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CHAPTER 2: LITERATURE REVIEW

 

2.1 Introduction

 

This chapter discusses the works of various authors and scholars who have highlighted theoretical exploration of the existing knowledge that is relevant to the diversity area. This chapter also focuses on similar and contrasting perspectives that researchers have used to approach this research areas.

 

2.2 What is Diversity

 

Diversity means relating and working with people who hold different perspectives and views and bringing different qualities to the workplace. According to (Kandola & Fullerton 1994, p.19) diversity consists of visible and non-visible differences which will include age, background, race, sex, disability, personality and lifestyle.

 

The concept of diversity means respect and acceptance, means understanding each individual is unique and recognizing our individual's differences. It can be the aspects of race, age, gender, ethnicity, sex, disability, religious beliefs, and political views and so on. It is also exploration of these differences in a safe positive and development organizational environment.

 

As the Wall Street Journal (2005) put about diversity, as companies do more and more business around the world, diversity is simple a matter of doing what is fair or good public relations which is a business imperative but diversity is supposed to enrich an organisation's human capital, whereas equal opportunity focuses on various ethnic groups.

 

Brewster (2002) defined that managing diversity tries to build specific skills and to create policies that derive the best from each employee and it is based on the assumption that diverse groups will create new ways of working together and have understanding in that group, profit and productivity will increase in the organisation. Where he found, diversity management is fast becoming a management approach that is being applied effectively within the organizations.

 

2.3 Benefits of Diversity

 

Diversity needs to be seen as an integral part of the business plan, essential to successful products and increased sales. This is especially true in today's global marketplace, as organizations interact with different cultures and people. Kandola & Fullerton (1998) identified the possible areas of diversity benefits, these are:#p#分頁標題#e#

 

a) Creativity increases - when people with different ways of solving difficult problems work together towards a common solution and the more ideas can obtain from different people.

 

b) Productivity increases - when people are from all cultures pull together towards a single inspiring goal. Increased productivity is an obvious advantage of diversity in the workplace.

 

c) Provide strong leadership - they take strong stands on advocating the need for a diverse workforce and can handle effectively different cultural people.

 

 

d) New attitudes - are brought to the business by people from diverse cultures. In most other countries around the world time is for building relationships and an integral part of getting to know that are considering doing business with before starting a transaction.

 

e) Provide diversity training and education - are obviously needed in today's increasingly global market and diverse employees often have this ability. Every company needs specific knowledge or language skills where the international job seekers have the advantage.

 

f) New processes - when people are with different ideas come together and collaborate. In today's first moving world, employee must bring multiple skills to the working environment and adapt quickly to new situations. (Harris et al. 2003)

 

International human resource manager can make organisations more successful and productive by managing diversity in the work place. Diversity brings real benefits to business environment where employing a diverse workforce enables it to use a wider range of skills and lead to creativity and innovation.

 

2.4 Human Resource (HR) Policies

 

HR policies provide guidelines on how key aspects of people management should be handled. The aim is to ensure that any HR issues are dealt with the values of the organisation with certain principles. Armstrong (2009) defined the philosophies and values of the organisation on how people should be treated and all organisations have HR policies. HR policies can be expressed formally as overall statements of the values of the organisation or in specific areas. Kandola & Fullerton (1994), these values are espoused by many organizations in one form or another. HR policy on managing diversity recognizes that there are differences among employees and properly managed where will enable work to be more effectively.

 

2.5 Managing Workforce Diversity

 

Legislation and the high profile of equal opportunities in the UK has had both positive

 

and negative effects on the way people view each other, (Barker, 2000). On the one hand, there is now widespread recognition that discrimination at work on the grounds of gender, race or ability alone is unjust, although the practice still continues. However, the grouping of minorities such as women or ethnic or disabled has produced responses. More recent thinking has moved towards ‘managing diversity'-recognizing and valuing differences in people and their unique contributions to the workforce.#p#分頁標題#e#

 

Managing diversity involves creating an environment that allows all employees to contribute to organizational goals and experience personal growth. This requires the company to develop employees that they are comfortable working with others from a variety of ethnic, racial and religious backgrounds. Noe et al. (2003) found that managing diversity may require changing the company culture. It includes the company's standards and how employees are treated, competitiveness, innovation and risk taking. Where management of diversity has been linked to innovation, improved productivity, lower employee turnover and other costs related to human resources, (Cox, 1993, p.24).

