Managing Workforce Diversity

Executive Summary

Workforce diversity is an issue that has generated sufficient interest from business managers, and scholars. Simply put effective management of workforce diversity as recognizing, understanding and appreciating the uniqueness of each individual in the staff. This should however not be motivated only by the potential to increase profit margin. Even so, a diverse workforce might result in increase employee creativity and innovation.

Similarly, an employer who has a good reputation of managing effectively the workforce will automatically attract, recruit and retain the best talent. As result, this group will bring on board different knowledge and experience of dealing with a diverse client base. On the other hand, diversity has its limitations. Some employees might not fit in very well and hence fail to play along the team for general good of the organization. Despite this, the benefits outweigh the limitation as portrayed IBM Company and Bank of Montrel.

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Both the two companies have a reputation of advocating for a diverse workforce. They have included workforce diversification in their corporate strategy and set programs to ensure they achieve these objectives. As a result, they have achieved tremendous success and increased employee productivity. Perhaps, the only challenge they have had to face in the process is committing most of their time and resources (money) in pursuing this endeavour.

Introduction

Without a doubt, the greatest asset an organization can have is its human resource. Therefore, issues affecting the staff have increasingly become popular among business managers, scholars, policy makers and other stake holders. One issue that have particularly generated sufficient interest is managing workforce diversity. O’leary & Weathington (2006) defines diversity simply as way of differentiating one person from another.

Diversity is about recognizing and appreciating the uniqueness of each person. People can be different in terms of race, sexual orientation, age, gender and physical abilities just to mention a few (Burke 2007). As a result, workforce diversity has become a major business concern.

Managing it should not be merely motivated by the potential of increasing the profit margin but also, should be to ensure the work environment is conducive, safe and nurturing (O’leary & Weathington 2006). Any business that manages its workforce effectively is bound to enjoy several benefits.

Advantages of Workforce diversity

It would be hypocritical not to acknowledge the fact that most business primarily exist with an intention of profit maximization. As result, most of the organization activities will be geared towards achieving this goal. Efficient management of the workforce diversity can accelerate the process by increasing the company’s competitive edge (Ongori & Agolla 2007).

O’leary & Weathington (2006) pointed out that are diversified staff is likely to be more creative, innovative and generally possess a relatively high ability of coming up with quality work. As oppose to a homogeneous group, when a diverse group gets acquainted to one another, their job performance becomes superior due to an efficient interaction process (Ongori & Agolla 2007).

Workforce diversity has also been credited with the ability of increasing the market share. This is because a diversified organization has the necessary resources, in terms of skill, to deal with a multicultural client base. Similarly, various studies have established that most customers prefer to deal with people who they perceive to possess similar attributes as theirs.

This factor particularly becomes important to an organization which is looking to venture into new and foreign markets, such as a different country (Burke 2007). Another very important point is the fact that according to Burke (2007), a significant group of customers generally favour those organizations that seem to encourage workforce diversity.

Having an effective employer brand can significantly increase a business profit margin. This is because; an employer who is positively perceived will automatically attract, recruit and retain the best talent. Workforce diversity is one factor that has enhances this brand. According to Burke (2007), companies that have a diversified workforce and therefore a strong brand, enjoy reduced cost associated with the recruitment process by almost 40%.

After recruiting the best talent, consisting of diverse individuals, the quality of management is most likely going to be improved. This is due to the fact managers are forced by various legislation and ethical guidelines to adopt anti-discriminatory policies. Manager also gain additional skills of handling different types of people and therefore are prepared to deal even with are more diverse client base (Burke 2007).

Disadvantages

Despite the overwhelming merits associated with workforce diversity, there still exist some negative factors that have been associated with it. O’leary & Weathington (2006) actually pointed out that workforce diversity can be a double edge sword. This is especially true if the organization manages it primary for the purpose of profit maximization.

