Please cite as: Kossek, Ellen Ernst, Lobel, S., Brown, J. 2006.

Human resource strategies to

manage work force diversity: Examining “the business case,” In Handbook of Workplace
Diversity (A. M. Konrad, P. Prasad, & J. K. Pringle, Editors), Thousand Oaks, CA: Sage,
pp. 53-74.
2

Human Resource Strategies to Manage

Workforce Diversity

Examining The Business Case’

ELLEN ERNST KOSSEK, SHARON A. LOBEL

AND JENNIFER BROWN

In this chapter, we discuss the human resource management (HRM) perspective

on workforce diversity. This viewpoint highlights the development and imple¬
mentation of organizational initiatives that (1) increase the numerical representa¬
tion of historically excluded groups; (2) empower a diverse workforce once it is
in place to participate fully in organizational decision making; and (3) ensure the
inclusion of a diverse workforce in every aspect of organizational life (Kossek &
Lobel, 1996). The business case for HR diversity strategies links recruitment,
selection, development and retention of a diverse workforce to business goals,
labor market shifts, globalization and competitive advantage (Yakura, 1996).
Data from the US Department of Labor (2004) illustrates the continuing need
for diversity strategies. Whites hold a larger than proportionate share of manage¬
ment occupations (88.4%) relative to other races and ethnicities (e.g. 5.7% for
blacks, 5.9% Hispanics). If proportions mirrored the population, we would expect
whites to comprise 75% of management, with blacks and Hispanics doubling
current rates. In 2002, women represented 47.5% of the managerial and profes¬
sional occupation, but mainly occupied ‘female-dominated’, relatively lower-paid
occupations (e.g. school teachers) within these professions, while men were nine
times as likely to be engineers and scientists. Turning globally, the Gender
54 THEORETICAL PERSPECTIVES ON WORKPLACE DIVERSITY

Promotion Programme of the International Labor Organization (www.ilo.org)

concludes that while globalization has created unprecedented economic opportu¬
nities, it has also deepened social inequalities. Only 54% of working-age women
are in the workforce worldwide compared to 80% of men. Further, women
continue to dominate the ‘invisible care economy’, which relates to caregiving
and domestic work. The ILO report notes that although more and more women
are obtaining paid work, most new employment in developed countries has been
in part-time jobs, while in developing countries women have gone mainly into the
informal sector and home-based work. Globally, women earn 20-30% less than
men and hold only 1% of chief executive positions.
Table 2.1 gives an overview of diversity management strategies, which involve
setting objectives (first column), translating objectives into programs and policies
(second column) and finally establishing measurement outcomes (third column).
For example, the organization might establish attracting a wider pool of talent as
an objective. Then managers develop methods of achieving the objective, such as
ensuring that women and minorities are on the interview shortlist for potential
hires. Measurement outcomes might reflect the ratio of acceptance of job offers,
and turnover exit interview data.
In this chapter, we review three principal research streams on the effectiveness
of HRM diversity strategies (see Figure 2.1). The first stream investigates how
particular HR practices influence workforce diversity. As Table 2.1 shows, diver¬
sity strategies can target individual, group and/or organizational outcomes. The
second stream examines how the presence of diversity in the workforce affects
outcomes, and the third stream directly links HR practices to outcomes.
We conclude with future research suggestions and a critique of the business case.

HR PRACTICES AND
WORKFORCE DIVERSITY

HR diversity practices have broadened beyond affirmative action (AA) and

equal employment opportunity (EEO) staffing efforts. Additional best practices
include establishing a visible Diversity Advisory Committee, conducting manda¬
tory training, and targeting communications to different affinity group members
(Jackson, 2002).
The first research stream examines the effects of adopting specific HR prac¬
tices on measures of workforce diversity. For example, Goodman, Fields and
Blum (2003) surveyed HR managers in several hundred employers in Georgia.
They found a positive relationship between emphasizing employee development
and promotion and the representation of women.
Typically, researchers are interested not only in overall numbers, but in repre¬
sentation at different levels. In a cross-sectional study of over 100 organizations,
Konrad and Linnehan (1995) found that identity-conscious HRM structures - those
that explicitly address demographic group representation in HR decision making
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58 THEORETICAL PERSPECTIVES ON WORKPLACE DIVERSITY

FIGURE 2.1 HRM diversity research streams

(e.g. setting diversity hiring goals) - are linked to the greater representation of
women and minorities in management. Reskin and McBrier (2000) used data from
the National Organization Survey (Kalleberg, Knoke, Marsden & Spaeth, 1994)
and found that organizations with formalized HR practices (e.g. written documents
for hiring and firing) had higher percentages of women in management. They
theorized that status positions or opportunities in large organizations are less likely
to be distributed based on ascribed characteristics (i.e. sex stereotypes of productive
managers) when formalized personnel practices exist (cf. Elvira & Graham, 2002).
Leek and Saunders (1992) studied compliance with Canada’s Employment
Equity Act, the legislation to increase workplace representation of women, disabled
persons and minorities. They found that employers who had more formalized pro¬
grams hired more women. They measured formalization through an Employment
Equity Program (EEP) effectiveness scale. Regression analyses showed the
strongest effects between EEP compliance and the representation of managerial
women.
French (2001) developed a typology of effective equal employment imple¬
mentation for the entire population (n = 1976) of large Australian private sector
organizations. She identified four equity profiles: traditional (non-compliance),
anti-discrimination, AA and EEO. Only the AA approach to equity management
resulted in increases in women in management across all tiers.
A major unpublished Ford Foundation study of non-profit boards shows a
cascading effect from hiring practices (Burbridge, Diaz, Odendahl & Shaw,
2002). By hiring more than one female or minority board or staff member, a cascade
effect followed as these hires make subsequent recruitment easier through their
access to networks and talent pools. This expansion shaped institutional cultures
and made retention easier.
In some research, HR diversity practices have not been associated with
increases in diversity. In their study of Society for Human Resource Management
(SHRM) members, Rynes and Rosen (1995) found little support for the notion
that the adoption of diversity training correlates with top management diversity
or increases in workforce diversity. Konrad and Linnehan (1995) found no rela¬
tionship between formalized HRM structures and percentage of minorities at
higher ranks of management. Moreover, Blum, Fields and Goodman (1994)
found that companies that have more women and blacks sometimes can be worse
places to work (e.g. lower salaries, more turnover), highlighting the issue that
demographic diversity is not a proxy for diversity initiatives.
Furthermore, although academics and practitioners hope that diversity initiatives
will have positive outcomes, there are occasionally undesirable impacts - those that
HR STRATEGIES TO MANAGE WORKFORCE DIVERSITY 59

perpetuate disparate treatment of women and minorities. Cox and Blake (1991)
argued that organizations that valued diversity would have greater marketing
capability by mirroring increasingly diverse markets. By matching customers and
service providers on racial characteristics, Brief (1998) shows how Shoney’s
restaurants enacted the business case argument to the detriment of black employees.
Throughout the chain, 75% of black employees held jobs in three low-paying, non¬
customer-contact positions. Senior leadership espoused the business justification that
the restaurant’s white customers preferred to be served by white employees.
Collins’ work (1997) also exemplifies unintended consequences. She inter¬
viewed 76 of the most successful black executives in Chicago. She examined
their job descriptions and coded them as racialized if the position had some link
to African American issues, or mainstream if the job involved roles without racial
implications. She documents how these executives are often relegated to what she
calls ‘racialized roles’ in organizations, such as marketing to blacks or the job
of equal employment officer. Those with racialized roles had lower advancement
and mobility rates and less skill development than those with mixed or main¬
stream job histories.
Indeed, many leading corporations have been effective in hiring women and
minorities to mirror their increasingly diverse markets and win over new customers
(Perlman, 1992); but they have been less successful in retaining and promoting
those hired (Blum, Fields & Goodman, 1994; Goodman et al„ 2003). Observing
this trend, Thomas (1990: 108) encouraged employers to move ‘From affirmative
action to affirming diversity’, arguing that ‘women and minorities no longer need a
boarding pass, they need an upgrade’. For this reason, Cox (2001) advises compa¬
nies to measure the identity profile or demographics of defined work groups. Using
this data, an intervention may be designed to increase the representation of minori¬
ties and women in top management, in line functions that have direct profit and loss
responsibility, or in functions where they have been historically under-represented
such as engineering. Thomas and Gabarro (1999) recommend that firms address
specific racial barriers to advancement at each career stage.
Overall, studies in this research stream have generally shown a positive asso¬
ciation between formalized HR practices and workforce diversity. Increasing
workforce diversity is only one piece of the puzzle, however. Important questions
about effectiveness can be answered by examining links between diversity and
performance outcomes as discussed below.