 

Price (1997, p.265) noted that the management of diversity goes beyond equal opportunity instead of allowing a greater range of people the opportunity to ‘fit in' the concept of diversity embodies the belief that people should be valued for their differences and variety. Diversity perceived to enrich an organisation's human capital. Whereas equal opportunity focuses on various disadvantaged groups, the management of diversity is about individuals and model of resourcing aimed at finding flexible employees. According to Harvard Business Review, managing diversity does not mean controlling or containing diversity, it means enabling every member of workforce to perform to their potential and getting from employees; everything right to expect and if it is well then thing they have to give, (Thomas, 2001).

 

The future success of any organisations relies on the ability to manage a diverse of capacity that can bring innovative ideas, perspectives and views to their work. The challenge and problems faced of workplace diversity can be turned into a strategic organisational asset if an organisation is able to make the most of diverse talents. Especially for multinational companies, who have operations on a global scale and employ people of different countries, ethical and cultural backgrounds.

 

Thus, a HR manager needs to be aware and may utilize a 'Think Global, Act Local' approach in most circumstances, (Jackson, 2002).

 

The goals of diversity training are eliminate values and managerial practices that restrain employee's personal development and allow employees to contribute to organisational goals within the cultural background, (Jackson & Associates, 1992). It is because of equal opportunity employment laws that companies have focused on ensuring equal access to jobs.

 

With a population attempt towards high technology and knowledge-based economy; foreign ability are tempt to share their expertise in these areas. Thus human resource managers have to undergo cultural-based human resource management training to further their abilities to motivate a group of professional that are highly qualified but culturally diverse.#p#分頁標題#e#

 

2.6 Achieving Equality and diversity Approach

 

The diversity approaches argue that diverse workgroups generate wealthier ideas and solutions than homogenous groups where benefits of diversity management include a greater concern for socially responsible behavior in organisations and more flexibility in organizational policies, (Wentling & Palma-Rivas, 1998, p.237).

 

Ross & Schneider (1992, p.49) discussed the fundamental perspective from equality to diversity that employers will find competitive advantage in encouraging diversity at work. Equal opportunities should become internally driven not externally imposed and focused on individuals where the responsibility of all.

 

Fredman (2001) observes that traditionally equality laws have been informed by neutrality, individualism and promotion of autonomy principles. These principles aim to ensure that people are treated in the same way and appear to be the most consideration in the UK anti-discrimination framework which is an approach to workplace equality based on achieving fairness. Walsh (2007) in her analysis of the 2004 Workplace Employment Relations Survey findings points out that women's representation in senior management in UK workplaces had only marginally improved by 2 percent between 1998 and 2004.

 

So diversity is a concept which recognises the benefits to be gained from differences and equal opportunity has traditionally been a concept, which sought to legislate against discrimination. These two concepts have the following characteristics:.

 

Those characteristics suggest that how organisations can move from where most are at present to a situation in which diversity enters the majority.

 

2.7 How the Diversity Concept has developed

 

Changes in the social and economic landscape led to legislation covering equal pay, sex and racial discrimination in the 1970s, followed by disability laws in the 1990s, (Daniels & Macdonald, 2005). More recently discrimination of sexual orientation and religion has been added by the law. By 1990s, it was being recognised that they had limited success in achieving their goals. At around the same time, researchers were also finding that culturally diverse teams were more creative than homogenous teams and contributed more effectively to meeting organisational goals. Three separate commissions have promoted equality and particular aspects of the legislation: the Equal Opportunities Commission, the Commission for Racial Equality and the Disability Rights Commission. From October 2007, a new Equality and Human Rights Commission has been established to cover all equality issues as well as of human rights, from (CIPD, 2007).

 

From the recent survey, unemployment is twice as high among people from ethnic minorities, although in UK relatively more Asian and Black African graduates than white graduates where only 12 percent of white men are in professional occupations. Statistical survey found that 41 percent of white women in employment work part-time but only 7 percent of white men and as opposed to 38 percent of Bangladeshi men, (http://www.cipd.co.uk/surveys).#p#分頁標題#e#

 

2.8 Diversity Policy

 

Changing workforce demographics and new organisational forms are increasing the diversity of work teams in general and decision-making teams in particular. The perspectives of diversity policy may lead to a variety of different consequences for decision-making teams in the organisation.

