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The Business Case for Diversity Management
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U N I T C O D E : S H R 0 5 4 - 6
S U P E R V I S O R : M U H A M M A D S A M E E R
C O U R S E : I N T E R N A T I O N A L H U M A N R E S O U R C E
M A N A G E M E N T
D A T E : 0 6 M A Y 2 0 1 4
U N I V E R S I T Y O F B E D F O R D S H I R E
THE BUSINESS CASE FOR DIVERSITY
MANAGEMENT: A CASE STUDY ANALYSIS
ON ABC PLC
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ACKNOWLEDGEMENT
First, I would like to thank God for giving me the strength and zeal to endure
this entire journey. I would also like to thank my project supervisor, Dr.
Muhammad Sameer, for his support and consideration throughout the
duration of my research. Picking you as my project supervisor was a wise and
constructive decision.
In addition, I would like to thank my entire family for their support and prayers,
particularly my mother Mrs. Nwakaego Jones, who relentlessly assured me
that I would succeed with my project. I would also like to thank Amara for her
incessant encouragement and counseling during this period, she has been a
great friend.
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EXECUTIVE SUMMARY
This report provided a background of the concept of diversity and the
evolution of diversity from the Civil Rights movement phase to the current
global diversity phase. In addition, it provided clear definitions on the concept
of diversity, as well as the business case for diversity management. These
definitions were sourced from different academic researchers, practitioners
and companies. Furthermore, relevant theories proposed by renowned
researchers, such as the Resource-based view model, the Upper Echelon
theory and the Social Exchange theory, were all applied to this report.
After thorough analysis of the case, this report also highlighted the issues
present in the case and analysed them alongside HR practices and activities
such as HR strategic partnering, recruitment and selection, training, reward
management and appraisals. Also, in order to understand the influence of the
demographic diversity types in different labour markets, this report provided
an analysis of the demographic diversity settings in UK and compared it with
other countries like the US, China, India and Turkey.
In addition, this report recommended that changes should be made to the
global diversity management programme in ABC Plc., and suggested that it
adopt a more Transversal model of managing diversity globally. In addition, a
partnership between its global diversity council and employee resource
groups was also suggested. This report also recommended fair reward and
appraisal practices, targeted at the underrepresented groups. Lastly, this
report incorporated an action plan, in order to ensure successful
implementation of the diversity management programme in ABC Plc.
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TABLE OF CONTENTS
Page No.
Acknowledgement ………………………………………………………………… 2
Executive Summary ……………………………………………………………… 3
List of Figures …………………………………………………………………….. 6
CHAPTER ONE - INTRODUCTION
1.1 Background of the Study …………………………………………………… 7
1.2 Scenario ………………………………………………………………………. 8
1.3 Rationale of the Study ………………………………………………………. 9
1.4 Significance of the Research ………………………………………………. 9
1.5 Aim and Objectives …………………………………………………………. 10
1.6 Structure of the Study ………………………………………………………. 10
CHAPTER TWO – LITERATURE REVIEW
2.1 Introduction …………………………………………………………………… 12
2.2 The Concept of Diversity Management ………………………………….... 12
2.2.1 An Overview of the Concept ……………………………………………... 12
2.2.2 Defining the Concept of Workforce Diversity …………………………… 13
2.3 Origin of Diversity in the Workplace ……………………………………….. 16
2.3.1 The Civil Rights Movement ………………………………………………. 18
2.3.2 Respecting Differences …………………………………………………… 19
2.3.3 Diversity Management ……………………………………………………. 19
2.3.4 Universal Diversity Management ………………………………………… 20
2.4 Theoretical Frameworks ……………………………………………………. 20
2.4.1 Resource-Based View Model ……………………………………………. 20
2.4.2 The Upper Echelon Theory ………………………………………………. 23
2.4.3 The Social Exchange Theory …………………………………………….. 24
2.5 Business Rationale for Workforce Diversity ………………………………. 26
2.5.1 The Impact of Demography on Workforce Diversity …………………... 27
2.5.2 Major Business Drivers for Workforce Diversity ……………………….. 30
2.6 Summary ……………………………………………………………………... 32
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CHAPTER THREE – CASE ANALYSIS AND DISCUSSION
3.1 Introduction …………………………………………………………………. 33
3.2 Case Analysis and Discussion …………………………………………… 33
3.2.1 Issues Existing in the Case …………………………………………….. 33
3.2.2 HR Strategic Partnering ………………………………………………… 34
3.2.3 Recruitment and Selection ……………………………………………… 35
3.2.4 Training …………………………………………………………………… 37
3.2.5 Reward Management …………………………………………………… 37
3.2.6 Appraisals ………………………………………………………………… 38
3.3 The Demographics in UK and Selected Developing and Developed
Economies ………………………………………………………………………. 39
3.3.1 Age Demographics ………………………………………………………. 39
3.3.2 Gender Demographics ………………………………………………….. 40
3.3.3 Race Demographics …………………………………………………….. 41
3.4 Summary …………………………………………………………………….. 42
CHAPTER FOUR – RECOMMENDATIONS
4.1 Global Diversity Management ……………………………………………... 43
4.2 Diversity Task Group ……………………………………………………….. 44
4.3 Diversity Training …………………………………………………………… 46
4.4 Fair Rewards ………………………………………………………………… 47
4.5 Measurement ………………………………………………………………… 48
4.6 Action Plan …………………………………………………………….. 49 – 50
CHAPTER FIVE – CONCLUSION
5.1 Key Points of the Literature ………………………………………………... 51
5.2 Main Findings of the Study ………………………………………………… 51
References ………………………………………………………………… 53 – 66
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LIST OF FIGURES
Figure 1: Structure of the Project
Figure 2: Evolution of Diversity in the Workplace
Figure 3: Resource-Based View Model
Figure 4: Variables that moderate the SE theory
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CHAPTER ONE – INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Various scholars assert that, although diversity is not a new concept
historically, research on the subject was essentially lacking and only became
intensified as a result of research carried out by Johnston and Packer in 1987,
on ‘Work and Workers for the Twenty-First Century’ (Kurowski, 1999;
McMillan-Capehart, 2003). Likewise, previous research shows that the
concept of diversity originated from the United States of America (US), with its
foundation dating back to the equal employment and civil rights movements,
which started in the 1950s/1960s and generated an awareness of African-
American workers in the American labour force (McDonald, 2010; McMillan-
Capehart, 2003). Additionally, Johnston and Packer’s (1987) publication in
Kurowski (1999) showed an understanding of diversity as the inclusion of
native ethnic minorities, female workers, senior residents and immigrants in
the labour force.
Building on the research published by Johnston and Packer (1987) in
McMillan-Capehart (2003) and Diamante and Giglio (1994), it was estimated
that by the year 2000, there would be an 85 percent composition of minorities,
inclusive of 29 percent of people of colour, as new entrants into the labour
force, essentially as a result of immigration. Also, Judy and D’Amico’s (1997)
research on diversity, which was influenced by Johnston and Packer’s (1987)
publication in McMillan-Capehart (2003), predicted that, by the year 2020,
there would be a continuous increase in the diversity of ethnicities, as well as
a 50 percent composition of female workers, in the labour force (McMillan-
Capehart, 2003).
Current research carried out by Byeong (2006) indicates that there has been
an increase in the number of people who presently belong to minority groups
in the United States (US) as they account for 31 percent of the population in
the US. Also, Byeong’s (2006) research predicts that half of the US population
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would be constituted of persons associated with the minority groups, within 50
years post-year 2000. Due to these demographic changes, Ivancevich and
Gilbert (2000) in Byeong (2006) reports that the US labour force has begun to
initiate reinforcements for successful diversity management practices.
Likewise, in the UK, research shows that by the year 2050, racial minorities
will account for one-fifth of the UK labour force (BBC, 2009). A UK survey
carried out in 2011 showed that, as at that time, racial minorities constituted of
11.4 percent of the entire UK labour force, which is lesser in comparison to
the US (Office for National Statistics, 2011).
Currently, CIPD (2013) reports that, labour diversity in the modern workplace
has led to a form of competitive advantage for business organisations
worldwide, as these businesses strive to recruit and retain a wide variety of
talents to foster business growth (CIPD, 2013). In general, these businesses
are attempting to comprehend the business benefits of having a diversified
workforce, as opposed to relying exclusively on laws and regulations that
foster workforce diversity. This report would examine the business needs,
objectives and benefits relative to workforce diversity i.e. the business case
for diversity management (CIPD, 2013).
1.2 SCENARIO
ABC Plc., a leading global car manufacturer based in the United Kingdom
(UK), perceives diversity as everything that makes individuals different with
regards to age, race, gender, personal values, etc., and aims to sustain an
organisational culture that values and embraces these individual differences.
Additionally, the overall objective of ABC Plc.’s diversity policy is to increase
its competitiveness, ensure its commercial growth and attain a strong
competitive advantage.
It is stated that its diversity initiative is mainly focused on the business case
for diversity, in comparison to other companies where legislative concerns
and human resource (HR) issues are more significant. Nonetheless, ABC Plc.
has also faced a number of challenges in the implementation of its diversity
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management programme and as a result, the diversity manager of ABC Plc.
has requested for an evaluation of its diversity management procedure to
rectify the underlying issues.
1.3 RATIONALE OF THE STUDY
Considering ABC Plc. is in its early stages of implementing diversity practices,
this study on diversity is being conducted to assist ABC Plc. in
comprehending the business case for diversity and implementing its diversity
management programme effectively. Also, this study is being conducted to
establish a better diversity management strategy for ABC Plc., which involves
effectual use of the line management and HR function in implementing its
diversity agenda. In addition, this study is being carried out to examine ABC
Plc.’s staff recruitment and retention practices, as well as other significant
practices, in order to resolve its challenge of halted staff continuity. Finally,
carrying out this study would also provide further insight into the logic behind
the business case for diversity management, for both the readers and the
writer.
1.4 SIGNIFICANCE OF THE RESEARCH
This research on the business case for diversity would benefit the employers
and employees in ABC Plc., as it would provide information on how to value
and respect individual differences and also foster positive interpersonal
relationships in the workplace. This research would also benefit the diversity
manager at ABC Plc. by presenting evidence on how to effectively manage
diversity and align it with the organisational needs, as well as the employees’
needs. Likewise, it would enhance existing literature and benefit researchers
interested in doing future research on the business case of diversity
management.
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1.5 AIM AND OBJECTIVES
In general, the main aim of this report is to critically evaluate the business
case of diversity management for ABC Plc. with the use of significant
theoretical and practice informed research. In order to realise this aim, certain
objectives would have to be attained. These objectives are highlighted below.
 To present the origin of diversity as a concept and critically discuss the
different demographic diversity types with regards to managing
workforce diversity.
 To present an analysis on the slow adoption of diversity management
practices in ABC Plc., in spite of its knowledge and understanding on
the potential benefits of diversity for organisational performance.
 To specify suitable recommendations for a diversity strategy, which
would strongly align ABC Plc.’s Human Resource Management (HRM)
and diversity management practices in the long term.
1.6 STRUCTURE OF THE STUDY
This report would be structured in the following pattern:
I.) Chapter two would examine and investigate the literature review on the
concept of diversity management and the business case, which would include
several definitions from academic researchers, business organisations and
practitioners. Also, chapter two would review the origin of the concept and
explore theoretical frameworks and models relative to the business case for
diversity management.
II.) Chapter three would analyse the issues in the case against the literature
provided and incorporate few developed and developing countries as a
benchmark for comparison.
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III.) Chapter four would provide recommendations for issues raised in the
analysis with the inclusion of an action plan, which considers specific
guidelines on how ABC Plc. would implement the suggestions.
IV.) Finally, chapter five would summarise the discussions, which have been
explored in each section and conclude on the key points highlighted in the
research.
Generally, each chapter would introduce its subject matter, discuss it and
conclude accordingly.
Figure 1: Structure of the Project
Introduction
Case Analysis Recommendations Conclusion
Literature Review
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CHAPTER TWO – LITERATURE REVIEW
2.1 Introduction
This chapter would review the past and current literature on workforce
diversity and begin by briefly providing an overview of diversity management
as well as critique the different views on the concept of workforce diversity,
which have been reported by academic scholars, research consultancies and
business organisations. In addition, this chapter would review the origin of
diversity in the workplace, highlighting and critiquing its historical background
with the use of seminal and classical references. This chapter would also
examine significant theoretical models and frameworks on the business case
for diversity and they would be assessed with the use of clear diagrams.
Furthermore, this chapter would review the impact of demography on
workforce diversity and explore the major drivers for the business case.
2.2 THE CONCEPT OF DIVERSITY MANAGEMENT
2.2.1 An Overview of the Concept
Parrotta, Pozzoli and Pytlikova (2014) report that, currently, many workplaces
are beginning to experience increase in diversity as most organisational
practices are being influenced by societal and governmental pressures in the
form of policies and regulations. The researchers added that, due to
globalisation, there is also an increased need for diverse goods and services
by various customers and markets and having a diverse workforce is highly
strategic and significant in comprehending and meeting these needs
(Parrotta, Pozzoli and Pytlikova, 2014). This assertion highlights the two
dimensions for managing diversity, which are the social/equality case for
diversity and the business case for diversity (CIPD, 2013).
Research shows that the social case for diversity is built on the assertion that
all employers are required to give all their employees equal access to
The Business Case for Diversity Management
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employment, reward and developmental practices available in an organisation
(CIPD, 2013). However, the business case for diversity builds on the
assumption that in order to manage diversity successfully, employees need to
be treated differently in ways that are fitted to their needs but also aligned with
the organisational needs, goals and objectives (CIPD, 2013). In addition,
studies show that, the social case and the business case for diversity both
consist of different methods to managing diversity, however they are not
substitutes but rather a correlation (CIPD, 2013). Although there is research
on the social case and business case for diversity, the main focus of this
review would be on the business case for workforce diversity with restriction
to demographic types only.
2.2.2 Defining the concept of ‘Workforce Diversity’
The concept of workforce diversity has advanced as a debatable human
resource subject over the years and has been viewed in different ways by
different researchers and scholars (Byeong, 2006). Companies are constantly
experiencing challenges with managing employees with dissimilarities as
opposed to managing situations more isomorphic in nature, which is as a
result of the ever-changing nature of their organisational cultures and their
employees’ individual principles (Byeong, 2006). These diverse views on the
concept of workforce diversity, cited by academic scholars, research
practitioners and business organisations, would be reviewed in subsequent
paragraphs.
I.) Academic Definitions
Cox (1993) in Seyed-Mahmoud (2004) defined diversity as individuals
belonging to various significant cultural groups, all being represented in one
societal classification. Although Cox’s (1993) definition highlighted the socio-
cultural element of diversity, it failed to specify what influence cultural diversity
exerts in the workplace. Likewise, Jackson, Stone and Alvarez (1993) viewed
diversity as dissimilarities existent in individuals, with regards to demographic
and personal characteristics. The researchers cited the demographic
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characteristics as visible elements such as gender, race, sex, age, etc., while
the personal characteristics (non-visible) were highlighted as social status,
educational background, style, etc. (Jackson, Stone and Alvarez, 1993). In
contrast, Pilbeam and Corbridge (2010) provided a definition that exhibited
the meaning of the concept in a work environment. These academic scholars
view workforce diversity as valuing all employees and “making employment
decisions based on objective, job related criteria rather than on the personal
characteristics of the individual” (Pilbeam and Corbridge, 2010, p. 227).
Furthermore, managing diversity is another concept that is significant to this
discussion. The concept of managing diversity and its benefits to
organisations has been a subject of scrutiny and controversy in the business
sphere over the years (Cox and Blake, 1991; Anderson and Metcalf, 2003 in
Pilbeam and Corbridge, 2010). Research shows that the concept of managing
diversity involves recognising and utilising the different needs of the individual
itself i.e. the employee (Pilbeam and Corbridge, 2010). These authors also
added that the diversity management approach is internally controlled by the
organisation and highly strategic, with focus on individuals and expected
outcomes i.e. business paybacks (Pilbeam and Corbridge, 2010).
Schneider (2001) outlined the business case for workforce diversity as
viewing, appreciating and harnessing individual differences as a significant
and strategic part of the organisational culture in a work environment.
Schneider’s (2001) view suggests that these individual differences should be
a thing of value as opposed to being a source detrimental to the firm’s
success. In addition, Schneider (2001) implies that practicing diversity
management should be fully embedded in the firm’s culture in order to realise
its benefits. Bratton and Gold (2007) supported Schneider’s (2001) view by
asserting that the business case for workforce diversity is recognising the
differences in people and viewing them as a source of conceivable
productivity. In addition, Bratton and Gold’s (2007) view also suggests that
practicing workforce diversity could give an organisation the competitive edge
both locally and internationally, which also corresponds with McDonald’s
(2010) assertion on global diversity management.
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In general, these academic scholars view diversity as inclusion rather than
exclusion of every unique individual and believe that an effective diversity
management practice would be beneficial to the firm’s productivity. Other
views discussed by research practitioners and companies would be reviewed
subsequently.
II.) Practitioner Definitions
CIPD (2013) defined managing diversity as placing value on each employee,
customer and client and treating him or her with respect while disregarding
prejudice. Like the academic scholars, CIPD (2013) also outlined the concept
of diversity as the personal characteristics that differentiate individuals such
as age, gender, sexual orientations, religion, race, disability, educational
background, etc. These researchers acknowledged that managing these
individuals with a singular method would not achieve fairness and equal
opportunity, as these individuals all have diverse needs and beliefs (CIPD,
2013).
In terms of understanding the business case for diversity management, CIPD
(2008, 2009) notes that a new diversity management agenda, which sees
these diverse personal characteristics as relevant to effective workplace
inclusion, has to be put in place. Likewise, research carried out by EU report
(2003) in Pilbeam and Corbridge (2010) supports CIPD ‘s (2008, 2009)
suggestion by arguing that an effective diversity management would also lead
to organisational commitment and higher work efficiency as a result of an
inclusive workplace. In addition, CIPD (2013) also argues that, organisations
should focus on a more strategic method of influencing their employees’
personal characteristics to align with their customer service delivery, client
needs and preferences.
III.) Company Definitions
Various top organisations define the concept of diversity, as well as diversity
management, in numerous ways. Companies such as Microsoft Corporation,
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which is one of the top Multinational Corporations (MNCs) in the technology
industry, views diversity management as incorporating different employee
characteristics of each employee, to promote a highly valued multicultural
workplace (Microsoft, 2014). In addition, this company also claims to recruit
employees from over 135 countries worldwide and believe that diversity would
enhance its employees’ performance, goods and services (Microsoft, 2014).
The view adopted by Royal Mail Group, a UK based Mail Company in the
postal services industry, perceived diversity management as the practice of
treating every colleague fairly irrespective of personal attributes such as
gender, sexuality, race, etc. (Royal Mail, 2014). This company also claimed to
recognise the differences in its employees and promote practices that value
these differences and help realize their full potential (Royal Mail, 2014).