ASSOCIATION OF WORKFORCE DIVERSITY

WITH INDIVIDUAL, GROUP AND
ORGANIZATIONAL OUTCOMES

The second research stream measures associations between the presence of diver¬
sity and performance outcomes measured at individual, group or organizational
levels. At the individual level, researchers have measured relationships between
60 THEORETICAL PERSPECTIVES ON WORKPLACE DIVERSITY

demographic diversity and attitudes and performance ratings. At the group level,
researchers have measured effects of group diversity on variables such as coop¬
erative behavior and social cohesion. At the organizational level, outcome vari¬
ables include turnover rates, productivity per employee and profitability.

Workforce Diversity and Individual Outcomes

Today, there are many individuals who view overt prejudice against women and
minorities as socially and organizationally unacceptable. They believe that orga¬
nizational decision-makers hold the same beliefs and therefore view discrimina¬
tion as an outdated issue. Because ‘modem racists’ believe that discrimination
is a thing of the past, they may believe that women and minorities are using unfair
tactics to demand workplace advantages, which they do not deserve on the basis
of merit (Brief & Barsky, 2000). Regarding workplace relations, modem racism
does not result in hate toward minorities and women, but rather discomfort, fear
and avoidance by majority members (Brief, 1998), which lessens majority members’
commitment to the diverse group and organization.
Some studies show that individuals have more favorable attitudes toward diver¬
sity initiatives when their work groups are more demographically divarseTKossek
and Zonm (1993) found that regardless of one’s individual demography, faculty
in work groups with greater gender diversity hacTmore favorable attitudes toward
organizational efforts to increase diversity, relative to individuals m other units
^withjess diversity
Kanter (1977) emphasized how a minimum number of employees, who represent
a minority in a group, create a critical mass that can protect the minority members
from negative stereotypes.,EhL(1995) reported that an increase in the proportion
ofwommiiLuipperji^^ is associated with a reduction in stereotyping.
Kossek, Markel and McHugh (2003) note the importance of identifying tipping
points, defined by Kanter (1977) as having a sufficient critical mass of minorities
in groups, for effectiveness in diversity change strategies. Webber and Donahue
(2001) suspect the relationship between amount of group diversity and perfor¬
mance may be curvilinear: too little or too much diversity may be detrimental to
group functioning.
Tsui and Gutek (1999) summarized consistent findings that show higher demo¬
graphic similarity between supervisors and subordinates on age, race or gender cor¬
relates with HR outcomes such as higher ratings on performance, organizational
citizenship, and lower role ambiguity and conflict. Leek, Onge and LaLancette
(1995) found that Canadian organizations with higher representation of manage¬
rial women also have the most rapidly decreasing wage gap; however, the wase
gap was widening for visible minority, Aboriginal and disabled women.
Overall, increasing workforce diversity seems to be associated with more
favorable- attitudes toward ^diversity and better performance ratings and wages.
Tfie^ffeefe^afldiyersity on individuals are often intertwined with Effects on
groups.
HR STRATEGIES TO MANAGE WORKFORCE DIVERSITY

Workforce Diversity and Group Outcomes

Results from studies examining effects of diverse group composition on group /

attitudes and performance are mixed. McLeod, Lobel and Cox (1996) found that \
more diverse groups had better-qualitysolutionson a brainstorming task, relative to
homogeneous groups, and displayed more cooperative behavior (Cox, Lobel &
McLeod, 1991). Yet major reviews of the diversity literature (Milliken & Martins,
1996; Tsui & Gutek7T999; Williams ScUTleilTy74998) conclude that the greater the
demographic-diversity ingroups, the lowerthe socialcohesionTTHembers who" arc~
different from others are more likely to exhibit turnover, as Elvira and Cohen’s
(2001) examination of the personnel records of employees at a Fortune 500 company
suggests. Women were more likely to turn over when fewer women were employed
at their job level. Finally, Webber and Donahue’s (2001) meta-analysis found no rela¬
tionship between diversity or type of team on work group cohesion and performance.
Researchers recognize the importance of measuring the tenure of members on
the team; as individuals get to know each other better, the negative effects of
diversity often subside (Watson, Kumar & Michaelsen, 1993). Besides demo¬
graphic diversity, other variables such as congruence in values (Harrison, Price &
Bell, 1998) are relevant.
Benschop (2001) observes that most of the research showing positive relation¬
ships between diversity and group performance is limited to laboratory studies or
experiments with MBA students (Cox et al., 1991; Watson et al., 1993) and generally
I not been replicated in organizations.
We need more complex studies within organizations to understand these issues.

