Workforce Diversity and the impact SHRM has towards Competitive Advantage Free Essays

Workforce Diversity covers a wide variety of differences, which include race, gender, age, culture, nationality, religion, sexuality, interests, needs and desires (Hartel Fujimoto, 2000). In order to explain workforce diversity in depth, this essay will utilise Race/Ethnicity as the key diversity characteristic, discussing the various theories and practices used in Strategic Human Resource Management (SHRM) to develop and manage diversity. In order to achieve increased organisational performance, a strategic plan must be implemented to position people throughout the organisation; and to manage these diverse cultures and ethnic backgrounds, and nurture their creativity and innovation, diverse recruitment and training is undertaken. We will write a custom essay sample on Workforce Diversity and the impact SHRM has towards Competitive Advantage or any similar topic only for you Order Now Through the use of the diverse labour pool available when recruiting, an organisation can benefit from the different skills and knowledge obtained by the diverse employees. Secondly, their creativity, innovation network range, uniqueness and rarity, serve as a means of giving the organisation unique resources and processes that competitors are unable to produce or replicate, resulting in the organisation benefiting from a human capital based competitive advantage. This essay discusses workforce diversity, competitive advantage, diversity orientation, diversity openness, and effects of diversity on team and individual performance, and diversity management. Due to the effects globalisation has on the organisations today, organisations must diversify the methods in which they manage their human resources and establish a competitive advantage to compete in the current global market. By defining the presence of differences among members of social units (Jackson et al. , 1995, as cited in D’Netto Sohal, 1999), different types of diversity can be identified and the groups can be categorised in order to manage them effective and efficiently. According to H?rtel and Fujimoto (2000), Workforce diversity is categorised into two dimensions: Observable differences and Underlying differences. Firstly, observable differences take into account the diverse characteristics such as race, gender, age, verbal/non-verbal behaviours. Secondly, underlying difference encapsulates less observable differences such as values/beliefs, sexual orientation, skills/knowledge, and religion. These two dimensions contribute to the influence of the process and outcomes of many organisations. As suggested by Ayoko and H?rtel, impact of diversity of workgroups has been a focus for most studies on diversity; however, in diversity studies from Cox and Blake (1991) and Jackson (1992), cultural heterogeneity differences in race, ethnicity and national origin have been the focal point. Experiences of lower cohesion and social integration (Hambrick, 1994), more conflict, higher turnover, less trust, less job satisfaction, more stress, more absenteeism, and more communication difficulties ( Alder, 1991; O’Reilly et al. 1992; Zenger and Lawrence, 1989) are shown as the key comparisons in the research between diverse workgroups and homogeneous groups. Diversity has both positive effects such as increasing opportunity for creativity and negative effects such as increasing the likelihood of dissatisfaction and failure to identify with one’s workgroup (Milliken and Martin, 1996). Richard Florida (2004, 2005; Lee et al. 2004) argues that diversity influences economic comp etitiveness directly by fostering creativity and innovation, which are elements for promoting rarity and unique ideas and concepts, giving an organisation an advantage in its market. Organisations that acknowledge workforce diversity and its different viewpoints, and facilitate unique and creative approaches to problem solving, increase creativity and innovation within the company, leading to increased organisation performance and competitive advantage. By utilising the diversity and realising its potential, organisations are able to attract and retain the best talent available, reduce costs due to lower turnover and fewer lawsuits; enhanced market understanding and market ability; greater creativity and innovations; better problem solving; greater organisational flexibility, better decision making, and better overall performance (Cox, 1993; Cox and Blake, 1991; Cox, 1991; Robinson and Dechant, 1997; Carlozzi, 1999; Griscombe and Mattis, 2002; McAllister, 1997; Watson et al. 1993). Allan et al. (2007) suggests the negative effects of diversity to organisational performance such as lower employee satisfaction and higher turnover (O’Reilly et al. , 1989), creating a sense of detachment (Tsui et al. , 1992), lower cohesiveness, and difficulties in communications, and intergroup conflict and tension (Richard et al. , 2003; Cox, 1993). These effects of poor diverse planning and management would have severe and damaging results for the organisation. The use of Strategic Human Resource Management and Diversity Management are used to manage the broad definition of diversity, inclusive of everyone and values the differences that each individual brings to the organisation. The need for a broader definition is recognised by Loden (1993), realising that theories only based on affirmative action and equal employment opportunity tend to focus only on women and minorities which result in organisation efforts that are sectioned with the outcome of other groups feeling disenfranchised. Strategic Human Resource Management (SHRM) uses people as one of its components to gain competitive advantage. To be able to retain this advantage, the resources must remain scarce and hard to duplicate, have the inability to be directly