Cultural Diversity Management in Organizations

Magisterarbeit von Alena Romanenko

Introduction:

Diversity represents the ‘multitude of individual differences and similarities that exist between people’ (Treven & Treven, 2007, p.29). It came into play as an organizational concept three decades ago, in the 1980s in the US as an initiative to create a more positive business perspective and provide equal employment opportunities for various minority groups. The initiative that started as a mere political correctness and legal compliance issue later on evolved into a complex business-orientated strategy in the area of human resource management and development, organizational culture and leadership, named by Gilbert, Stead, and Ivancevich (1999) the new organizational paradigm.

Changing demographics and recent societal changes like extensive immigration and consequent increase in international workforce alongside with current economic metatrends such as internationalisation and globalisation are causing more exposure to Diversity, both in daily and in business life. Managing Diversity is becoming a strategic focus area of management in organizations and a resource, which enables companies gain competitive advantage on the modern market through company’s most important asset - its people (Richard, 2000). Literature reviews (Cox & Blake, 1991) and numerous surveys (e.g. The Second European Diversity Survey, 2004; Survey on Diversity in Corporate Annual Reports of Stoxx 50 Companies, 2009) show that the topic of Diversity and, eminently, the issues of cultural diversity and ethnicity are currently gaining prominence amongst human resource (HR) professionals. Consequently, cultural diversity trainings (CDTs) are becoming salient, e.g. researchers report (Sweeney, 2002 as cited in Jackson, Joshi & Erhardt, 2003) that 67% of employers carry out ethnicity-related diversity trainings (DT). However, scholars (King, Dawson, Kravitz, & Gulick, 2010, p.1) point out that ‘prevalence of DT has not been matched by empirical research on its effectiveness’. The trend toward diversity trainings in organizations poses the question of their efficiency (Pendry, Driscoll, & Field, 2007; Roberson, Kulik, & Pepper, 2001), which can be operationalized as organizational business and individual-level outcomes, i.e. in form of psychological variables, relevant in that regard for both parties - employees and organizations.

On the structural level of organizations Diversity is viewed as an organizational human resource development tool Diversity Management (DM). This tool enables acknowledging the differences between employees and helps to use diversity’s positive contributions for strategic purposes of the company. Diversity management focuses primarily on organizational practices of recruitment, training and promoting underrepresented groups and is broadly defined by Cox and Blake (1991, p.45): ‘Managing diversity refers to a variety of management issues and activities related to hiring and effective utilization of personnel from different cultural backgrounds’. Based on the so-called business case for diversity human resource management (HRM) models generally assume that there’s a certain alignment between organizational human resource strategies, organizational performance, and competitiveness. Despite of somewhat contradictory results of empirical studies of diversity in teams and workgroups (Williams & O’Reilly, 1998), the general stand is that managed the right way diversity brings benefits and improvements such as attracting the best minority personnel, enhancing decision-making, increasing team cooperation, and problem solving (Egan, 2005; Elsass & Graves, 1997), reducing opportunity costs by cutting down turnover, absenteeism rates, increasing job satisfaction, improved commitment, and organizational flexibility (Cox & Blake, 1991).

Based on various literature reviews (Jackson et al., 2003; Shore, Chung-Herrera, Dean, Ehrhart, Jung, Randel, & Singh, 2009), three main structural levels can be differentiated within Diversity research in organizations: organizational, group and individual (see 2.4. Diversity Outcomes). Focus of group diversity research clearly lies in the area of group performance (e.g. Chatman & O'Reilly, 2004; Watson, Kumar, Michaelson, 1993). Quantitatively less attention has been devoted to individual-level psychological variables, such as employee attitudes (Montei, Adams & Eggers, 1996; Nakui, Paulus, Van der Zee, 2008) and, in particular, attitudes towards diversity (Van Oudenhoven-Van der Zee, Paulus, Vos, & Parthasarathy, 2009). Research of organizational Diversity lies in the area of economic company performance (Hollowell, 2007), whereas again the impact of company’s Diversity management strategy influencing individual-level psychological variables, such as employee affective organizational commitment (Magoshi & Chang, 2009) has been far less researched. Therefore, a research gap seems to be particularly apparent within the area of psychological outcome variables of cultural diversity in organizations, with central variables being affective commitment and attitudes towards diversity (ATD). This fact is somewhat paradoxical in the twenty-first century’s age of knowledge work, where concepts like commitment HR strategy are key and where ‘learning organizations’ target at ‘mobilizing worker commitment and sustainable competitiveness” (Bratton & Gold, 2007, p.59).

As literature research shows group diversity research has been mostly focused on the performance aspect of workgroup diversity (Chatman & O'Reilly, 2004). Far less researched, but nonetheless not less important, are employee’s affective reactions (e.g. commitment) and attitudes towards diversity (Van Oudenhoven-Van der Zee et al., 2009). Existing studies (Chang, 2006; Huselid, 1995) examine the effects of HR commitment practices and, using the logic of the commitment management approach, prove (Magoshi & Chang, 2009) that attitudes towards diversity change as a consequence of company’s exercising of Diversity Management and have far-reaching consequences on employee’s affective commitment (AC). In other words: HR commitment practices have a positive effect on employees’ organizational commitment. With change of attitudes being a common goal of diversity trainings, another research line has taken up the study of attitudinal changes as a result of employee participation in DTs. Speaking of the outcomes, many researchers (van Knippenberg & Haslam, 2003; Van Oudenhoven, Van der Zee, Paulus, Vos & Parthasarathy, 2009) have suggested that positive attitudes towards diversity in workgroups affect feelings and general work attitudes of participants in a positive way. Thus, research has suggested a strong link between the attitudes and organizational commitment.

Multiple associations of commitment with such variables as performance, productivity, retention, citizenship behaviour have been documented in the literature (Meyer & Allen, 1990, 1991, 1997) and have left no doubt about the concept’s importance. Based on empirical research of commitment practices (Bae & Lawler, 2000; Huselid, 1995), it has been suggested that Diversity Management Practices (DMP) can be seen as a reflection of commitment management philosophy. According to Magoshi and Chang (2009) commitment management approach foregrounds the reciprocity between the company and the employees (Kossek & Block, 2000), views the relationship between them as exchanges of commitment (March & Simon, 1958), and inherently implies devotion of the company practicing DM to the employees and their needs. In line with the abovementioned theory, company’s adherence to Diversity Management Practices (e.g. in form of carrying out HR development initiatives like cultural diversity trainings) triggers positive effects on employees’ organizational commitment and should, therefore, be treated as an important outcome, which implicates positive consequences for overall organizational performance. Research on both: commitment (Magoshi & Chang, 2009) and attitudes towards diversity (Riordan, 2000; Strauss, 2007) indicates that the abovementioned effects vary for groups with different ethnic composition as well as for people with majority and minority backgrounds. This fact offers interesting basis for scientific debate and will be further on discussed in this thesis.

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CHAPTER 3.4, CHAPTER SUMMARY:

The theoretical basis for understanding the outcomes of diversity and psychological mechanisms behind them can be provided by two perspectives dominant in theoretical and empirical literature on organizational diversity. The pessimistic perspective is rooted in social identity theory (Tajfel, 1982) and similarity-attraction paradigm (Byrne, 1971), and uses self-categorization processes to explain the harmful outcomes of cultural diversity on workgroup performance. The optimistic perspective understands cultural diversity as generally beneficial, is based on the value in diversity standpoint (Cox, 1991) and uses information-processing and Allport’s contact hypothesis to explain the positive diversity outcomes. SIT-rooted relational demography studies show how dissimilarity and heterogeneity in workgroups result in less psychological attachment, reduced intention to stay in the company, higher absenteeism, and high emotional conflict. Information-processing-rooted studies show how heterogeneity brings in varied perspectives, higher quality of ideas, creativity, and information-elaboration causing deeper analysis. The negative diversity consequences raise the issues of proper diversity management in organizations through diversity trainings, just like the positive show the aspiration for the competitive edge and a way to capitalize on the diversity-performance link. The theoretical perspectives used to explain certain controversial results of empirical studies of diversity and its ironic outcomes (e.g. see faultlines research and categorization-elaboration model by van Knippenberg et al., 2004) remind of the complexity of psychological mechanisms, salience of which is contextual. Aligning organizational context (increased deadline pressure), goals of diverse workgroups (need for increased creativity and unconventional solutions), and situational factors (identity threat) can help organizational decision-making in choosing appropriate group-constellation for specific cases and for general diversity management.