Workforce Diversity and Organizational Outcomes

A workforce that is diverse may increase customer demand for related products
and services (Richard, Kochan & McMillan-Capehart, 2002). Resource-based
strategic theory predicts that firms with greater cultural diversity will be better
able to mirror increasingly diverse product markets and have more complex
inimitable social resources (Richard, 2000).
Drawing on federal records, Cordeiro and Stites-Doe (1997) showed that the
1992 percentage of the representation of women managers in the largest US firms
was positively related to firm performance (return on equity, return on assets).
The effect persisted even after controlling for growth in resources.
Catalyst (2004) conducted a study of linkages between the gender diversity
of top management and business performance in Fortune 500 companies. After
controlling for size and industry, the study showed that firms with higher top
management gender diversity had 35% higher return on equity and 34% higher
total return to shareholders than other firms.
A large multi-employer field study on the effects of racial and gender differ¬
ences on group and organizational performance indicates the importance of time
lag and cross-level effects within firms. The research was conducted at four major
62 / THEORETICAL PERSPECTIVES ON WORKPLACE DIVERSITY

US firms that were leaders in supporting workforce diversity (Kochan et al.,

2003). Comparing the performance, group process and financial results for
comparable teams or business units by industry (information processing, financial
services or retail), the authors concluded that there were few direct effects of
workforce diversity on organizational performance.
p- n-u:-:-1..-a.— 4.1 ^ • 1 ■

positive or negative relationship. Instead, the relationship may depend on the type
of strategyjfillowed (e.g. innovation, growth). Richard’s (2000) survey of over
500 banks found that those with more racial diversity and a growth strategy expe¬
rienced higher return on equity and net income per employee, relative to organi¬
zations with a diverse workforce and a no-growth or downsizing strategy. Richard
and colleagues resurveyed a subset of this sample several years later, and found a
moderation effect: workforce racial diversity only significantly improved perfor¬
mance when the firm followed an innovation strategy (Richard et al., 2003).
Frink et al. (2003) suggest an inverted U-shaped relationship between gender
composition and performance that may vary by industry. Relying on several
national datasets, they found that increases in the representation of women are
related to perceptual measures of productivity per employee and profitability only
up to the point when an equal proportion of jobs are held by men and women — no
higher. Richard et al. (2002) bemoan the fact that cross-sectional studies comprise
most of the literature on organizational outcomes. In other words, the second
research stream we have reviewed does not address the question of causality
(i.e. whether diversity caused these outcomes or whether HR practices were at all
relevant) - issues tackled by the third research stream.

HR PRACTICES AND INDIVIDUAL, GROUP

AND ORGANIZATIONAL OUTCOMES

The third research stream investigates how HR practices lead to individual, group
or organizational performance outcomes. Cox and Blake (1991) argued that
heterogeneous organizations that valued diversity would have higher-quality
group decision making, greater creativity and innovation, more organizational
flexibility due to the possession of divergent thinking, greater ability to attract and
retain the best talent, and greater marketing capability. These objectives can be
realized via organizational change strategies and interventions. Interventions such
as altered selection processes (individual focus), conflict management (group
focus) and top management commitment (organizational focus) might all con¬
tribute to the effect that diversity has on firm effectiveness. Interventions target
not only formal bottom-line outcomes, such as turnover and productivity, but also
intermediate and informal process-oriented outcomes, such as the cultural experi¬
ences and quality of member interactions, teamwork and cooperation, and individual
commitment and identification with organizational goals.
HR STRATEGIES TO MANAGE WORKFORCE DIVERSITY 63

HRM Strategies to Change Individuals

Workplace diversity generally impacts organizational-level outcomes indirectly

through effects that begin at the individual level (Rynes & Rosen, 1995).
Diversity training is the most prevalent individual-level intervention (SHRM
Diversity Surveys, 1998, 2000, 2002). Ford and Fisher’s (1996) review states that
training programs aim to change employees’ attitudes (affective and cognitive)
and behaviors to ‘value diversity’ and reduce subtle forms of discrimination and
exclusion that hinder effective working relationships. They note three main types
of training objectives. Programs fostering assimilation provide education about
the norms and goals of the dominant culture and might target minorities.
Programs focused on accommodation emphasize adjustment of the majority to
the changing workforce. Programs emphasizing multiculturalism (where members
of two or more cultures are allowed to retain key aspects of their cultures) involve
a bilateral process jointly focused on the majority and minorities.
Training topics typically include stereotyping, prejudice, communication
styles, and attitudes toward AA (Nkomo & Kossek, 2000). However, there is very
little research analyzing the differential effectiveness of various training designs,
such as whether they are mandatory or voluntary or emphasize moral or business
arguments.
Lobel’s (1999) review described the positive impact of diversity initiatives such
as training on attitudes. Using a survey of SHRM members, Rynes and Rosen
(1995) published one of the few refereed studies on the effectiveness of diversity
training. While 75% of respondents state trainees leave diversity training with
positive diversity attitudes, only 9% believed trainees enter with favorable
attitudes. Similarly, 68% believed that employees are skeptical prior to training,
whereas only 7% reported skepticism after training. Importantly, these were HR
managers’ estimates rather than actual measures of attitude change. Training
success was also correlated with managerial mandatory attendance and rewards
for increasing diversity, long-term evaluation of training results and defining
diversity broadly. Despite these positive perceptions, this same study found that
only one-third of organizations viewed diversity management training efforts as
having lasting change.
Others have been unable to document the advantages of diversity training
(MacDonald, 1993). One reason training may have limited impact is that most
training programs reinforce norms, values and perspectives of the dominant orga¬
nizational culture; the focus is on helping members of the non-dominant group to
adapt to the majority (Tung, 1993). Another reason is that the training, itself, may
not incorporate what we know about transfer of training. The training context may
be different enough from the ongoing work context so as to make it difficult for
trainees to exhibit behaviors similar to those learned in training (Ford & Fisher,
1996). A third reason may relate to insufficient skill levels of diversity trainers.
Roberson, Kulik and Pepper’s (2003) review recommends that companies system¬
atically conduct a training needs assessment. Additionally, training objectives -
whether to raise awareness or develop multicultural skills or both — need to be
64 THEORETICAL PERSPECTIVES ON WORKPLACE DIVERSITY

clarified. Social psychological research on stereotyping and linkages to prejudice

reduction might also be more tightly incorporated into training design. Devine
(1989) conducted several lab studies and found that change processes to support
prejudice reduction were most likely to occur when a person was able to make
active associations between both their personal belief structure and their stereo¬
type structure. Regardless of whether a person tended to be a high or low preju¬
diced person, her research suggests that cognitive change is most likely to occur
in training situations when social desirability demands are low.
Mentoring is another strategy targeting change at the individual level. Here a
successful senior mentor is matched with a more junior woman or minority, with
the objective of enabling under-represented demographic groups to move through
‘glass ceilings’ - the traditional, invisible barriers to advancement (Ragins, 2002;
Thomas & Gabarro, 1999). Formal mentoring programs create a structure for pair¬
ing individuals; informal mentoring programs evolve from interactions individuals
establish in the course of working together. Using a national sample drawn from
professional associations, Ragins, Cotton and Miller (2000) conducted a mail
survey on mentoring. The study showed that satisfaction with a mentoring rela¬
tionship was a stronger influence on career attitudes such as commitment, job
satisfaction, intention to turnover, and perception of organizational justice than
program design or the mentor type (formal or informal). Post hoc analyses showed
that although both men and women received similar mentoring information and
had similar levels of satisfaction, women in formal programs had lower career
commitment, suggesting that the selection of effective mentors though informal
processes may be especially critical. Formal HR diversity strategies may be less
effective for members of traditional out-groups, unless supported informally.
Ragins (2002) urged firms to recognize that while formal programs help proteges
deal with their jobs, informal programs help them deal with their lives.
Incorporating principles from research on intergroup contact, attitude change, per¬
suasion and stereotype reduction may increase effectiveness. Developing ‘affective
ties’ with out-group members, which increases information and empathy regarding
the out-group and fosters social connections, reduces prejudice (Pettigrew, 1998).
Rather than designing diversity initiatives to only focus on task issues such as
imparting information, it may be useful to include opportunities to enhance social
interaction.
Petty and Cacioppo (1990) argue that when persuasion depends on emotional
appeals and values such as equality, it is less likely to produce lasting change.
Rational appeals to the recipient's current goals and outcomes are more effective
over the long term. Rather than using rhetoric emphasizing that diversity is the
‘morally right thing, to do’, communication strategies might focus more on how
these initiatives will help individuals personally be more effective on the job or
help their company be more competitive. Individuals are more favorable toward
affirmative action if it is framed as equal opportunity and not reverse discrimina¬
tion (Bosveld, Koomen & Vogelaar, 1997).
Wood (2000) notes that behavioral influence strategies are more effective in
changing attitudes when they involve participation in public acts that are designed
HR STRATEGIES TO MANAGE WORKFORCE DIVERSITY 65

