As opposed to the former, the tacit one is embedded in people. The size of the tacit knowledge is proportional to the diversity of the workplace. Therefore, organizations face the increasing challenge today of finding ways to grasp into the pool of tacit knowledge they own in order to create competitive advantage. This is the type of knowledge to which competition doesn't have access because it's embedded in unique individuals belonging to a give organization. Knowledge can be enhanced by the learning process. Its final objective is to be materialized into products and services. This final stage of the process refers to the innovation part. Innovations are the most important tool an organization has in hand to generate competitive advantage. In diverse workplaces the probability to generate innovations is higher than workplaces with less diversity because in the former, more knowledge sets interact with each other increasing the probability to reach a superior result.

Learning ( Knowledge ( Innovation

According to Porter (1998) theory about competitive advantage of nations, the advantage of a nation is highly dependant on the competitiveness of a large cluster made of firms, suppliers, related industries and institutions. A cluster is defined as a network of players that interact with each other to reach common goals. Strong clusters embed strong knowledge within and they foster innovation. By adapting the organization - learning -- knowledge -- innovation relation in the cluster, increased organizational diversity will increase the cluster's diversity and because increased organizational diversity translates into greater competitive advantage, then increased cluster diversity can translate in the same way.

Managing workplaces with increased diversity

Skopec (1997) defined several guidelines to help managers deal with issues generated by diverse workplaces in an efficient manner:

1. Allocate time especially to manage relationships. A large number of managers take relationships for granted and become concerned about them if/when something goes wrong. Prevention may be a good alternative to this approach, especially when dealing with relationships because while processes or systems can have an easy fix, emotions may require longer periods of time to deal with. Good managers take their time when discussing with employees to be able to identify potential disturbing factors and deal with them before they generate conflicts or any type of disturbing situation for that matter.

2. Identify critical relationships. Every workplace has critical relationships between different hierarchical levels or within the same level and their number increases as diversity increases. Good managers should divide the critical relationships into: vital, important and incidental and deal with them by prioritizing the vital first, the important second and incidental after (Skopec, 1997).

3. Draw clear and realistic expectations. The expectations are important especially for critical relationships. It is important for a manager to know if its expectations from the critical relationships and/or individuals are clear and realistic. Skopec (1997) suggested that every manager should ask himself/herself these questions: "What does this person do for me? How important is each of the tasks? For each task, should the person do it on his/her own, ask for advice, or wait for me to explain what to do?." The answers to these questions can be of much help for managers when assigning the right tasks to their subordinates and reducing tension in relationships.

4. Evaluate each relationship separately. Trying to fit relationships into strict categories, such as 'good' or 'bad' can inhibit the factors that make each relationship special. Good managers try to capture the uniqueness of each relationship to improve communication.

5. Use direct approach to relational issue. It is a well-known fact that individuals coming from different cultures have different ways to communicate. Some are direct, straightforward and some are indirect, suggestive. However, when it comes to a manager having to communicate with subordinates about relational issues, the best way to do it is through direct confrontation, because managers need to be sure that their message reaches the other individual and its content is correctly understood.

6. Let communication in person become a habit. Impersonal ways of communicating with people, such as emails can be seen as ways to avoid dealing with relational issues. Also, these ways may distort the content of the message, thus affecting the communication process. Face-to-face communication has the advantage of being able to connect to the other person's communication context, if not by prior knowledge of the context, then by observing its reactions.

7. Be objective. A good manager has to be able to make the difference between a good or bad relationship with a subordinate and the subordinate's good of bad performance....

Whenever the relationship and the performance send different signals, managers are tempted to mix those things together and let one issue influence the other. That is, evaluate a good performance as bad, because the relationships with the subordinate is not as good as intended or evaluate a bad performance as good, because the relationships a very good.
8. Lead by example. Just like teaching by example is the most efficient way of doing it, leading by example should have the deepest impact on subordinates. Skopec (1997) identified three critical elements is this type of leadership: loyalty, reinforcement and support. Loyalty refers to tolerance for situations when individuals make mistakes. Everybody makes mistakes and instead of punishing subordinates every time they do so, managers should back them up and gain their loyalty. Reinforcement refers to legitimate, authentic recognition, rather than an impersonal appreciation. Last, but not least, support refers to situation in which managers offer their help to their subordinates to help those solve their issues.

We've seen how important is for diverse organizations to have a well defined strategy during the entire change process. The strategies and tactics have to work in all managerial levels. The organizational level creates the basis for the existence of a multicultural environment, but it is people that have to turn the basis into something operational. Which is why, the managerial level is just as important as the organizational one when it comes to dealing with diversity in an efficient way.

What organizations really know about workplace diversity theory and ways to improve

The theoretical review has provided insight in the diversity issue and its impact on the workplace-related activity. Diversity is a complex issue and organizations have more to learn about it. To add more complexity to this, diversity is permanently changing because people, within nations change, so organizations have to adapt to those changes to get the best of this characteristic.

Diversity has become an issue for organizations as a result of the globalization's expansion. The globalization has spread around the world as a consequence of economic development.

Further research on this topic should include determining exactly what globalization is and measure its impact on workforce diversity. The analysis should have a qualitative side and a quantitative one. The quantitative side is probably the most challenging part, because to measure the phenomenon's impact using quantitative methods, one should be able to draw its precise boundaries.

There is a considerable number of sources for diversity, such as gender or race, but the one that is by far the most challenging is the culturally related one, because it is complex and its implications are not always obvious. Organizations need to design strategies for culturally diverse workplaces; strategies that promote diversity and through which organizations can tap into issues with significant potential for their business.

The research on the strategy area of diversity is mainly focused on organizations from the big cities, rather than across countries. Because of that there is a high probability that the results are slightly biased, because individuals from big cities are in average more educated, more open to change, to something new and more tolerant to cultural diversity. A country-level research should give organizations an idea of what the perspective of each nation is vis-a-vis this issue.

Further research on cultural differences should focus on a better measurement for cultural differences and how these build the cultural distance between nations.

Kogut & Singh (1988) developed an abstract expression of cultural distance, in which the cultural distance between two countries is influenced by the sum of quadratic differences between the 4 cultural dimensions defined by Hofstede (1984, 2001) divided by their variance:

(where Iij = index of the ith cultural dimension and the jth country; Vi = variance of the index of the ith dimension; p = Primary country -- the country used for reference, point 0; CDj = cultural difference of the jth country from primary country).

Hofstede's index contains four cultural dimensions that are meant to measure organisational cultures specific to each country. The dimensions were categorised into "power distance" -- large vs. small; "uncertainty avoidance" -- strong vs. weak; "individualism" vs. "collectivism"; and "femininity" vs. "masculinity."

The power distance index (PDI) reflects the extent to which individuals accept the unequally distributed power inside institutions. Societies with large power distance are likely to give importance to status difference, respect for old age, obedience rather than initiative and subordinate consultation rather than participative management. It has been observed that less developed countries tend to have…