substituted, and enable companies to pursue opportunities (Barney, 1991; Boyd Wright, 1992). The key to a competitive advantage is how well the human resources work within the company (Pfeffer, 1994), leading to the creation of value, hard to imitate, and is rare which in turn increases sustainability of the competitive advantage. As the global market and its demographic characteristics of its customers change, so must an organisation’s to retain a competitive edge in the market (Cox, 1994). As communities become more multicultural, organisations must change their human resource structure so that it is aligned with the customer’s needs, as the organisation span widens globally, employees are then needed to understand the customer’s references and requirements (Cox Blake, 1991). In order to maximise diverse employees, Diversity-oriented Human Resource Management (HRM) is utilised and is achieved through the implementation of HRM policies. By strategically focusing on processes such as employee attraction and recruitment, retainment, training and development, and organisational alignment (Denton, 1992; H?rtel Fujimoto, 2010; Rosen Lovelace, 1991), diverse employees can be promoted to assist an organisation to manage the challenges the come with today’s diverse marketplace. Problems arise for HRM when implementing diversity initiatives, such as convincing top management that the initiatives will benefit the organisation. Management can see the diverse initiatives as being too expensive, production may be reduced and disruption the workplace (D’Netto Sohal, 1999). On the other hand, diverse-oriented organisations not only accept diversity, they also recognise it as an integral part of the organisation (Richard Johnson, 2001). The key aspects of diversity orientation: work design, staffing, training, and compensation are all embedded with the foundation of diversity, thus being valued as the core part of the organisation. It is through the bundling of the HRM policies and practices that direct the organisation towards diversity and diversity management. The organisation activities of training and development, work design, staffing, and compensation programs need to all supporting and reinforcing diversity for the constitution of diversity orientation to be successful. Coinciding with the organisational activities suggested previously, procedural fairness must be undertaken so that both majority and minority groups do not experience a sense of feeling left out. Diversity orientation is a rewarding tool when striving for competitive advantage; however, diversity orientation is not universal. The effectiveness of diversity orientation involves a substantial commitment of resources and a willingness to experience inefficiencies for a time, although through persistence, this tolerance for inefficiency may be of great benefit for organisations desiring innovation, high-commitment work environments, and the ability to face dynamic environments. To be able to effectively manage diversity, the implementation of SHRM policies and procedures regarding recruitment and training must first be undertaken. Problems need to be identified so that the correct policies and procedures can be put into place. D’Netto and Sohal (1999) suggest several â€Å"best practices† be used to improve workforce diversity management during recruiting and selection; job descriptions and selection progress that cover job relevant duties, qualifications, and experience and comply with anti-discrimination legislation. Successful organisations can benefit from orkforce diversity by creating an organisation environment which attracts people from diverse labour markets. A competitive edge is promoted by selecting the right people for the correct task regardless of race (Cornelius, 1999). Through recruitment, human capital is used as a driver for competitive advantage by selecting diverse individuals with specific, unique, and rare skills, increa ses the efficiency and effectiveness of an organisation, exploiting market opportunities, and neutralise potential threats (Barney, 1991; Ulrich Lake, 1991). Human capital that is not readily available in the labour market and not easily duplicated by other organisations provides a potential source of competitive advantage (Snell, Youndt Wright, 1996). Management needs to proactively communicate the organisation’s commitment and reasons for valuing diversity, invest in training, socialisation, and other efforts to manage conflicts effectively (Richard et al. , 2002). Once the right people have been employed it is then up to Human Resource management to implement diversity orientated training, helping to retain the diverse workforce and to focus on the organisation as a whole, creating an environment where clear, unambiguous policies and procedures are initiated. Training can create an awareness of certain traps and provide strategies for addressing any underlying issues (Barry Bateman, 1996). A well implemented training program will provide employees with a better understanding of each other’s race, culture, gender, religion, and sexual preferences. It will help those who are not from diverse backgrounds identify the strengths and opportunities that are supplied by the minority groups. Communication problems can be addressed through proper diverse training, helping employees understand that minority groups are handled differently according to their skills and knowledge as opposed to the employment due to their minority status. The benefit of diversity-orientated training is that it reduces the amount of bias from both employees and management, allowing the diverse groups to be accepted for the skills and knowledge they offer, which in turn, leads to a more productive, innovative, and creative organisation and promotes cohesion and cooperation between colleagues (H?rtel Fujimoto, 2010), resulting in