 

 

2.8.1 The Business Issues

 

Equal opportunities are often seen as meaning treating everyone in exactly the same way. Kandola (2006) argued that the social justice and business issues for diversity are complementary because unless people are treated fairly at work they will therefore under-perform. But diversity takes equality forward and evidence indicates that organisations that are serious about diversity show better overall financial performance. Diversity policies also help organisations to create an environment in which people from all backgrounds can work together.

 

2.8.2 People Issues

 

People are aspiring to work for employers with good employment practices and feel valued at work place. Dowling et al. (1999, p.262) states that to be competitive organisations need to derive the best contributions from everyone and need to create an inclusive workplace culture in which everyone feels valued. The HRM aspects are operating different countries as a way of illustrating the situation that may confront multinationals attempting to penetrate developing markets.

 

2.9 The Nature of Diversity in Decision-Making Teams

 

Many organisations use the term diversity to refer only to demographic differences among employees, with gender, ethnicity and age being the dimensions of greatest concern. Changing workforce demographics and new organisational forms are increasing the diversity of work teams in general and decision-making teams in particular. Diversity may lead to a variety of different consequences for decision-making teams.

 

2.9.1 Gender Diversity

 

Gender diversity in teams may indicate the extent to which team members form same gender relationships outside the team. Studies on social networks suggest that employees form relationships with each other based on their gender. In a study of male and female managers in an advertising firm, Ibarra (1995) found that men and women formed same gender networks that served both social and instrumental goals.

 

2.9.2 Ethnicity Diversity

 

Social identity and organisational demography suggests that people are preferred to interact with members of their own identity group rather than with members of other groups. Where white males tend to perform in higher positions, (Chow & Crawford, 2004) females and ethnic minorities tend to occupy more junior positions. Experiences of racism shared by women and members of different ethnic groups affect their attitudes and behaviours in the workplace.#p#分頁標題#e#

 

2.9.3 Age Diversity

 

People within age groups share common experiences, attitudes and values (Lawrence, 1988), a person's age can act as an indication that triggers social categorization processes and promotes communication among group members.

 

Descriptions of workforce demographics usually emphasize the fact that the average age of the work force is increasing but the distribution of ages represented in the workforce is also changing. Following figure showing age distribution where non-white groups are younger:

 

White groups have an older age structure where the mixed group had the youngest age structure 50 percent were under the aged of 16. The Bangladeshi, other Black and Pakistani groups also had young age structures of 38 percent were aged 16. This was almost double the proportion of the White British group, where 20 percent were under the age of 16.

 

2.10 Managing Diversity is Different from Affirmative Action

 

Managing diversity focuses on maximizing the ability of all employees to contribute to organisational goals. Affirmative action focuses on specific groups because of historical discrimination, such as people of colour and women, (Kravitz & Klineberg, 2000). Affirmative action emphasizes legal necessity and social responsibility where managing diversity emphasizes business necessity. So it is much more inclusive and acknowledges that diversity must work for everyone.

 

Affirmative actions having the employer take actions in recruitment, hiring, promotions and compensation to eliminate the present effects of past discrimination. Affirmative action is still a significant workplace issue today. The incidence of major court-mandated affirmative action is down, but courts still use them. Furthermore, many employers must still engage in voluntary programs. For example, executive order 11246 (issued in 1965) requires federal contractors to take affirmative action to improve employment opportunities for groups such as women and racial minorities. EEO 11246 covers about 26 million workers about 22 percent of the US workforce, (Dessler 2008, p.63).

 

2.11 Organisational Context

 

Managerial approaches to diversity will inevitably be informed by the specific organisational context. Attracting different types of people to an organisation will be determined by people's perceptions of the industry in which the organisation operates. The image and reputation of the organisation as an employer will affect the types of people attracted to the organisation, (Markwick & Fill, 1997). The maternity and children specialist retailer who came 18th in the 2008 Sunday Times '20 Best Big Companies to Work For' list attribute their ranking to a number of factors to their employer brand. These include an emphasis on work-life balance, flexible working, better than average maternity pay and leave. These argue helps to attract and retain staff especially female employees, (Leopold & Harris, 2009).#p#分頁標題#e#

 

If an organisation is able to employ a diverse workforce, the extent to which these individual differences are recognised in employment practices will be significantly affected by the size and structure of the organisation.

