Workforce Diversity

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Workforce Diversity and the impact SHRM has towards Competitive Advantage

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. 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 Hȁrtel 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 Hȁrtel, 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 competitiveness 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...
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