human resources and practices that are of a competitive nature. The first two theories Social Identity and Similarity Attraction both dentify the negative effects that diversity can have on an organisation and how it can also affect the competitive advantage, in the form of human resource. Firstly, Festinger’s (1954) studies of Social Identity theory focus on the development of social identity which results in the comparison of individuals towards other group members. The outcome of these comparisons can result in the individual with either a positive or negative self-image (Richard Johnson, 2001), and desire to be part of the group or wanting to leave a group. Social Identity theory suggests that being part of a group creates a feeling of collective representation of self-identity and behaviour. According to Tajfel (1982), â€Å"the psychological process associated with this theory generates distinct group behaviour, such as, solidarity within a group, conformity to group norms, and discrimination against out groups†. The second theory of Similarity Attraction (Byrne, 1971) is reliant upon demographic characteristics such as race. Similarities are perceived by individuals and compared to other members of a group, fostering trust, mutual cooperation and interaction. These effects lead to sub groups which, in turn, lead to less effective team function as a whole. Finally, theory that describes the positive attributes to diversity is the Information Processing and Decision Making Theories (Gruenfeld et al. , 1996), suggesting that decision making and exchanging of information are improved within groups that are more diverse. Benefits arising from diversity are their ability to use a greater variety of resources, allowing the use of more diverse networks. The key to dealing with all of these theories of diversity are correct usage of Diversity Management, allowing management to identify the characteristics of each and deal with them accordingly, in doing so conflict, absenteeism, and discrimination are reduced, allowing for cohesion, creativity and innovation to be produced. Competitive advantage, organisation effectiveness, increased productivity and coherent organisational environment are all outcomes that can be acquired through the correct implementation of Diversity Management. These can be achieved through the building of specific skills, creating of policies and drafting practices (D’Netto Sohal, 1999), which in turn, get the best results from every employee. The management of diversity can be identified as the leveraging and use of cultural differences in people’s skills, ideas nd creativity to contribute to a common goal in such a way that an organisation can achieve an advantage above that of the organisations competition (Deversky, 1994; Fernandez, 1993; Morrison, 1992). The management of diverse groups is becoming increasingly difficult. Globalisation is a large contributor to workforce diversity, increased migration as a result of the opening of foreign borders, especially from different countries where people were originally migration from, resulting in a wider span of people with diverse racial/ethnic backgrounds populating the country. In order to achieve competitive advantage through the use of diversity and SHRM, ethnic diverse individuals/employees must be strategically managed so that their diverse attributes can be utilised within the organisation, leading to organisation performance and efficiency. Diversity Management focuses on the inclusion of the full span of diverse employees, allowing them to perform to their full potential, ensuring that their wellbeing, both individually and in the organisation remain positive. Introducing training, development, and affective leadership are concepts that help develop diverse employees. According to H?rtel and Fujimoto (2010), it is reported that employees working in a diversity managed organisation have an improved work-life and higher cohesion among employees. Diversity Management has many positive effects which include understanding that minority viewpoints foster quality of thought, performance, and decision making (Nemeth, 1992), and that groups made up of larger diverse backgrounds and characteristics produce a wider variety of ideas, solutions, and alternatives than those groups with similar demographic characteristics (Bantel Jackson, 1989; Jackson, 1992). Once these viewpoints are identified and understood, procedures and practices can be implemented to embed their skills and knowledge resulting in better organisational performance. Task conflict, when using diverse groups to problem solve complex, non-routine tasks, results in disagreements amongst members about task, including viewpoints ideas and opinions, utilising their skills, knowledge, abilities, and perspectives, leading to more complete analysis of the issues and improved decision-making and performance (Jehn, 1995; Pelled, 1996). In conclusion to the discussion of the previous associative approaches to managing diversity, the essay found limitations as a result of the quantity of differences that incorporate diversity, it would be limited to arguing the characteristic of Race/Ethnicity and the effects that workforce diversity has on its contribution to competitive advantage. The review concluded that the need for a contingency approach is needed to manage diversity effectively, as problems are constantly arising due to the ever changing demographical characteristics of today’s global market. Individuals from diverse cultures are migrating to areas in which they previously were not. This results in the need for continuously updated training and recruitment with placement of diverse individuals into positions to effectively communicate and network with global customers. How to cite Workforce Diversity and the impact SHRM has towards Competitive Advantage, Papers