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Multi-cultural and Diversity Management

Introduction

Culture is defined as " the complex whole that includes knowledge, beliefs, art, morals, laws, custom and any other capabilities and habits acquired by man as a member of society’.^[1]

Diversity is explained as the individualistic differences one encounters among the dimensions of race,

, sexual orientation, age, socioeconomic status, physical abilities, , political beliefs, or any other ideologies.^[2] It is the exploration and embracing of these differences in a safe, positive, and nurturing environment that constitutes as good diversity management. Successful diversity management is about understanding each other and moving beyond simple tolerance to embrace and celebrate the rich dimensions of the diversity that exists in each individual.^[3]

The unique combination of culture and diversity management involves accepting and respecting individualistic differences and enabling people to act on their philosophies and beliefs in a socially acceptable manner.

Diversity management can be defined as mindful management that consists of personnel policies, office programs, and initiatives such as trainings, implementation of mission statements, and task forces that can be characterized as relevant to diversity.^[4] This definition centres around diversity within firms and can be be directly related to the elements present in any multi-cultural organization. The case for diversity management argues that personal dimensions such as race, ethnicity etc. cannot be individually evaluated, but need to be viewed as a whole to understand diversity and it's effects and benefits. Diversity managment should not be seen as confined to the workplace, It is much broader and conceptually linked to different fundamentals within family and professional life.

Multi-cultural and diversity management contends that within the organizational environment, we cannot exist mutually exclusive to each other; we are all in some way co-dependent on each other regardless of seniority or rank. Through embracing the diversity of a multi-cultural workforce, managers can build organizational culture which includes a holistic approach to values, beliefs principles, practices and behaviour.^[5]

Two principal ideologies identified in organizational psychology literature can be used to develop strategies for effective diversity management are M

Multiculturalism

Multiculturalism supports the importance of accepting and celebrating group dynamics.[11]

Multiculturalism brings benefits to the organization such as;^[12]

• Improved decision making and increased organisational creativity;
• Bridging of the communication gap enabling effective team work;
• Greater success in marketing to foreign and ethnic minority markets; and
• Better distribution of economic opportunities

Color Blind Approach

Color blindness believes group dynamics should be disregarded as individuals are generally the same.^[11] The implementation of color blind approach has mainly been associated with negative reviews as it in some cased breeds a level of of discrimination.^[11] This approach may suppress the reality of employees’ socially diverse identities and may reduce the presence of group diversities and the crucial benefits associated with having a work force which encompasses divergent ideas that would could greatly benefit an organization.^[13] Further, this approach may limit organization’s capacity for learning and improvement in their own strategies and practices.^[14] Based on these literatures, it could be suggested that managerial efforts to support diversity through color blindness may encourage inequality and discrimination.

Though contrasting in nature, both ideologies are applied at the organizational levels and supports equality in the work environment. However, management must be aware that over reliance or misuse of one ideology with an aim for achieving diversity management might result in the unintentional inequality and discrimination of employees.^[11]

Though these two schools of thoughts attempt to simplify organizational multi-cultural and diversity management, the thought process of individualistic beings cannot be undermined. The different levels of philosophies – be it individual, societal, and organizational brings complexities to one’s ‘own’ survival. In other words, an answer for a simple question such as what is right or wrong for one? cannot be explained in modest terms. This leads to further ambiguity among different groups and creates challenges to acceptance of diversity management. Some of these obstacles include;^[15]

• Significant differences in valuation and acceptance of diversity management concepts;
• Staying in the comfort level and building association only with those who are like themselves;
• Grievances caused due to introducing new approaches to old practices; generation gap; and
• Unable to implement an ‘all employee inclusive’ diversity management approach.

Overcoming these challenges are not straightforward, however in an era of business mergers, takeovers and increased migration , it is crucial for managers to account for the importance and implications of effective diversity management. By doing so, the organization can stand out in the eyes of public and the regulatory bodies and can be perceived as a socially responsible institutions.

The successful realization of advantages associated with multi-cultural and diversity management depend largely upon the leadership quality of the senior management in any organization. An

leadership who instils a personal agenda instead of welcoming heterogeneous views from employees is less likely effectively motivate and retain staff.

