Diversity management is one of the key issues facing corporate America today. Higher number of female workers along with influx of immigrants from various racial and ethnic backgrounds in the workforce has prompted a need for diversity management because lack of the same can cause serious legal and performance problems. Diversity management refers to the strategies that seek to create a positive and healthy environment for everyone at the workplace. In more meaningful terms, diversity management is any effort made to train managers and other employees to get along with each other in a more positive manner. Diversity management is closely connected with good performance because the better and more positive a work environment, the higher will be the productivity of individual employees. Secondly if there are diversity related issues at workplace, it not only diminishes productivity and commitment, it can also lead to higher turnover and more legal repercussions. In 1996, Texaco made national headlines when a tape of its executives revealed use of inappropriate language when referring to black female workers in the firm. A discrimination lawsuit was filed which was immediately settled for $176 million. "Of that, $35 million was to fund diversity efforts. Texaco revamped training, expanded feedback to managers through diversity audits and diversity evaluations, and set up mentoring programs and affinity networks for women and minorities. Texaco's report on its progress after five years championed the programs but did not make clear whether diversity had actually increased."

Diversity management is closely connected with good overall performance because it results in reduction of costs associated with unnecessary turnover, employee clashes, and lawsuits. Another major reason why companies perform better is because of the positive reputation they enjoy in the market when diversity management is in place. If a firm is known to be an equal opportunity provider that makes every effort to handle diversity in an appropriate and timely fashion, then there is a chance this would resonate with the public and translate into higher sales. The opposite of it is also equally true. Companies with bad reputation for diversity management...

Thomas Roosevelt said that diversity should not be considered limited to race, gender and age. Instead diversity is a much wider issue encompassing any similarities and differences found in any set of attributes including education, social background etc. This is a wider definition which makes it even easier to understand why diversity management is so critical to success of any organization.
Dr. Thomas argues that diversity management "has the potential to enhance the quality of decision making in any setting." (p. xiii) He says that diversity management is an essential skill that not only the organizations must possess but we as individuals must also have. This skill allows us to make better decisions when confronted with issues of differences and similarities. Dr. Thomas also makes it absolutely clear that diversity management has nothing to do with affirmative action. They are two different things and must be treated as such in order for diversity management issues to succeed.

There are several programs that companies come up with usually consisting of seminars and education programs where training is provided and diversity issues are explained. Richard et al., (2004) in their research on the subject made an interesting discovery. They found that diversity management is important because firms with greater diversity were more likely to perform well in high risk areas such as rapid decision making. They found that homogeneity of management groups can stifle creativity and hence slow down response. "…the results suggest that totally homogeneous groups may not thrive in an environment requiring decision speed and aggressive competitive behavior. As management group diversity approaches a moderate level, however, its positive effects may yield performance advantages in a high-risk strategic context." (p. 264)

With more and more firms valuing talent and diversity, it has become increasingly important to have diversity management programs in place. This can facilitate communication between employees and allow them to work in harmony…