Unfortunately, most management efforts are geared towards this goal. Mismanaging the workforce diversity makes an organization prone to various set backs. To begin with, the morale of the workers becomes dampened. From reviewing various literatures, O’leary & Weathington (2006) discovered that when an employee fails to identify with a certain group, he or she loses the morale and consequently experience job dissatisfaction.

According to Browder & Miller (2009) there are certain groups of people who react adversely to various initiatives adopted to manage the workforce diversity. For example, a study indicated that women and people from ethnic minority will react positively to a diversified work force.

However, white male showed a negative attitude towards these initiatives and even become less productive. When diversity is not positively appreciated by the workforce, an organization will automatically experience a number of stumbling blocks. These barriers will include an upsurge in interpersonal conflict, diminished commitments level, and automatically lack of team work (O’leary & Weathington 2006).

Case Studies

As outlined by O’leary & Weathington (2006), the issue is not whether or not to diversify the workforce, diversify is inevitable; the issue is how to effectively manage diversification. There are number of organizations that have successful been able to do this and as a result have enjoyed tremendous success. A good example includes the following.

International Business Machine (IBM)

IBM is a multinational company specializing in information technology and business consulting. Over its long and outstanding history, the company has achieved tremendous success. For example in the year 2000, Forbes magazine ranked it as the world second largest Information and Technology Company both in terms of market capitalization and profitability. Similarly, recent data ranks it as number four in terms of size and number two in terms of Global brand value; coming second after Coca-cola company (Browder & Miller 2009).

Workforce Diversity at IBM

Among the factors attributed to its success is its effective management of workforce diversity. Ted Childs, one of its retired executive, was in fact in 2000 named by a reporter in the Fast Company magazine as the most effective diversity executive in the world.

Long before the need to effectively manage workforce diversity became an issue, IBM had already incorporated it in its policies as a major strategic objective. Currently the management practices and policies guiding the workforce diversity are well expanded to focus on matters beyond the normal issues such as gender, race, religion, and physical abilities (Browder & Miller 2009).

Equal opportunity, affirmative action and work/life are the most notable programs this company has taken on to effectively manage its workforce diversity. By equal opportunity, the company implies that all its business activities are free of any form of discrimination. It is the duty of every manager to ensure the workplace environment is conducive for all employees.

Regardless of colour, physical ability, gender, sexual orientation or any other unique attribute, every employee in the organization has an equal chance of pursuing and advancing in their career to the best of their ability. This is in line with equity theory which implies that employees usually expect to be rewarded according to their efforts (IBM 2007; O’leary & Weathington 2006).

IBM management also acknowledges not all employees are able to compete on an equal ground. When the environment is left on its own without any form of control, some employees will be at a disadvantage. Some of these employees include the disabled, women, aboriginals, among others. Therefore, it was deemed appropriate to formulate an affirmative action that ensured all factors hindering this group of people are excluded (IBM 2007).

For example, the organization addresses the needs of the women through the Women in Technology initiative. This initiative was undertaken in 1997 to support talented women in the technology industry. Through partnership with other organizations, it encourages more young girls to pursue career in IT sector. Similarly, it creates an effective recruitment process to bring on board more talented women.

Another similar initiative is its accommodation fund which aims at enabling people with disability access adaptive equipments that helps them function as well as other people. This fund aims to cover the cost of acquiring these equipments. Also, part of its workforce diversity policies is the work/life program. This program indicates that the organization understands different employees have other needs apart from working (IBM 2007; Browder & Miller 2009).

Advantages of Workforce diversity to IBM

According to O’leary & Weathington (2006) employees naturally value a sense of justice and fairness. If they feel this is not being offered to them, then they are more inclined to take actions that will definitely have negative effects on their productivity. However, if they feel their needs is being addressed the vice-versa will happen.

Such is the case at IBM, the management at the company have pointed out that they have experienced increased teamwork. For instance, Browder & Miller (2009) elaborated that the partnership between senior management and employees has significantly evolved to a point whereby a positive overhaul in organization culture was experienced.

