Benefits From Cultural Diversity Within Business example essay topic

Pa lich, L.E. and Gomez-Mejia, L.R. (1999) admit that their claims... "regarding the deleterious effects of cultural diversity for global firms clearly diverge from the "value-in-diversity" perspective that dominates contemporary theory". Through a detailed review of the relevant literature, examine the arguments supporting the view that cultural diversity can have a positive impact on global firms. Throughout the following pages I will explain the reasons why there is support for cultural diversity within the workplace even though it has been exploited as having a detrimental affect upon domestic and international companies. Having examined the literature there are a number of key topics which I feel benefits from cultural diversity within business. Diversity is defined as all of the ways in which we differ. If we stop today and look around, we will see many workers of different ages, sex, nationality and culture working together side by side, this has caused companies to adjust to this unique situation.

Hofstede defines culture as "the collective programming of the mind which distinguishes the members of one group or category of people from another" (Hofstede, 1997). Culture is the learned ways of group living and the group's responses to various stimuli. It is also the total way of life and thinking patterns that are passed from generation to generation. It encompasses norms, values, customs, art, and beliefs. Culture is the patterns of behaviour and thinking that people living in social groups learn, create, and share. Culture distinguishes one human group from others.

A people's culture includes their beliefs, rules of behaviour, language, rituals, art, technology, styles of dress, ways of producing and cooking food, religion, and political and economic systems. Due to the changes in workforce demographics resulting from globalisation this has resulted in a practical concern of multi-cultural companies. According to a study held by the Society for Human Resource Management (SHRM) and Fortune magazine called Impact of Diversity Initiatives on the Bottom Line, which was based on the responses of human resource professionals at 121 Fortune 1,000 companies, diversity initiatives bolster the bottom line in a number of ways. Respondents indicate that diversity improves: 1. Corporate culture. 2.

Recruitment of new employees. 3. Client relations. In addition, diversity results in: 1. Higher retention of employees. 2.

Decreased complaints and litigation. 3. The organization's improved ability to move into emerging markets. Effectively managing the challenges and implications of a diverse workplace has been on the radar screen of many major corporations for at least the last eight years. Programs and policies have been implemented, personnel appointed and resources allocated. But as the economy slows and company leaders review costs with a high-powered magnifying glass, it is the ideal time to analyse which company expenditures provide value added, and which do not.

Prioritising budgetary items is a tricky business and only the most adept can manipulate their way successfully through an economic downturn. Can diversity initiatives provide the necessary value added at your company? The benefits listed below can help determine their importance for a particular business. However we must keep in mind that only those companies who can proactively manage their diversity will be able realize the benefits described. Taking advantage of a diverse workforce is a learned skill, not unlike practicing the principles of time management or process improvement. Without understanding and applying the necessary skills, studies show that organizations do not see bottom-line change.

Benefit 1: Marketing. Marketing is a major factor when building international business. How the marketing effort interacts with a culture determines the success or failure of a product. Advertising and promotion require special attention because they play a key role in communicating product concepts and benefits to the target segment and also people in different cultures often have different ideas about the same object and what is acceptable in one culture may not necessarily be so in another. So an understanding of the culture is central to successful marketing. Therefore a diverse workforce is a great benefit to the company as to develop a successful marketing strategy the marketing manager must have knowledge of the needs and wants of potential buyers.

For example Campbell soup lost $30 million in Europe before it accepted the idea that UK & US soup consumers were different in 3 ways -- -UK consumers have difference taste preference, UK consumers had not been educated to the condensed soup product and they also did not respond in the same way to US advertisement. So we need to understand the beliefs, values, customs and rituals of the country in which the product is being marketed in order to adapt the product to local needs, wants and tastes and design the promotional message to suit the culture. Who better to predict and determine strategy than those belonging to that same consumer group? As nations like the US and Britain becomes increasingly diverse, companies should be looking toward the billions annually spent by Hispanics, Blacks and Asians in these countries and providing the services and goods they want. Therefore diversity leads to access to other markets, including globally. For example, those most likely to have the knowledge and experience to tap into the Asian markets are likely to be Asian.

This can be seen in Maricopa County, US where 40% of the businesses say that the increase in the Hispanic customer base has caused them to hire more employees who can speak Spanish. Furthermore cultural differences need checking in the following categories: . Language - correct translation (words & symbols). Needs and wants - they may differ from one country to another. Consumption patterns - product used in larger or smaller quantities or used in different ways. Market segments- different demographic, geographic, socio-cultural and psychological groupings.