Linking these views to the business case, they propose a strategic view to
diversity management wherein an effective diversity management practice
would lead to an expected outcome of increased long term productivity and
efficiency. In contrast, some manufacturing companies such as Volkswagen
Group still incorporate a certain element of the traditional equality approach in
their diversity management strategy. This MNC, with its parent company
based in Germany, view diversity management as promoting groups with a
social disadvantage intentionally, dealing with the employees with mutual
respect and fairness and granting equal access to employment opportunities
(Volkswagen, 2014). However, Toyota Motor Corporation, another
manufacturing company, adopted a more strategic approach by generating an
organisational culture that promotes self-fulfillment and respects diverse ideas
amongst employees, in order to enhance the employability skills of each
employee in the long run, as opposed to targeting specific disadvantaged
groups (Toyota, 2014).
2.3 ORIGIN OF DIVERSITY IN THE WORKPLACE
McDonald (2010) claims that, prior to the concept of workforce diversity
existent from the 1980s in the US, the terms more prominent were the Equal
The Business Case for Diversity Management
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Employment Opportunity (EEO) policies and Affirmative Action. In addition,
this researcher commended Johnston and Packer’s (1987) seminal work on
workforce diversity for influencing subsequent discussions by other academic
researchers regarding these concepts and creating a growing awareness of
workforce diversity in general (McDonald, 2010; Johnston and Packer, 1987).
Likewise, Gottfredson (1992) also praised Johnston and Packer’s (1987)
research by adding that it generated a strong apprehension for an effective
application of diversity in the workplace. In order to comprehend the origin of
workforce diversity, McDonald (2010) proposed four phases highlighting the
evolution of diversity and included the researchers that reviewed each phase
during that era.
Figure 2: Evolution of Diversity in the Workplace
(Adapted and modified from McDonald (2010), source:
http://www.academia.edu/225006/The_Evolution_of_Diversity_Management_in_the_USA_So
cial_Contexts_Managerial_Motives_and_Theoretical_Approaches )
Phase 1: CivilRights
Movement
Phase 2: Respecting
Differences
Phase 3: Diversity
Management
Phase 4: International
Diversity
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2.3.1 The Civil Rights Movement
Prior to this era, although there were various ethnicities present in the US due
to migration, McMillan-Capehart (2003) and Blauner (1972) asserted that
different ethnic groups had dominance in specific industries and jobs
(McMillan-Capehart, 2003). Blauner’s (1972) research showed that the Irish
workers dominated the waterway systems, while the Italian workers
dominated in construction. In addition, Blauner (1972) claimed that, the
Asians, the African-Americans and the Mexicans were all positioned majorly
in low paid and unskilled jobs.
Handlin (1961) and McMillan-Capehart (2003) both noted that, in spite of the
presence of jobs available for foreigners, these workers were treated poorly,
with no respect for their uniqueness. Due to the poor treatment, the civil rights
movement era initiated an awareness of diversity in the US during the 1950s,
wherein US citizens who were Africans demanded to be treated fairly in
political, social and economic settings (Button, 1989; McDonald, 2010). These
occurrences led to several EEO policies and the Affirmative Action
(McDonald, 2010), which Chay (1998) argued have been debatable over the
years. Especially with regards to racial inequality, Chay (1998) noted that the
revised EEOA had a direct effect on the Black Americans as a high
percentage of them were employed in these small organisations.
Although Chay’s (1998) research stated that these policies hardly had an
impact on the changes that occurred in the US labour market, as they would
have occurred anyway due to drivers such as recession, etc., Chay (1998)
also argued that the rate of Black Americans that were self employed dropped
from 7.5 percent to 4.5 percent in the range of year 1967 to 1980 as a result
of an improved labour market, which gave the self employed Black Americans
prospects to migrate to the private income sector (Chay, 1998). In summary,
Button (1989) asserted that this Civil Rights Movement era inspired a
newfound sense of self-respect and self-appreciation in the Black American
Society, with Thomas (1995) adding that other minorities also embraced their
individual differences.
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2.3.2 Respecting Differences
This phase was focused on the changing demographics in the US and was
largely influenced by Johnston and Packer’s (1987) publication on workers for
the twenty-first century (Kurowski, 1999; McMillan-Capehart, 2003; McDonald,
2010), as briefly discussed in the background section. McDonald (2010)
states that this era saw a change from employers being concerned with
adhering to government policies regarding work diversity to employers
contemplating the business benefits of having a diverse workforce.
During this phase, various studies predicted that the labour force would
consist of equal numbers of male and female workers by the year 2000, as
well as the minority group occupying 75 percent of the 20 plus millions jobs,
which would be generated over the next decade (Williams and O’Reilly, 1998;
Loden and Rosener, 1991; Johnston and Packer, 1987; Jackson, Stone and
Alvarez, 1993). Other researchers added that 11 percent of the US labour
force would be composed of African-American workers, while 14 percent
would be composed of Hispanics within the next two decades (Judy and
D’Amico, 1997; Williams and O’Reilly, 1998).
Various studies argued that this phase prompted employers to recognise their
employees as assets to the organisation rather than liabilities (Cox, 1993;
Fernandez, 1993; Thomas, 1991).
2.3.3 Diversity Management
Research indicated that this phase introduced the strategic aspect of labour
diversification, as managers sought out diversity as a form of competitive
advantage by successfully utilising the unique talents in their organisations
(McDonald, 2010; Cox and Beale, 1997). This assertion could be linked to the
term ‘functional diversity’ (Simons and Rowland, 2011 p.172; Bunderson and
Sutcliffe, 2002) wherein an integration of diversity would most likely result in a
more effective innovation. Furthermore, studies also showed that, during this
phase, organisations began to adopt appropriate leadership styles that
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aligned with the firm’s objectives, with emphasis on expected outcomes
(Thomas, 1991).
In addition, other sources reported that, with the availability of diverse talents
and skills, organisations started thinking strategically and perceived that
diverse products and services would be marketed better and dissimilar work
groups would have a higher chance at developing successful strategies as
opposed to similar teams, whose ideas would be extremely unified (Cox,
1993; Fernandez, 1993). In general, this phase initiated the process of
managers adjusting their organisational culture to fit the process of strategic
diversity management (McDonald, 2010).
2.3.4 Universal Diversity Management
Ozbiligin and Tatli (2008) state that, currently, diversity has become a widely
adopted concept globally, with organisations hiring natives and promoting
localised products as they carry out their businesses across borders. Overall,
this current phase depicts how the concept of diversity has gradually
progressed from the US to other countries such as the United Kingdom (UK),
Japan, etc. and has also begun to have an effect in the global trade economy
(McDonald, 2010; Ozbiligin and Tatli, 2008). In the UK, laws such as the
Equal Pay Act (1970), Sex Discrimination Act (1975) and Race Relations Act
(1976) were introduced as a platform to promote diversity in the workplace,
which were then replaced by the current Equality Act (2010) (Gov.UK, 2013;
Paton, 2010; Sloane and Chiplin, 1970).
2.4 THEORETICAL FRAMEWORKS
2.4.1 Resource-Based View Model
McMillan-Capehart (2003) argues that managers are not only concerned
about diversity management but also the potential benefits it brings to the
firm. Cox (1994), Loden and Rosener (1991) supported this argument by
The Business Case for Diversity Management
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claiming that firms are adopting a strategy of placing value on diversity
practices, in order to gain the competitive advantage over other firms. Studies
show that a significant theory fusing strategic management with diversity
management is the Resource-Based View (RBV) model, which was originally
proposed by Wernerfelt (1984) in Shaw, Park and Kim (2012) and further
discussed by Barney (1991) (Wright, McMahan and McWilliams, 1994).
Wright, McMahan and McWilliams (1994) also affirm that the RBV model
successfully interlinks the firm’s inner resources, its strategy and its
employees’ performance.
Figure 3: Resource-Based View Model
Source: Adapted and Modified from Bratton and Gold (2007) Human
Resource Management: Theory and Practice.
This model implies that the physical resources, organisational resources or
human resources of a firm should be rare, valued, inimitable and non-
identical, to enable it attain competitive advantage (Selznick, 1957; Penrose,
1959; Wernerfelt, 1984; Barney, 1991; Pfeffer, 1994; McMillan-Capehart,
2003).
Barney (1991) proposed that, in order to sustain a firm’s competitive
advantage, there should be a clear assessment of its human capital such that
they become inimitable and difficult to duplicate by other firms. In addition,
Barney (1991) argued that the four elements of the RBV model i.e. rare,
valued, non-identical and inimitable, are very significant when it comes to
FIRM’S RESOURCES
Rare
Valued
Inimitable
Non-identical
STRATEGIES
SUSTAINED
COMPETITIVE
ADVANTAGE
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sustaining the competitive advantage and Bratton and Gold (2007) supported
this view by claiming that, coordinating the various knowledge and skills of the
employees and incorporating diverse information technology is a beneficial
strategy that competitors have difficulty duplicating. Research shows that,
organisations with a high number of diverse human resources have more
productive advantage over their rivals and such organisations develop greater
capacity for task achievements and generate better strategies to adapt to
external fluctuations (Baron and Armstrong, 2007; Pilbeam and Corbridge,
2010; Yang and Konrad, 2011).
This model is linked to the business case for workforce diversity in the sense
that the recruitment, selection and development of diverse talents and skills
i.e. human capital, when managed effectively, would successfully lead to
prolonged viable benefits such as increase in innovations and better product
deliveries. Williams and O’Reilly (1998) also reports that the RBV model is
linked to workforce diversity, wherein a platform is generated for increase in
creativity, wider range of ideas and better managerial decision-making.
Although this model is dominant and widely used in different organisations
currently, with regards to strategic management (Paauwe and Boselie, 2003;
Yang and Konrad, 2011), it is also faced with certain criticisms, which would
be reviewed subsequently.
II.) Criticisms of the RBV model
Pilbeam and Corbridge (2010) argue that there is a high level of ambiguity
with the application of the RBV model, as to whether the model relates to the
entire human capital or restricted to just the senior management. The authors
added that, although the senior management team is more likely to have
greater effect on firm performance and also more likely to be inimitable and
rare, great value could also be spread across the entire human capital team
(Pilbeam and Corbridge, 2010).
In addition, in as much as the RBV model specifically proposes that the
human capital is a strong source of competitive advantage for the firm
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(Wright, McMahan and McWilliams, 1994), Boxall (1996) critiqued the RBV
model by questioning if the developed human capital itself or if the complex
practices, adopted by managers to manage the human capital, eventually
become the inimitable element in sustaining the competitive advantage.
Nonetheless, Yang and Konrad (2011) conclude that firms attempting to
integrate their diversity management practices could benefit from perceptions
provided by the RBV model.
2.4.2 The Upper Echelon Theory
Studies show that the Upper Echelon (UE) theory was proposed by Hambrick
and Mason in 1984 (Nishii, Gotte and Raver, 2007). This theory proposes that
the demographic features of the Upper Echelon in a firm (i.e. top executive
members) will have an effect on the practices and decisions implemented in
that firm (Nishii, Gotte and Raver, 2007). Also, Kaczmarek (2009) supports
this argument and claims that the firm as a whole becomes a reflection of the
top executives as the strategic management of that firm is strengthened by
their principles and cognitions.
This theory implies that the personalities and individualities of the top
executive members influence the organisational performance, with regards to
the policies and practices put in place for the governance of the firm. Linking
this theory to the business case for diversity, when there are diverse talents at
the Upper Echelon, this reflects in the recruitment, selection, reward and
appraisal practices of the firm, which in turn fosters greater innovation and
performance amongst the employees. Kaczmarek (2009) also notes that the
Upper Echelon have a significant role in shaping how the firm develops.
Research carried out by Nishii, Gotte and Raver (2007) shows that there is a
positive link between the demographic diversity of the top executive members
and the demographic diversity of the employees as a whole. The researchers
added that this is reflected in their implementation of practices and suggested
that firms that desire to recruit, retain and benefit from diverse talents need to
foster the diversity of their top executives (Nishii, Gotte and Raver, 2007).
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Hambrick (2007) also reinforced the UE theory by claiming that, with regards
to strategic management, the senior management team has an influence on
the occurrences in their firm. However, DiMaggio and Powell’s (1983)
Institutional theory argues that the characteristics of the top executives hardly
has a strong influence on the activities of the firm, as it is mostly influenced by
external elements such as, regulations, norms and institutions (Hambrick,
2007; DiMaggio and Powell, 1983). Overall, studies show that when diversity
initiatives are strongly supported by the top management, they become
successful and generate return on investment i.e. increased competitive
advantage (Nishii, Gotte and Raver, 2007).
II.) Criticisms of the UE theory
Daellenbach et al (1999) critiqued the UE theory, claiming that the functional
diversity of the top executives does not necessarily result in greater innovation
but rather, could result in information overload (Daellenbach et al, 1999;
Clegg and Cooper, 2009). In addition, Smith and Hitt’s (2005) research shows
that the UE theory is critiqued for placing a high level of emphasis on the
significance of the top executives, which inevitably leads to glorification of the
selected team. These critics are of the opinion that other members of the
organisation also have significant effect on the firm’s activities and should
receive worthy recognition (Smith and Hitt, 2005). However, in opposition of
the critics, Nishii, Gotte and Raver (2007) argue that, in order to initiate
diversity successfully, the premise and recognition should start with the top
executives.
2.4.3 The Social Exchange Theory
Blau (1964) proposed the Social Exchange (SE) theory, which argues that
organisations treat their employees favourably with the prospect that it would
be reciprocated with a positive work attitude (Blau, 1964; Ko and Hur, 2014;
Gould-Williams and Davies, 2005).
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Figure 4: Variables that moderate the SE Theory
Source: Adapted and Modified from Ko and Hur (2014).
Majiros (2013) claims that the SE theory proposes an exchange of physical
and non-physical commodities between interacting work individuals, including
an insight to the costs and benefits of that relationship. In addition, Ko and
Hur (2014) argue that, if there is a positive social exchange between
employees and the organisation, it could result in mutual benefits for both
parties involved. Parzefall and Salin (2010) also argued that employees are
more prone to embrace positive work attitudes if there is existence of
favourable work conditions and employee benefits tailored to their individual
needs. This theory implies that when employees perceive fair treatment from
the organisation, there would be a reciprocal behaviour of work efficiency and
commitment, which could prevent high dysfunctional and voluntary turnover
rates.
Likewise, this theory is of the opinion that the organisation perceives the
employees as a form of investment, by creating career and personal
development opportunities for them and endorsing long-term affiliations with
them subsequently. Linking it to the business case for diversity, when the
employees perceive their diverse needs are being met and there are fair
Employee Benefits
Traditional Benefits
Favourable Work
Conditions
Fair Organisational
Justice
Managerial
Trustworthiness
Social Exchange
Turnover Intention
Job Satisfaction
WorkCommitment
WorkAttitude
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practices in place, it generates reciprocal outcomes such as employee
commitment, employee engagement, and job satisfaction, which is beneficial
to the organisation.
II.) Criticisms of the SE Theory
Some researchers critiqued Blau’s (1964) SE theory for merging elements
from behaviourism and microeconomics, a combination, which dismisses
significant sociological elements by deeming them incompatible (Cook, 2000;
Zafirovski, 2005). In addition, Zafirovski (2005) also critiqued the SE theory for
its assumption that social exchange is built on the grounds of mutual benefits
as opposed to being established on the basis of social norms and regulations.
Mitchell (1978) also argues that this theory dismisses variables such as
political/institutional control, social differentiation and group classification,
which could have an influence on individual exchange. However, Ko and Hur
(2014) propose that if organisations desire to foster positive employee
relations and work attitudes, there should be focus on benefits that cater to
the employee’s individual needs as opposed to generalising the benefits,
which is the basis for the SE theory and also, the argument for the business
case for diversity management.
2.5 BUSINESS RATIONALE FOR WORKFORCE DIVERSITY
Byeong (2006) views the business case for diversity as organisations
recognising the social, economic and financial benefits of integrating diversity
management practices. This implies that companies are looking beyond legal
requirements and becoming more strategic in managing diversity. This section
would review the demographic impacts on diversity management, the major
drivers for diversity management and the implementation issues involved.
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2.5.1 The Impact of Demography on Workforce Diversity
Williams and O’Reilly (1998) and CIPD (2013) identified various types of
diversity, sectioning them into demographic and non-demographic
characteristics. The researchers highlighted the demographic characteristics
as age, gender, race, ethnicity, sexual orientation, religion, etc., while the non-
demographic characteristics were listed as educational background, accent,
language, etc. (CIPD, 2013; Williams and O’Reilly, 1998; Guirdham, 2011).
However, for the purpose of this report, this section will focus on only three
popular demographic types of diversity (Strauss, Sawyerr and Oke, 2008;
Williams and O’Reilly, 1998). These three types are Age, Gender and Race
(CIPD, 2013; Guirdham, 2011; Williams and O’Reilly, 1998).
I.) Age Diversity
Studies show that, due to the demographic variations taking place globally,
organisations are becoming more concerned with the fact that the labour force
is becoming more age diverse as a result of shortages in the labour market
(Kunze, Boehm and Bruch, 2013; Baltes and Finkelstein, 2011). Kunze,
Boehm and Bruch (2013) view age diversity as preventing work discrimination
against aged and young employees, with more emphasis on the aged
workers. Riach (2009) notes that one of the business case arguments for age
diversity is the assertion that the older workers provide a reflective image of
the potential labour force.
In addition, past research also showed that aged employees are usually more
satisfied with their jobs and more committed to their organisation (James,
Mckechnie and Swanberg, 2011). However, Metcalf and Thompson (1990)
argue that the promotion of age diversity often limit organisations to recruit
older workers for low-skilled and customer-attentive jobs, as opposed to
placing them in positions that involve strategic management.
Likewise, Kunze, Boehm and Bruch (2009) highlighted the social identity
theory (Tajfel and Turner, 1986) and the self-categorisation theory (Turner,
1987) in arguing that, as the promotion of age diversity increases, there could
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be an increase in the level of age discrimination and segregation. These
theories proposed that individuals are prone to section themselves and other
individuals into groups they exclusively relate to (Kunze, Boehm and Bruch,
2009). These researchers added that the older employees could sense
discrimination and inter-group bias from the younger employees, especially if
they deliberately differentiate themselves from the older workers and this
could have a negative effect on their task performance and performance
appraisals (Kunze, Boehm and Bruch, 2009).
Similarly, Kunze, Boehm and Bruch (2013) argue that, with reference to the
UE theory (Hambrick and Mason, 1984), if there were existence of negative
age stereotypes in the executive board, this would generate negative age
group segregation amongst the employees. However, Choi (2013), Nishii,
Gotte and Raver (2007) argue that sufficient empirical research indicates that,
a well diverse top executive team could aid better teamwork, increase work
performance and promote better job satisfaction amongst the employees.
Overall, Backes-Gellner and Veen (2013) conclude that the integration of age
diversity is beneficial to the organisation because the older workers generate
additional work knowledge and skills, thus increasing productivity and adding
value to the organisation.
II.) Gender Diversity
Gender diversity can be viewed as the “patterned, socially produced
distinctions between female and male” (Guirdham, 2011, p.10). Kalev, Kelly
and Dobbin’s (2006) research claims that one of the business benefits of
gender diversity is an improvement in problem-solving strategies, as females
are more likely to possess these cognitive abilities. The research also
indicates that this serves as a source of competitive advantage for the
organisation (Kalev, Kelly and Dobbin, 2006). However, Williams and O’Reilly
(1998) claim that there is empirical evidence to indicate that a gender diverse
group exhibits higher levels of conflict and hostility, as opposed to an all-male
group. This could prove detrimental to the organisation as high levels of
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conflict downgrades team work, which ultimately leads to poor work
performance.
Nonetheless, there are some researchers that perceive gender diversity as a
form of appreciation to the female employees such as Hanappi-Egger (2006),
who points out that a low level of females at the top management level, as
well as a large number at low hierarchical levels, signify that female workers
are not being valued in the organisation. Linking this to the UE theory
(Hambrick and Mason, 1984), studies also showed that female workers at the
executive board have generated better gender inclusion in organisations, in
comparison to the male executive workers and thus, should be regarded as
assets to the organisations (Nishii, Gotte and Raver, 2007).
Overall, Riordan and Shore (1997) claim that sufficient empirical research
shows female workers to have higher levels of organisational and work
commitment than their male counterparts, due to existence of greater
responsibility outside the workplace. Nevertheless, the researchers
acknowledge that further research needs to be carried out to really
comprehend the relationship between gender diversity and work commitment
(Riordan and Shore, 1997).
III.) Racial Diversity
Andrevski et al (2014) defined racial diversity in the workplace as the degree
to which the human capital in an organisation belongs to several ethnic
groups, as opposed to belonging to one group. Cheng and Li (2012) argue
that, there has been an increase in racial diversity because most foreign
immigrants have gradually become main sources of growth in labour markets
worldwide. In addition, Richard, Kirby and Chadwick (2013) argued that, the
business benefits of racial diversity within an organisation is an elevation in its
decision-making and problem-solving abilities, as well as a broad selection of
creative ideas and diverse knowledge on the needs of the locals.
Furthermore, empirical research carried out by Herring (2009) on a national
sample of business organisations, with the use of data derived from the
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National Organisations Survey, showed that racial diversity can be linked with
increase in profits, wider customer base, sales revenue and market shares.
However, Bell et al (2011) argues that recruiting individuals specifically for the
purpose of increasing racial diversity is misguided, as racial diversity is said to
have a negative effect on team performance. These researchers claimed that,
this could be linked to the self-categorisation theory (Turner, 1987), as
individuals tend to categorise themselves based on the similarities observed
in easily recognised characteristics such as the individuals race, gender and
age, with race being the highest basis for group categorisation (Bell et al,
2011).
Nonetheless, with reference to the RBV model (Barney, 1991), Richard, Kirby
and Chadwick (2013) claim that, the utilisation of the racial minorities in an
organisation would generate indispensable variation of knowledge, which
ultimately results in improved organisational performance. McLeod and Lobel
(1992) in Williams and O’Reilly (1998) supported this argument to some
extent, by citing empirical research which consisted of tasks carried out by
137 undergraduate and graduate students, paired into two sets of groups i.e.
the racial diverse group and the homogeneous group. The researcher found
that, although the racial diverse group did not generate more ideas than the
homogeneous group, the ideas generated were of better quality in
comparison to those of the homogeneous group (McLeod and Lobel, 1992)
and thus, can be deemed beneficial.
2.5.2 Major Business Drivers for Workforce Diversity
Research shows that there are three major business drivers for workforce
diversity, which are noted as: Employee Matters, Market Effectiveness and
Business Reputation (CIPD, 2013; Rajan and Harris, 2003). This is as a result
of the increasing need for competitive advantage, due to globalisation and the
growing variations taking place in the global economy (Rajan and Harris,
2003).
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I.) Employee Matters
Organisations are beginning to comprehend the growing importance of having
a diverse workforce, as most individuals want to feel valued and are more
likely to be productive in organisations with fair work practices (CIPD, 2013).
In addition, survey carried out by CIPD (2007) showed that recruiting and
retaining the best talents to improve organisational performance is listed as
one of the top ten business drivers for workforce diversity.
Ali, Kulik and Metz (2011) also argue that, recruiting diverse employees with
different experiences, could give insights to the consumer needs of different
customers. Likewise, Johnson (2008) acknowledges that, diverse employees
placed in groups for work projects are more likely to be successfully, with
regards to meeting client needs. This implies that, in order for companies to
meet the client needs of their stakeholders, they need to have a productive
and creative workforce, which is why they set out to recruit diverse talents.
II.) Market Effectiveness
This is also interlinked to the growing importance of having a diverse
workforce. As a result of market competitiveness and increase in the
availability of open markets, organisations are recognising that a diverse
workforce can provide insight to the advancement of new products, widen
their consumer market and generate business opportunities, especially across
borders (CIPD, 2013).
Likewise, linking to the UE theory (Hambrick and Mason, 1984), Kaczmarek
(2009) argues that diversity amongst top executives is highly beneficial to
organisations that are greatly integrated in international markets i.e. MNCs. In
addition, Yang and Konrad (2011) also note that, the RBV model (Barney,
1991) suggests that a diverse workforce can generate economic profit in a
competitive market, especially if they are rare, non-substitutable and of high
value.
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III.) Business Reputation
When statements of employee value and moral conduct are set as standards
in an organisation, it becomes of high importance to the community it resides
in (CIPD, 2013). This can be linked to the concept of Corporate Social
Responsibility (CSR) wherein companies take interest in the social welfare of
their employees and their communities. With the recruitment of diverse
workers, both locally and globally, CSR is integrated in the organisation,
which is likely going to generate a positive brand image for the organisation
and a wider consumer base (CIPD, 2013). This can also be linked to the SE
theory (Blau, 1964), such that, if the employees and the locals sense that the
organisation has a fair and positive work environment, it would be
reciprocated with a positive work attitude and good business reputation.
2.6 Summary
This chapter reviewed the concept of diversity management by providing
definitions from different academic sources, practitioners and companies.
Also, the evolution of diversity was revised, right from the Civil Rights
Movement era to the adoption of current diversity practices. This chapter also
attempted to integrate three theoretical frameworks: RBV model, UE theory
and SE theory, and underlined their relationship to the business case for
diversity. The impact of demographic diversity on organisational performance
was also reviewed with limitations to just three demographic types i.e. Age,
Gender and Race. Furthermore, the three major business drivers for
workforce diversity, cited as employee matters, business reputation and
market effectiveness, were also briefly examined. The next chapter will
attempt to analyse the case against the given literature with the use of
significant company reports and case studies.
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CHAPTER THREE – CASE ANALYSIS AND DISCUSSION
3.1 Introduction
Research shows that, due to the growing demographic change worldwide, the
concept of diversity management is becoming of great interest to the UK, as it
is seen to be a vital addition to its current equal opportunities approach
(Strauss, Sawyerr and Oke, 2008; Maxwell, Blair and McDougall, 2001). As
derived from the case, ABC Plc. is a leading MNC in car manufacturing, with
its headquarters situated in the UK. It is also noted that this company has just
recently commenced the implementation of its diversity practices and requires
vital knowledge on how to successfully integrate these practices long term.
Firstly, this chapter will follow up on the objectives mentioned in the
Introduction chapter, highlight the issues existing in the case and discuss
selected HR practices in relation to the theoretical frameworks analysed in
chapter two. It would also attempt to distinguish the demographics in selected
developed and developing countries against the UK. Also, selected
companies would be used as case studies for discussion regarding the
business case for workforce diversity.
3.2 Case Analysis And Discussion
3.2.1 Issues Existing in the Case
In order to analyse the reason for the slow adoption of diversity management
practices in ABC Plc., the problems in the case has to be identified. First, it is
depicted in the case that there is a potential barrier of the HR function in ABC
Plc. acting exclusively, which could result in inaction. The case implies that
working through HR without the use of the line management could prevent
successful implementation of the diversity management programme in ABC
Plc. Also, another issue shown in the case is the lack of staff continuity in the
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continuous implementation of the diversity agenda. It is reported that a full
time employee who was in charge of the diversity agenda had resigned and
as a result, the implementation was placed on hold. These issues will set a
base for subsequent discussion on the different HR practices and activities
linked with diversity management in ABC Plc. and generate the reasons for its
slow adoption of diversity management practices. Although there are various
HR practices and activities, this discussion would focus on the practice of HR
strategic partnering and four relevant HR activities, which are: recruitment and
selection, training, reward management and appraisals.
3.2.2 HR Strategic Partnering
It can be said that the success of workforce diversity lies solely with the
effectiveness of the management team. Research shows that there are
certain individuals in an organisation who are vital to the progress of
workforce diversity and they are listed as the diversity managers, line
managers, development professionals, HR managers, etc. (CIPD, 2007).
HR strategic partnering is described as the process “in which HR
professionals work closely with business leaders and/or line managers to
achieve shared organisational objectives” (Taylor and Woodhams, 2012, p.
5). It is stated in the case that, one of the challenges ABC Plc. encountered in
implementing its diversity management programme is the HR function working
exclusively without the involvement of the line management. It could be
implied that one of the reasons for the slow adoption of diversity management
practices in this company is the lack of strategic partnering between the HR
management and the line management. Reilly, Tamkin and Broughton (2007)
report that one of the benefits of strategic partnering is the assertion that, it
permits the HR management to play a more strategic role, with regards to
contributing to the business needs of the company and promoting the
employees’ needs as well, while demonstrating better commitment with the
line management.
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Pertaining to diversity management, CIPD (2002) reports that both HR and
line managers need to work together to implement diversity successfully, as
Ozbilgin et al (2008) notes that motivating line management is vital to the
progress of workforce diversity. Studies show that, most organisations fail with
their diversity integration because they view it as just another HR initiative
(Hirschkorn, 2004).
Studies show that, as both parties are interested in achieving the
organisational objective of diversity integration, it would be beneficial to the
organisation if the HR managers generate more support to the line managers,
as they are challenged with the increasing need for fairness in the workplace,
while handling pressure from external regulatory forces (Foster and Harris,
2005).
3.2.3 Recruitment and Selection
Harris (2007) reports that, as the market competitiveness grows globally, a
much more larger and extensive work environment is created, thus increasing
the need for the recruitment and retention of the best talents. It is depicted in
the case that ABC Plc. has a global diversity council, which is led by the head
of HR and constitutes of the line managers in different functions in the
company, who administer the diversity management programme.
Using the UE theory proposed by Hambrick and Mason (1984), it is implied
that the success of diversity integration in an organisation depends on the
presence of diversity at the senior management level. Hirschkorn (2004)
proposes that, in order to implement diversity successfully, changes have to
commence with the top management, as they are vital change agents. It could
be implied that one of the reasons for the slow adoption of diversity
management practices in ABC Plc. stems from the lack of a diversified senior
management team i.e. its global diversity council. It is reported that
organisations try to acquire and develop diverse human capital that is
expected to generate and apply effective product marketing strategies, which
would greatly increase the value of their products in the long run (Yang and
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Konrad, 2011). Thus, if the global diversity council at ABC Plc. were
homogeneous, driving the diversity initiatives for the purpose of business
growth would prove futile, as their principles and policies are a reflection of
the diversity practices in the company. Likewise, if there were lack of support
from the executive board members, with regards to these principles and
policies, the diversity integration at ABC Plc. would be unsuccessful.
Also, it could be implied that companies want to progress higher than others
in a competitive market, thus the need for recruiting and selecting the right set
of people and as stated in the literature review, employee matters and market
effectiveness are two of the major drivers for workforce diversity. Studies
show that Toyota (2014), a top car manufacturing company, strongly believes
that cautiously recruiting and developing the right human resources
continuously, would generate competitive advantage and mutual success for
both the company and the employees, in the long term (Liker and Hoseus,
2008). This can be linked to the RBV model and is applicable to the case in
the sense that, the adoption of the diversity management practices in ABC
Plc. cannot be successful, if those recruited for this purpose are not the right
set of people or are not being utilised effectively.
It can be argued that the value of the diversity management programme in
ABC Plc., in the long run, depends mostly on the effectiveness of the
strategies adopted by those recruited and selected for the task.
Furthermore, citing Avon Plc. as an example, this MNC started a global
inclusion office in 2010 in order to, integrate diversity into its core practices,
employ diversity as a source for business growth and promote brand
reputation (Avon, 2014). Also, with the help of its diverse Associate Resource
Groups (ARGs), who are change agents for business expansion, talent
recruitment and development, it was able to implement its diversity
management practices successfully, because these ARGs acted as strategic
partners, ensuring the alignment of Avon’s global diversity strategy with its
business goals (Avon, 2014).
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3.2.4 Training
Another reason for slow adoption of diversity management practices in ABC
Plc. could be the lack of training on the diversity management concept, for the
parties involved, which includes the HR managers, the line managers and the
employees (CIPD, 2013). Studies show that, these individuals have an
obligation to ensure diversity is fully integrated in the work practices of the
organisation (Hirschkorn, 2004; CIPD, 2007). However, they also need to
have the necessary skills needed to ensure progress in diversity integration.
Studies show that, there is an essential need to formally train these
managers, who have the responsibility of advancing diversity integration
(CIPD, 2007; 2013). Likewise, Shen et al (2009) report that different units in
an organisation, i.e. employees, managers, etc., often have different
perceptions to the real meaning of workforce diversity, thus quality training for
diversity awareness is imperative to the successful integration of diversity
management.
Furthermore, Strauss, Sawyerr and Oke (2008) report that introducing the
right training and change management programmes can positively influence
peoples’ attitudes toward diversity integration in the workplace. Citing Dell as
an example, this MNC introduced training programmes for its employees on
diversity awareness, in the form of workshops and online training sessions,
which take place annually and is compulsory for all Dell employees (Shin and
Park, 2013). Especially when these employees are placed in diverse group
settings, Shen et al (2009) advises that diversity training is essential in order
to avoid group conflicts.
3.2.5 Reward Management
It could be implied that another reason for the slow adoption of diversity
management practices in ABC Plc. is the lack of diversified reward practices.
When there are diverse employees in an organisation, introducing rewards
and benefits that are unique to their individual needs becomes imperative to
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maintaining their work-life balance (Ko and Hur, 2014). Linking to the literature
review in chapter two, the RBV model (Barney, 1991) proposed that
companies that invest in their human resources would attain competitive
advantage in return, as these employees become major source of business
growth for them (Wernerfelt, 2013). Likewise, Shaw, Park and Kim (2013)
proposed that investing in these employees is likely to lead to reduction in
voluntary turnovers. It can be asserted that providing fair rewards and benefits
for these employees is a form of investment for the company, if they expect
better work productivity as a return on investment.
Furthermore, linking to the SE theory examined in the literature review, Blau’s
(1964) research showed that, if the employees perceive that there are fair
work practices in their workplace, they would reciprocate with positive work
attitudes (Ko and Hur, 2014). Ford (2014), a leading global car manufacturer,
is an example of a company that integrates diverse rewards and benefits in its
HR practices. It is considered to be an award-winning leader in diversity
management as a result of its inclusive culture with benefits such as flexible
working hours for female employees, etc. (Ford, 2014).
3.2.6 Appraisals
Effective appraisal methods are crucial to successful diversity management
practices (Shen et al, 2009). It could be implied that another reason for slow
adoption of diversity management practices at ABC Plc. is the lack of fair
appraisal methods. Studies show that, employees are committed to
organisations where every opinion is valued and respected (Richard, Kirby
and Chadwick, 2013). Likewise, Shen et al (2009) advises that the
implementation of diversity management practices can be applicable with the
use of fair and objective performance appraisal methods.
With reference to the SE theory (Blau, 1964), it is noted that an employee’s
perception of organisational justice has an effect on his or her level of work
commitment (Ko and Hur, 2014). In the case of diversity management,
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managers need to create opportunities for their employees to express their
diverse views and concerns without prejudice, as this can help monitor their
level of job satisfaction and prevent high voluntary turnover rates (Ko and Hur,
2014).
3.3 The Demographics in UK and Selected Developing and Developed
Economies
In light of the issues discussed above, this section would attempt to analyse
the different demographic settings in UK and compare with selected
developing and developed countries such as India, Turkey, China and the US.
It would shed light on the influence these demographic settings could have in
their labour markets and advise that MNCs be made aware of these settings if
they plan to adopt diversity management practices in these countries.
3.3.1 Age Demographics
As mentioned in the literature review, shortages in the labour market have
prompted a more age diverse workforce worldwide (Kunze, Boehm and
Bruch, 2013). Likewise, the diverse age divisions in the populations of
different countries have a direct effect on the entry and length of stay of the
workers in their labour force.
In the UK, research shows that more than 73 percent of the entire population
are aged 25 years and above, with 41 percent allocated to those aged from
25 to 54, 17.5 percent constituting of those aged from 55 to 64 years and 17.3
percent constituting of those aged 65 years and above (CIA Factbook, 2014).
Due to this demographic set up, age diversity has a strong influence in the
working nature of organisations in the UK. This has led to a number of
organisations targeted at ensuring the welfare of the ageing workforce such
as AgeUK (2014). AgeUK (2014) is UK’s largest non-profit organisation
The Business Case for Diversity Management
| PAGE40
whose proceeds are used to ensure the welfare of aged citizens as well as
protect the welfares of the upcoming generations long term.
Also, B&Q is another UK company that integrates age diversity successfully.
The company currently employs over 32,000 people with the youngest age
being 16 years old and the oldest, 96 years old (B&Q, 2014). In addition, a
quarter of its whole workforce are aged 50 years and above. Furthermore,
survey carried out by Warwick University on B&Q in 1991, showed that the
company’s profits increased by 18 percent, with decrease in absenteeism and
shrinkage by 39 percent and 58 percent respectively, as a result of its age
diversity integration (B&Q, 2006). This became a form of encouragement for
the company, as they began to recruit more aged workers productively (B&Q,
2006).
Likewise, other developed countries also have strong presence of age
diversity. Take China - a major emerging economy - for example; due to its
policy on a single child per family, it has resulted in its rapidly ageing labour
market (Guirdham, 2011). According to the CIA Factbook (2014), China’s age
structure indicates that the age range of 25 – 54 years reports a rate of 47.2
percent, with the 55 years and over showing a rate of 19 percent. This shows
that those over the age of 25 years constitute of approximately 67 percent of
the Chinese population, which would explain the rapidly ageing workforce.
MNCs that want to set up subsidiaries in China need to be aware of this age
demographic set up, especially in their recruitment and selection practices, if
they want to integrate age diversity successfully.
3.3.2 Gender Demographics
It is factual knowledge that in Asia, the number of male populates outnumber
the number of female populates (Guirdham, 2011). MNCs that plan to
integrate gender diversity as part of their business strategy need to be aware
of these demographics.