As a result of overviewing conceptual and original research literature on diversity dynamics and potential organizational benefits from practicing Diversity, two central psychological variables commonly targeted in (cultural) diversity initiatives (Research Question 2) have been identified to be of particularly importance: attitudes towards diversity (ATD) and organizational commitment (OC). Recapitulating the business case for diversity one can recall that diversity’s utility for company’s performance nonrandomly comes from psychological variables such as employee commitment and ATD (content and fulfilled employees are less likely to leave the organization and more likely to be productive). In this connection the area of human resource trainings and development (namely: cultural diversity trainings) becomes particularly salient because of its common offer/claim of attitudinal change. On a similar note, after having learned that outcomes of diversity in workgroups are not only dependant on group composition (social identity theory), but also hinge on attitudes towards diversity (anchored in information-processing), the importance of this psychological variable for organizations became apparent. Theoretical literature (e.g. theory of reasoned action of Fishbein & Ajzen, 1975) announces attitudes to be antecedents of behavioural intent and empirical literature shows that there seems to be a positive relationship between employee’s organizational commitment and organizational performance as well as between positive attitudes towards diversity and constructive workgroup outcomes. The analysis of workgroup outcomes under the condition of an individual holding pro-diversity beliefs (positive ATD) confirms that diversity in workgroups can have an enhancing effect on feelings of participants and workgroup’s task performance and real as well as perceived productivity (Knippenberg & Haslam, 2003), thus protecting against the negative effects of group dissimilarity (van Dick et al., 2008) and group faultlines (Homan et al., 2007). The psychological dynamics of attitudes provide two main sources of attitudinal change: through reconceptualization of social group categories and intergroup contact (Brown et al., 1999; Van Knippenberg et al, 2004) and/or provision of information (Sanchez & Medkik, 2004), making attitudes an ideal goal for cultural diversity trainings.

Empirical research literature shows that both variables: ATD and OC are exhibiting a broad range of correlations with performance-related variables. According to the modern view of commitment (Meyer & Allen, 1990, 1991, 1997) OC seems to be a multi-dimensional construct, which wields influence on job-related attitudes like withdrawal cognitions, organizational citizenship, engagement, and job-related behaviours like turnover, in-role performance. In general, it seems to influence virtually any outcome beneficial to organizations, thus, yielding a competitive edge for organizations, where OC and positive ATD are existent.

Based on the rationale of the attitudinal approach (Mowday et al., 1982) according to which commitment depends on employees’ experiences and perceptions, it can be argued that commitment is an employee’s affective attitude towards the company. In this light the recent studies, which link organizational commitment practices in form of diversity management (Chang, 2005; Magoshi & Chang, 2009) to a change in employee’s attitudes, in the good spirit of the business case for diversity, connect companies practicing it with superior organization performance (Deng et al., 2003; Wright et al., 2003).

Thus, after having identified (in CHAPTER ‘MANAGEMENT OF CULTURAL DIVERSITY IN ORGANIZATIONS’) the research gap in the area of individual-level psychological variables, a closer look has been taken (in CHAPTER ‘PSYCHOLOGICAL MECHANISMS AND OUTCOMES OF DIVERSITY INITIATIVES’) at the current state of research of cultural diversity management initiatives in connection with employee’s attitudes (towards diversity) as well as other variables targeted in diversity management initiatives (most notably: organizational commitment). Considering the particular interest of organizations in increasing the productivity on all possible levels, the consequential questions are: how exactly can attitudes in organizations be influenced in order to produce effects on outcomes relevant and desirable in organizational settings (e.g. in form of employees’ organizational commitment)? Which contextual variables should be taken into consideration while working on attitudes and commitment and why? Theoretical and empirical literature leading up to answering that question will be covered in CHAPTER ‘CULTURAL DIVERSITY INITIATIVES AND TRAININGS’.