Socio-economic- different disposable income or decision making roles. Marketing conditions - differences in retail, distribution, communication systems, advertising regulations / legislation Benefit 2: Productivity. Achievement of employees was found to be linked to how well members of minority groups related to their work and employer. How well a company succeeds in fostering a partnership with its employees contributes significantly to employee moral and satisfaction. The fallout of harassment (i.e. work quality, productivity, absenteeism and turnover) becomes directly related to company profitability and market share. Moreover, when an employer creates a positive environment for its employees, recruiting for new employees becomes less time consuming and expensive.

Doing everything possible to generate positive reviews helps the company save money in recruiting and retention costs. In addition, an inclusive policy and positive public image affects sales, according to a study that watched stock prices in conjunction with positive and negative announcements reflecting their ability to manage diversity. Furthermore research illustrates that diversity can heighten creativity, improve problem solving, enhance decision making skills and increase innovative ideas. These studies show that diverse groups that were trained in effectively managing diversity were six times more effective in problem solving.

The quality of ideas produced was 11% higher than in homogeneous groups, based on both the feasibility of their implementation and overall effectiveness. On the other hand, studies found that diverse groups that were not trained in the existence and implications of their differences produced lower problem-solving scores than homogeneous groups. Benefit 3: Competitive Advantage. "Multicultural organisations... human differences are valued and seen as a competitive advantage for the organisation" Jackson, Hol vino & Cox.

Competitive Advantage is about being the best, the leader, in the market place at any given time and to beat the competition at their own game. It also means being the first choice for a customer or consumer and that the company or organization has positioned itself in the market place to secure a positive impression with a discrete set of buyers. To gain competitive advantage, an organization must have the best market intelligence, the right resources in the right place at the right time, and products and services that meet the needs and expectations of customers at the right price. A diverse workforce gives companies a competitive advantage by enabling them to better meet the needs of their customers, successfully compete in the global marketplace, and hire from an expanded labour pool. Firms are becoming increasingly aware of the importance of knowledge as a source of competitive advantage, and are seeking strategies and structural changes that will improve their learning and knowledge management capabilities.

Work groups must generate and develop new concepts in a nurturing environment. Work groups with a greater mix of cultural backgrounds, mental models, and experience at functional levels will, when appropriately managed, generate more innovative products and services. In a diverse workforce, supplier relationships can also benefit. Knowledge of other languages and cultures can be critical to a company's competitive advantage when forging new supplier relationships or maintaining existing ones, and when attracting overseas investment dollars. As Lambert & Sharma (1990). state diversity gives "better customer needs and customer based competitive analysis". Benefit 4: Communication.

The most obvious benefit of a diverse workforce is that it represents a local face to the customer. Operating successfully in a national market calls for a workforce that speaks the local language, understands traditions and rules of behaviour, and interact effectively with customers, public officials and other stakeholders. The relationship between workforce diversity and the development of international business capabilities is not well understood. As business ventures overseas, it is faced with the challenges of doing business with people from different backgrounds. These diverse backgrounds include an array of ideologies and institutions, such as different languages, customs, belief systems, social hierarchies and business practices. These factors contribute to the complexity and uncertainty surrounding the international business environment.

Organizations operating internationally must develop capabilities to navigate culturally complex environments. Organizations, which use a culturally diverse workforce, are instrumental in developing such capabilities. If you are not culturally diverse you can expect some of the following problems: . Unexpected costs for parts sourced internationally? Unanswered routine communications? Stalled joint projects?

Frequent miscommunication's? Low productivity? Failed meetings? Unmet commitments from suppliers? Competing knock offs of your core products? Deals coming undone?

Benefit 5: Workforce A diverse workforce can greatly contribute to your organisation's productivity and profitability. According to reports, diverse teams achieve higher levels of technological and organisational efficiency than homogenous work groups and organisational flexibility therefore increases. For example, Canen (1998) believes that it gives a "better organisations performance". Also it was established by Katzenbach Smith (1998, p 18) that a "broader mix of skills are better" and Maginn (1994 p 1) states "more is accomplished and less time is wasted within different culture work teams" Moreover Eales & White (1996, p 26) found that "There was an indication that respondents do more than is expected of them and there is an indication that some team members form alliances and it also suggests a high degree of mutual support amongst team members". There are many benefits to ensuring that a workforce is made up of a representative mix of the community, including people with a disability, older and younger people and culturally and linguistically diverse people. Benefits include: .

Having a workforce that more closely reflects the diverse needs of the whole community and is therefore more responsive to clients and customers (for example, it is estimated that 18% of British people have a disability). A broader pool of candidates to choose from. A broader range of knowledge and experience. A more accessible workplace for your employees means a more accessible workplace for your clients and customers. Mature aged staff can have a steadying and responsible influence on younger staff. A broad range of backgrounds results in a more flexible and responsive workforce However the effects of diversity on organizational performance might be more favorable if group leaders and members build on team members' creativity and information.

Diversity may also be more likely to improve performance when group members and leaders are trained to deal with group process issues, particularly those involved in communicating and problem solving in diverse teams Benefit 6: Management. Once seen as simply a reaction to harassment behaviour and discrimination lawsuits, diversity is now seen as a proactive way to build productivity and profits. Investing in education, systems analysis, and other organizational efforts aimed toward reducing any factual basis for complaint seems prudent. The key to success, however, is remembering that simply asking a diverse group of people to work together does not financially benefit an organization. However, organizations and managers trained to effectively manage their diverse workforce avoid misunderstandings, conflict and anxiety. It is using diversity as a business strategy - with genuine commitment by senior management -- that can help propel firms forward in terms of retention, innovation and profits.

Having a good cultural diversity programme in place helps ensure discrimination does not occur. Having taken steps to minimise the occurrence of discriminatory practice can be a defence that may reduce liability costs. Also direct or indirect discriminatory practices lead to stress for those affected, and therefore stress to their colleagues, which increases the risk of health and safety issues arising in the workplace. At least 85 per cent of work accidents are estimated to be caused by difficulties coping with emotional stress. "Companies that have managers who are equipped to successfully leverage the distinct and rich talents and skills and knowledge of all employees will not only avoid drains on profitability, they will actually attain a number of strategic benefits", says Linda Stokes, president and CEO of PRISM International, Inc. By effectively harnessing the different perspectives and talents of a diverse workforce, skilled managers help their companies to differentiate and produce results that are superior to any that could come from the collective efforts of a more homogenous group.

Conclusion: I feel that not recognizing different groups in the workplace will, and has for some companies caused lack of communication, the unwillingness to work as a team, and a reduction in the experience and knowledge passed down for the next generations. In my opinion we must stop seeing diversity as a problem, and start seeing it as an advantage. To succeed, organizations must understand and use the skills, traditions and backgrounds of a diverse workforce. There are several reasons why a diverse workforce will add value to a company. Most businesses, either large or small, work on a global scale; the information age has brought the entire world a lot closer.

Having associates that can deal with different cultures around the world is crucial to an expanding business. A diverse workforce will help to build more rounded individuals with experience they will gain from a mixed environment. Customers will benefit from the diverse workforce because a company that makes a choice to be open and flexible with its associates will more than likely be easy to work with in a business relationship. Probably the most important aspect of having a diverse workforce is the vast knowledge gained by pooling the different life lessons, cultures and experience together thereby allowing everyone the chance to learn new and different business practices.

In reality, as you can see from the positive argument produced above, diversity gives businesses a key advantage in the world marketplace. A wider range of viewpoints offers a spectrum of talents-meticulous craftsmanship, for example-which can improve many aspects of product and process research. Culture is something that can drive a business to success, when diverse, non-biased and properly managed. Yes, at times is can act as a barrier, but more often than not it is the bridge that crosses over those boundaries. There is no doubt after researching the arguments for cultural diversity that organisations should invest in a highly motivated and skilled diversified workforce, which will give them a powerful competitive advantage. Unfortunately, those who have not recognized these unique situations are scrambling for talent, stuck maybe, with a workforce of soon to be retired employees with little experience ready to back them up.

However companies that have recognized this are educating their workforce, offering programmes that help develop talent that can work together, sharing knowledge learned from experience and past mistakes, to helping all share the new technology that our younger workforce brings with them. Finally many businesses benefit enormously from the diversity and variety of their workforce. The richer the mix of people, skills and cultures in a company, the greater the range of inputs, viewpoints and experiences. These inputs in turn generate more ideas, more challenges to traditional thinking, and more angles from which to approach any problem. And, as a result, there is a greater likelihood of coming up with winning solutions. To quote Tony Blair: " I sincerely believe that we must work towards the removal of all barriers that prevent people from achieving their full potential and in this way build societies which represent and value diversity.

This will be one of our biggest challenges in the new Millennium".

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