The Business Case for Diversity Management
| PAGE41
In developing countries such as India, gender diversity has become a critical
issue in workplaces, as it is a male dominated country. Census data derived
from the CIA Factbook (2014) shows that, the entire Indian population records
1.08 males to 1 female ratio figure. As a result of this male domination in
India, female employees are prone to stagnant work positions, while the male
employees progress through work positions (Gupta, 2009). Nonetheless,
MNCs in India are progressively integrating gender diversity as part of their
diversity management strategy (Gupta, 2009). MNCs such as Bharti
Enterprise are part of this initiative, with this company ensuring that 25 to 30
percent female applicants progress to the interview stage and requesting its
global recruitment agencies to follow this same policy (Buddhapriya, 2013).
However, in Europe, the number of females in the European labour force has
quickly progressed from year 2000 to year 2006, with the female to male ratio
being 105:100 (Guirdham, 2011). Currently in the UK, the census shows a
ratio of 0.99 males to 1 female while the current census for Turkey shows a
ratio of 1.02 males to 1 female (CIA Factbook, 2014). Avon (2014) is another
MNC that is a major promoter for gender diversity and has successfully
integrated it as part of its core business strategy. Currently in Turkey, Avon
(2014) has placed females in leadership positions, making up 100 percent of
the directorial positions.
3.3.3 Race Demographics
In reference to the literature review, studies show that foreign immigrants are
progressively becoming key sources of growth in labour markets, as they help
to provide significant knowledge on the needs of the locals (Cheng and Li,
2012; Richard, Kirby and Chadwick, 2013). Studies show that racial diversity
in the UK has progressed over the years, with the racial minority population
witnessing an increase from 6.4 percent in 1991, to 6.7 percent in 2008 and
12.8 percent in 2011 (Strauss, Sawyerr and Oke, 2008; CIA Factbook, 2014).
Although racial diversity in the UK seems to be increasing, it is however
moderately low in comparison to the US. According to the CIA Factbook
The Business Case for Diversity Management
| PAGE42
(2014), figures show that racial minorities make up 20.04 percent of the US
population. This is as a result of the unfavourable immigration policies in the
UK, with regards to racial minorities, as opposed to the less restrictive policies
in the US (Strauss, Sawyerr and Oke, 2008). MNCs need to be aware of the
immigration policies in these countries so as to effectively manage racial
diversity. Johnson and Johnson (2014) is an example of an MNC that
integrates racial diversity successfully. It is reported that it considers diversity
a central part of its organisational culture and its executive board of 13
members consist of three African-American members, as well as one
Hispanic (Johnson and Johnson, 2014).
3.4 Summary
This chapter analysed the issues present in ABC Plc. and incorporated
selected HR practices and activities, relative to diversity management, as
basis for discussion. These practices and activities were listed as HR strategic
partnering, recruiting and selecting diverse talents, appraisals, training, fair
rewards and benefits. Also, this chapter discussed the different demographic
settings in few developed and developing economies, such as UK, US, India,
Turkey and China and the demographics discussed were highlighted as Age,
Gender and Race.
The Business Case for Diversity Management
| PAGE43
CHAPTER FOUR – RECOMMENDATIONS
Linking to the discussions carried out in chapter three, this section would
recommend a suitable model of global diversity management for ABC Plc.
and incorporate some aspects of a five-step strategy, proposed by Gutmacher
(1998), which would help it implement its diversity management programme
successfully, for the long term. In addition, these recommendations would be
in light of the issues observed in the case analysis section and would help
ABC Plc. increase its competitiveness, ensure profitable growth and attain
competitive advantage. Gutmacher (1998) acknowledges that various
organisations have adopted this diversity strategy and have found it effective
and beneficial.
4.1 Global Diversity Management
Karabacakoglu and Ozbilgin (2010) analysed three models of global diversity
management that MNCs typically adopt and they are highlighted as Universal,
Localised and Transversal. The Universal model is focused on applying a
global approach to managing diversity, with no consideration for local
preferences, while the Localised model is fixated on localising diversity
management practices, with emphasis on native preferences (Karabacakoglu
and Ozbilgin, 2010). However, the Transversal model is a mix of both the
Universal and Localised models. With the Transversal model, the MNC sets a
number of combined global diversity management practices, while permitting
the subsidiaries to integrate their unique primacies for local diversity
management (Karabacakoglu and Ozbilgin, 2010).
As discussed in chapter three, various countries have unique demographic
settings and policies that influence their diversity management practices, and
considering ABC Plc. is an MNC, it is recommended that they integrate the
Transversal model for their global diversity management programme.
Ericsson is an example of an MNC that uses the Transversal model and
research shows that, this model has resulted in the successful adoption of its
The Business Case for Diversity Management
| PAGE44
global diversity management practices (Ericsson, 2014). It is reported that, the
HR department in Ericsson has sole responsibility for the development of its
global diversity initiatives and all of its line managers have the responsibility of
implementing the local and global diversity initiatives (Karabacakoglu and
Ozbilgin, 2010). In addition, Ericsson ensures that each subsidiary manager
endorses and manages the advancement of the diversity practices in their
localities, while also reporting the progression status of their local diversity
practices to the global diversity director every quarter (Karabacakoglu and
Ozbilgin, 2010). Having established that ABC Plc. should apply the
Transversal model of global diversity management, subsequent
recommendations for the implementation of a suitable diversity management
strategy would be discussed below.
4.2 Diversity Task Group
Gutmacher (1998) proposes that the first step to initiating the diversity
management strategy is to recruit a diversity task group i.e. a selected group
of individuals, with proficient knowledge on diversity management, who
generates the diversity policies and can administer the firm’s diversity
initiatives, with the right provision of control, focus and continuity. The
researcher added that these selected individuals should be representatives of
different demographics such as gender, age, race, etc. and they could be
external sources with knowledge on the subject of diversity or they could be
selected from different departments and sections within a firm (Gutmacher,
1998).
Thus, it is recommended that ABC Plc. select a more diversified global
diversity council, which would include the integration of more female
employees, aged workers, ethnic minorities, etc., both locally and globally
(Shen et al, 2009). Integrating these diverse employees into its global
diversity council would give ABC Plc. a direct insight into the unique needs of
each underrepresented group worldwide, including the needs of its diverse
customers, thus creating a platform where their needs can be met and
The Business Case for Diversity Management
| PAGE45
business growth can be ensured. Also, as the global diversity council in ABC
Plc. generates the diversity initiatives and policies, CIPD (2013) proposes
that, they should have the support of the board members and top
management team. This can be linked to the UE theory (Hambrick and
Mason, 1984), in the sense that the attitudes of the executive members
towards diversity integration can positively or negatively influence the
reception of diversity integration in the entire work place.
Trompenaars and Hampden-Turner (1977) in Hanappi-Egger (2006) propose
that treating diversity management as a continual progression, rather than a
singular occurrence, is highly imperative in ensuring its business success.
Thus, it is also recommended that, ABC Plc. adopt the practice of HR
strategic partnering in forming its diversity task group and driving the diversity
initiatives long term. This subject of HR strategic partnering, which was
discussed in chapter three, proposes that HR managers should partner with
line managers and/or business leaders in order to attain a shared
organisational goal (Taylor and Woodhams, 2012; CIPD, 2013).
Linking to the practice of HR strategic partnering, it would be beneficial to
ABC Plc. to ensure that the line managers are fully involved in the
implementation of its diversity management programme, especially those in
the global diversity council. Also, it is recommended that ABC Plc. generate
employee resource groups, who would act as voluntary partners to its global
diversity council, in order to ensure the continuous progress of its diversity
management programme.
Several top MNCs encourage the use of these employee resource groups to
effectively integrate diversity into all areas of their businesses. Citing Coca-
Cola as an example, its diversity advisory councils partner with employee
resource groups and they have discussions regarding the execution and
maintenance of practices that would embrace the cultural and personal
uniqueness in each employee (Shin and Park, 2013). In addition, as a result
of this partnership, Coca-Cola’s diversity advisory councils provide its top
management with different ways to advance their diversity objectives while
The Business Case for Diversity Management
| PAGE46
the employee resource groups generate a platform for connection between
employees who share similar interests (Shin and Park, 2013).
Other MNCs that have employed the use of these employee resource groups
are Ford (2014) and Microsoft (2014). Ford’s partnership with its employee
resource groups has facilitated the availability of support and outreach to
employees who belong to the same racial group, age group or backgrounds
(Ford, 2014). On the other hand, Microsoft (2014) practices a more
Transversal model of global diversity management, with the integration of its
employee resource groups, which are more global oriented, and its employee
networks, which are more localised and country specific.
4.3 Diversity Training
Another step in Gutmacher’s (1998) diversity strategy is to provide diversity
training to the participants, so they can comprehend how the diversity
initiatives link to the overall business strategy. Thus, it is recommended that
ABC Plc. provide diversity training programmes to all participants involved i.e.
the employees, the HR and line managers at all levels in the company and the
top management team. A top-down training strategy should be adopted at
ABC Plc., such that training for diversity awareness is provided to the senior
management first, and diversity training on team-building skills is delivered to
the employees subsequently (Shen et al, 2009). These training programmes
should include a global mentoring programme, a web-based global diversity-
training programme and educative diversity programme.
First, the global mentoring programme should be targeted at the
underrepresented groups, especially the female employees. Volkswagen
(2014) is an MNC that targets its mentoring programme to women, as it
believes that women are still being underrepresented in the car manufacturing
industry. Thus, this global mentoring programme would help ABC Plc.
integrate more skilled female employees in top management positions and
generate more diversity awareness both globally and locally.
The Business Case for Diversity Management
| PAGE47
Furthermore, the web-based global diversity-training programme would
include online training tools and workshops to help the employees to
understand the business case for diversity management at ABC Plc. Dell
(2014) and Ericsson (2014) are two MNCs who have integrated online based
training programmes into their diversity training strategy and have found them
beneficial to their diversity training needs. Lee (2014) reports that most MNCs
collectively spend approximately 130 billion dollars annually, on job training
and accreditation, with online training costing approximately 1,195 dollars per
employee annually. The researcher added that, these companies realise the
potential benefits of online training programmes, which are noted as better
innovation and creativity, which utilmately leads to competitive advantage for
them (Lee, 2014).
In addition, the educative diversity programme would involve internal
seminars for the employees, on the issues of diversity and collaboration with
external educational sources. Currently, Toyota’s successful collaboration
with University of Toyota, with regards to delivering educative training on
diversity to its employees, is part of its yearly commitment to diversity worth
1.2 billion dollars (Wiscombe, 2007). Likewise, Coca-Cola is another MNC
that currently adopts educative diversity training programmes (Shin and Park,
2013).
4.4 Fair Rewards
Gutmacher (1998) proposes that, another step in implementing the diversity
management programme is to ensure that the diversity practices align with
other organisational practices such as employee rewards and recognition.
Therefore, it is recommended that ABC Plc. integrate fair rewards and
benefits targeted at improving the work life balance of the underrepresented
groups. These benefits should include medical and dental insurance, flexible
working hours and childcare leave, which are all beneficial to female
employees, aged workers, etc. Top MNCs like Toyota (2014) and Dell (2014)
believe in integrating these fair and flexible reward practices, to improve the
work life balance of their employees, which they believe would result in better
The Business Case for Diversity Management
| PAGE48
work productivity and profitable growth subsequently. This assertion can be
linked to the SE theory (Blau, 1964) such that, organisations initiate fair
employee benefits and rewards in exchange for positive employee work
attitudes and high levels of job satisfaction.
4.5 Measurement
The last step of the diversity strategy is to measure the effectiveness of the
diversity management programme (Gutmacher, 1998). As discussed in
chapter three, when employees perceive that their opinions are valued, with
no form of prejudice, they have higher levels of job satisfaction. Thus, it is
recommended that ABC Plc. conduct employee attitude survey to assess the
advancement of diversity awareness in its firm. Ozbilgin et al (2008) proposes
that this form of measurement is considered the most successful. Also, ABC
Plc. should incorporate feedback forms to assess the number of
discrimination complaints post-diversity integration (Shen et al, 2009). This
can help the company analyse the success level of the diversity management
programme. Lastly, ABC Plc. should assess the retention figures and exit
interviews to certify that employees are not resigning as a result of ineffective
diversity integration (Shen et al, 2009).
With the diversity strategy discussed above, it can be asserted that these
recommendations would enable ABC Plc. align its HR and diversity
management practices successfully, and attain business growth in the longer
term. Subsequently, an action plan would be drawn in order to show the
implementation process.
The Business Case for Diversity Management
| PAGE49
4.6 Action Plan
Issues to
Rectify
Action Impact By Whom Timescale Cost
1.) Model of
global
diversity
management
programme.
1.) Incorporate the
Transversal model of global
diversity management
programmes.
2.) Delegate the HR
department with the sole
responsibility of developing
the global diversity
initiatives.
The diversity
management
programme at
ABC Plc. would
be successfully
implemented and
advanced, both
locally and
globally.
CEO, all
executive
directors.
Second
Quarter in
2014, prior to
implementati
on of diversity
practices.
No cost.
2.) Diversity
Task Group
1.) Identify diverse
employees with a
combination of demographic
profiles, from different
departments in the firm to
create a more diversified
global diversity council.
2.) Assign the line
management with the
implementation of the local
and global diversity
initiatives.
3.) Generate voluntary
Employee Resource Groups
to collaborate with the global
diversity council.
4.) Generate employee
networks to partner with the
subsidiaries to localise
With a diversified
global diversity
council and
employee
resource groups,
diverse customer
and employee
needs would be
identified and
met, hence
ensuring
business growth.
HR
Director
Second
Quarter in
2014, post-
meeting with
CEO and
executive
directors.
1.) 2% salary
increase for
global
diversity
council
members
2.) No cost
for voluntary
employee
resource
groups.
The Business Case for Diversity Management
| PAGE50
diversity initiatives.
3.) Diversity
Training
1.) Introduction of a global
mentoring programme
mostly targeted at the
underrepresented groups.
2.) Online training tools and
workshops on the business
case for diversity
management for all
employees.
3.) Internal educative
seminars on issues of
diversity for all employees
and partnership with
external educational bodies.
Advance the
level diversity
awareness at
ABC Plc.
Executive
directors,
HR
managers,
line
managers,
employees
First 3
months
1.) No cost
for mentoring
programme.
2.) £1,250 on
average, per
employee, for
ten online
workshop
sessions.
3.) £480 on
average, per
employee, for
four seminars
each month.
4.) Reward
Management
Integration of medical and
dental insurance, more
flexible working hours and
child care leave, mostly
targeted at the
underrepresented groups.
Higher job
satisfaction and
work productivity
as a result of
better work-life
balance.
HR
manager,
line
manager.
On-going 2% Increase
in corporate
budget to
cover these
reward
practices,
annually.
5.)
Measurement
1.) Conduction of employee
attitude survey.
2.) Incorporation of feedback
forms.
3.) Assess retention figures
and exit interviews.
Increase in
budget for
performance
management
resources.
HR
Director.
Third Quarter
of 2014, post-
diversity
integration.
1% Increase
in corporate
budget for
measurement
resources,
quarterly.
The Business Case for Diversity Management
| PAGE51
CHAPTER FIVE – CONCLUSION
In conclusion, it can be said that this research is a valid contribution to the
literature on the concept of diversity and the business case for diversity
management. The business case for diversity management has prompted
many organisations to re-examine their motives behind integrating diversity
into their businesses. Thus, the main purpose of this report has been to
review past and current literature on the concept of diversity and the
rationality behind the business case for diversity management in ABC Plc.
5.1 Key Points of the Literature
Three significant theories relative to the business case for diversity were
reviewed in the literature. The first theoretical framework adopted was the
RBV model proposed by Barney in 1991. It was concluded that this model
strongly aligned strategic management practices to diversity management, as
companies are placing emphasis on their diverse human capital as a source
of competitive advantage, by constantly developing them to be rare and
inimitable.
Other theories applied in this research were the UE theory and the SE theory,
both proposed by Hambrick and Mason (1984) and Blau (1964) respectively.
The UE theory was linked to the business case for diversity management, in
the sense that, the presence of diversity at the top management level would
determine the successful integration of diversity in the workplace, as the
attitudes of these top executive members strongly influence the policies
governing the organisation. In addition, the SE theory concluded that
employees who ascertain that there is a fair and diverse work environment
would reciprocate with positive work attitudes and better work productivity.
This report also reviewed the impact of age demography, racial demography
and gender demography on the business case for diversity management and
concluded that integrating these diverse demographics is imperative to
business success. To round up the discussion on the concept of diversity
The Business Case for Diversity Management
| PAGE52
management, this report concluded that the three major business drivers for
diversity management were employee matters, market effectiveness and
business reputation.
5.2 Main Findings of the Study
Evidence in this research showed that, majority of organisations want to attain
that competitive edge over their rivals and as a result, they incessantly try to
ensure their human capital is of great value. These findings showed that, the
business case for diversity management has been a growing concept in
recent years, as organisations are beginning to support an organisational
culture that places high value on individual dissimilarities and uniqueness, and
utilising them in order to gain profitable growth. Likewise, these findings also
revealed that a diverse team of employees generates better creativity and
innovation, which is highly beneficial to the company’s growth as well.
Furthermore, evidence in this study showed that the strong presence of age,
racial and gender demographics vary between countries and MNCs need to
put this into consideration, prior to the adoption of their diversity management
practices in these countries. In addition, research showed that strengthening
the alignment of diversity management practices with HR management
practices enhances organisational value in the longer term. Evidence also
revealed that the support of the executive board members in a firm are crucial
to the successful integration of its diversity management practices.
It can be affirmed that this research has contributed to the argument for the
business case for diversity management, however it is expected that further
advancement would be done with this research, so as to generate better
understanding of diversity management in the business society.
The Business Case for Diversity Management
| PAGE53
REFERENCES
AgeUK (2014) Who We Are. [Online] Available at:
http://www.ageuk.org.uk/about-us/who-we-are-/ (Accessed: 27 April 2014).
Ali, M., Kulik, C., T. and Metz, I. (2011) 'The gender diversity-performance
relationship in services and manufacturing organizations', International
Journal of Human Resource Management, 22 (7), pp.1464 – 1485.
Anderson, T. and Metcalf, H. (2003) Diversity: Stacking up the Evidence: A
Review of Knowledge, Executive Briefing. London: CIPD.
Andrevski, G., Richard, O., Shaw, J. and Ferrier, W. (2014) ‘Racial Diversity
and Firm Performance: The Mediating Role of Competitive Intensity’, Journal
of Management, 40(3), pp. 820 – 844.
Armstrong, C., Flood, P., C., Guthrie, J. P., Liu, W., MacCurtain, S. and
Mkamwa, T. (2010) 'The impact of diversity and equality management on firm
performance: Beyond high performance work systems', Human Resource
Management, 49 (6), pp. 977 – 998.
Avon (2014) Associate Resource Groups. [Online] Available at:
http://www.avoncompany.com/corporatecitizenship/corporateresponsibility/cor
porateresponsibilitypractices/diversityinclusion/associate-networks.html
(Accessed: 29 April 2014).
