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Learning Goals for today
• Why manage Diversity?
– State of Canada’s businesses & population
– Disadvantages of mis-managing diversity
– Advantages of managing diversity well
• What is Diversity?
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Why Manage Diversity
Current State of Canadian Businesses
• Highly skilled labour is a major contributor to
labour force growth bec. of technology,
globalization, etc.
• Existing Canadian population is not replacing
itself with skilled labour
– Need to import skilled labour from Asia & S.
America
– Canada competes w/Europe & the US for skilled
labour
Oliver
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Immigrants & Labour Force
• 54% of immigrants are highly skilled labour
• Immigrants will contribute to 100% of labor
force growth in 2011
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Conf Board of Canada, cited in Oliver
Why Manage Diversity
State of the Canadian Population
• Immigration
– 70% of 200,000 immigrants/year are Visible
Minorities
• Census in 2001
• 11% of Population is Visible Minority
• Projections for 2017
• 19-23% of Canadians will be Visible Minority
Oliver
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Why Manage Diversity
Visible Minorities in the Labour Force
• VMs accounted for 33.3% of Labour force’s
contribution to GDP for 1992-2001 even
though they made up only 11% of labour force
• Visible Minorities (VMs) will account for over
10% of the gains in GDP growth
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Conf Board of Canada, cited in Oliver
Visible Minorities
Immigrants
Skilled Labour
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Why Manage Diversity?
VMs in the workplace
• Wage gap
– VMs earn less than Canadian average
• 11% less in 1991
• 14% less in 2000
– Asian men immigrating to Canada earn 10-15%
less than immigrants to US (even after controlling
from experience & schooling)
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Conf Board of Canada, cited in Oliver
Why Manage Diversity?
VMs in the workplace
• Unfair Treatment
– 1 in 5 VMs report discrimination and unfair
treatment in the last 5 years (Stats Can)
• 4 times more than for non-visible minorities
– Poor representation of VMs in key decision
making positions (Conf Board of Canada)
• 3% of respondents have VM CEOs
• 3% of 900 senior executives were VMs
• 9 in 10 org do not have a plan to recruit VM to Board
even though they believe it is important to have such
representation on Board (New Racism)
Oliver
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Why Manage Diversity?
VMs in the marketplace
• Consumer behavior shaped by cultural and
ethnic background (cox)
– Implications for marketing to such consumers
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Physical Consequences of
Mis-managing Diversity
• Cost of Employee Withdrawal
– E.g., Replacing employee, days absent, sick days
• Mental health care costs
• e.g., costs for coping w/stress
• Lowered employee productivity
• Health care costs
• e.g., negative effects on health from stress
• Legal costs
– E.g., costs of settling/contesting discrimination and
harassment lawsuits
• Lowered stock value
Stephan & Stephan, Cox
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Psychological Consequences of
Mis-managing Diversity
Increased conflict
Lower social attraction to work group
Williams
&
Lower commitment to work group
O’Reilly 98
Increased & discrimination
Poorer communication
Lower cooperation & cohesiveness (Pelled et
al 99)
• Higher Turnover (Cox)
• Higher stress (Stephan & Stephan)
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Advantages of Diversity
• Improves/increases
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Problem solving & decision making quality
Creativity & innovation
Interpersonal skills among employees
Organizational flexibility
Quality of human resources
Marketing strategies
Higher annualized returns
• Fulfils organizational values of fairness
Stephan & Stephan, Cox, Oliver
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Advantages of Group Diversity
• Improves Problem Solving because…
• Problems are approached from broader & richer
base of experience (cox)
• Increased critical analyses bec. there were more
differences in opinion (Cox, Oliver)
• Generates more range of perspectives and more
alternatives (Conf Board)
• Limiting factor
• Only when diverse groups are trained on how to
understand each others’ attitudes (Triandis et al)
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Advantages of Group Diversity
• Improves Creativity/Innovation
• More ideas generated (Oliver)
• E.g., In demographically diverse top management
teams in the banking industry
• Improved performance in task requiring
marketing to different cultures (Cox)
Member
diversity
Differences in
perspective
Better
Quality ideas
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Advantages of Diversity in Groups
• Better interpersonal skills among employees
• Visible Minority group members score higher on
collectivism
• Collectivists were more cooperative (cox et al)
• But increased employee diversity can also reduce
cooperation (Pelled et al 99)
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Advantages of Employee Diversity
• Organizational Flexibility
• Different people have different ways of organizing
info, responding and reacting to info, and are more
or less flexible in their ways of thinking
• E.g., Women score higher on tolerance for ambiguity
which is linked to cognitive complexity & ability to
perform ambiguous tasks
• E.g., Bilinguals show more cognitive flexibility & more
divergent thinking than monolinguals
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Cox
Advantages of Employee Diversity
• Quality of Human Resources
• When diversifying implies enlarging the pool of
potential employees, it increases organizational
performance
• Restricting selection of employees to one group reduces
pool to choose from and therefore the range of talent
– Assumes full range of ability/skill in all groups of employees
(e.g., physical strength range in men vs. women)
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Cox
Marketing Advantages of Employee Diversity
• Expand to Global Markets
• Hiring new immigrants with knowledge (of business
norms of markets) & connections to home countries
(via personal relationships w/individuals in those
countries) helps expand company’s operations to
such countries
• Public relations advantage of managing diversity
well (Cox)
• Assumes: That perceptions of organizations w/
predominantly vm employees is also favorable
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Marketing Advantages of Employee Diversity
• When employees match the composition of the
market, they
– E.g., secure more business from those ethnic
groups (e.g., BMO; cited in Oliver)
– Understand how people of those ethnic groups buy
goods enabling orgs to market to them (Cox)
– Are better at providing service to those customers
bec. they know better how to do so
• E.g., If employee speaks language of non-English
speaking customer (Leonard et al, 2004)
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Marketing Advantages of Employee Diversity
• Match b/w employee & customer’s group
membership increases likelihood of customer
sponsoring organization
– Due to customers’ preferences for similarity
• Supported in sports memorabilia purchases
• Not supported in other retail environments (Leornard et al)
– Note: Argument of customer-service provider
match was used to discriminate against vms when
customer base was white & is now being used as
rationale to attract vm customers
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Marketing Advantages of Employee Diversity
• Employee’s cultural group membership
implies s/he has knowledge about own culture
and cultural group members’ preferences
– But see Cultural circles exercise!
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What is Diversity?
• Differences in social & cultural group
memberships among people (cox)
• E.g., religion, ethnicity, gender, nationality, sexual
orientation,
– Exercises illustrating these differences: Pie Chart exercise;
Cultural circles exercise; Twenty Statements Test
• Individual differences on any measurable &
valid dimension
• E.g., cognitive complexity; cooperativeness; skills
– Value of using such dimensions vs. social/cultural group
membership differences for
» Fairness
» Positive organizational outcomes
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