to alter the social definition of an object. These influence strategies can be more
effective in shifting relevant privately held attitudes by focusing on changing the
meaning and definition of an object instead of focusing on only changing attitudes
toward an object. For instance, using ‘affinity group celebrations’ as an example of
an object, having Hispanic-American employees design activities for an
Asian-American affinity month (Jackson, 2002), rather than simply exposing
them to announcements about the importance of affinity activities or cultural facts,
illustrates one method that could be used to change definitions. In this way, atti¬
tudes toward affinity group celebrations may become a source of pride for those
outside the affinity group, and yield not only a better cross-cultural understanding
of others, but also a new outlook and personal definition of how diversity is
honored within an organization and the social meaning of and personal rewards
from such celebrations. For individuals from outside the affinity group, the cele¬
brations are now less likely to be defined as an ‘activity that doesn’t pertain to me’.
Richard and Kirby (1999) found that explaining the business case for imple¬
menting a particular diversity program, such as diversity training, has a positive
effect on attitudes towards the program. We need more studies on employee
perceptions of workplace diversity programs, and additional constructs such as
respondents’ legal knowledge of AA programs (Little, Murry & Wimbush, 1998).
In sum, HRM practices, such as diversity training and mentoring, have the
potential to change attitude and career outcomes. We have learned how to make
these efforts more successful, for example by incorporating social psychological
principles into training design and by recognizing the unique advantages of
informal mentoring.

HRM Strategies to Change Groups

Given evidence showing that work group diversity can lead to short-term,
increased conflict among members (Pelled, Eisenhardt & Xin, 1999), focused
training with an external facilitator may help the group to achieve higher levels
of productivity in a shorter time. Training can target methods for raising,
discussing and resolving difficult interpersonal, business and/or team-related
process issues.
Some HR interventions at the group level involve identity-based networking
groups, which are formal or informal associations of employees with common
group identities. Friedman (1996) notes these separate affinity groups provide
opportunities to connect socially and professionally to one another and enable
members to make contacts that expand the range, strength and configuration of
their social networks and reduce their isolation. Friedman and Holtom (2002)
analyzed cross-sectional survey data from over 1000 minority employees in
20 networking groups for Asian, African American or Hispanic employees.
Turnover intentions of managerial-level minority employees in networking groups
were significantly lower than the intentions of minorities not in groups. They
argued that more firms should establish networking groups, as these groups may
66 THEORETICAL PERSPECTIVES ON WORKPLACE DIVERSITY

have outcomes that extend beyond group members. For example, a case study at
Digital Corporation found that the presence of valuing diversity discussion
groups does seem to improve a company’s reputation (Walker & Hanson, 1992).
However, formal sanctioning of identity-based groups may have unintended
negative consequences when they are perceived to be exclusionary or threat¬
ening, particularly by white males. This perceived threat can lead to negative
reactions, or ‘backlash when minorities are seen as attempting to develop
power by individual or collective means’ (Chemers, Oskamp & Constanzo,
1995). Flynn (1999) notes few companies offer formal mentoring and network¬
ing groups for white men, which may be perceived as unfair and ‘reverse dis¬
crimination’ by white males, who do not see themselves as contributing to a
problem (Flynn, 1999).
Caproni’s management skills text (2001) notes that cultural barriers become
exacerbated in virtual teams, unless team-building activities such as face-to-face
workshops, followed up with regular email, rotation of team meetings and cross-
cultural communication training are conducted. The British Council, with over
6000 employees in 109 countries, created technology-based teams with these
methods (www.britishcouncil.org). Interventions in global teams can include
discussion of how diversity influences team processes.
Many questions about impacts of group-level interventions remain. For exam¬
ple, does providing formal team feedback on diversity climate improve team
building or make it easier to integrate diverse points of view? We also need
research to identify how programs targeted at the individual or organizational
level impact groups. Based on an organizational simulation of 248 MBA students,
Chatman, Polzer and Neale (1998) found that groups in organizations that
promote a collectivist culture, where people look out for one another rather than
just for themselves, are more likely to reap the benefits of diversity. These obser¬
vations crystallize the importance of showing how interventions directed at one
level affect processes that occur at other levels.

HRM Strategies to Change Organizations

A successful diversity strategy must address organizational culture change to create

a work environment that nurtures teamwork, participation and cohesiveness-
characteristics of a ‘collective’ (versus individualistic) organizational culture (Dwyer,
Richard & Chadwick, 2001). Cox (2001) suggests starting with a visioning exer¬
cise for change that specifically identifies what success in a multicultural organi¬
zation might look like. A diversity council with credible people from a
cross-section of functions should be charged with creating a business diversity
strategy and serving as a resource. Diversity should be strategically integrated
with the business objectives (Richard, 2000).
Top management should model leadership behaviors such as conducting the
feedback sessions of the results of an organizational diversity climate survey. If
HR STRATEGIES TO MANAGE WORKFORCE DIVERSITY 67

diversity change efforts consist mainly of programs which lack the involvement
of top managers and fail to address overall work processes, their long-term effec¬
tiveness in transforming the organizational culture is likely to be limited (Nkomo &
Kossek, 2000). Thomas and Gabarro’s (1999) study of US minority executives
also echoed this theme: when a critical mass of senior executives were involved
in supporting diversity efforts such as mentoring, or recruitment of minorities for
top jobs, organizational diversity and upward mobility efforts were easier and
more effective.
Establishing a formal measurement system is important early in the process to
serve as a baseline for the current climate for diversity (Cox, 2001). Large amounts
of data need to be collected to assess the dominant organizational culture and the
perceptions of various employee groups. Cox stresses the importance of measur¬
ing the right indicators and identifies key organizational-level measures. These
include the workforce identity profile to highlight demographic differences of
defined work groups, cultural values and norms, power distribution between iden¬
tity groups, whether employee acculturation fosters assimilation or pluralism,
openness of informal social and communication networks, and HR policies and
practices related to recruiting, promotion, pay, development, work schedules and
the physical work environment. These measures yield information about the
cultural barriers that may hinder the full and effective participation of all individ¬
uals and identity groups.
The outcome of diversity efforts should be systemic and structural organiza¬
tional transformation (Litvin, 2002). Long-term culture change requires a signif¬
icant commitment of resources and leadership (Cox, 2001). Organizations and
researchers need to conduct regular employee attitude surveys about diversity and
measure performance of managers. Organizational-level effects of this magnitude
take time to materialize, with risks of setbacks and variable commitment over
time. Few studies have been published using cultural audit survey data (an excep¬
tion being Kossek & Zonia, 1993); most firms keep the data internal for fear of
negative publicity or other adverse outcomes. Existing research provides some
support for a contingency perspective on the effectiveness of diversity interven¬
tions targeting organizational outcomes (e.g. innovation). That is, the extent to
which racial diversity will positively influence firm performance is contingent
upon the firm’s strategy and environment demands, and what it expects of its
employees (Richard, 2000). Thebusiness case for diversity suggests that a diverse
workforce and a supportive culture can bring about increased creativity. A diverse
workforce, then, becomes a source of competitive advantage for firms that strive
to achieve a high level of innovation.
Richard and Johnson (1999) conducted one of the few studies that investigates
organizational advantages of formal diversity practices. They found that the adop¬
tion of formal diversity practices reduced turnover. While there was not a main
effect of these practices on return on earnings, a strategic contingency relation¬
ship was supported: diversity practices correlated with improved productivity and
market performance for firms following innovation strategies.
68 THEORETICAL PERSPECTIVES ON WORKPLACE DIVERSITY

Turning to effective AA, Wright, Ferris, Hiller and Kroll (1995) note that while
AA and managing diversity are not the same, discriminatory practices and guilty
verdicts are examples of ineffective diversity management. Well-run AA
programs indicate effectiveness in attracting a diverse workforce. Wright and
colleagues used an event study methodology where one examines a significant
change in stock price in the days immediately surrounding the event of interest.
Focusing on 34 firms which received a Department of Labor award for their AA
programs and another 35 firms which had major EEO settlements noted in the
press, they showed that having an award-winning AA program was associated
with better financial performance and having discrimination lawsuits related to
worse performance. Arthur (2003) found a similar positive linkage for share price
reaction to favorable press on work-family policies.
Stage models of organizational change and development may be helpful for
organizing future research. Benschop (2001) supports further study of organiza¬
tions that fall along the spectrum of minimal diversity strategies to all-inclusive
HRM diversity strategies. Ely and Thomas (2001) documented three different
perspectives governing how organizations respond to diversity. The equality and
fairness perspective equates diversity with increasing the number of women and
minorities on the payroll. The legitimacy perspective emphasizes that it is critical
to mirror key customer demographics. Under the integration and learning
approach, majority members assume they can learn from the minority members
and the culture can be changed to reflect two-way adaptation and learning.
Comer and Soliman (1996: 478) attribute the lack of evaluation of diversity
efforts to an unwillingness of many organizations to respond to what the research
might demonstrate: for example, that efforts are ineffective or counter-productive,
or that ‘a radical upending of basic assumptions, patterns, and structures’ is
necessary. To augment research in this arena we will need to discover whether
resource issues, a lack of interest, or fear of the results are key reasons for diffi¬
culties in measuring organizational outcomes. Perhaps companies believe that
doing something is better than doing nothing at all. We need to know what kinds
of incentives would be attractive to overcome the resistance. How can we put the
measurement issue on the radar screen of those who have the authority to direct
organizational resources toward research?
Future research should attempt to identify other factors that intervene in the
effects of diversity practices on firm performance (Richard & Johnson, 2001).
Models with intervening variables such as business strategy, HRM strategy and
organizational environment should be tested to ascertain the effect of diversity on
organizational performance.
Future research on organizational-level impacts might examine questions such
as the following: Does including ‘valuing diversity’ in the mission statement elicit
organizational unity and commitment? If so, does this facilitate a more favorable
multicultural environment that yields stronger business results? Do organizations
that value diversity because of the moral imperative do better on measures of
organizational effectiveness, relative to those that value diversity because of the
‘business case’?
HR STRATEGIES TO MANAGE WORKFORCE DIVERSITY 69

CONCLUSION

Today, there is a wide spectrum of organizational response to managing diversity.

There are some organizations responding to legal mandates; others are focused on
discrete programs and policies; still others are implementing broad HR diversity
strategies to foster change in culture and work processes.
In 2002, SHRM conducted a survey jointly with Fortune magazine to examine
how the Post 9/11 economic challenges faced by many firms had affected diver¬
sity efforts. Although there were slight shifts, the 2002 survey showed that
corporate spending on diversity initiatives remained constant, with even slight
increases in funding for diversity training related to race and ethnicity (www.shrm.
org/diversity/TalkingtoDiversityExperts.pdf).
In general, while most US multinationals have established diversity programs, a
private research report indicates they are only beginning to establish parallel efforts
in their overseas affiliates and subsidiaries. Most efforts are currently cosmetic and
off-the-shelf US approaches that will likely be ineffective in the European Union
(Eagan & Bendick, 2001). Around the world, valuing diversity faces competition
from many other pressing HR issues (Wheeler, 1995).
Future work might be improved by more careful identification of relationships
between specific HRM strategies, the target level of intervention (e.g. individual,
group, organizational, or external stakeholder) and whether outcomes are related
to process or productivity (Kossek et al., 2003). More research is needed on the
interactions of the variables that contribute to positive outcomes of diversity,
including time-continuum studies (Richard et al., 2002). For example, positive
business outcomes from increasing diversity may depend on whether the firm
emphasizes an innovation strategy or highly values retaining top talent.
In a survey of US firms examining the adoption of work/life policies and links
to financial performance, Perry-Smith and Blum (2000) found that some policies
may be more effective in impact if they are clustered or implemented with other
HR policies than if they are adopted piecemeal. Building on their work, we
suggest that diversity researchers examine the impact of policies not only sepa¬
rately but also in clusters with other HR practices and strategies. For example,
diversity practices might be part of a high-commitment employer strategy as
Osterman (1995) found for work/life policies. We need research not only on clus¬
ters of practices, but also on different forms of diversity (e.g. nationality, gender,
ethnicity) and how these intersect with other important organizational characteris¬
tics such as leadership, top management composition, culture, representation across
functions and industry key success factors.

BROADEN BEYOND THE BUSINESS CASE

Although organizations might express a desire for greater racial harmony,

none, at least in the private sector, claims it as an important end in and of itself
70 THEORETICAL PERSPECTIVES ON WORKPLACE DIVERSITY

(Brief & Barsky, 2000). Most organizations still require a business justification or
a government influence, such as the European Union Directives, in order for these
goals to be consistently articulated. Still, there are some important caveats to the
business case for diversity strategy. Kossek (2005) argues that the business case
emphasizes the shareholder over all other organizational stakeholders (families,
employees, society). Business organizations are likely to be held increasingly
accountable to multiple societal goals, such as promoting social change (Aaronson &
Reeves, 2002; Anft, 2002). Lobel (1996) has advocated this approach for evalu¬
ating impacts of work/life initiatives. Corporations will not be healthy unless the
society is healthy, and a healthy society in the twenty-first century will be one in
which career opportunities are truly available to all races, ethnic groups (Gummer,
2000) and, indeed, all people.

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