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Impact of Diversity
management on
organization performanceEddy S.W. NG
Curtis E.F
Dreachslin J.L.Saadia Atta
Wagma Farid
Hammad Baig
Khizer Farooq
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Write one sentence that comes to
your mind about
D I V E R S I T Y
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Did any of the words appear in yourdefinition?
Different
Individual
Race
Unlike characteristics
Diverse
Minorities
Unique
Variety
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Definition
the way in which people in a work place are
similar and different from one another. in
addition to the characteristics protected bylaw, other similarities and differences
commonly cited includes background,
education, language skills, personality and
work role.
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Causes of workforce diversity
Internal factors:
Age
Gender Sexual orientation
Physical/mental ability
Workforce factors
Work style
Physical appearance
Work history
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Communication style
Income
Family status Educational background
Work place factors
Job level location
Type of work
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Why workforce diversity?
There are various reasons explaining the needto manage diversity. They are:
A large number of women are joining the work-force.
Work-force mobility is increasing.
Young workers in the work-force are increasing
Ethnic minorities' proportion constantly in thetotal work-force is increasing.
International careers and expatriate are becomingcommon.
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Workforce diversity management
A management system which eliminates the
differences found in a multicultural workforce
in a manner which results in the highest levelof productivity for both the organization and
the individual. In simple words managing
diversity means managing people in the best
interest of employee as well as employer.
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Why organization manages diversity
Determinants are of the opinion that the
environment dictates the structures and
organizations of firms, and that managerialbehavior is severely constrained by the
external environment
Where as strategic choice proponents believethat managers posses considerable freewill in
charting their own course of action.
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Managerial free will is more predominant than
the environment in an organizations choice to
manage diversity.
Strategic choice theory
Leadership behavior and decision making
Upper echelon theory
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Strategic choice theory
It states that CEOs have substantial leverage in
shaping their organizations. The voluntary adoption of diversity management
is example of strategic managerial choice.
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Leadership behavior and decision making:
Strategic leadership theory explains the impact of
individuals or top executive teams on firms. Complex decisions are largely result of behavioral
factors.
And ill-defined options are derived from the
decision- makers belief and values which means
they rely on cognitive models to make strategic
decisions.
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Upper echelon theory:
It says that the organization is the reflection of its
top executives. The CEOs characteristics(demographics) can be
used to predict organizational outcomes.
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variables
Age The younger CEOs are more likely than olders CEOs to be
committed to diversity
Gender Female leaders are expected to be more proactive in
embracing diversity practies.
Race CEOs who are members of racial minority group are more
likely to be comitted to diversity Educational background
CEOs with higher levels of education are more commitedto diversity
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PROPOSITION
CEOs who are younger , female, a racial
minority and better educated are more likely
to lead firms with a greater number ofdiversity practices
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criticism
Demographic variables lack conceptual clarity
and many theoretical concepts are loosely
specified. Example:
Its not neccesary that a person who is highly
educated will value diversity.
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To overcome the short comes pointed out byLawrence(1977) author extended the research byconsidering the psychological constructs in predicting
the CEOs commitment to managing diversity. By Extending variables of demographics to:
Executive values
Cognition
Leadership styles Commitment
All of them are proposed to affect the cognitive processesin commitment to diversity.
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values
Values are guides and determinants of socialattitudes, ideologies, and social behavior(Rokeach, 1973).
Social values
free-dom , equality, and world peace
morality-based values
politeness , helpfulness, affection, and forgiveness
These types of values imply social interactionwith others.
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Personal values self-respect , broad-mindedness, and courage,
competency -based values
logic and competenceThese two types of values are more centered on the
individual and do not necessarily imply a broader socialor societal perspective.
Theoretically most closely related to civil rights ordiscrimination against persons of different race orethnic back-ground
These values are expected to be negatively correlatedwith or unrelated to diversity
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helping (moral)
compassion (moral)
equality (social)
loving (moral)
to be linked to executive regard for employees.
a comfortable life (personal)
wealth (personal)
pleasure (personal)
to be related to executive self-interest
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PROPOSITION
CEOs who have higher moral and social values are
more likely to be committed to diversity.
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cognition
Explain that how decision-makers cognitions and
motivations systematically affect the processing
of issues and the types of organizational actions
taken in response to them (Dutton &
Jackson,1987; Schwenk, 1984).
Catagorization practiced by CEOs
Reduces the complexity of the issue
Helps CEOs to impose orders on others
Threats and oppurtunity
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Workforce diversity, as a strategic issue, is a
double-edged sword and can be perceived as
having a positive or negative impact on group processes and organizational outcomes
(Milliken & Martins, 1996).