Furthermore within multinational corporations it is key to balance between international integration and local responsiveness in a sustainable manner to rightfully reap the benefits of multi-cultural and diversity management. If any aspect is unfairly balanced, the arising implications might be challenging to resolve.^[16]

History

The history of diversity management in United States

Through the 1960s and 1970s diversity management was viewed as a form of human resource management, originating from the social and civil rights movements.^[17] In this period, diversity management placed emphasis on solving social inequity problems in social groups. Discrimination laws around companies were initially brought to light during the civil rights movement in 1964. Companies were not allowed to discriminate regarding race, religion, sex, nationality in employment practices.^[18] Society at this point demanded that organizations offer equal opportunities to employment applicants who had similar qualifications and achievements. Another executive regulation, released in 1965, requested that government officials take positive measures to discard the former models of exclusion. These actions served as a favourable role in eliminating discrimination against specific groups of workers and imposing strict punishments for unfair employment practices. To assist this movement, in the 1960s, some commercial authorities including job-matching institutions were set up to address the difficulty of diversity management.^[19]

Although regulations were introduced to address exclusion and discrimination, they were not as effective as they could have been in solving diversity issues in many companies. While workforces became increasingly diverse, deep-rooted company cultures were often hard to transform. During the period of 1970s to early 1980s, to encourage the acceptance of a more diversified workforce, many organizations began offering training sessions focused on “valuing diversity”. The main purpose of these strategies was to alter the attitudes of workers and remove behaviours which showed more subtle types of discrimination that consistently impeded necessary interactions. These widely adopted training sessions expanded “diversity” conception because people started to understand that visible differences like race and sex were not the only factors influencing relationships among colleagues. These training programs took initiatives to encourage workers to pay more attention to the wide variety of cultural and personality differences, resulting in the improvement in decision making, dilemma solving and innovation at work.^[20]

In the late 1980s, Johnston and Packer claimed that in the next ten years, workers would get increasingly older, more feminized in American companies, because just 10 percent of new employees will be local white men, which is nearly four time less than that of 1987.^[21] They suggested that the government was required to invest more in education, accompanied with the changes of working conditions and environment to meet the needs for female workers. For example, more flexible time for taking care of children. Furthermore, they also pointed out that minority workers (black people) were confronted with not just education and training problems, but also linguistic and cultural barriers.

In the 1990s, diversity trope transformed to place emphasis on the business context for increasing workforce variety. The former CEO of Hewlett Packard set an example for this transformation by persuading other fellow administrators that managing diversity in an organization is essential for a business because more diversified workforce generally generates better outcomes and performance performance than those generated by a homogeneous workforce.^[22]

The history of diversity management in Australia

In Australia, diversity management first emerged in literature in 1992. This was in the form of a short report on equal employment opportunity programs in more than 10 organizations. Moving forward, further explanations and definitions based on Australian context appeared in government-funded periodicals, meeting records, Asia Pacific Journal of Human Resources, and also in finance and management textbooks in education institution.^[23]

Following the adoption of diversity management in United States, Australia began accepting the concept. The transmission to Australia was powered by the existence of international American controlled enterprises which served as a contributing factor in promoting diversity. These companies dominated the early adoption of diversity management in Australia, they included, Ford, Shell and IBM.^[24]

The desire of Australian businesses to increase their competitiveness in global context, accelerated the uptake of diversity management in Australia. Karpin (1995) claimed that the Australian government released a report of the industry task force on skills of management, which illustrated the importance of better management of diversity of culture and gender. This was due to findings that the deficiency of diversity in organizations was a dominant reason for stunted development, efficiency and effectiveness of Australian companies.^[25]

In the past 20 years, the Australian government has taken several diversity encouraging initiatives, which are part of reformed multicultural regulation, and stands to promote multicultural acceptance and contribute to generating other economic benefits. These driving factors for promoting diversity made the concept of diversity management more present in managerial and public environment during the period 1990s to early 2000s.^[26]

Some communities like diversity practitioner communitys also have been set up in the last few years, including full-time diversity practitioners and human resource managers who take the responsibility of diversity management and development. The practitioner community originated from organizations which were dedicated to promoting the equal employment opportunity in work place in 1990s. An example of this is the, EEO network in Victoria. As diversity management becomes increasingly popular, equal employment opportunity networks have expanded and have launched a forum for the people who are interested in equal employment opportunity issues and offer assistance to practitioners to improve their internal diversity and accommodation abilities.^[26]

Today diversity management is a well-developed business management concern in Australia. According to the investigation of practitioners of human resource management, there was a dramatic increase (168%) in the level of consciousness and practice of managing diversity in Australian during the period of 1999 to 2001.^[27]

Case Study

As the world becomes 'smaller' and global interaction and business dealings become part of everyday life, the distance between us from a cultural perspective has not changed. We have spent thousands of years developing

and methods for maintaining order, yet we have achieved this independently of each other. As our worlds and civilisations now collide, we are faced with the task of being mindful of each others cultures, in order for us to maintain order while dealing in multi-cultural settings.

One famous case which created much discussion around cross cultural ethical practices was that of the Enron funded power plant ordeal in Dabhole, Maharashtra state, India.

Case 1

In 1992 India was on the brink of a digital boom, Enron was one company that recognised this and set on a path to build a power station in Dabhole, India. At the time this was India's largest ever private foreign investment^[28] and included partnerships with General Electric and Bechtel. Unfortunately in the early stages of development it was discovered that the the power generated would cost too much money and the investment would not be feasible.^[29] Despite the forecast liability the Indian Government guaranteed Enron a significant return on investment, and construction began.

Unfortunately by 1995 allegations of bribery were made by both Gopinath Munde, a senior Indian politician and the Human Rights Watch.^[30] Soon after, public opinion tuned against the power station development and the government guarantees were withdrawn. By 1999 only a small portion of the plant was completed and began operating.^[29]

In analysis of this case, we need to understand what caused public opinion to change so dramatically. Much of the criticism of Enron was focused on the ethical bribary and corruption breaches that they allegedly were involved in. This however is inconsistent with the Transparency International study that found that 62% of Indians had first hand experience paying bribes.^[31]

This case is a clear example of the misunderstanding of a culture and it's practices on Enrons behalf. India is a place that is exceptionally highly relationship focused. Often things are only achieved through utilising complex webs of family networks^[29]. Whilst bribery does exist strongly in India, it exists due to the high level of regulation and bureaucracy in the government,^[32] not to replace the established method of achieving outcomes. Enron's approach did not take this into account and the bribery that pursued was hence viewed by the Indian public as unethical.^[29]

This however begs the question of what constitutes as ethics? Is bribery ever ethical? What gave the Indian public the right to decide what was ethical and what wasn't?

Ethics was defined by

and avoid counter-productive behaviour.

Case 2

In the above case we have seen and can learn what not to do, and how practices can help us avoid negative scenarios. However, effective diversity management can actually benefit organisations greatly.

IBM pioneered this movement in 1993 where they reformed their diversity management policy by moving away from the process of simply ignoring the differences between people and moved towards a task force driven program of embracing differences to help IBM target those specific groups of people more effectively and thereby improve their market reach. One example of this was the work done by the women's task force, which was focused on developing market in female owned businesses. This division grew from $10m in revenue in 1998 to $300m in revenue in 2001.[36]

This is a true testament to how ones approach to management of different cultures can so drastically change an outcome.

Case 3

A third theme in cross cultural business dealing and interaction is that of cross border

negotiation and it's challenges in a cross cultural setting.

A most classic case that is taught in many business schools is that of the GE and Hitachi negotiation in 1981.^[37] At the time GE was trying to make headway into the robotics industry at a rapid pace. They began negotiation with Hitachi (a Japanese robotics manufacturer) to secure supply of certain robotics lines. The clear understanding of the difference of approach and culture allowed these two completely different companies to come to an agreement that left them with a life long partnership that endures today and has taken form in the GE Hitachi Nuclear Energy partnership.

The Japanese culture and approach to business dealings and negotiation is a polar opposite to that of the American approach.^[38] Cross cultural negotiations become difficult because communication across different cultures are different. In these settings, what is often said and what is often heard are two very different things. Assertiveness is one example of this, where Japanese expression of assertiveness may include avoidance as an appropriate strategy, while this may be perceived very differently from a Western point of view^[39]. So in this case the approach by both parties resulted in a positive outcome, yet less can be said for other famous cross cultural negotiations.

One such example is that of Google and its struggle to launch in China. Another is that of the failure of Ebay^[40] to launch in China. Both of these are examples of large corporations who have great service offerings yet faced culturally driven difficulty, in launching in a cultures so different to their own.

Through the above analyses we can see how prominent cross cultural dealing are in the modern world and how they can so easily be affected by things as small as mind frames. It is once again clear how understanding of our neighbouring cultures can benefit both cross businesses and internal business management^[35] and how managers need to be mindful of the differences of their employees rather than simply ignoring them.^[36]

Research

As diversity in businesses has grown due to globalizing factors such as the introduction and advancement of internet, higher levels of working women and immigration, the research on the subject has also grown substantially. In the research that has been done, researchers have found both positive and negative effects for the organizational environment.^[41]

While researchers such as Tajfel & Turner (1979) and J. C. Turner (1985) have drawn on

Through the literature that has been published, there is a fair agreement that culture powerfully influences ways of thinking, behaving, and communicating , and that a diversity in culture brings useful sources of input.[43]^[44][45]

Culture, diversity, language and the level in which these affect how we interpret verbal and non-verbal communication have all been studied well through other fields of research. Research on the relationship between language and organization management is however still in its early development.^[46]

Multiculturalism is not an inherent management discipline and is more often used as part of sociology and public policy to denote a plurality of people with a diverse set of race, nationality, ethnicity, language and age.

According to Stahl et. al(2010), in the research that has been done on the matter of diversity, the effects that are seen are not differentiated by the source of diversity; gender, culture, ethnicity, age, function and so on, all have been assumed to have the same impact.[43]

What research is relevant and what kinds of outcomes it might have then heavily depends on the type of work that is being executed and in which way employees and organization members have to interact and the level of autonomy that is involved.[ref]

Teams

In the context of teamwork, Hajro & Pudelko (2010) and Zander & Butler (2012) both conclude that a multi-cultural and diverse team either overperforms or underperforms in comparison to a more homogenous team, and that the outcome heavily depends on the transformational powers of the leadership.^[49][50]

Shorter distances through technological and globalizing advancements has also introduced the global and virtual teams(GVT), working across timezones, continents and borders. Zander, Mockaitis & Butler (2012) argue that the GVT, through its virtual nature, makes little room for traditional leadership and that success therefore lies in the clear communication of team direction and individual goals.^[50] Kearney & Gebert (2006) found that diversity in age, nationality, and functional background, have a positive effect on team innovativeness in a high transformational leadership context, but no effect in a low one.^[51]

In failing to manage the diversity, or developing diversity by strategic employment will according to Bell & Berry(2007) and Klein & Harrison(2007) will only lead to a mixed set of reapable results and benefits. It is necessary that the manager or management take an active part in building and managing the organization's diversity in order to reach an optimal business output and diverse promise.^[52][Bell; Klein ref]

Cohesiveness

Cohesiveness refers to the individual members of a group creating and sharing interpersonal bonds with each other and with the group as a whole. In a multicultural and diverse context, factors that create diversity can as already indicated, lead to increased conflict within a group.^[53]

Lauring & Selmer (2010) divides Group cohesiveness into three aspects:^[46]

• Group conflict – refers to the internal conflicts of opposing and incompatible views with a group, and is conceptually divided into emotional elements (frustration, friction, tension, and dislike) and task-oriented elements (differing workrelated viewpoints and ideas).^[54]
• Group trust – refers to the internal expectation that the members will engage in transactions in a predictable way, with benevolence and not taking advantage when given the opportunity.^[55]
• Group involvement – refers to an individual's involvement in communication and collaboration, how much the individual feels respected and listened to, and relates to the groups inclusion and exclusion in terms of employee interaction within teams.^[56]

Shared language

In order to increase frequency of communication in organizations, some researchers have proposed a shared language to be used. According to Feely and Harzing (2003) multicultural organizations almost by definition also are multilingual and introducing an organization—or at least team-wide—shared language may improve the communication frequency, but it is also common to find organizations and networks that are parallel language-based.^[46][57]

Implication

With the increase of economic globalization, there is a growing need for effective diversity management to help them improve workforce cohesiveness, coherent action on organization goals as well as the reduction of internal organisational friction and conflict.^[58]

Multi-cultural and diversity management can build a competitive advantage through 6 aspects: marketing, problem solving, creativity, cost, resource acquisition, and organizational flexibility (Cox, 1991). The aim of the organizations in this sense is to maximize the benefits and minimize shortcomings of diversity. Cox (1991) suggests 5 key issues for the traditional monolithic organizations transform into multicultural ones.^[59]

The first one is leadership. Diversity is a reality in both the labour force and customer markets. In order to be successful in workplace and gain more benefits from the diversity a sustainable systemic approach is required. It is vital for cultural diversity to receive the top management’s commitment and support. Diversity requires leaders who to make strong personal stands on the need for change, behave like a role model for change and assist the organization moving forward.^[60] The genuine commitment need willing to change the human resource management systems like staff performance evaluation and executive bonuses. Also need have the willingness of keeping mental energy and financial support for a period of years, not a couple months or weeks. Although the management commitment is important, it is not sufficient enough. The lower levels champion such as key line managers are also needed. Normally most of the organizations are addressing the leadership requirement headed by the senior managers. Some of the companies use a specific designed manager for diversity to supervise the work though the company wide. So use a specific manager to do the diversity task force is recommended and it is crucial in the early stage of the work.^[61]

Second is training. Successful diversity management often begins with valuing diversity (MVD) training. There are two types of the training: Awareness training and skill building training. The former focuses on improving the participants’ self-awareness of diversity issue like sensitivity to cross cultural issues. The latter teaches staff the specific culture differences and how to deal with them in the workplace. Training is essential for employees to learn and communicate and hence avoid conflict. However after training finishes the benefits are often lost, it is vital to make the training as an on-going session instead of the short-term seminar.^[62]

The third key component is research. A lot of information related with diversity need to be collected such as traditional equal-opportunity profile data, analysis of employees’ opinion and attitudes, and the data which record the different culture groups’ career experience. The research is helpful to identify which place need to be change and supply the clues to guide the changes. It is also important to evaluate changing effort.

Next is analysis and change of culture and human resource management systems. The comprehensive analysis includes recruitment, promotion, performance assessment, potential assessment and compensation. The aim of this audit is to uncover sources of potential bias unfavourable to members of certain cultural groups. The audit should be an in-depth analysis and the result should be translated to an agenda for specific changes in the organization culture and systems.^[63]

The last component is called follow-up. It contains monitoring the changes, evaluating the results, and institutionalizing the changes in the organization’s regular sustainable processes. Like other management efforts, there is a need for accountability and control for work on diversity. Finally, however, accountability for preserving the changes must be established with every manager. Changes in the performance appraisal and reward processes are often needed to accomplish this. The follow-up activity should include additional training, repetition of the system audit, and use of focus groups for on-going discussions about diversity issues. ^[64]

There are some suggestions for the manager who lead the multicultural team.

• Flexibility in multicultural workplace is an essential management strategy for managers. Managers should make sure their staff feel the manager is not judging them by their belief or race. Regardless of the religion, ethnic or cultural background, all employees must be treated ‘fairly’. People should always be chosen for specific tasks and roles on merit alone.^[65]

• Develop the understanding of different cultures and values and give respect to those differences. Such as the religious practices, such as dietary requirements. Never think ethnic jokes are trivial. A bad joke can make or break the cohesion of your team so be sure that your work environment is free or racial or religious or even sexual bias. Volitions of these issues should be taken seriously and should be dealt as such so the message goes out to the offender as well as the person targeted.^[66]

• Always remember the differences of culture or values are never the reason for communication gaps. Try to listen to others well and give them enough confidence to communicate with managers by showing respect. Give people the opportunity to express their ideas and it is very important to let others know you are listening and considering their ideas too.^[67]

• Treating everyone in the same way is not always fair because people are diverse as well as the capabilities. So some people do need the special consideration. For instance the manager talking to the staff who is native English speaker, the same way talking with the people who has limited English skills, it is unfair to the latter people. Give the people who need space more special attention and use their capabilities by making sure they understand the goals completely instead of falling to prey to a false sense of fairness.^[68]