Diversity Management in Corporate America: Strategies and Impact

Introduction to Diversity Management

Diversity management is one of the key issues facing corporate America today. The growing number of female workers, along with an influx of immigrants from various racial and ethnic backgrounds, has prompted a need for diversity management, because the lack of it can cause serious legal and performance problems. Diversity management refers to strategies that seek to create a positive and healthy environment for everyone in the workplace. In more concrete terms, it encompasses any effort made to train managers and other employees to interact with one another in a more positive and constructive manner.

Diversity management is closely connected with good performance because the more positive a work environment, the higher the productivity of individual employees. When diversity-related issues arise in the workplace, they not only diminish productivity and commitment but can also lead to higher turnover and greater legal exposure. In 1996, Texaco made national headlines when a recording of its executives revealed the use of inappropriate language when referring to Black female workers at the firm. A discrimination lawsuit was filed and immediately settled for $176 million, of which $35 million was designated to fund diversity efforts. Texaco subsequently revamped its training programs, expanded feedback to managers through diversity audits and evaluations, and established mentoring programs and affinity networks for women and minorities. Texaco's report on its progress after five years championed these programs but did not make clear whether diversity had actually increased.

Diversity management is closely connected with strong overall performance because it reduces costs associated with unnecessary turnover, employee conflicts, and lawsuits. Another major reason companies perform better when diversity management is in place is the positive reputation they enjoy in the marketplace. If a firm is known as an equal-opportunity employer that makes every effort to handle diversity appropriately and promptly, that reputation can resonate with the public and translate into higher sales. The opposite is equally true: companies with a poor reputation for diversity management face public backlash in the form of lower sales and diminished brand value.

There are several programs that companies typically implement, usually consisting of seminars and educational initiatives 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 among management groups can stifle creativity and slow down response times: "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)

Diversity Management and Organizational Performance

In an important contribution to the discussion of diversity management, R. Roosevelt Thomas argued 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, and more. This broader definition makes it even easier to understand why diversity management is so critical to the success of any organization.

Thomas further argues that diversity management "has the potential to enhance the quality of decision making in any setting" (p. xiii). He contends that diversity management is an essential skill that not only organizations must possess, but that individuals must also develop. This skill enables better decisions when confronted with issues of difference and similarity. Thomas also makes it clear that diversity management has nothing to do with affirmative action. They are two distinct concepts and must be treated as such in order for diversity management efforts to succeed.

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

Defining Diversity: Beyond Race and Gender

Diversity concerns are on the rise, and so are diversity-related lawsuits. This has become a major concern since full-spectrum diversity became a widely recognized imperative. Discrimination related to age, race, and gender is one area that companies must address completely in order to avoid potential legal problems. Diversity issues are complex, however, and organizations may not always be prepared to handle every situation that arises.

In their efforts to eliminate discrimination, companies may inadvertently become guilty of reverse discrimination. Reverse discrimination must be taken into consideration just as seriously as other forms of bias. Most importantly, organizations cannot afford to be complacent when it comes to diversity. They need to understand that new challenges can surface at any time, and that narrower interpretations of constitutional rights can pose new threats to a company's diversity policy. For this reason, it is essential to have a diversity training program in place that accounts for full-spectrum diversity issues, including reverse discrimination.

Diversity initiatives can become problematic when they are based on flawed ideals. Wildermuth and Gray (2005) explain when diversity initiatives become faulty: