The Chartered Institute of Personnel and Development defines: “Managing diversity is about ensuring that all employees have the opportunity to maximize their potential and enhance their self-development and their contribution to the organization.”
Diversity is everywhere; you can find it at the marketplace, at the workplace and at the workforce; then it can´t be said that managing diversity is an exclusive topic for the Human Resource management in the organization; a really committed company towards diversity needs it to be part of its organizational culture: “Diversity is a source of competitive advantage only when it represents a deep commitment to the inherent values, beliefs, and behavioral norms of the organization” (Slater, Stanley et al “The business case for commitment to diversity” Kelley School of Businesses).
An organization may manage diversity with any of these two approaches:
1. Managing Diversity: It means believing we are all different being able to deal with those differences, maximizing each one’s potential.
2. Equal Opportunities: It means believing we are all the same; then it is necessary to enforce laws to provide equal opportunities.
It is said that managing diversity is a source of competitive advantage. A competitive advantage is build when a specific thing is difficult to imitate or substitute: “of all of the resources of the firm, the human resource is the least substitutable in the long-run.” (Slater, Stanley et al “The business case for commitment to diversity” Kelley School of Businesses).
“Human capital is a source of competitive advantage when employees either possess more competitively valuable skills or when they are better matched to the strategic needs of the firm.” (Slater, Stanley et al “The business case for commitment to diversity” Kelley School of Businesses).
§ Cost: workers with the best skills and abilities are selected for jobs that require these skills.
§ Resource acquisition: effective systems facilitate the acquisition and retention of valuable and rare human resources, while high quality human resources shape the human resource management system.
§ Marketing: Diverse groups can connect the company with variety of customers.
§ Creativity: As people think from really different points of view they will bring more ideas leading to innovation.
§ Problem solving: A wider range of perspectives can bring the best solution.
§ Flexibility and change management: Diversity brings faster reactions.
There are also some other potential benefits for the organization when managing diversity, such as having a more satisfied workforce feeling they are treated fairly; higher stock prices because of the perception about management practices; lower litigation expenses because of bad publicity; all resulting in a higher company performance .
But managing diversity is not always about benefits and advantages; it presents some challenges that need to be treated in order to maximize those benefits. As people tend to feel more attracted towards those who are similar, diversity can increase the costs of communication making it less frequent and effective, diversity may also lead to emotional conflicts decreasing the group’s cohesiveness and incentives for cooperation which results in a higher employee turnover. Stereotypes also present a challenge because they are used to make decisions about particular individuals what can lead to unfair decision making.
When diversity is part of the organization conflict will always appear; the company must be prepared for it, assuring itself to take advantage of it because conflict in certain scenarios can be a positive thing.
“The costs of diversity are more likely to outweigh the benefits when diversity is seen as a program, rather than as an organizational commitment that will produce superior business results.” (Slater, Stanley et al “The business case for commitment to diversity” Kelley School of Businesses).
Diversity management at IBM is definitively a source of competitive advantage because by encouraging diversity within the organization IBM created ways to appeal to a broader set of employees and customers and by seeking those ways effectively IBM has seen good bottom line results. As Lou Gerstner says “We made diversity a market-based issue....It's about understanding our markets, which are diverse and multicultural.”
2. Does the IBM case reflects a strong organizational commitment to diversity? Why?
IBM case is a clear reflect of organizational commitment to diversity because they stated diversity as a strategic goal for the company. They created a new approach of calling attention to differences, with the hope of learning from them and making improvements to the business. IBM also encouraged employees to respond with specific suggestions for how to make IBM a more inclusive environment.