 

2.12 Diversity in Multinational Companies

 

As more and more organisations become global and people of different cultures and ethnic backgrounds work together, the need for multicultural understanding becoming obvious to many organisation. Harris et al. (2003, p.25) referred that a multinational team would be much stronger in communication which is vital aspect in business. Most of the multinational company gives priority to work with diversity people as a result they are success in international market. Ansari & Jackson (1995, p.12) described, multicultural teams led to more people from different culture and ethnic intermarrying. Globalisation and advances in communication and technology have reduced trade barriers and increased interaction among people. Companies and leaders who recognise the cultural diversity and find the right cultural mixture among the team can achieve comparative advantages.

 

To understand how diversity is managed in multinational company, in that case need to understand the concept of corporate culture which describe the organisational diversity programs and how to minimize conflict between employees.

 

2.13 Why Culture Counts

 

According to Mattock (1999) organisations have moved on from international to multinational to global. Multicultural teams have become very common in recent years. With cross border mobility becoming much easier the number of people moving from one country to another has grown significantly. As a manager need to successful interaction with others like sharing ideas, their needs and helping to improve performance, where need to consider cultural context.

 

A diverse multi cultural work place enables a company to handle diverse projects. Erlenkamp (2007, p.7) found, in the last decades many scientist tried to define intercultural difference to enhance the communication between different cultures. ‘The most important studies were conducted by Geert Hofstede, Edward Hall and Fons Trompenaars,' that shows the importance of multicultural workforce and HRM of many organisations do study these theories to implement it in their employee training.

 

2.14 Understanding Cross-Cultural Communication

 

Language issues can develop into a source of conflict and inequality within culturally diverse organisations becomes more and more multicultural, (Ansari & Jackson 1995). In the international business environment of today and tomorrow communication is a business necessity. The communication process contains five elements, the communicator, the message, the medium, the receiver and feedback. Business people from different cultures effectively and efficiently communicate in different skills, thinking and opinions with each other every business day. Those successful communications exhibit the following attributes (Ivancevice & Matteson 2002):#p#分頁標題#e#

 

a) They have made it a point to familiarize themselves with significant cultural differences that might affect the communication process.

 

b) They make a conscious and concerted effort to put down away more culturally sensitive.

 

2.15 Key Theories of Culture

 

The most important key theories of culture were conducted by Geert Hofstede, Edward Hall and Fons Trompenaars (Erlenkamp 2007), which show the importance of multicultural workforce.

 

2.15.1 Hofstede and National Cultures

 

Hofstede theory can be defined as “the collective programming of the mind, which distinguishes the members of one group or category of people from another” (Bowe & Martin 2007, p.80). His theory is based on the assumption that countries can be compared with each other.

 

Hofstede (1997) describes the basic points of all cultural dimensions and score for 10 countries as follows:

 

1) Power-Distance Cultures - It shows with high and low power-distance cultures. High power-distance cultures encourage managers to be show and use power, e.g. Russia and China to follow figure: 1.3. And low power cultures put pressure on bosses to listen to subordinates, like Germany.

 

2) High and Low Uncertainty-Avoidance Orientation - High uncertainty-avoidance cultures try to reduce risks of something challenging the existing views of self or

 

3) Individual vs. Collective Orientation - Individualist cultures put more value on people thinking for themselves and taking action, USA. Collectivist focus strong family groups demand loyalty to the clean, like Indonesia.

 

4) Masculinity or femininity - Masculine cultures highlight winning, ambition and success through challenging and beating the competition, like Japan. Feminine cultures favour a natural balance to life and care and fairness for all and less aggressive, like Netherlands.

 

5) Long-Term Orientation - Cultures involving preserving status-based relationships and thrift, where environment, family and work are not separated.

 

2.15.2 Edward Hall Theory

 

Hall defines culture as a set of behavioural rules gained during the socialisation process which determine the way in which individuals perceive their environment and use verbal and non verbal communication, (Bluedorn 2002, p.51). He divides cultures into two types, according to its context and they are as followed:

 

1. High-context culture - Here context rather than content is of significance. Fewer legal documents are used in these cultures.

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2. Low-context culture - With clear and explicit messages in which written words transmit most of the information. Legal documents are considered essential. Europe and the USA are examples of these cultures, (Hollensen 2007, p.220).