Avon (2014) Workforce Diversity at Avon. [Online] Available at:
http://www.avoncompany.com/corporatecitizenship/corporateresponsibility/cor
porateresponsibilitypractices/diversityinclusion/workforcediversity.html
(Accessed: 29 April 2014).
B&Q (2014) Age Diversity. [Online] Available at:
http://www.diy.com/diy/jsp/corporate/pdfs/age.pdf (Accessed: 30 April 2014).
B&Q (2014) Respect for People. [Online] Available at:
The Business Case for Diversity Management
| PAGE54
http://www.diy.com/diy/jsp/corporate/content/environment_ethics/ethics/respe
ct.jsp (Accessed: 30 April 2014).
Backes-Gellner, U. and Veen, S. (2013) 'Positive effects of ageing and age
diversity in innovative companies - large-scale empirical evidence on
company productivity', Human Resource Management Journal, 23 (3), pp.
279 – 295.
Baltes, B., B. and Finkelstein, L., M. (2011) ‘Contemporary Empirical
Advancements in the study of Aging in the Workplace, Journal of
Organizational Behaviour, 32, pp. 151 – 154.
BBC (2009) Number of Foreigners in UK hits Record 6.7m. [Online] Available
at: http://news.bbc.co.uk/1/hi/8402784.stm (Accessed: 20 February 2014).
Berrey, E. (2014) Breaking glass ceilings, ignoring dirty floors: The culture and
class bias of diversity management.
Blau, P., M. (1964) Exchange and Power in Social Life. New York: Wiley.
Blauner, R. (1972) Racial Oppression in America. New York: Harper and
Row.
Boxall, P. (1996) ‘The Strategic HRM Debate and the Resource-based View
of the Firm’, Human Resource Management Journal, 6(3), pp. 59 – 75.
Boyett, J., H. and Boyett, J., T. (1996) Beyond Workplace 2000: Essential
Strategies for the New American Corporation, New York: Penguin Books USA
Inc.
Bratton, J. and Gold, J. (2007) Human Resource Management: Theory and
Practice. 4th edn. Hampshire: Palgrave Macmillan.
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CHINENYE DIVERSITY PROJECT FINAL COPY 2014

  • 1. The Business Case for Diversity Management | PAGE1 N A M E : C H I N E N YE N W A G B O S O S T U D E N T I D : 0 9 1 6 9 3 7 U N I T C O D E : S H R 0 5 4 - 6 S U P E R V I S O R : M U H A M M A D S A M E E R C O U R S E : I N T E R N A T I O N A L H U M A N R E S O U R C E M A N A G E M E N T D A T E : 0 6 M A Y 2 0 1 4 U N I V E R S I T Y O F B E D F O R D S H I R E THE BUSINESS CASE FOR DIVERSITY MANAGEMENT: A CASE STUDY ANALYSIS ON ABC PLC
  • 2. The Business Case for Diversity Management | PAGE2 ACKNOWLEDGEMENT First, I would like to thank God for giving me the strength and zeal to endure this entire journey. I would also like to thank my project supervisor, Dr. Muhammad Sameer, for his support and consideration throughout the duration of my research. Picking you as my project supervisor was a wise and constructive decision. In addition, I would like to thank my entire family for their support and prayers, particularly my mother Mrs. Nwakaego Jones, who relentlessly assured me that I would succeed with my project. I would also like to thank Amara for her incessant encouragement and counseling during this period, she has been a great friend.
  • 3. The Business Case for Diversity Management | PAGE3 EXECUTIVE SUMMARY This report provided a background of the concept of diversity and the evolution of diversity from the Civil Rights movement phase to the current global diversity phase. In addition, it provided clear definitions on the concept of diversity, as well as the business case for diversity management. These definitions were sourced from different academic researchers, practitioners and companies. Furthermore, relevant theories proposed by renowned researchers, such as the Resource-based view model, the Upper Echelon theory and the Social Exchange theory, were all applied to this report. After thorough analysis of the case, this report also highlighted the issues present in the case and analysed them alongside HR practices and activities such as HR strategic partnering, recruitment and selection, training, reward management and appraisals. Also, in order to understand the influence of the demographic diversity types in different labour markets, this report provided an analysis of the demographic diversity settings in UK and compared it with other countries like the US, China, India and Turkey. In addition, this report recommended that changes should be made to the global diversity management programme in ABC Plc., and suggested that it adopt a more Transversal model of managing diversity globally. In addition, a partnership between its global diversity council and employee resource groups was also suggested. This report also recommended fair reward and appraisal practices, targeted at the underrepresented groups. Lastly, this report incorporated an action plan, in order to ensure successful implementation of the diversity management programme in ABC Plc.
  • 4. The Business Case for Diversity Management | PAGE4 TABLE OF CONTENTS Page No. Acknowledgement ………………………………………………………………… 2 Executive Summary ……………………………………………………………… 3 List of Figures …………………………………………………………………….. 6 CHAPTER ONE - INTRODUCTION 1.1 Background of the Study …………………………………………………… 7 1.2 Scenario ………………………………………………………………………. 8 1.3 Rationale of the Study ………………………………………………………. 9 1.4 Significance of the Research ………………………………………………. 9 1.5 Aim and Objectives …………………………………………………………. 10 1.6 Structure of the Study ………………………………………………………. 10 CHAPTER TWO – LITERATURE REVIEW 2.1 Introduction …………………………………………………………………… 12 2.2 The Concept of Diversity Management ………………………………….... 12 2.2.1 An Overview of the Concept ……………………………………………... 12 2.2.2 Defining the Concept of Workforce Diversity …………………………… 13 2.3 Origin of Diversity in the Workplace ……………………………………….. 16 2.3.1 The Civil Rights Movement ………………………………………………. 18 2.3.2 Respecting Differences …………………………………………………… 19 2.3.3 Diversity Management ……………………………………………………. 19 2.3.4 Universal Diversity Management ………………………………………… 20 2.4 Theoretical Frameworks ……………………………………………………. 20 2.4.1 Resource-Based View Model ……………………………………………. 20 2.4.2 The Upper Echelon Theory ………………………………………………. 23 2.4.3 The Social Exchange Theory …………………………………………….. 24 2.5 Business Rationale for Workforce Diversity ………………………………. 26 2.5.1 The Impact of Demography on Workforce Diversity …………………... 27 2.5.2 Major Business Drivers for Workforce Diversity ……………………….. 30 2.6 Summary ……………………………………………………………………... 32
  • 5. The Business Case for Diversity Management | PAGE5 CHAPTER THREE – CASE ANALYSIS AND DISCUSSION 3.1 Introduction …………………………………………………………………. 33 3.2 Case Analysis and Discussion …………………………………………… 33 3.2.1 Issues Existing in the Case …………………………………………….. 33 3.2.2 HR Strategic Partnering ………………………………………………… 34 3.2.3 Recruitment and Selection ……………………………………………… 35 3.2.4 Training …………………………………………………………………… 37 3.2.5 Reward Management …………………………………………………… 37 3.2.6 Appraisals ………………………………………………………………… 38 3.3 The Demographics in UK and Selected Developing and Developed Economies ………………………………………………………………………. 39 3.3.1 Age Demographics ………………………………………………………. 39 3.3.2 Gender Demographics ………………………………………………….. 40 3.3.3 Race Demographics …………………………………………………….. 41 3.4 Summary …………………………………………………………………….. 42 CHAPTER FOUR – RECOMMENDATIONS 4.1 Global Diversity Management ……………………………………………... 43 4.2 Diversity Task Group ……………………………………………………….. 44 4.3 Diversity Training …………………………………………………………… 46 4.4 Fair Rewards ………………………………………………………………… 47 4.5 Measurement ………………………………………………………………… 48 4.6 Action Plan …………………………………………………………….. 49 – 50 CHAPTER FIVE – CONCLUSION 5.1 Key Points of the Literature ………………………………………………... 51 5.2 Main Findings of the Study ………………………………………………… 51 References ………………………………………………………………… 53 – 66
  • 6. The Business Case for Diversity Management | PAGE6 LIST OF FIGURES Figure 1: Structure of the Project Figure 2: Evolution of Diversity in the Workplace Figure 3: Resource-Based View Model Figure 4: Variables that moderate the SE theory
  • 7. The Business Case for Diversity Management | PAGE7 CHAPTER ONE – INTRODUCTION 1.1 BACKGROUND OF THE STUDY Various scholars assert that, although diversity is not a new concept historically, research on the subject was essentially lacking and only became intensified as a result of research carried out by Johnston and Packer in 1987, on ‘Work and Workers for the Twenty-First Century’ (Kurowski, 1999; McMillan-Capehart, 2003). Likewise, previous research shows that the concept of diversity originated from the United States of America (US), with its foundation dating back to the equal employment and civil rights movements, which started in the 1950s/1960s and generated an awareness of African- American workers in the American labour force (McDonald, 2010; McMillan- Capehart, 2003). Additionally, Johnston and Packer’s (1987) publication in Kurowski (1999) showed an understanding of diversity as the inclusion of native ethnic minorities, female workers, senior residents and immigrants in the labour force. Building on the research published by Johnston and Packer (1987) in McMillan-Capehart (2003) and Diamante and Giglio (1994), it was estimated that by the year 2000, there would be an 85 percent composition of minorities, inclusive of 29 percent of people of colour, as new entrants into the labour force, essentially as a result of immigration. Also, Judy and D’Amico’s (1997) research on diversity, which was influenced by Johnston and Packer’s (1987) publication in McMillan-Capehart (2003), predicted that, by the year 2020, there would be a continuous increase in the diversity of ethnicities, as well as a 50 percent composition of female workers, in the labour force (McMillan- Capehart, 2003). Current research carried out by Byeong (2006) indicates that there has been an increase in the number of people who presently belong to minority groups in the United States (US) as they account for 31 percent of the population in the US. Also, Byeong’s (2006) research predicts that half of the US population
  • 8. The Business Case for Diversity Management | PAGE8 would be constituted of persons associated with the minority groups, within 50 years post-year 2000. Due to these demographic changes, Ivancevich and Gilbert (2000) in Byeong (2006) reports that the US labour force has begun to initiate reinforcements for successful diversity management practices. Likewise, in the UK, research shows that by the year 2050, racial minorities will account for one-fifth of the UK labour force (BBC, 2009). A UK survey carried out in 2011 showed that, as at that time, racial minorities constituted of 11.4 percent of the entire UK labour force, which is lesser in comparison to the US (Office for National Statistics, 2011). Currently, CIPD (2013) reports that, labour diversity in the modern workplace has led to a form of competitive advantage for business organisations worldwide, as these businesses strive to recruit and retain a wide variety of talents to foster business growth (CIPD, 2013). In general, these businesses are attempting to comprehend the business benefits of having a diversified workforce, as opposed to relying exclusively on laws and regulations that foster workforce diversity. This report would examine the business needs, objectives and benefits relative to workforce diversity i.e. the business case for diversity management (CIPD, 2013). 1.2 SCENARIO ABC Plc., a leading global car manufacturer based in the United Kingdom (UK), perceives diversity as everything that makes individuals different with regards to age, race, gender, personal values, etc., and aims to sustain an organisational culture that values and embraces these individual differences. Additionally, the overall objective of ABC Plc.’s diversity policy is to increase its competitiveness, ensure its commercial growth and attain a strong competitive advantage. It is stated that its diversity initiative is mainly focused on the business case for diversity, in comparison to other companies where legislative concerns and human resource (HR) issues are more significant. Nonetheless, ABC Plc. has also faced a number of challenges in the implementation of its diversity
  • 9. The Business Case for Diversity Management | PAGE9 management programme and as a result, the diversity manager of ABC Plc. has requested for an evaluation of its diversity management procedure to rectify the underlying issues. 1.3 RATIONALE OF THE STUDY Considering ABC Plc. is in its early stages of implementing diversity practices, this study on diversity is being conducted to assist ABC Plc. in comprehending the business case for diversity and implementing its diversity management programme effectively. Also, this study is being conducted to establish a better diversity management strategy for ABC Plc., which involves effectual use of the line management and HR function in implementing its diversity agenda. In addition, this study is being carried out to examine ABC Plc.’s staff recruitment and retention practices, as well as other significant practices, in order to resolve its challenge of halted staff continuity. Finally, carrying out this study would also provide further insight into the logic behind the business case for diversity management, for both the readers and the writer. 1.4 SIGNIFICANCE OF THE RESEARCH This research on the business case for diversity would benefit the employers and employees in ABC Plc., as it would provide information on how to value and respect individual differences and also foster positive interpersonal relationships in the workplace. This research would also benefit the diversity manager at ABC Plc. by presenting evidence on how to effectively manage diversity and align it with the organisational needs, as well as the employees’ needs. Likewise, it would enhance existing literature and benefit researchers interested in doing future research on the business case of diversity management.
  • 10. The Business Case for Diversity Management | PAGE10 1.5 AIM AND OBJECTIVES In general, the main aim of this report is to critically evaluate the business case of diversity management for ABC Plc. with the use of significant theoretical and practice informed research. In order to realise this aim, certain objectives would have to be attained. These objectives are highlighted below.  To present the origin of diversity as a concept and critically discuss the different demographic diversity types with regards to managing workforce diversity.  To present an analysis on the slow adoption of diversity management practices in ABC Plc., in spite of its knowledge and understanding on the potential benefits of diversity for organisational performance.  To specify suitable recommendations for a diversity strategy, which would strongly align ABC Plc.’s Human Resource Management (HRM) and diversity management practices in the long term. 1.6 STRUCTURE OF THE STUDY This report would be structured in the following pattern: I.) Chapter two would examine and investigate the literature review on the concept of diversity management and the business case, which would include several definitions from academic researchers, business organisations and practitioners. Also, chapter two would review the origin of the concept and explore theoretical frameworks and models relative to the business case for diversity management. II.) Chapter three would analyse the issues in the case against the literature provided and incorporate few developed and developing countries as a benchmark for comparison.
  • 11. The Business Case for Diversity Management | PAGE11 III.) Chapter four would provide recommendations for issues raised in the analysis with the inclusion of an action plan, which considers specific guidelines on how ABC Plc. would implement the suggestions. IV.) Finally, chapter five would summarise the discussions, which have been explored in each section and conclude on the key points highlighted in the research. Generally, each chapter would introduce its subject matter, discuss it and conclude accordingly. Figure 1: Structure of the Project Introduction Case Analysis Recommendations Conclusion Literature Review
  • 12. The Business Case for Diversity Management | PAGE12 CHAPTER TWO – LITERATURE REVIEW 2.1 Introduction This chapter would review the past and current literature on workforce diversity and begin by briefly providing an overview of diversity management as well as critique the different views on the concept of workforce diversity, which have been reported by academic scholars, research consultancies and business organisations. In addition, this chapter would review the origin of diversity in the workplace, highlighting and critiquing its historical background with the use of seminal and classical references. This chapter would also examine significant theoretical models and frameworks on the business case for diversity and they would be assessed with the use of clear diagrams. Furthermore, this chapter would review the impact of demography on workforce diversity and explore the major drivers for the business case. 2.2 THE CONCEPT OF DIVERSITY MANAGEMENT 2.2.1 An Overview of the Concept Parrotta, Pozzoli and Pytlikova (2014) report that, currently, many workplaces are beginning to experience increase in diversity as most organisational practices are being influenced by societal and governmental pressures in the form of policies and regulations. The researchers added that, due to globalisation, there is also an increased need for diverse goods and services by various customers and markets and having a diverse workforce is highly strategic and significant in comprehending and meeting these needs (Parrotta, Pozzoli and Pytlikova, 2014). This assertion highlights the two dimensions for managing diversity, which are the social/equality case for diversity and the business case for diversity (CIPD, 2013). Research shows that the social case for diversity is built on the assertion that all employers are required to give all their employees equal access to
  • 13. The Business Case for Diversity Management | PAGE13 employment, reward and developmental practices available in an organisation (CIPD, 2013). However, the business case for diversity builds on the assumption that in order to manage diversity successfully, employees need to be treated differently in ways that are fitted to their needs but also aligned with the organisational needs, goals and objectives (CIPD, 2013). In addition, studies show that, the social case and the business case for diversity both consist of different methods to managing diversity, however they are not substitutes but rather a correlation (CIPD, 2013). Although there is research on the social case and business case for diversity, the main focus of this review would be on the business case for workforce diversity with restriction to demographic types only. 2.2.2 Defining the concept of ‘Workforce Diversity’ The concept of workforce diversity has advanced as a debatable human resource subject over the years and has been viewed in different ways by different researchers and scholars (Byeong, 2006). Companies are constantly experiencing challenges with managing employees with dissimilarities as opposed to managing situations more isomorphic in nature, which is as a result of the ever-changing nature of their organisational cultures and their employees’ individual principles (Byeong, 2006). These diverse views on the concept of workforce diversity, cited by academic scholars, research practitioners and business organisations, would be reviewed in subsequent paragraphs. I.) Academic Definitions Cox (1993) in Seyed-Mahmoud (2004) defined diversity as individuals belonging to various significant cultural groups, all being represented in one societal classification. Although Cox’s (1993) definition highlighted the socio- cultural element of diversity, it failed to specify what influence cultural diversity exerts in the workplace. Likewise, Jackson, Stone and Alvarez (1993) viewed diversity as dissimilarities existent in individuals, with regards to demographic and personal characteristics. The researchers cited the demographic
  • 14. The Business Case for Diversity Management | PAGE14 characteristics as visible elements such as gender, race, sex, age, etc., while the personal characteristics (non-visible) were highlighted as social status, educational background, style, etc. (Jackson, Stone and Alvarez, 1993). In contrast, Pilbeam and Corbridge (2010) provided a definition that exhibited the meaning of the concept in a work environment. These academic scholars view workforce diversity as valuing all employees and “making employment decisions based on objective, job related criteria rather than on the personal characteristics of the individual” (Pilbeam and Corbridge, 2010, p. 227). Furthermore, managing diversity is another concept that is significant to this discussion. The concept of managing diversity and its benefits to organisations has been a subject of scrutiny and controversy in the business sphere over the years (Cox and Blake, 1991; Anderson and Metcalf, 2003 in Pilbeam and Corbridge, 2010). Research shows that the concept of managing diversity involves recognising and utilising the different needs of the individual itself i.e. the employee (Pilbeam and Corbridge, 2010). These authors also added that the diversity management approach is internally controlled by the organisation and highly strategic, with focus on individuals and expected outcomes i.e. business paybacks (Pilbeam and Corbridge, 2010). Schneider (2001) outlined the business case for workforce diversity as viewing, appreciating and harnessing individual differences as a significant and strategic part of the organisational culture in a work environment. Schneider’s (2001) view suggests that these individual differences should be a thing of value as opposed to being a source detrimental to the firm’s success. In addition, Schneider (2001) implies that practicing diversity management should be fully embedded in the firm’s culture in order to realise its benefits. Bratton and Gold (2007) supported Schneider’s (2001) view by asserting that the business case for workforce diversity is recognising the differences in people and viewing them as a source of conceivable productivity. In addition, Bratton and Gold’s (2007) view also suggests that practicing workforce diversity could give an organisation the competitive edge both locally and internationally, which also corresponds with McDonald’s (2010) assertion on global diversity management.
