The impact of workforce diversity on organizational effectiveness

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Information about The impact of workforce diversity on organizational effectiveness
Business & Mgmt

Published on February 15, 2014

Author: omershahzad91

Source: slideshare.net

THE IMPACT OF WORKFORCE DIVERSITY ON ORGANIZATIONAL EFFECTIVENESS

INTRODUCTION • the quality or state of having many different forms, types, ideas OR • the state of having people who are of different races or who have different cultures in a group or organization • Globalization web increase demographic diversity in the workforce • Increased competition demand from workgroups to generate innovations, flexibility, and quick decision making for sustained business success • Demographic changes and laws aimed at promoting fairness in recruitment practices are urging diversity within work teams

INTRODUCTION • Diversity as multi-ethnic (previous studies) • work place (workforce) diversity is found to have a contrasting dual implication on organizational effectiveness. • Milliken and Martins (1996) opines that 'diversity appears to be a double-edged sword, increasing the opportunity for creativity as well as the likelihood that group members will be dissatisfied and fail to identify with the group’

INTRODUCTION One side Other side • Greater innovation • increase conflict • improved strategic decision making • reduce social cohesion and • organizational performance and • increase employee turnover business organizations are contending with the challenges of effectively managing a diverse workforce

RESEARCH HYPOTHESES (1) Workgroups that are demographically diverse are likely to be less effective in workgroup contexts that emphasize competition oriented cultures than in contexts that do not emphasize competition-oriented cultures. (2) Workgroups that are demographically diverse are likely to be more effective in workgroup contexts that pursue growth oriented business strategies than in contexts that do not pursue growth-oriented business strategies.

LITERATURE REVIEW • Workplace diversity is a complex, controversial, and political phenomena (Janssens & Steyaert, 2003) Perspective about Diversity Nkomo,1995 Broad perspective Narrow Perspective

NARROW PERSPECTIVE • Diversity should be restricted to specific cultural categories such as race and gender • Diversity based on race, gender and ethnicity differ from the diversity based on organizational function, abilities or cognitive orientation So, • Narrow concept is deficient as cultural diversity dimension interacts with other dimension of diversity

BROAD PERSPECTIVE • Encompasses all the possible ways people can differ Race, gender, age and other demographic categories Values, abilities, orga nizational function, tenure, pers onality

demographic characteristic CLUSTER CLASSIFICATION McGath, Berdahl & Arrow (1995) personal, cognitive and attitudinal styles values,views and attitudes workplace diversity Status in the organization task-related knowledge, skills and capacities

social categorization (turner) similarity/attraction theory • categorization of people based on salient attributes like gender, ethnicity or age • result in stereotyping on the basis of these differences • Asserts that similarity on salient and non-salient attributes like race or values increases interpersonal attraction and attachment information and decision-making theory • examines the impact of distribution of information and expertise on workteams

CONFLICTS BY DIVERSITY • Disrupt group dynamics • Out-group members evoke more disliking, distrust, and competition than in group members • the perception of a salient quality (e.g., race) more or less inevitably triggers a corresponding categorization • Biases seem to unfold automatically • Linguistic or paralinguistic differences may foster miscommunication and misunderstanding • Problematic formation of sub-group (“us” versus “them”)

DIVERSE TEAM VS. HOMOGENOUS TEAMS • Relative to homogeneous • Dissimilar belief structures groups, members of diverse work- i.e., priorities, assumptions groups display less attachment to each about future events, and other understandings of alternatives • Show less commitment to their respective organizations • Communicate less with one another, miss work more often • Experience more conflict based on previous training and Experiences • divergent preferences and interpretations of tasks

THE CONTROVERSY Whether or not there is a positive connection Between WORKPLACE DIVERSITY AND ORGANIZATIONAL PERFORMANCE Still persists

METHODOLOGY • Gleaned both from primary and secondary data sources • Random sample of work teams within the bank’s 62 branch network in Lagos Island and Mainland, using questionnaires • Sample size surveyed is 120 work-teams Dependent variable • Response rate to the survey was 40% Cultural Diversity independent variable Performance Measure

FINDINGS • Gender is negatively related to both employee productivity and performance bonus, but is significantly related to employee productivity • Age is positively related to employee productivity, and it is significantly positive in its correlation to performance bonus • Ethnicity is insignificantly negative in its relationship to both employee productivity and performance bonus • Tenure is insignificantly positive in its correlation to employee productivity, and is not related to Bonus • In terms of the moderating effects of workgroup contexts (competition oriented workgroup culture, and growth-oriented strategy) of diversity factors, the research results indicate that context effect is insignificant.

RECOMMENDATION & CONCLUSION • Diversity sometimes is associated with effectiveness, other times with negative outcomes, and often it has no effects at all. • Company executives are not likely to see a direct positive relationship between workforce heterogeneity and organizational effectiveness. • The effects are likely to be determined by the strategies a firm pursues and by how organization leaders and participants respond to and manage diversity The impact of workforce heterogeneity on organizational effectiveness when moderated by workgroup contexts is minimal

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