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Those who hold a resource-based view (e.g.,
Cox & Blake, 1991; Richard,2000) see diversity
as an opportunity that enhances creativity andperformance, while those who hold a social
contact perspective see increasing diversity as
a source of inter-group conflict (e.g.,
Greenwood, 1999; Tsui, Egan, & OReilly,
1992) and a threat to organizational
effectiveness.
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organizations develop and adopt strategies toincrease the control over supplies of neededresources, or increase dominance in the market
for needed resources. Thus, an organizations managers will take actions
perceived to acquire resources essential forsurvival.
CEOs are likely to devote attention to diversityissues when they hold positive beliefs aboutdiversity and have a need for resource acquisition
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PROPOSITION
Holding all else constant, a firms diversity
practices are related to its CEOs cognitive
categorization of diversity.
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Leadership styles
Considered to be another facet of executives that effectsorganizational outcomes.
transactional
bureaucratic authority
legitimate power emphasize task assign-ments, work standards, and employee
compliance.
rely on rewards and punishment to influence employee behavior.
Transformational (or charismatic) motivates followers by appealing to higher ideals and moral values.
Able to inspire followers.
managing diversity is a business imperative and moral obligation not agovernment mandate.
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if transformational leaders are more likely to
engage in good citizenship behavior, then a
similar link to managing diversity should alsoexist. Thus, a CEOs leadership style serves to
communicate and exhibit values that can lead
to a plural orientation in an organization.
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PROPOSITION
CEOs who display a transformational
leadership style are more likely to lead firms
with a greater number of diver-sity practicesthan CEOs who display a transactional
leadership style. This relationship is mediated
by the CEOs commitment to diversity
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CEO commitment
a state of being in which an individual becomes boundby his actions and through these actions to beliefs thatsustain the activities and his (or her) own involvement
Commitment molds an individual's attitudes andmaintains the behavior even in the absence of positivereinforcements and tangible rewards.
Firstly, CEO is the person who:
possesses the discretion and ability to set the strategiccourse that can influence organizational outcomes
set the corporate agenda, make decisions, and allocateresources required for managing diversity
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PROPOSITION
the number of diversity practices in a firm is
related to its CEOs commitment to diversity.
CEOs commitment mediates the relationshipsbetween CEO observable demographic
characteristics, values, cognitive
categorization, and leadership styles and thenumber of diversity practices in a firm.
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Therefore, consistent with the upper echelon
theory and the strategic choice perspective, a
leaders (demographic) characteristics, values,and beliefs are expected to translate into
commitment to action, which is essential to
mobilize a firms resources into managing
diversity.
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Diagrammatically
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two sets of variables are considered:
observable demographic characteristics and thepsychological attributes of CEOs.
These variables are selected because they are thoughtto have the greatest impact on leadership behavior anddecision making.
Demographic characteristics are extended to overcome
the criticism raised. it is anticipated that both
observable and unobservable CEO characteristics willaccount for a CEOs commitment to managing diversity.
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in the absence of managerial strategic choice,environmental factors alone are limited in theireffectiveness in promoting women and minorities
in the workplace. While other factors might influence a CEOs
commitment to diversity and consequently affecta firms diversity practices.
It is not intended to be a comprehensive modelof all the antecedents of a CEOs commitment,nor does it pretend to take into account all thepossible variables
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Many business issues may arise in short run
where as diversity management requires long
term commitment and the payback is notoften as tangible or predictable.
Thus, CEO commitment is particularly
important because the top executivedetermines and prioritizes a firms time and
resources.
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conclusion
Although environmental forces may pressure
firms to implement employment equity,
organizational decision-makers exercise strategic
choice in the way they respond to these
pressures
the framework calls for a greater understanding
of the perspectives and priorities of CEOs to helpexplain a firms strategic orientation toward the
firms management of diversity.
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implications
changing demographics and workerimmigration prompts employment equity ordiversity initiatives.
in the absence of leadership support, (EEO)(AAPs) alone aren't sufficient for advancingwomen and minorities.
links diversity practices to the strategicleadership literature, using psychologicalconstructs to understand why organizationsmanage diversity.
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although CEO commitment is critical for the firmsmanagement of diversity, no empirical evidencesupports this notion.
research propositions can be tested to provide theempirical support on linking leadership commitment todiversity outcomes.
From a HRD perspective, workforce diversity can affecta firms performance in terms of productivity,
absenteeism, and turnover. Thus, future research canexplore the link between CEO commitment to diversityin the presence and absence of the business case fordiversity.
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