According to Browder & Miller (2009) most of this organization’s employees feel personally involved in the company’s matters and hence hold themselves responsible for the company’s success. Another important merit is the fact that IBM has used it’s the diversification as bridge to the market place.

As result, the capacity to handle foreign culture and belief has tremendously increased. These initiatives have also streamlined the recruitment process enabling the company to attract the best talent. Even when there is scarce talent in the labour market, initiatives such as the training of fresh talent ensures the organization has plenty of supply. Women in Technology, is such as initiative.

However, a notable contribution of the workforce diversity to the company’s bottom line is the fact it was able to turn 10 million dollars to 200 million dollar. This happened within a span of 3 years, from 198 to 2001, as result of effectively employing a diverse group of vendors (IBM 2007; Browder & Miller 2009).

Disadvantages

Amid all the benefits effective management of workforce diversity has brought to both the employees and the organization, there still exist some minor demerits experienced. One of the major set back is the increase in operating cost. The organization over the past years has been forced to spend huge sums of money to maintain its image as a global organization that highly support diversification.

For example, buying adaptive instrument require additional allocation of funds. Similarly, their work/life balance program, which at times allows employees to work at home, has to a certain percentage reduced the control of the manager (IBM 2007; Browder & Miller 2009).

Another factor that can act as disadvantage to this organization is combining workforce diversification program with affirmative action. The move can be quite counter productive. This is because, more often than not affirmative action are designed to cover certain groups of people who had previously experienced some sort of social injustice.

As result, applying it as workforce diversity program can mistakenly favour one group over the other. Therefore, when adopted in an organization, as in the case for IBM, it might lead to resistance. At the moment staffs in this organization very satisfied with what IBM is doing. Therefore it should not relent in its efforts of effectively managing the workforce diversity (IBM 2007; Browder & Miller 2009).

Bank of Montreal (BMO)

Bank of Montreal, or as it is well known BMO, is another company that has a high reputation of effectively managing and encouraging workforce diversity. It is cited as the oldest and fourth largest bank-in terms of customer’s deposit- in Canada. In 1989, it incorporated the establishing and managing of a diverse workforce in its corporate strategy. The move indicated how serious this company is when it comes to managing workforce diversity. Recently, it was awarded the 2010 Canada’s Best Diversity Employer (BMO financial group 2010).

Workforce Diversity at BMO

The company has taken several steps to ensure workforce diversity is well managed. As an indication of how serious it is on the issue, the top leadership have been fully involved in the process. This is done through the establishment of a CEO council of equitable workplace. The council regularly monitors and review the progress of the organization towards achieving the set goals. Well laid down infrastructure such online platforms, helps in reviewing the progress quarterly.

Similarly, annual performance appraisals are conducted. The assigned managers are held accountable of any regression witnessed. If the progress in their departments is wanting, they should have a good enough reason as to why that is so, while at the sometime suggesting ways of improving the system (BMO financial group 2010).

To ensure the environment is conducive enough to support the works of senior management, the company went ahead and develop the diversity councils and affinity groups. Diversity councils are groups which actively involves all the employees of BMO in the process of effectively managing the workforce.

They create a platform which allow these employees to champion for are diversified and inclusive work environment. Affinity group contributes to the success of these objectives by including the whole community at large (BMO financial group 2010).

In addition, BMO has gone an extra mile to become the top sponsor of the external diversity employer award. This is an award system that honours those companies that manages well their diverse workforce. The main aim of the award scheme is to encourage organization to adopt workplace best management practices.

Such a move signals that this organization is not merely motivated by profit gains, but it is sincerely concerned about the welfare of the workforce. This conclusion is arrived by considering two factors; the first one is the fact that it encourages other organization to incorporate objectives concerning effective management of workforce diversity, in their corporate.

This it does knowing very well that when other organizations adopts its recommendation, their might increase their competitive advantage. As result, pose serious competition especially if they are targeting the same market. The second one, is the fact that BMO is not eligible to contest therefore missing out the opportunities that comes along with being among the winners (BMO financial group 2010).