 

2.15.3 Fons Trompenaars Theory

 

Trompenaars (1994) is more concerned with the concept of culturally relative meaning at the individual level of analysis, afterwards defining seven dimensions of culture, which correspond well with national differences (Morrison, 2002). He identifies seven fundamental dimensions of culture, which are:

 

a) Universalism v particularism

 

b) Individualism v collectivism

 

c) Neutral v affective

 

d) Specific v diffuse

 

e) Achievement v ascription

 

f) Sequential v synchronous

 

g) Internal v external control

 

Mead (1998) believes relationships between people are focused in the first five dimensions, the sixth one is based on time orientation, and the final dimension is relation to nature.

 

The research of Hofstede and Trompenaars are focus on the diversity among national culture in the organisation, which is one best way of managing and organising people, (Schneider & Barsoux, 1997).

 

2.15.4 Compare and Contrast the Theories

 

Table below shows the common themes among the theories of the three researchers, Hofstede, Hall and Trompenaars. Each of the scholars has his own dimension for culture. There could be many comparison and contrast done between the theories, but only few will be mentioned here in brief.

 

This table shows that of the seven value dimensions of Trompenaars where two reflect closely to the Hofstede. Hall's Theory could assist managers to understand how members of different cultures develop business relationships. The theories of all these three researchers are being implemented by the HRM of organisations to have a better motivated and strong communicative workforce. So, the HRM could study and implement for building a stronger multi-cultural workforce for competitive advantage.

 

2.16 Managing Change

 

Today organisations are increasingly focusing on creating a high-performance culture to compete effectively in the knowledge-based and globalise business environment. According to French & Bell (1999, p.25) organisation development is a long-term effort, led by top management to improve an organisation's visioning, learning and problem-solving processes through organisation culture and change management. The effective management of change is a central and critical feature of organisation development.#p#分頁標題#e#

 

Where organisational change is described as the intended rearrangement of the organisation's resources in order to show different characteristics and relate differently to its environment. Organisational development inevitably requires organisational culture change and change management where the strategic role that HR plays in organisational development and in achieving strategic objectives, (Mullins, 2005).

 

According to Crainer (1998, p.145) many managers refuse to accept the necessity of change. He suggests that the seven skills involved in managing change are:

 

a) Managing conflict

 

b) Interpersonal skills

 

c) Project management skills

 

d) Leadership and flexibility

 

e) Managing processes

 

f) Managing strategy and

 

g) Managing their own development.

 

The successful management of change is essential for competitiveness and continue performance. The organisational change system will influence people's attitudes, individuals and groups, and in that way the level of organisational performance.

 

2.17 Motivating Across Cultures

 

A global human resources manager needs to identify the needs of individual employees, within the context of the culture in which he or she is working. Recognise the personal priorities of the diverse individuals in the team and apply the appropriate motivational tools. Kreitner et al. (1999) suggest that motivation is a necessary contributor for job performance and also a combination of level of skill, where performance is ability and motivation level.

 

The level of motivation focuses on the three basic needs that occur in any workforce. These are:

 

1. Autonomy cultures tend to be motivated by desire to achieve.

 

2. Consensus cultures are usually motivated by the wish to gain affiliation.

 

3. Status cultures are often motivated by the desire for power.

 

To understand fully what motivates an individual, you must take personal circumstances into account and allow for cultural changes, (Armstrong, 2006).

 

2.18 Diversity Training

 

Managing diversity accepts that the workforce consists of a diverse population of people. Diversity training designed to change employee attitudes about diversity and develop skills needed to work with a diverse workforce. The effective organisational performance are demand an understanding of diversity and need to manage diversity in a manner that benefits of all members of staff. Diversity training will not be effective if recognised as a company initiative and part of the core value of the organisation (Mullins, 2007). To successfully manage a diverse workforce, companies need to ensure that:#p#分頁標題#e#

 

a) Increasing the awareness and value of diversity.

 

b) Employees understand how their values influence toward others of different gender, ethnic and racial backgrounds.

 

c) The ability to communicate effectively with all members of staff.

 

d) Developing the skills of effective diversity management.

 

This can be accomplished through diversity training programs. Diversity training programs vary according to whether attitude or behaviour changes emphasized (Noe et al., 2003, p. 302).

 

The following chapter will provide the description and explanation about the research methodology applied in this dissertation, in order to meet the research objectives.