  • 15. The Business Case for Diversity Management | PAGE15 In general, these academic scholars view diversity as inclusion rather than exclusion of every unique individual and believe that an effective diversity management practice would be beneficial to the firm’s productivity. Other views discussed by research practitioners and companies would be reviewed subsequently. II.) Practitioner Definitions CIPD (2013) defined managing diversity as placing value on each employee, customer and client and treating him or her with respect while disregarding prejudice. Like the academic scholars, CIPD (2013) also outlined the concept of diversity as the personal characteristics that differentiate individuals such as age, gender, sexual orientations, religion, race, disability, educational background, etc. These researchers acknowledged that managing these individuals with a singular method would not achieve fairness and equal opportunity, as these individuals all have diverse needs and beliefs (CIPD, 2013). In terms of understanding the business case for diversity management, CIPD (2008, 2009) notes that a new diversity management agenda, which sees these diverse personal characteristics as relevant to effective workplace inclusion, has to be put in place. Likewise, research carried out by EU report (2003) in Pilbeam and Corbridge (2010) supports CIPD ‘s (2008, 2009) suggestion by arguing that an effective diversity management would also lead to organisational commitment and higher work efficiency as a result of an inclusive workplace. In addition, CIPD (2013) also argues that, organisations should focus on a more strategic method of influencing their employees’ personal characteristics to align with their customer service delivery, client needs and preferences. III.) Company Definitions Various top organisations define the concept of diversity, as well as diversity management, in numerous ways. Companies such as Microsoft Corporation,
  • 16. The Business Case for Diversity Management | PAGE16 which is one of the top Multinational Corporations (MNCs) in the technology industry, views diversity management as incorporating different employee characteristics of each employee, to promote a highly valued multicultural workplace (Microsoft, 2014). In addition, this company also claims to recruit employees from over 135 countries worldwide and believe that diversity would enhance its employees’ performance, goods and services (Microsoft, 2014). The view adopted by Royal Mail Group, a UK based Mail Company in the postal services industry, perceived diversity management as the practice of treating every colleague fairly irrespective of personal attributes such as gender, sexuality, race, etc. (Royal Mail, 2014). This company also claimed to recognise the differences in its employees and promote practices that value these differences and help realize their full potential (Royal Mail, 2014). Linking these views to the business case, they propose a strategic view to diversity management wherein an effective diversity management practice would lead to an expected outcome of increased long term productivity and efficiency. In contrast, some manufacturing companies such as Volkswagen Group still incorporate a certain element of the traditional equality approach in their diversity management strategy. This MNC, with its parent company based in Germany, view diversity management as promoting groups with a social disadvantage intentionally, dealing with the employees with mutual respect and fairness and granting equal access to employment opportunities (Volkswagen, 2014). However, Toyota Motor Corporation, another manufacturing company, adopted a more strategic approach by generating an organisational culture that promotes self-fulfillment and respects diverse ideas amongst employees, in order to enhance the employability skills of each employee in the long run, as opposed to targeting specific disadvantaged groups (Toyota, 2014). 2.3 ORIGIN OF DIVERSITY IN THE WORKPLACE McDonald (2010) claims that, prior to the concept of workforce diversity existent from the 1980s in the US, the terms more prominent were the Equal
  • 17. The Business Case for Diversity Management | PAGE17 Employment Opportunity (EEO) policies and Affirmative Action. In addition, this researcher commended Johnston and Packer’s (1987) seminal work on workforce diversity for influencing subsequent discussions by other academic researchers regarding these concepts and creating a growing awareness of workforce diversity in general (McDonald, 2010; Johnston and Packer, 1987). Likewise, Gottfredson (1992) also praised Johnston and Packer’s (1987) research by adding that it generated a strong apprehension for an effective application of diversity in the workplace. In order to comprehend the origin of workforce diversity, McDonald (2010) proposed four phases highlighting the evolution of diversity and included the researchers that reviewed each phase during that era. Figure 2: Evolution of Diversity in the Workplace (Adapted and modified from McDonald (2010), source: http://www.academia.edu/225006/The_Evolution_of_Diversity_Management_in_the_USA_So cial_Contexts_Managerial_Motives_and_Theoretical_Approaches ) Phase 1: CivilRights Movement Phase 2: Respecting Differences Phase 3: Diversity Management Phase 4: International Diversity
  • 18. The Business Case for Diversity Management | PAGE18 2.3.1 The Civil Rights Movement Prior to this era, although there were various ethnicities present in the US due to migration, McMillan-Capehart (2003) and Blauner (1972) asserted that different ethnic groups had dominance in specific industries and jobs (McMillan-Capehart, 2003). Blauner’s (1972) research showed that the Irish workers dominated the waterway systems, while the Italian workers dominated in construction. In addition, Blauner (1972) claimed that, the Asians, the African-Americans and the Mexicans were all positioned majorly in low paid and unskilled jobs. Handlin (1961) and McMillan-Capehart (2003) both noted that, in spite of the presence of jobs available for foreigners, these workers were treated poorly, with no respect for their uniqueness. Due to the poor treatment, the civil rights movement era initiated an awareness of diversity in the US during the 1950s, wherein US citizens who were Africans demanded to be treated fairly in political, social and economic settings (Button, 1989; McDonald, 2010). These occurrences led to several EEO policies and the Affirmative Action (McDonald, 2010), which Chay (1998) argued have been debatable over the years. Especially with regards to racial inequality, Chay (1998) noted that the revised EEOA had a direct effect on the Black Americans as a high percentage of them were employed in these small organisations. Although Chay’s (1998) research stated that these policies hardly had an impact on the changes that occurred in the US labour market, as they would have occurred anyway due to drivers such as recession, etc., Chay (1998) also argued that the rate of Black Americans that were self employed dropped from 7.5 percent to 4.5 percent in the range of year 1967 to 1980 as a result of an improved labour market, which gave the self employed Black Americans prospects to migrate to the private income sector (Chay, 1998). In summary, Button (1989) asserted that this Civil Rights Movement era inspired a newfound sense of self-respect and self-appreciation in the Black American Society, with Thomas (1995) adding that other minorities also embraced their individual differences.
  • 19. The Business Case for Diversity Management | PAGE19 2.3.2 Respecting Differences This phase was focused on the changing demographics in the US and was largely influenced by Johnston and Packer’s (1987) publication on workers for the twenty-first century (Kurowski, 1999; McMillan-Capehart, 2003; McDonald, 2010), as briefly discussed in the background section. McDonald (2010) states that this era saw a change from employers being concerned with adhering to government policies regarding work diversity to employers contemplating the business benefits of having a diverse workforce. During this phase, various studies predicted that the labour force would consist of equal numbers of male and female workers by the year 2000, as well as the minority group occupying 75 percent of the 20 plus millions jobs, which would be generated over the next decade (Williams and O’Reilly, 1998; Loden and Rosener, 1991; Johnston and Packer, 1987; Jackson, Stone and Alvarez, 1993). Other researchers added that 11 percent of the US labour force would be composed of African-American workers, while 14 percent would be composed of Hispanics within the next two decades (Judy and D’Amico, 1997; Williams and O’Reilly, 1998). Various studies argued that this phase prompted employers to recognise their employees as assets to the organisation rather than liabilities (Cox, 1993; Fernandez, 1993; Thomas, 1991). 2.3.3 Diversity Management Research indicated that this phase introduced the strategic aspect of labour diversification, as managers sought out diversity as a form of competitive advantage by successfully utilising the unique talents in their organisations (McDonald, 2010; Cox and Beale, 1997). This assertion could be linked to the term ‘functional diversity’ (Simons and Rowland, 2011 p.172; Bunderson and Sutcliffe, 2002) wherein an integration of diversity would most likely result in a more effective innovation. Furthermore, studies also showed that, during this phase, organisations began to adopt appropriate leadership styles that
  • 20. The Business Case for Diversity Management | PAGE20 aligned with the firm’s objectives, with emphasis on expected outcomes (Thomas, 1991). In addition, other sources reported that, with the availability of diverse talents and skills, organisations started thinking strategically and perceived that diverse products and services would be marketed better and dissimilar work groups would have a higher chance at developing successful strategies as opposed to similar teams, whose ideas would be extremely unified (Cox, 1993; Fernandez, 1993). In general, this phase initiated the process of managers adjusting their organisational culture to fit the process of strategic diversity management (McDonald, 2010). 2.3.4 Universal Diversity Management Ozbiligin and Tatli (2008) state that, currently, diversity has become a widely adopted concept globally, with organisations hiring natives and promoting localised products as they carry out their businesses across borders. Overall, this current phase depicts how the concept of diversity has gradually progressed from the US to other countries such as the United Kingdom (UK), Japan, etc. and has also begun to have an effect in the global trade economy (McDonald, 2010; Ozbiligin and Tatli, 2008). In the UK, laws such as the Equal Pay Act (1970), Sex Discrimination Act (1975) and Race Relations Act (1976) were introduced as a platform to promote diversity in the workplace, which were then replaced by the current Equality Act (2010) (Gov.UK, 2013; Paton, 2010; Sloane and Chiplin, 1970). 2.4 THEORETICAL FRAMEWORKS 2.4.1 Resource-Based View Model McMillan-Capehart (2003) argues that managers are not only concerned about diversity management but also the potential benefits it brings to the firm. Cox (1994), Loden and Rosener (1991) supported this argument by
  • 21. The Business Case for Diversity Management | PAGE21 claiming that firms are adopting a strategy of placing value on diversity practices, in order to gain the competitive advantage over other firms. Studies show that a significant theory fusing strategic management with diversity management is the Resource-Based View (RBV) model, which was originally proposed by Wernerfelt (1984) in Shaw, Park and Kim (2012) and further discussed by Barney (1991) (Wright, McMahan and McWilliams, 1994). Wright, McMahan and McWilliams (1994) also affirm that the RBV model successfully interlinks the firm’s inner resources, its strategy and its employees’ performance. Figure 3: Resource-Based View Model Source: Adapted and Modified from Bratton and Gold (2007) Human Resource Management: Theory and Practice. This model implies that the physical resources, organisational resources or human resources of a firm should be rare, valued, inimitable and non- identical, to enable it attain competitive advantage (Selznick, 1957; Penrose, 1959; Wernerfelt, 1984; Barney, 1991; Pfeffer, 1994; McMillan-Capehart, 2003). Barney (1991) proposed that, in order to sustain a firm’s competitive advantage, there should be a clear assessment of its human capital such that they become inimitable and difficult to duplicate by other firms. In addition, Barney (1991) argued that the four elements of the RBV model i.e. rare, valued, non-identical and inimitable, are very significant when it comes to FIRM’S RESOURCES Rare Valued Inimitable Non-identical STRATEGIES SUSTAINED COMPETITIVE ADVANTAGE
  • 22. The Business Case for Diversity Management | PAGE22 sustaining the competitive advantage and Bratton and Gold (2007) supported this view by claiming that, coordinating the various knowledge and skills of the employees and incorporating diverse information technology is a beneficial strategy that competitors have difficulty duplicating. Research shows that, organisations with a high number of diverse human resources have more productive advantage over their rivals and such organisations develop greater capacity for task achievements and generate better strategies to adapt to external fluctuations (Baron and Armstrong, 2007; Pilbeam and Corbridge, 2010; Yang and Konrad, 2011). This model is linked to the business case for workforce diversity in the sense that the recruitment, selection and development of diverse talents and skills i.e. human capital, when managed effectively, would successfully lead to prolonged viable benefits such as increase in innovations and better product deliveries. Williams and O’Reilly (1998) also reports that the RBV model is linked to workforce diversity, wherein a platform is generated for increase in creativity, wider range of ideas and better managerial decision-making. Although this model is dominant and widely used in different organisations currently, with regards to strategic management (Paauwe and Boselie, 2003; Yang and Konrad, 2011), it is also faced with certain criticisms, which would be reviewed subsequently. II.) Criticisms of the RBV model Pilbeam and Corbridge (2010) argue that there is a high level of ambiguity with the application of the RBV model, as to whether the model relates to the entire human capital or restricted to just the senior management. The authors added that, although the senior management team is more likely to have greater effect on firm performance and also more likely to be inimitable and rare, great value could also be spread across the entire human capital team (Pilbeam and Corbridge, 2010). In addition, in as much as the RBV model specifically proposes that the human capital is a strong source of competitive advantage for the firm
  • 23. The Business Case for Diversity Management | PAGE23 (Wright, McMahan and McWilliams, 1994), Boxall (1996) critiqued the RBV model by questioning if the developed human capital itself or if the complex practices, adopted by managers to manage the human capital, eventually become the inimitable element in sustaining the competitive advantage. Nonetheless, Yang and Konrad (2011) conclude that firms attempting to integrate their diversity management practices could benefit from perceptions provided by the RBV model. 2.4.2 The Upper Echelon Theory Studies show that the Upper Echelon (UE) theory was proposed by Hambrick and Mason in 1984 (Nishii, Gotte and Raver, 2007). This theory proposes that the demographic features of the Upper Echelon in a firm (i.e. top executive members) will have an effect on the practices and decisions implemented in that firm (Nishii, Gotte and Raver, 2007). Also, Kaczmarek (2009) supports this argument and claims that the firm as a whole becomes a reflection of the top executives as the strategic management of that firm is strengthened by their principles and cognitions. This theory implies that the personalities and individualities of the top executive members influence the organisational performance, with regards to the policies and practices put in place for the governance of the firm. Linking this theory to the business case for diversity, when there are diverse talents at the Upper Echelon, this reflects in the recruitment, selection, reward and appraisal practices of the firm, which in turn fosters greater innovation and performance amongst the employees. Kaczmarek (2009) also notes that the Upper Echelon have a significant role in shaping how the firm develops. Research carried out by Nishii, Gotte and Raver (2007) shows that there is a positive link between the demographic diversity of the top executive members and the demographic diversity of the employees as a whole. The researchers added that this is reflected in their implementation of practices and suggested that firms that desire to recruit, retain and benefit from diverse talents need to foster the diversity of their top executives (Nishii, Gotte and Raver, 2007).
  • 24. The Business Case for Diversity Management | PAGE24 Hambrick (2007) also reinforced the UE theory by claiming that, with regards to strategic management, the senior management team has an influence on the occurrences in their firm. However, DiMaggio and Powell’s (1983) Institutional theory argues that the characteristics of the top executives hardly has a strong influence on the activities of the firm, as it is mostly influenced by external elements such as, regulations, norms and institutions (Hambrick, 2007; DiMaggio and Powell, 1983). Overall, studies show that when diversity initiatives are strongly supported by the top management, they become successful and generate return on investment i.e. increased competitive advantage (Nishii, Gotte and Raver, 2007). II.) Criticisms of the UE theory Daellenbach et al (1999) critiqued the UE theory, claiming that the functional diversity of the top executives does not necessarily result in greater innovation but rather, could result in information overload (Daellenbach et al, 1999; Clegg and Cooper, 2009). In addition, Smith and Hitt’s (2005) research shows that the UE theory is critiqued for placing a high level of emphasis on the significance of the top executives, which inevitably leads to glorification of the selected team. These critics are of the opinion that other members of the organisation also have significant effect on the firm’s activities and should receive worthy recognition (Smith and Hitt, 2005). However, in opposition of the critics, Nishii, Gotte and Raver (2007) argue that, in order to initiate diversity successfully, the premise and recognition should start with the top executives. 2.4.3 The Social Exchange Theory Blau (1964) proposed the Social Exchange (SE) theory, which argues that organisations treat their employees favourably with the prospect that it would be reciprocated with a positive work attitude (Blau, 1964; Ko and Hur, 2014; Gould-Williams and Davies, 2005).
  • 25. The Business Case for Diversity Management | PAGE25 Figure 4: Variables that moderate the SE Theory Source: Adapted and Modified from Ko and Hur (2014). Majiros (2013) claims that the SE theory proposes an exchange of physical and non-physical commodities between interacting work individuals, including an insight to the costs and benefits of that relationship. In addition, Ko and Hur (2014) argue that, if there is a positive social exchange between employees and the organisation, it could result in mutual benefits for both parties involved. Parzefall and Salin (2010) also argued that employees are more prone to embrace positive work attitudes if there is existence of favourable work conditions and employee benefits tailored to their individual needs. This theory implies that when employees perceive fair treatment from the organisation, there would be a reciprocal behaviour of work efficiency and commitment, which could prevent high dysfunctional and voluntary turnover rates. Likewise, this theory is of the opinion that the organisation perceives the employees as a form of investment, by creating career and personal development opportunities for them and endorsing long-term affiliations with them subsequently. Linking it to the business case for diversity, when the employees perceive their diverse needs are being met and there are fair Employee Benefits Traditional Benefits Favourable Work Conditions Fair Organisational Justice Managerial Trustworthiness Social Exchange Turnover Intention Job Satisfaction WorkCommitment WorkAttitude
  • 26. The Business Case for Diversity Management | PAGE26 practices in place, it generates reciprocal outcomes such as employee commitment, employee engagement, and job satisfaction, which is beneficial to the organisation. II.) Criticisms of the SE Theory Some researchers critiqued Blau’s (1964) SE theory for merging elements from behaviourism and microeconomics, a combination, which dismisses significant sociological elements by deeming them incompatible (Cook, 2000; Zafirovski, 2005). In addition, Zafirovski (2005) also critiqued the SE theory for its assumption that social exchange is built on the grounds of mutual benefits as opposed to being established on the basis of social norms and regulations. Mitchell (1978) also argues that this theory dismisses variables such as political/institutional control, social differentiation and group classification, which could have an influence on individual exchange. However, Ko and Hur (2014) propose that if organisations desire to foster positive employee relations and work attitudes, there should be focus on benefits that cater to the employee’s individual needs as opposed to generalising the benefits, which is the basis for the SE theory and also, the argument for the business case for diversity management. 2.5 BUSINESS RATIONALE FOR WORKFORCE DIVERSITY Byeong (2006) views the business case for diversity as organisations recognising the social, economic and financial benefits of integrating diversity management practices. This implies that companies are looking beyond legal requirements and becoming more strategic in managing diversity. This section would review the demographic impacts on diversity management, the major drivers for diversity management and the implementation issues involved.
