workforce
demographics tend to change rapidly, and individuals may find it threatening, especially when
they do not feel secure enough to maintain their position at the workplace (Edewor & Aluko,
2007).

The current paper examined the literature on diversity management, and research gaps can be
identified. Seymen (2006) concluded that “there is not a consensus on how cultural diversity
can be managed, and the topic is handled from very different approaches” (Seymen, 2006, p.
301). Today’s digitalized world would require further research on how diversity can be
managed in online work environments. Moreover, it should also be examined how different
inequalities affect diversity management practices (Denissen et al., 2020).

2698 words
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