Today's businesses are growing and experiencing rapid change due to many factors such as technology and globalization. Diversity is an important part of this change. Many organizations are working on an international level and, as such, need to understand the meaning of diversity when managing an increasingly growing and diverse group of people.
What Is Diversity?
Diversity refers to the mix of qualities that are different from our own and those of the groups to which we belong—both socially and within our work environments. Diversity encompasses (but is not limited to) personality, race, gender, ethnicity, age, physical abilities, sexual orientation, marital status, religious beliefs, organizational function, tenure, and educational background.
In the context of the workplace, valuing diversity means creating a workplace that respects people's differences and recognizes the unique contributions that individuals can make—ultimately creating a work environment that maximizes the potential of all employees.
By understanding diversity—and all its implications—organizations can be better prepared to manage their ever-changing workforce. Let's take a look at how just two of these dimensions of diversity—age and ethnicity—can affect your business.
How Diversity Can Affect Your Business: Some Important Considerations
In terms of age, the current labor force can be divided into three distinct age groups. By defining these age groups, organizations can get a better understanding of their diverse workforce.
- Baby Boomers—those born between 1946 and 1964. This group is often portrayed as having generated optimism and is committed to career and education.
- Generation X (Gen X)—those born between 1965 and 1981. This group grew up in an era of emerging technology and is considered to be very autonomous.
- Generation Y (Gen Y)—also known as "Millennials." Born between 1982 and 1995, this group may turn out to be the most educated and often feels deserving. Gen Y individuals want to work for a company that is socially responsible and do something to make a difference in the world. They have a tendency to switch jobs often, and are the most tech-savvy of the three age groups.
Baby boomers are reaching traditional retirement age and the number of skilled young workers is declining. Statistics show the following:
- Baby boomers represent the largest generation in the workplace.
- Population-wise, Gen X and Gen Y combined already outnumber the baby boomers.
- US Bureau of Labor Statistics projections imply that over the next decade, 40 million people will enter the workforce, about 25 million will leave the workforce, and 109 million will remain.
Given these impressive numbers, it's important to understand the impact that these changes in population will have on our future workforce. Here is one such example.
Succession Planning: Succession planning is a critical tool for ensuring lasting organizational improvements. However, the biggest challenge for most organizations is how to effect a well-designed transition of personnel without disrupting organizational continuity. Business leaders need up-to-date information to make vital decisions to meet short- and long-term needs. Identifying planning needs and committing the resources to meet them are some initial challenges of succession planning.
Before organizations can put together a proper succession plan, however, they need to look at the demographics of their workforce. Demographic trends describe the changes in demographics in populations over time and can provide organizations with insight into patterns and warn them of the upcoming configuration of its workforce.
For a few sectors and industries, these changes in workforce demographics are creating unique risk factors. The most evident factor is that people are living longer (greater life expectancies). Why would this pose a risk to organizations? The aging workforce brings with it two very distinct organizational challenges: potential productivity loss (lower productivity of the employee) and retirement risk (loss of the employee).
Age and productivity of course depend on the individual employee and their job functions. Some employees may still be very productive in their golden years, whereas others may show a drop in productivity due to decreased energy levels and increased health issues. How these two possibilities play out will determine the number of workers that companies will need to attract.
So, what do workforce demographics say about how organizations should be designing their succession plans? For one, they present an opportunity for knowledge transfer. Human resources (HR) professionals have the vital responsibility of ensuring their organization has the right tools and information to effectively transfer knowledge to the next generation of employees.
Approaches for knowledge transfer range from simple information-sharing between colleagues, to informal discussions, to networking through social channels, to a more formal approach through developed programs. Mentoring is also an effective way of transferring knowledge. For instance, baby boomers can mentor younger-generation employees by providing them with historical corporate knowledge or tried-and-true best practices. Conversely, Gen Xers can help baby boomers improve their computer skills.
There is a lot of knowledge and information that individuals within a diverse workforce can provide one another. Managers with a variety of backgrounds are pooling their knowledge and training new employees, who bring their own unique experiences and backgrounds.
Local Implications: If you've done any travelling throughout North America in the past decade, one thing you're certain to have noticed is the diversity of the population. According to 2010 US Census Bureau data, more than 40% of the US population is from ethnic or racial minority groups, 12.6% are African American, 16.3% are Hispanic, 4.8% are Asian, and 10.2% represent other groups.
As such, our workplaces are also becoming more diverse. Women (who, according to the US Census Bureau in 2010, account for 50.8% of the population) and minority groups (as discussed above) are recognized as a critical part of the workforce mix.