  • 27. The Business Case for Diversity Management | PAGE27 2.5.1 The Impact of Demography on Workforce Diversity Williams and O’Reilly (1998) and CIPD (2013) identified various types of diversity, sectioning them into demographic and non-demographic characteristics. The researchers highlighted the demographic characteristics as age, gender, race, ethnicity, sexual orientation, religion, etc., while the non- demographic characteristics were listed as educational background, accent, language, etc. (CIPD, 2013; Williams and O’Reilly, 1998; Guirdham, 2011). However, for the purpose of this report, this section will focus on only three popular demographic types of diversity (Strauss, Sawyerr and Oke, 2008; Williams and O’Reilly, 1998). These three types are Age, Gender and Race (CIPD, 2013; Guirdham, 2011; Williams and O’Reilly, 1998). I.) Age Diversity Studies show that, due to the demographic variations taking place globally, organisations are becoming more concerned with the fact that the labour force is becoming more age diverse as a result of shortages in the labour market (Kunze, Boehm and Bruch, 2013; Baltes and Finkelstein, 2011). Kunze, Boehm and Bruch (2013) view age diversity as preventing work discrimination against aged and young employees, with more emphasis on the aged workers. Riach (2009) notes that one of the business case arguments for age diversity is the assertion that the older workers provide a reflective image of the potential labour force. In addition, past research also showed that aged employees are usually more satisfied with their jobs and more committed to their organisation (James, Mckechnie and Swanberg, 2011). However, Metcalf and Thompson (1990) argue that the promotion of age diversity often limit organisations to recruit older workers for low-skilled and customer-attentive jobs, as opposed to placing them in positions that involve strategic management. Likewise, Kunze, Boehm and Bruch (2009) highlighted the social identity theory (Tajfel and Turner, 1986) and the self-categorisation theory (Turner, 1987) in arguing that, as the promotion of age diversity increases, there could
  • 28. The Business Case for Diversity Management | PAGE28 be an increase in the level of age discrimination and segregation. These theories proposed that individuals are prone to section themselves and other individuals into groups they exclusively relate to (Kunze, Boehm and Bruch, 2009). These researchers added that the older employees could sense discrimination and inter-group bias from the younger employees, especially if they deliberately differentiate themselves from the older workers and this could have a negative effect on their task performance and performance appraisals (Kunze, Boehm and Bruch, 2009). Similarly, Kunze, Boehm and Bruch (2013) argue that, with reference to the UE theory (Hambrick and Mason, 1984), if there were existence of negative age stereotypes in the executive board, this would generate negative age group segregation amongst the employees. However, Choi (2013), Nishii, Gotte and Raver (2007) argue that sufficient empirical research indicates that, a well diverse top executive team could aid better teamwork, increase work performance and promote better job satisfaction amongst the employees. Overall, Backes-Gellner and Veen (2013) conclude that the integration of age diversity is beneficial to the organisation because the older workers generate additional work knowledge and skills, thus increasing productivity and adding value to the organisation. II.) Gender Diversity Gender diversity can be viewed as the “patterned, socially produced distinctions between female and male” (Guirdham, 2011, p.10). Kalev, Kelly and Dobbin’s (2006) research claims that one of the business benefits of gender diversity is an improvement in problem-solving strategies, as females are more likely to possess these cognitive abilities. The research also indicates that this serves as a source of competitive advantage for the organisation (Kalev, Kelly and Dobbin, 2006). However, Williams and O’Reilly (1998) claim that there is empirical evidence to indicate that a gender diverse group exhibits higher levels of conflict and hostility, as opposed to an all-male group. This could prove detrimental to the organisation as high levels of
  • 29. The Business Case for Diversity Management | PAGE29 conflict downgrades team work, which ultimately leads to poor work performance. Nonetheless, there are some researchers that perceive gender diversity as a form of appreciation to the female employees such as Hanappi-Egger (2006), who points out that a low level of females at the top management level, as well as a large number at low hierarchical levels, signify that female workers are not being valued in the organisation. Linking this to the UE theory (Hambrick and Mason, 1984), studies also showed that female workers at the executive board have generated better gender inclusion in organisations, in comparison to the male executive workers and thus, should be regarded as assets to the organisations (Nishii, Gotte and Raver, 2007). Overall, Riordan and Shore (1997) claim that sufficient empirical research shows female workers to have higher levels of organisational and work commitment than their male counterparts, due to existence of greater responsibility outside the workplace. Nevertheless, the researchers acknowledge that further research needs to be carried out to really comprehend the relationship between gender diversity and work commitment (Riordan and Shore, 1997). III.) Racial Diversity Andrevski et al (2014) defined racial diversity in the workplace as the degree to which the human capital in an organisation belongs to several ethnic groups, as opposed to belonging to one group. Cheng and Li (2012) argue that, there has been an increase in racial diversity because most foreign immigrants have gradually become main sources of growth in labour markets worldwide. In addition, Richard, Kirby and Chadwick (2013) argued that, the business benefits of racial diversity within an organisation is an elevation in its decision-making and problem-solving abilities, as well as a broad selection of creative ideas and diverse knowledge on the needs of the locals. Furthermore, empirical research carried out by Herring (2009) on a national sample of business organisations, with the use of data derived from the
  • 30. The Business Case for Diversity Management | PAGE30 National Organisations Survey, showed that racial diversity can be linked with increase in profits, wider customer base, sales revenue and market shares. However, Bell et al (2011) argues that recruiting individuals specifically for the purpose of increasing racial diversity is misguided, as racial diversity is said to have a negative effect on team performance. These researchers claimed that, this could be linked to the self-categorisation theory (Turner, 1987), as individuals tend to categorise themselves based on the similarities observed in easily recognised characteristics such as the individuals race, gender and age, with race being the highest basis for group categorisation (Bell et al, 2011). Nonetheless, with reference to the RBV model (Barney, 1991), Richard, Kirby and Chadwick (2013) claim that, the utilisation of the racial minorities in an organisation would generate indispensable variation of knowledge, which ultimately results in improved organisational performance. McLeod and Lobel (1992) in Williams and O’Reilly (1998) supported this argument to some extent, by citing empirical research which consisted of tasks carried out by 137 undergraduate and graduate students, paired into two sets of groups i.e. the racial diverse group and the homogeneous group. The researcher found that, although the racial diverse group did not generate more ideas than the homogeneous group, the ideas generated were of better quality in comparison to those of the homogeneous group (McLeod and Lobel, 1992) and thus, can be deemed beneficial. 2.5.2 Major Business Drivers for Workforce Diversity Research shows that there are three major business drivers for workforce diversity, which are noted as: Employee Matters, Market Effectiveness and Business Reputation (CIPD, 2013; Rajan and Harris, 2003). This is as a result of the increasing need for competitive advantage, due to globalisation and the growing variations taking place in the global economy (Rajan and Harris, 2003).
  • 31. The Business Case for Diversity Management | PAGE31 I.) Employee Matters Organisations are beginning to comprehend the growing importance of having a diverse workforce, as most individuals want to feel valued and are more likely to be productive in organisations with fair work practices (CIPD, 2013). In addition, survey carried out by CIPD (2007) showed that recruiting and retaining the best talents to improve organisational performance is listed as one of the top ten business drivers for workforce diversity. Ali, Kulik and Metz (2011) also argue that, recruiting diverse employees with different experiences, could give insights to the consumer needs of different customers. Likewise, Johnson (2008) acknowledges that, diverse employees placed in groups for work projects are more likely to be successfully, with regards to meeting client needs. This implies that, in order for companies to meet the client needs of their stakeholders, they need to have a productive and creative workforce, which is why they set out to recruit diverse talents. II.) Market Effectiveness This is also interlinked to the growing importance of having a diverse workforce. As a result of market competitiveness and increase in the availability of open markets, organisations are recognising that a diverse workforce can provide insight to the advancement of new products, widen their consumer market and generate business opportunities, especially across borders (CIPD, 2013). Likewise, linking to the UE theory (Hambrick and Mason, 1984), Kaczmarek (2009) argues that diversity amongst top executives is highly beneficial to organisations that are greatly integrated in international markets i.e. MNCs. In addition, Yang and Konrad (2011) also note that, the RBV model (Barney, 1991) suggests that a diverse workforce can generate economic profit in a competitive market, especially if they are rare, non-substitutable and of high value.
  • 32. The Business Case for Diversity Management | PAGE32 III.) Business Reputation When statements of employee value and moral conduct are set as standards in an organisation, it becomes of high importance to the community it resides in (CIPD, 2013). This can be linked to the concept of Corporate Social Responsibility (CSR) wherein companies take interest in the social welfare of their employees and their communities. With the recruitment of diverse workers, both locally and globally, CSR is integrated in the organisation, which is likely going to generate a positive brand image for the organisation and a wider consumer base (CIPD, 2013). This can also be linked to the SE theory (Blau, 1964), such that, if the employees and the locals sense that the organisation has a fair and positive work environment, it would be reciprocated with a positive work attitude and good business reputation. 2.6 Summary This chapter reviewed the concept of diversity management by providing definitions from different academic sources, practitioners and companies. Also, the evolution of diversity was revised, right from the Civil Rights Movement era to the adoption of current diversity practices. This chapter also attempted to integrate three theoretical frameworks: RBV model, UE theory and SE theory, and underlined their relationship to the business case for diversity. The impact of demographic diversity on organisational performance was also reviewed with limitations to just three demographic types i.e. Age, Gender and Race. Furthermore, the three major business drivers for workforce diversity, cited as employee matters, business reputation and market effectiveness, were also briefly examined. The next chapter will attempt to analyse the case against the given literature with the use of significant company reports and case studies.
  • 33. The Business Case for Diversity Management | PAGE33 CHAPTER THREE – CASE ANALYSIS AND DISCUSSION 3.1 Introduction Research shows that, due to the growing demographic change worldwide, the concept of diversity management is becoming of great interest to the UK, as it is seen to be a vital addition to its current equal opportunities approach (Strauss, Sawyerr and Oke, 2008; Maxwell, Blair and McDougall, 2001). As derived from the case, ABC Plc. is a leading MNC in car manufacturing, with its headquarters situated in the UK. It is also noted that this company has just recently commenced the implementation of its diversity practices and requires vital knowledge on how to successfully integrate these practices long term. Firstly, this chapter will follow up on the objectives mentioned in the Introduction chapter, highlight the issues existing in the case and discuss selected HR practices in relation to the theoretical frameworks analysed in chapter two. It would also attempt to distinguish the demographics in selected developed and developing countries against the UK. Also, selected companies would be used as case studies for discussion regarding the business case for workforce diversity. 3.2 Case Analysis And Discussion 3.2.1 Issues Existing in the Case In order to analyse the reason for the slow adoption of diversity management practices in ABC Plc., the problems in the case has to be identified. First, it is depicted in the case that there is a potential barrier of the HR function in ABC Plc. acting exclusively, which could result in inaction. The case implies that working through HR without the use of the line management could prevent successful implementation of the diversity management programme in ABC Plc. Also, another issue shown in the case is the lack of staff continuity in the
  • 34. The Business Case for Diversity Management | PAGE34 continuous implementation of the diversity agenda. It is reported that a full time employee who was in charge of the diversity agenda had resigned and as a result, the implementation was placed on hold. These issues will set a base for subsequent discussion on the different HR practices and activities linked with diversity management in ABC Plc. and generate the reasons for its slow adoption of diversity management practices. Although there are various HR practices and activities, this discussion would focus on the practice of HR strategic partnering and four relevant HR activities, which are: recruitment and selection, training, reward management and appraisals. 3.2.2 HR Strategic Partnering It can be said that the success of workforce diversity lies solely with the effectiveness of the management team. Research shows that there are certain individuals in an organisation who are vital to the progress of workforce diversity and they are listed as the diversity managers, line managers, development professionals, HR managers, etc. (CIPD, 2007). HR strategic partnering is described as the process “in which HR professionals work closely with business leaders and/or line managers to achieve shared organisational objectives” (Taylor and Woodhams, 2012, p. 5). It is stated in the case that, one of the challenges ABC Plc. encountered in implementing its diversity management programme is the HR function working exclusively without the involvement of the line management. It could be implied that one of the reasons for the slow adoption of diversity management practices in this company is the lack of strategic partnering between the HR management and the line management. Reilly, Tamkin and Broughton (2007) report that one of the benefits of strategic partnering is the assertion that, it permits the HR management to play a more strategic role, with regards to contributing to the business needs of the company and promoting the employees’ needs as well, while demonstrating better commitment with the line management.
  • 35. The Business Case for Diversity Management | PAGE35 Pertaining to diversity management, CIPD (2002) reports that both HR and line managers need to work together to implement diversity successfully, as Ozbilgin et al (2008) notes that motivating line management is vital to the progress of workforce diversity. Studies show that, most organisations fail with their diversity integration because they view it as just another HR initiative (Hirschkorn, 2004). Studies show that, as both parties are interested in achieving the organisational objective of diversity integration, it would be beneficial to the organisation if the HR managers generate more support to the line managers, as they are challenged with the increasing need for fairness in the workplace, while handling pressure from external regulatory forces (Foster and Harris, 2005). 3.2.3 Recruitment and Selection Harris (2007) reports that, as the market competitiveness grows globally, a much more larger and extensive work environment is created, thus increasing the need for the recruitment and retention of the best talents. It is depicted in the case that ABC Plc. has a global diversity council, which is led by the head of HR and constitutes of the line managers in different functions in the company, who administer the diversity management programme. Using the UE theory proposed by Hambrick and Mason (1984), it is implied that the success of diversity integration in an organisation depends on the presence of diversity at the senior management level. Hirschkorn (2004) proposes that, in order to implement diversity successfully, changes have to commence with the top management, as they are vital change agents. It could be implied that one of the reasons for the slow adoption of diversity management practices in ABC Plc. stems from the lack of a diversified senior management team i.e. its global diversity council. It is reported that organisations try to acquire and develop diverse human capital that is expected to generate and apply effective product marketing strategies, which would greatly increase the value of their products in the long run (Yang and
  • 36. The Business Case for Diversity Management | PAGE36 Konrad, 2011). Thus, if the global diversity council at ABC Plc. were homogeneous, driving the diversity initiatives for the purpose of business growth would prove futile, as their principles and policies are a reflection of the diversity practices in the company. Likewise, if there were lack of support from the executive board members, with regards to these principles and policies, the diversity integration at ABC Plc. would be unsuccessful. Also, it could be implied that companies want to progress higher than others in a competitive market, thus the need for recruiting and selecting the right set of people and as stated in the literature review, employee matters and market effectiveness are two of the major drivers for workforce diversity. Studies show that Toyota (2014), a top car manufacturing company, strongly believes that cautiously recruiting and developing the right human resources continuously, would generate competitive advantage and mutual success for both the company and the employees, in the long term (Liker and Hoseus, 2008). This can be linked to the RBV model and is applicable to the case in the sense that, the adoption of the diversity management practices in ABC Plc. cannot be successful, if those recruited for this purpose are not the right set of people or are not being utilised effectively. It can be argued that the value of the diversity management programme in ABC Plc., in the long run, depends mostly on the effectiveness of the strategies adopted by those recruited and selected for the task. Furthermore, citing Avon Plc. as an example, this MNC started a global inclusion office in 2010 in order to, integrate diversity into its core practices, employ diversity as a source for business growth and promote brand reputation (Avon, 2014). Also, with the help of its diverse Associate Resource Groups (ARGs), who are change agents for business expansion, talent recruitment and development, it was able to implement its diversity management practices successfully, because these ARGs acted as strategic partners, ensuring the alignment of Avon’s global diversity strategy with its business goals (Avon, 2014).
  • 37. The Business Case for Diversity Management | PAGE37 3.2.4 Training Another reason for slow adoption of diversity management practices in ABC Plc. could be the lack of training on the diversity management concept, for the parties involved, which includes the HR managers, the line managers and the employees (CIPD, 2013). Studies show that, these individuals have an obligation to ensure diversity is fully integrated in the work practices of the organisation (Hirschkorn, 2004; CIPD, 2007). However, they also need to have the necessary skills needed to ensure progress in diversity integration. Studies show that, there is an essential need to formally train these managers, who have the responsibility of advancing diversity integration (CIPD, 2007; 2013). Likewise, Shen et al (2009) report that different units in an organisation, i.e. employees, managers, etc., often have different perceptions to the real meaning of workforce diversity, thus quality training for diversity awareness is imperative to the successful integration of diversity management. Furthermore, Strauss, Sawyerr and Oke (2008) report that introducing the right training and change management programmes can positively influence peoples’ attitudes toward diversity integration in the workplace. Citing Dell as an example, this MNC introduced training programmes for its employees on diversity awareness, in the form of workshops and online training sessions, which take place annually and is compulsory for all Dell employees (Shin and Park, 2013). Especially when these employees are placed in diverse group settings, Shen et al (2009) advises that diversity training is essential in order to avoid group conflicts. 3.2.5 Reward Management It could be implied that another reason for the slow adoption of diversity management practices in ABC Plc. is the lack of diversified reward practices. When there are diverse employees in an organisation, introducing rewards and benefits that are unique to their individual needs becomes imperative to
  • 38. The Business Case for Diversity Management | PAGE38 maintaining their work-life balance (Ko and Hur, 2014). Linking to the literature review in chapter two, the RBV model (Barney, 1991) proposed that companies that invest in their human resources would attain competitive advantage in return, as these employees become major source of business growth for them (Wernerfelt, 2013). Likewise, Shaw, Park and Kim (2013) proposed that investing in these employees is likely to lead to reduction in voluntary turnovers. It can be asserted that providing fair rewards and benefits for these employees is a form of investment for the company, if they expect better work productivity as a return on investment. Furthermore, linking to the SE theory examined in the literature review, Blau’s (1964) research showed that, if the employees perceive that there are fair work practices in their workplace, they would reciprocate with positive work attitudes (Ko and Hur, 2014). Ford (2014), a leading global car manufacturer, is an example of a company that integrates diverse rewards and benefits in its HR practices. It is considered to be an award-winning leader in diversity management as a result of its inclusive culture with benefits such as flexible working hours for female employees, etc. (Ford, 2014). 3.2.6 Appraisals Effective appraisal methods are crucial to successful diversity management practices (Shen et al, 2009). It could be implied that another reason for slow adoption of diversity management practices at ABC Plc. is the lack of fair appraisal methods. Studies show that, employees are committed to organisations where every opinion is valued and respected (Richard, Kirby and Chadwick, 2013). Likewise, Shen et al (2009) advises that the implementation of diversity management practices can be applicable with the use of fair and objective performance appraisal methods. With reference to the SE theory (Blau, 1964), it is noted that an employee’s perception of organisational justice has an effect on his or her level of work commitment (Ko and Hur, 2014). In the case of diversity management,
  • 39. The Business Case for Diversity Management | PAGE39 managers need to create opportunities for their employees to express their diverse views and concerns without prejudice, as this can help monitor their level of job satisfaction and prevent high voluntary turnover rates (Ko and Hur, 2014). 3.3 The Demographics in UK and Selected Developing and Developed Economies In light of the issues discussed above, this section would attempt to analyse the different demographic settings in UK and compare with selected developing and developed countries such as India, Turkey, China and the US. It would shed light on the influence these demographic settings could have in their labour markets and advise that MNCs be made aware of these settings if they plan to adopt diversity management practices in these countries. 3.3.1 Age Demographics As mentioned in the literature review, shortages in the labour market have prompted a more age diverse workforce worldwide (Kunze, Boehm and Bruch, 2013). Likewise, the diverse age divisions in the populations of different countries have a direct effect on the entry and length of stay of the workers in their labour force. In the UK, research shows that more than 73 percent of the entire population are aged 25 years and above, with 41 percent allocated to those aged from 25 to 54, 17.5 percent constituting of those aged from 55 to 64 years and 17.3 percent constituting of those aged 65 years and above (CIA Factbook, 2014). Due to this demographic set up, age diversity has a strong influence in the working nature of organisations in the UK. This has led to a number of organisations targeted at ensuring the welfare of the ageing workforce such as AgeUK (2014). AgeUK (2014) is UK’s largest non-profit organisation
  • 40. The Business Case for Diversity Management | PAGE40 whose proceeds are used to ensure the welfare of aged citizens as well as protect the welfares of the upcoming generations long term. Also, B&Q is another UK company that integrates age diversity successfully. The company currently employs over 32,000 people with the youngest age being 16 years old and the oldest, 96 years old (B&Q, 2014). In addition, a quarter of its whole workforce are aged 50 years and above. Furthermore, survey carried out by Warwick University on B&Q in 1991, showed that the company’s profits increased by 18 percent, with decrease in absenteeism and shrinkage by 39 percent and 58 percent respectively, as a result of its age diversity integration (B&Q, 2006). This became a form of encouragement for the company, as they began to recruit more aged workers productively (B&Q, 2006). Likewise, other developed countries also have strong presence of age diversity. Take China - a major emerging economy - for example; due to its policy on a single child per family, it has resulted in its rapidly ageing labour market (Guirdham, 2011). According to the CIA Factbook (2014), China’s age structure indicates that the age range of 25 – 54 years reports a rate of 47.2 percent, with the 55 years and over showing a rate of 19 percent. This shows that those over the age of 25 years constitute of approximately 67 percent of the Chinese population, which would explain the rapidly ageing workforce. MNCs that want to set up subsidiaries in China need to be aware of this age demographic set up, especially in their recruitment and selection practices, if they want to integrate age diversity successfully. 3.3.2 Gender Demographics It is factual knowledge that in Asia, the number of male populates outnumber the number of female populates (Guirdham, 2011). MNCs that plan to integrate gender diversity as part of their business strategy need to be aware of these demographics.
