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• Why manage Diversity? – State of Canada’s businesses & population– Disadvantages of mis-managing diversity– Advantages of managing diversity well

• What is Diversity?

Learning Goals for today

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• Highly skilled labour is a major contributor to labour force growth bec. of technology, globalization, etc.

• Existing Canadian population is not replacing itself with skilled labour– Need to import skilled labour from Asia & S.

America– Canada competes w/Europe & the US for skilled

labour

Why Manage DiversityCurrent State of Canadian Businesses

Oliver

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• 54% of immigrants are highly skilled labour

• Immigrants will contribute to 100% of labor force growth in 2011

Immigrants & Labour Force

Conf Board of Canada, cited in Oliver

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• Immigration – 70% of 200,000 immigrants/year are Visible

Minorities

• Census in 2006• 16% of Population is Visible Minority

• Projections for 2017• 19-23% of Canadians will be Visible Minority

Why Manage DiversityState of the Canadian Population

Oliver

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• VMs accounted for 33.3% of Labour force’s contribution to GDP for 1992-2001 even though they made up only 11% of labour force

• Visible Minorities (VMs) will account for over 10% of the gains in GDP growth

Why Manage DiversityVisible Minorities in the Labour Force

Conf Board of Canada, cited in Oliver

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Immigrants

Visible Minorities

Skilled Labour

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• Wage gap– VMs earn less than Canadian average

• 11% less in 1991

• 14% less in 2000

– Asian men immigrating to Canada earn 10-15% less than immigrants to US (even after controlling from experience & schooling)

Why Manage Diversity?VMs in the workplace

Conf Board of Canada, cited in Oliver

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• Unfair Treatment– 1 in 5 VMs report discrimination and unfair

treatment in the last 5 years (Stats Can)

• 4 times more than for non-visible minorities

– Poor representation of VMs in key decision making positions (Conf Board of Canada)

• 3% of respondents have VM CEOs

• 3% of 900 senior executives were VMs

• 9 in 10 org do not have a plan to recruit VM to Board even though they believe it is important to have such representation on Board (New Racism)

Why Manage Diversity?VMs in the workplace

Oliver

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• Cost of Employee Withdrawal – E.g., Replacing employee, days absent, sick days

• Mental health care costs • e.g., costs for coping w/stress

• Lowered employee productivity• Health care costs

• e.g., negative effects on health from stress

• Legal costs– E.g., costs of settling/contesting discrimination and

harassment lawsuits

• Lowered stock value

Physical Consequences of Mis-managing Diversity

Stephan & Stephan, Cox

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• Increased conflict

• Lower social attraction to work group

• Lower commitment to work group

• Increased & discrimination

• Poorer communication • Lower cooperation & cohesiveness (Pelled et

al 99)

• Higher Turnover (Cox) • Higher stress (Stephan & Stephan)

Psychological Consequences of Mis-managing Diversity

Williams&O’Reilly 98

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• Improves/increases• Problem solving & decision making quality• Creativity & innovation • Interpersonal skills among employees • Organizational flexibility• Quality of human resources • Marketing strategies• Higher annualized returns

• Fulfils organizational values of fairness

Advantages of Diversity

Stephan & Stephan, Cox, Oliver

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• Improves Problem Solving because…• Problems are approached from broader & richer

base of experience (cox)

• Increased critical analyses bec. there were more differences in opinion (Cox, Oliver)

• Generates more range of perspectives and more alternatives (Conf Board)

• Limiting factor• Only when diverse groups are trained on how to

understand each others’ attitudes (Triandis et al)

Advantages of Group Diversity

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• Improves Creativity/Innovation• More ideas generated (Oliver)

• E.g., In demographically diverse top management teams in the banking industry

• Improved performance in task requiring marketing to different cultures (Cox)

Advantages of Group Diversity

Member diversity

Differences in perspective

Better Quality ideas

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• Better interpersonal skills among employees• Visible Minority group members score higher on

collectivism• Collectivists were more cooperative (cox et al)

• But increased employee diversity can also reduce cooperation (Pelled et al 99)

Advantages of Diversity in Groups

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• Organizational Flexibility• Different people have different ways of organizing

info, responding and reacting to info, and are more or less flexible in their ways of thinking

• E.g., Women score higher on tolerance for ambiguity which is linked to cognitive complexity & ability to perform ambiguous tasks

• E.g., Bilinguals show more cognitive flexibility & more divergent thinking than monolinguals

Advantages of Employee Diversity

Cox

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• Quality of Human Resources• When diversifying implies enlarging the pool of

potential employees, it increases organizational performance

• Restricting selection of employees to one group reduces pool to choose from and therefore the range of talent

– Assumes full range of ability/skill in all groups of employees (e.g., physical strength range in men vs. women)

Advantages of Employee Diversity

Cox

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• Expand to Global Markets • Hiring new immigrants with knowledge (of business

norms of markets) & connections to home countries (via personal relationships w/individuals in those countries) helps expand company’s operations to such countries

• Public relations advantage of managing diversity well (Cox)

• Assumes: That perceptions of organizations w/ predominantly vm employees is also favorable

Marketing Advantages of Employee Diversity

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• When employees match the composition of the market, they – E.g., secure more business from those ethnic

groups (e.g., BMO; cited in Oliver)

– Understand how people of those ethnic groups buy goods enabling orgs to market to them (Cox)

– Are better at providing service to those customers bec. they know better how to do so

• E.g., If employee speaks language of non-English speaking customer (Leonard et al, 2004)

Marketing Advantages of Employee Diversity

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• Match b/w employee & customer’s group membership increases likelihood of customer sponsoring organization – Due to customers’ preferences for similarity

• Supported in sports memorabilia purchases • Not supported in other retail environments (Leornard et al)

– Note: Argument of customer-service provider match was used to discriminate against vms when customer base was white & is now being used as rationale to attract vm customers

Marketing Advantages of Employee Diversity

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• Employee’s cultural group membership implies s/he has knowledge about own culture and cultural group members’ preferences– But see Cultural circles exercise!

Marketing Advantages of Employee Diversity

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• Differences in social & cultural group memberships among people (cox)

• E.g., religion, ethnicity, gender, nationality, sexual orientation,

– Exercises illustrating these differences: Pie Chart exercise; Cultural circles exercise; Twenty Statements Test

• Individual differences on any measurable & valid dimension

• E.g., cognitive complexity; cooperativeness; skills– Value of using such dimensions vs. social/cultural group

membership differences for » Fairness» Positive organizational outcomes

What is Diversity?