Interestingly, within our own communities, we (as citizens) are marginally aware of these cultural differences, but often do little to understand them. Conversely, when we travel to different countries on vacation or for business, we tend to be very aware of the cultural behaviors that we must adhere to. So how do we transcend these attitudes in our workplaces?
The more organizations are willing to understand these cultural differences within the workforce, the more proactive they'll be in developing a diversity program. A diversity program goes beyond hiring people of all races, religions, and cultures; it's about understanding the fundamental differences in each and every individual within the organization and striving to ensure those individuals and their contribution to the company (through their cultural upbringing, achieved skills, level of education, etc.) are nurtured. Conversely, involvement at the organizational level ensures that every individual understands their own importance within the company. Keeping a varied workforce actively engaged in the development, implementation, and training process is key to ensuring higher levels of productivity and service. As a result, companies are securing a future that has diversity embedded into the culture.
Global Business: As companies begin recruiting and hiring employees from all over the world, they must be ready—and willing—to understand the diverse cultural differences of their workforce. They must be cognizant of the multicultural interplay in their business environment, as well as understand the stringent local compliance regulations and government labor standards in effect for all their business locations.
As most large companies view the entire world as their marketplace, both from sales and employee recruiting perspectives, competition for these markets is also global. And although most organizations have adapted to the global reality of their operations, many are falling behind in developing HR policies, programs, structures, and services that support global operations. Workforce diversity is one such program that will be certain to boost an organization's international sales.
What Can My Organization Do?
While the rewards of a diverse workforce are real, the process to developing, implementing, and evaluating a diversity program can be a long and arduous process. At a high level, here are the three key steps to developing a truly diverse workforce.
Development: A crucial component of a successful diversity effort is developing a strategy to create a "culture of diversity" that penetrates every department and function of the organization. Before that can happen, however, sponsorship, commitment, and support from organizational leaders are needed.
Because workplace diversity is strategically important to achieving business outcomes, it needs to be viewed as part of an integrated planning and management effort. Attitudes toward diversity originate at the top and cascade downward. Organizational leaders, such as company presidents and chief executive officers (CEOs), need to be involved from the get-go and model the behaviors they themselves wish to see in the organization. Management cooperation and participation is a must for creating a culture conducive to the success of an organization's plan.
Implementation and Training: In order for a diversity program to be effective, organizations must commit to educating their workforce on an ongoing basis. Diversity training is not about a one-time seminar that each employee attends; it's a continuous learning process that involves everyone. A diversity training program is about helping employees understand their roles and responsibilities, allowing employees to voice their opinions and perspectives, learning tolerance, reducing negative elements of intolerance, and about developing leadership skills. Diversity training also inspires employees to become more interested in the company's success because it shows them that the company has made in investment in them (their opinions and their future within the organization).
For organizations that conduct business on a global level, a diverse workforce means that there is a larger pool of experience to draw from when dealing with customer issues around the world.
Evaluation (Measurement and Assessment): In order to be successful, organizations must make evaluation and assessment an integral part of their diversity program. Surveys are an invaluable tool for improving overall organization effectiveness and can help top management determine which challenges and obstacles to diversity exist within the organization and which policies need to be added or eliminated.
A customizable employee satisfaction survey can help organizations accomplish this by examining organizational practices and providing an understanding of the strengths and weaknesses within the organization, as well as what employee perceptions are about their roles, the company, and so on. Whether you already have the tools in-house to track and measure this data (e.g., business intelligence, a talent management solution, or analysis and reporting tools) or you hire a consulting firm to conduct these evaluations, the end results will provide invaluable information for making future business decisions.
There are consulting firms and diversity training organizations out there that can help with your diversity initiatives, such as the following (to name a few):
I have only scratched the surface by touching on two areas within the dimensions of workforce diversity; the list of challenges—and opportunities—is endless.
An organization's success (and competitiveness) depends upon its ability to embrace diversity and realize the rewards that such a program can bring. Companies that encourage diversity in the workplace inspire all of their employees to perform to their highest ability. With a company-wide strategy in place, organizations can reap the benefits of higher productivity, profit, and return on investment (ROI). Moreover, a diversity program can enhance an organization's responsiveness to an increasingly diverse world of customers, increase the organization's ability to manage change, as well as expand the creativity of the organization.
For another interesting perspective on cultural diversity, I recommend Glenn Llopis's post, "The Lack of Cultural Intelligence Is Damaging Our Enterprises and Our Economy," on his blog, The Immigrant's Perspective.