impact of diversity management on organization performance

8/2/2019 Impact of Diversity Management on Organization Performance

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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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impact of diversity management on organization performance

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