  • 41. The Business Case for Diversity Management | PAGE41 In developing countries such as India, gender diversity has become a critical issue in workplaces, as it is a male dominated country. Census data derived from the CIA Factbook (2014) shows that, the entire Indian population records 1.08 males to 1 female ratio figure. As a result of this male domination in India, female employees are prone to stagnant work positions, while the male employees progress through work positions (Gupta, 2009). Nonetheless, MNCs in India are progressively integrating gender diversity as part of their diversity management strategy (Gupta, 2009). MNCs such as Bharti Enterprise are part of this initiative, with this company ensuring that 25 to 30 percent female applicants progress to the interview stage and requesting its global recruitment agencies to follow this same policy (Buddhapriya, 2013). However, in Europe, the number of females in the European labour force has quickly progressed from year 2000 to year 2006, with the female to male ratio being 105:100 (Guirdham, 2011). Currently in the UK, the census shows a ratio of 0.99 males to 1 female while the current census for Turkey shows a ratio of 1.02 males to 1 female (CIA Factbook, 2014). Avon (2014) is another MNC that is a major promoter for gender diversity and has successfully integrated it as part of its core business strategy. Currently in Turkey, Avon (2014) has placed females in leadership positions, making up 100 percent of the directorial positions. 3.3.3 Race Demographics In reference to the literature review, studies show that foreign immigrants are progressively becoming key sources of growth in labour markets, as they help to provide significant knowledge on the needs of the locals (Cheng and Li, 2012; Richard, Kirby and Chadwick, 2013). Studies show that racial diversity in the UK has progressed over the years, with the racial minority population witnessing an increase from 6.4 percent in 1991, to 6.7 percent in 2008 and 12.8 percent in 2011 (Strauss, Sawyerr and Oke, 2008; CIA Factbook, 2014). Although racial diversity in the UK seems to be increasing, it is however moderately low in comparison to the US. According to the CIA Factbook
  • 42. The Business Case for Diversity Management | PAGE42 (2014), figures show that racial minorities make up 20.04 percent of the US population. This is as a result of the unfavourable immigration policies in the UK, with regards to racial minorities, as opposed to the less restrictive policies in the US (Strauss, Sawyerr and Oke, 2008). MNCs need to be aware of the immigration policies in these countries so as to effectively manage racial diversity. Johnson and Johnson (2014) is an example of an MNC that integrates racial diversity successfully. It is reported that it considers diversity a central part of its organisational culture and its executive board of 13 members consist of three African-American members, as well as one Hispanic (Johnson and Johnson, 2014). 3.4 Summary This chapter analysed the issues present in ABC Plc. and incorporated selected HR practices and activities, relative to diversity management, as basis for discussion. These practices and activities were listed as HR strategic partnering, recruiting and selecting diverse talents, appraisals, training, fair rewards and benefits. Also, this chapter discussed the different demographic settings in few developed and developing economies, such as UK, US, India, Turkey and China and the demographics discussed were highlighted as Age, Gender and Race.
  • 43. The Business Case for Diversity Management | PAGE43 CHAPTER FOUR – RECOMMENDATIONS Linking to the discussions carried out in chapter three, this section would recommend a suitable model of global diversity management for ABC Plc. and incorporate some aspects of a five-step strategy, proposed by Gutmacher (1998), which would help it implement its diversity management programme successfully, for the long term. In addition, these recommendations would be in light of the issues observed in the case analysis section and would help ABC Plc. increase its competitiveness, ensure profitable growth and attain competitive advantage. Gutmacher (1998) acknowledges that various organisations have adopted this diversity strategy and have found it effective and beneficial. 4.1 Global Diversity Management Karabacakoglu and Ozbilgin (2010) analysed three models of global diversity management that MNCs typically adopt and they are highlighted as Universal, Localised and Transversal. The Universal model is focused on applying a global approach to managing diversity, with no consideration for local preferences, while the Localised model is fixated on localising diversity management practices, with emphasis on native preferences (Karabacakoglu and Ozbilgin, 2010). However, the Transversal model is a mix of both the Universal and Localised models. With the Transversal model, the MNC sets a number of combined global diversity management practices, while permitting the subsidiaries to integrate their unique primacies for local diversity management (Karabacakoglu and Ozbilgin, 2010). As discussed in chapter three, various countries have unique demographic settings and policies that influence their diversity management practices, and considering ABC Plc. is an MNC, it is recommended that they integrate the Transversal model for their global diversity management programme. Ericsson is an example of an MNC that uses the Transversal model and research shows that, this model has resulted in the successful adoption of its
  • 44. The Business Case for Diversity Management | PAGE44 global diversity management practices (Ericsson, 2014). It is reported that, the HR department in Ericsson has sole responsibility for the development of its global diversity initiatives and all of its line managers have the responsibility of implementing the local and global diversity initiatives (Karabacakoglu and Ozbilgin, 2010). In addition, Ericsson ensures that each subsidiary manager endorses and manages the advancement of the diversity practices in their localities, while also reporting the progression status of their local diversity practices to the global diversity director every quarter (Karabacakoglu and Ozbilgin, 2010). Having established that ABC Plc. should apply the Transversal model of global diversity management, subsequent recommendations for the implementation of a suitable diversity management strategy would be discussed below. 4.2 Diversity Task Group Gutmacher (1998) proposes that the first step to initiating the diversity management strategy is to recruit a diversity task group i.e. a selected group of individuals, with proficient knowledge on diversity management, who generates the diversity policies and can administer the firm’s diversity initiatives, with the right provision of control, focus and continuity. The researcher added that these selected individuals should be representatives of different demographics such as gender, age, race, etc. and they could be external sources with knowledge on the subject of diversity or they could be selected from different departments and sections within a firm (Gutmacher, 1998). Thus, it is recommended that ABC Plc. select a more diversified global diversity council, which would include the integration of more female employees, aged workers, ethnic minorities, etc., both locally and globally (Shen et al, 2009). Integrating these diverse employees into its global diversity council would give ABC Plc. a direct insight into the unique needs of each underrepresented group worldwide, including the needs of its diverse customers, thus creating a platform where their needs can be met and
  • 45. The Business Case for Diversity Management | PAGE45 business growth can be ensured. Also, as the global diversity council in ABC Plc. generates the diversity initiatives and policies, CIPD (2013) proposes that, they should have the support of the board members and top management team. This can be linked to the UE theory (Hambrick and Mason, 1984), in the sense that the attitudes of the executive members towards diversity integration can positively or negatively influence the reception of diversity integration in the entire work place. Trompenaars and Hampden-Turner (1977) in Hanappi-Egger (2006) propose that treating diversity management as a continual progression, rather than a singular occurrence, is highly imperative in ensuring its business success. Thus, it is also recommended that, ABC Plc. adopt the practice of HR strategic partnering in forming its diversity task group and driving the diversity initiatives long term. This subject of HR strategic partnering, which was discussed in chapter three, proposes that HR managers should partner with line managers and/or business leaders in order to attain a shared organisational goal (Taylor and Woodhams, 2012; CIPD, 2013). Linking to the practice of HR strategic partnering, it would be beneficial to ABC Plc. to ensure that the line managers are fully involved in the implementation of its diversity management programme, especially those in the global diversity council. Also, it is recommended that ABC Plc. generate employee resource groups, who would act as voluntary partners to its global diversity council, in order to ensure the continuous progress of its diversity management programme. Several top MNCs encourage the use of these employee resource groups to effectively integrate diversity into all areas of their businesses. Citing Coca- Cola as an example, its diversity advisory councils partner with employee resource groups and they have discussions regarding the execution and maintenance of practices that would embrace the cultural and personal uniqueness in each employee (Shin and Park, 2013). In addition, as a result of this partnership, Coca-Cola’s diversity advisory councils provide its top management with different ways to advance their diversity objectives while
  • 46. The Business Case for Diversity Management | PAGE46 the employee resource groups generate a platform for connection between employees who share similar interests (Shin and Park, 2013). Other MNCs that have employed the use of these employee resource groups are Ford (2014) and Microsoft (2014). Ford’s partnership with its employee resource groups has facilitated the availability of support and outreach to employees who belong to the same racial group, age group or backgrounds (Ford, 2014). On the other hand, Microsoft (2014) practices a more Transversal model of global diversity management, with the integration of its employee resource groups, which are more global oriented, and its employee networks, which are more localised and country specific. 4.3 Diversity Training Another step in Gutmacher’s (1998) diversity strategy is to provide diversity training to the participants, so they can comprehend how the diversity initiatives link to the overall business strategy. Thus, it is recommended that ABC Plc. provide diversity training programmes to all participants involved i.e. the employees, the HR and line managers at all levels in the company and the top management team. A top-down training strategy should be adopted at ABC Plc., such that training for diversity awareness is provided to the senior management first, and diversity training on team-building skills is delivered to the employees subsequently (Shen et al, 2009). These training programmes should include a global mentoring programme, a web-based global diversity- training programme and educative diversity programme. First, the global mentoring programme should be targeted at the underrepresented groups, especially the female employees. Volkswagen (2014) is an MNC that targets its mentoring programme to women, as it believes that women are still being underrepresented in the car manufacturing industry. Thus, this global mentoring programme would help ABC Plc. integrate more skilled female employees in top management positions and generate more diversity awareness both globally and locally.
  • 47. The Business Case for Diversity Management | PAGE47 Furthermore, the web-based global diversity-training programme would include online training tools and workshops to help the employees to understand the business case for diversity management at ABC Plc. Dell (2014) and Ericsson (2014) are two MNCs who have integrated online based training programmes into their diversity training strategy and have found them beneficial to their diversity training needs. Lee (2014) reports that most MNCs collectively spend approximately 130 billion dollars annually, on job training and accreditation, with online training costing approximately 1,195 dollars per employee annually. The researcher added that, these companies realise the potential benefits of online training programmes, which are noted as better innovation and creativity, which utilmately leads to competitive advantage for them (Lee, 2014). In addition, the educative diversity programme would involve internal seminars for the employees, on the issues of diversity and collaboration with external educational sources. Currently, Toyota’s successful collaboration with University of Toyota, with regards to delivering educative training on diversity to its employees, is part of its yearly commitment to diversity worth 1.2 billion dollars (Wiscombe, 2007). Likewise, Coca-Cola is another MNC that currently adopts educative diversity training programmes (Shin and Park, 2013). 4.4 Fair Rewards Gutmacher (1998) proposes that, another step in implementing the diversity management programme is to ensure that the diversity practices align with other organisational practices such as employee rewards and recognition. Therefore, it is recommended that ABC Plc. integrate fair rewards and benefits targeted at improving the work life balance of the underrepresented groups. These benefits should include medical and dental insurance, flexible working hours and childcare leave, which are all beneficial to female employees, aged workers, etc. Top MNCs like Toyota (2014) and Dell (2014) believe in integrating these fair and flexible reward practices, to improve the work life balance of their employees, which they believe would result in better
  • 48. The Business Case for Diversity Management | PAGE48 work productivity and profitable growth subsequently. This assertion can be linked to the SE theory (Blau, 1964) such that, organisations initiate fair employee benefits and rewards in exchange for positive employee work attitudes and high levels of job satisfaction. 4.5 Measurement The last step of the diversity strategy is to measure the effectiveness of the diversity management programme (Gutmacher, 1998). As discussed in chapter three, when employees perceive that their opinions are valued, with no form of prejudice, they have higher levels of job satisfaction. Thus, it is recommended that ABC Plc. conduct employee attitude survey to assess the advancement of diversity awareness in its firm. Ozbilgin et al (2008) proposes that this form of measurement is considered the most successful. Also, ABC Plc. should incorporate feedback forms to assess the number of discrimination complaints post-diversity integration (Shen et al, 2009). This can help the company analyse the success level of the diversity management programme. Lastly, ABC Plc. should assess the retention figures and exit interviews to certify that employees are not resigning as a result of ineffective diversity integration (Shen et al, 2009). With the diversity strategy discussed above, it can be asserted that these recommendations would enable ABC Plc. align its HR and diversity management practices successfully, and attain business growth in the longer term. Subsequently, an action plan would be drawn in order to show the implementation process.
  • 49. The Business Case for Diversity Management | PAGE49 4.6 Action Plan Issues to Rectify Action Impact By Whom Timescale Cost 1.) Model of global diversity management programme. 1.) Incorporate the Transversal model of global diversity management programmes. 2.) Delegate the HR department with the sole responsibility of developing the global diversity initiatives. The diversity management programme at ABC Plc. would be successfully implemented and advanced, both locally and globally. CEO, all executive directors. Second Quarter in 2014, prior to implementati on of diversity practices. No cost. 2.) Diversity Task Group 1.) Identify diverse employees with a combination of demographic profiles, from different departments in the firm to create a more diversified global diversity council. 2.) Assign the line management with the implementation of the local and global diversity initiatives. 3.) Generate voluntary Employee Resource Groups to collaborate with the global diversity council. 4.) Generate employee networks to partner with the subsidiaries to localise With a diversified global diversity council and employee resource groups, diverse customer and employee needs would be identified and met, hence ensuring business growth. HR Director Second Quarter in 2014, post- meeting with CEO and executive directors. 1.) 2% salary increase for global diversity council members 2.) No cost for voluntary employee resource groups.
  • 50. The Business Case for Diversity Management | PAGE50 diversity initiatives. 3.) Diversity Training 1.) Introduction of a global mentoring programme mostly targeted at the underrepresented groups. 2.) Online training tools and workshops on the business case for diversity management for all employees. 3.) Internal educative seminars on issues of diversity for all employees and partnership with external educational bodies. Advance the level diversity awareness at ABC Plc. Executive directors, HR managers, line managers, employees First 3 months 1.) No cost for mentoring programme. 2.) £1,250 on average, per employee, for ten online workshop sessions. 3.) £480 on average, per employee, for four seminars each month. 4.) Reward Management Integration of medical and dental insurance, more flexible working hours and child care leave, mostly targeted at the underrepresented groups. Higher job satisfaction and work productivity as a result of better work-life balance. HR manager, line manager. On-going 2% Increase in corporate budget to cover these reward practices, annually. 5.) Measurement 1.) Conduction of employee attitude survey. 2.) Incorporation of feedback forms. 3.) Assess retention figures and exit interviews. Increase in budget for performance management resources. HR Director. Third Quarter of 2014, post- diversity integration. 1% Increase in corporate budget for measurement resources, quarterly.
  • 51. The Business Case for Diversity Management | PAGE51 CHAPTER FIVE – CONCLUSION In conclusion, it can be said that this research is a valid contribution to the literature on the concept of diversity and the business case for diversity management. The business case for diversity management has prompted many organisations to re-examine their motives behind integrating diversity into their businesses. Thus, the main purpose of this report has been to review past and current literature on the concept of diversity and the rationality behind the business case for diversity management in ABC Plc. 5.1 Key Points of the Literature Three significant theories relative to the business case for diversity were reviewed in the literature. The first theoretical framework adopted was the RBV model proposed by Barney in 1991. It was concluded that this model strongly aligned strategic management practices to diversity management, as companies are placing emphasis on their diverse human capital as a source of competitive advantage, by constantly developing them to be rare and inimitable. Other theories applied in this research were the UE theory and the SE theory, both proposed by Hambrick and Mason (1984) and Blau (1964) respectively. The UE theory was linked to the business case for diversity management, in the sense that, the presence of diversity at the top management level would determine the successful integration of diversity in the workplace, as the attitudes of these top executive members strongly influence the policies governing the organisation. In addition, the SE theory concluded that employees who ascertain that there is a fair and diverse work environment would reciprocate with positive work attitudes and better work productivity. This report also reviewed the impact of age demography, racial demography and gender demography on the business case for diversity management and concluded that integrating these diverse demographics is imperative to business success. To round up the discussion on the concept of diversity
  • 52. The Business Case for Diversity Management | PAGE52 management, this report concluded that the three major business drivers for diversity management were employee matters, market effectiveness and business reputation. 5.2 Main Findings of the Study Evidence in this research showed that, majority of organisations want to attain that competitive edge over their rivals and as a result, they incessantly try to ensure their human capital is of great value. These findings showed that, the business case for diversity management has been a growing concept in recent years, as organisations are beginning to support an organisational culture that places high value on individual dissimilarities and uniqueness, and utilising them in order to gain profitable growth. Likewise, these findings also revealed that a diverse team of employees generates better creativity and innovation, which is highly beneficial to the company’s growth as well. Furthermore, evidence in this study showed that the strong presence of age, racial and gender demographics vary between countries and MNCs need to put this into consideration, prior to the adoption of their diversity management practices in these countries. In addition, research showed that strengthening the alignment of diversity management practices with HR management practices enhances organisational value in the longer term. Evidence also revealed that the support of the executive board members in a firm are crucial to the successful integration of its diversity management practices. It can be affirmed that this research has contributed to the argument for the business case for diversity management, however it is expected that further advancement would be done with this research, so as to generate better understanding of diversity management in the business society.
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