Diversity: stacking up the evidence

Because no two workforces are the same

Since the 1990s management gurus and the business press have claimed that workforce diversity brings real business benefits and that organisations must embrace diversity in order to succeed in a competitive market. But it is often assumed that it hasn't always been a bed of roses - with potential for negative effects as well as positive. However, these favourable and unfavourable claims are rarely substantiated.

This bulletin summarises the Executive Briefing Diversity: Stacking up the Evidence which assesses the evidence for the effects of diversity on business. The publication provides employers with an accessible analysis of academic studies on diversity and important insights into the challenges presented which will assist them in determining diversity strategies. It contains a comprehensive bibliography that provides a useful information resource to enable interested readers to follow up the research references in detail.

For nearly a decade organisations have been identifying business reasons for diversity - from both the public and private sectors and from large and small organisations. What is clear from such case-study evidence is that the term 'business case' is defined differently and that it is sometimes interpreted narrowly. The business benefits of managing diversity are also varied and often related to the particular goals, challenges, circumstances and operational contexts of organisations.

Impressive progress has been made in finding ways of accessing diverse talent and using different perspectives and ideas to increase creativity and innovation to gain economic advantage. But organisations must be prepared to focus on developing different and appropriate management styles and systems in order to be better at embracing diversity. Businesses should identify and analyse the pros and cons of diversity and manage both in order to maximise business success. Failure to do this by resisting change will reduce the potential that managing diversity has to offer.

• how social category diversity - which relates to differences in demographic characteristics, such as age and race - has the potential to impact on group communication and cohesion
  
• how informational diversity (also known as organisational diversity) - which refers to diversity of background such as knowledge, education, experience, tenure and functional background - has the potential to cause higher task-related conflict, as well as to affect group communication and cohesion
  
• how value diversity (also known as psychological diversity) - which includes differences in personality and attitudes - can impinge on the organisation.

Research background

Tracy Anderson and Hilary Metcalf of the National Institute of Economic and Social Research carried out for the study for the CIPD to investigate research evidence about the potential for diversity to add value to the business. The research built on the success of the position paper on managing diversity published by the CIPD in the 1990s. It describes the various business reasons for employer action and includes quotes from a range of organisations to illustrate why diversity is important to them.

The benefits and pitfalls of diversity

Significant work has been carried out to develop and promote the business case for diversity to engage the interest and commitment of employers. The benefits claimed for diversity in the workplace are:

• greater access to a wider range of individual strengths, experiences and perspectives
  
• a greater understanding of the diverse groups of potential and existing customers represented within the workforce
  
• better communication with these diverse groups of potential and existing customers
  
• improved legitimacy and organisational image across a wider audience.

But it is not suggested that diversity comes without problems. The claimed disadvantages of workforce diversity are:

• increased conflict among the workforce as differences in opinion make it more difficult to agree on solutions
  
• poorer internal communication, because levels of knowledge and comprehension differ between employees
  
• increased management costs that arise from dealing with potential conflict and communication problems.

On reflection

The benefits of managing diversity are still to be fully mastered and it is likely that the more we learn the more we will realise how much more is yet to be understood. Managing diversity is central to good people management in the view of the CIPD. But the research to date shows that in academic terms the jury is still out on the business case for diversity - we are yet on the nursery slopes regarding the management of diversity and the ways in which it can improve business performance. What is clear is that different kinds of diversity can impact on organisations in different ways in different contexts and at different times and that traditional ways of managing people and businesses may not be appropriate if organisations want to gain benefits. The challenges to organisations in managing diversity are great and will provide rich opportunities.