Advantages of Workforce diversity to BMO

Both external studies and sources within the company have pointed out to a number of benefits associated with effective management of workforce diversity. These benefits are not any different from those enjoyed by IBM or any other company that has adopted best practices.

Particularly the company is enjoying merits in the recruitment and retention process. Initiatives such as equity through education, undertaken by this organization continuously ensure there is supply of talent. This initiative provides education and training to marginalized groups (BMO financial group 2010)..

Similarly, the diverse workforce has assisted this organization to understand the customers. Therefore, it has become is to forecast the way customers are likely to react when certain business actions are undertaken. BMO financial group (2010), acknowledge this fact by categorically stating that its diverse workforce reflects its customer base.

For a company operating in Canada, whereby visible minorities and people regarded as ‘marginalized’ hold quite a substantial purchasing power, this factor becomes very important. More over, when BMO hired Chinese speaking employees in its branches at the Asian markets, its level of success increased since customer responded positively.

The employees were culturally competent and therefore well positioned to satisfy the customers’ needs. For example, they suggested new ways of interacting with customers and changes in the organization structure and branding techniques, to include factors such as new colours which reflect the culture of this nation (BMO financial group 2010).

Effective management of the workforce diversity has not only benefited the employer but also the employees. Particularly the policies associated with communication has enabled employee voice their concerns in areas where they feel equal opportunity is not being practiced. As result, employees have become more aware their rights.

If either one of them feel his or her right is being isolated, they know exactly which offices they can visit to present their case and demand for necessary action to be taken. As result, various surveys have indicated that most employee of this organization continuously feel as essential part of the system. This has automatically resulted into increase productivity and levels of commitment. Actually senior executives have reported a continuous increase in creativity, innovation and collective knowledge (BMO financial group 2010).

Disadvantage

Various cultural dimensions will determine how people behave or generally conduct themselves. Definitely multi-cultural workforce is bound to experience various challenges. Factors such as language barrier, key values and approach to life can make an employee detach him or herself from the visibly different group. As result BMO has been forced to engage in tremendous effort and dedicate massive resources required to ensure there is harmony among all employees (BMO financial group 2010).

This takes a lot of time and money; extra employees are needed for the sole purpose of ensuring accord. Similar employees, especially top managers, have to spend substantial time analysing and reviewing whether the company is in progress of achieving the objectives. Despite this efforts there still some attitude among employees that do not compile with the general attitude of the organization.

This non-physical hostile behaviour administered to minorities by the majorities can result in serious legal implications that might either affect the company financially or dent its corporate image (Burke 2007; BMO financial group 2010).

Conclusion

Whether to diversify the workforce or not is not the issue; the current business operating environment has made diversification unavoidable. The issue is how a business can effectively manage and encourage work diversity. This should not be merely for the purpose of maximizing the profit, but should be for the general good of its employee.

Provided the employee feel an organization has their interest at heart, their productivity will be increased and accordingly result in a higher profit margin. Such is the case for IBM and BMO. Although the two organizations have massively invested towards ensuring an effective and diversified workforce, they have been reaping the sumptuous benefits.

Reference List

BMO Financial Group c, 2010. Diversity, Equity, and Inclusion [Online] available from
[ Accessed 17th Dec 2010].

Browder, LM & Miller 2009, Workforce Diversity: The Big Blue Case, McGraw-Hill, New Delhi.

Burke, LM 2007, Managing the Diverse Workforce Effectively, Rutledge, London.

IBM c ,2007. Global workforce diversity [online] available from
[Accessed 17th Dec 2010].

O’Leary, BJ., & Weathington BL., 2006. Beyond the Business Case for Diversity in Organisations. Employee Responsibilities and Rights Journal, Dec, 18 (4), pp.1-10.

Ongori, H., & Agolla, J., 2007. Critical Review of Literature on Workforce Diversity. Africa Journal of Business Management, 22 (4), pp. 72-76.

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