Demographic changes, technological advances, and global competition have forced U.S. corporations to reexamine their policies, programs, and practices. One of the most cited reports on the dramatic demographic changes in U.S. society is Workforce 2000: Work and Workers for the Twenty-First Century (Johnston & Parker, 1987). This report and others (U.S. Bureau of the Census, 1994; U.S. Bureau of Labor Statistics, 1993) indicate that the workforce demographic is expected to change dramatically. Demographers have reported that workforce population will include more minorities, individuals with varieties of ethnic backgrounds, more aging workers, and people with varying lifestyles.
According to Loden and Rosener (1991), this diverse workforce will influence the management of organizations because, for the first time in the United States, managers will face the challenge of dealing with large numbers of diverse groups in the workplace. Therefore, how well organizations deal with the demographic shift of their workforce, from white males to the inclusion of a more diverse workforce, will directly affect their outcomes (Caudron, 1990). Managers who want their organizations to remain competitive are concerned about how to implement different programs to incorporate and retain a more diverse body of employees (Jamieson & O'Mara, 1991). It has become apparent that American competitiveness in the global marketplace will depend on effective human resource development and management (Fernandez, 1993).
Many terms have been used to describe cultural differences in the workforce, including cultural diversity, the multicultural workforce, and cultural pluralism. The term used currently is diversity. The term diversity is more than a name used to describe the presence of multiple cultures in the workforce or, as Lynch (1989) defined cultural diversity, "the presence within one geographic area of a number of different cultural, linguistic, credal, ethnic, or racial groups" (p. 5). Diversity, in its broader meaning, includes all the ways in which people differ, and it encompasses all the different characteristics that make one individual different from another (Griggs, 1995). According to Johnson (1995), a broad definition of diversity goes beyond protected-class differences because all employees bring their differences, including a variety of group-identity differences, to the workplace. A broad definition moves workplace diversity issues beyond an "us versus them" struggle to a focus on utilizing and maximizing diversity to accomplish both individual and organizational goals. It provides an overarching goal for a unifying focus.
Many believe that the concern for managing diversity started with Affirmative Action/Equal Employment Opportunity (AA/EEO). Traditionally, AA/EEO requirements have been based upon social, moral, and legal obligations. Thomas (1991) suggested that AA/EEO efforts are no longer sufficient to meet the challenges posed by the increasing participation of women, minorities, and immigrants in the workforce. AA/EEO policies are important steps in opening the workplace to diversity. However, alone they are limited and do not create conditions that capitalize on the full potential of diversity. While AA/EEO have greatly increased the recruitment and hiring of women and minorities, they have done little to ensure their promotion or retention (Jackson & Associates, 1992; Loden & Rosener, 1991).
Managing diversity differs mainly from AA/EEO programs in that diversity programs tend to have broader goals and means for improving organizational climate. Attempts to manage diversity initiatives are "efforts to create an environment that works naturally for the `total' diversity mixture" (Thomas, 1992, p. 308), but not just women and minorities (Gottfredson, 1992). Griggs (1991) noted that companies who have been successful as EEO/AA employers are now realizing that the diverse workforce that they created needs to be better managed in order for them to fully maximize their human resource (HR) potential and increase their competitive edge.
Surveys of business leaders indicate that interest in managing diversity is widespread (Jackson & Associates, 1992). For example, Towers Perrin & Hudson Institute (1990) surveyed 645 firms and found that 74 percent of the respondents were concerned about increased diversity and, of these, about one-third felt that diversity affected their corporate strategy. This study also revealed two primary reasons for managing diversity: (1) the perception that supervisors did not know how to motivate their diverse work groups and (2) an uncertainty about how to handle the challenge of communicating with employees whose cultural backgrounds result in differing assumptions, values, and--sometimes--language skills. Some companies have connected higher turnover rates for women and minorities to a work environment that does not support diversity (Cox & Blake, 1991; Kilborn, 1990). Consequently, the lack of support for diversity has incurred excessive recruiting and training costs (Caudron, 1990; Schmidt, 1988).
According to Jackson and Alvarez (1992), the two economic forces that are especially relevant to workforce diversity are the shift from a manufacturing based economy to a service economy and the globalization of the market place. Jackson and Alvarez (1992) believe that, with 78 percent of American jobs in the service area, diversity issues will gain in importance because, in a service economy, effective interactions and communications between people are essential to business success. Several studies have found that race and gender affect interaction between employees and customers in service businesses (Juni, Brannon, & Roth, 1988; McCormick & Kinloch, 1986; Stead & Zinkhan, 1986). According to Triandis, Kurowski, and Gelfand (1994), "delivering service products requires employees with well-developed interpersonal skills; cultural similarity between the service provider and the customer may improve the effectiveness of service delivery and the perceived quality of service" (p. 770).
Increased competition and the changing marketplace are convincing many business leaders that diversity should be an essential part of their business strategy. Leaders in some organizations believe that, with a diverse employee population, they can better understand customers' needs in ethnic and international markets (Adler, 1983; Griggs, 1991). This is one of the arguments to support the notion that diversity is needed in American corporations in order for them to succeed in international markets. However, there is no research to support this perspective, especially when homogeneous societies like Japan have succeeded in the international marketplace (Triandis & Bhawuk, 1994).
Over the past decade, discrimination complaints have increased nationwide, with multimillion dollar settlements awarded in cases of sex and race bias. A class-action suit in 1992 against a major insurance corporation for sex bias in promotion resulted in an award of over $150 million (Cannon, 1992). According to Fernandez (1993), "nearly 90 percent of Fortune 500 companies have received complaints of sexual harassment, and more than one third have been sued at least once (almost a quarter have been sued more often)" (p. 203). A 1996 racial discrimination lawsuit against Texaco, a well-known oil company, resulted in an award of over $176.1 million (Stanfield, 1996). Obviously, the inability to manage the impact of diversity in the workplace and the changing values of workforce participants has become extremely costly.
Many university researchers have started to include diversity issues as part of their research agenda (Rosen & Lovelace, 1991). Workforce diversity is also a concern of educators as well (Johnson, 1991; Smith, 1989; Warnat, 1991). In 1995, the University of Illinois's Department of Human Resource Education introduced a new graduate course on "Diversity in Education and Training" in order to encourage participation and discussions between educators and business professionals with the intent of sharing strategies for managing diversity.
In addition, HRD professionals are concerned with improving management of workforce diversity. Many organizational development consultants have conducted research on the influence and impact of diversity in the workplace (Adler, 1991; Carnevale & Stone, 1995; Cox, 1991; Fernandez, 1993; Harris, 1994; Hayles, 1996; Henderson, 1994; Jamieson & O'Mara, 1991; Loden & Rosener, 1991; Morrison, 1992; Thomas, 1991). In September 1995, the University of Minnesota sponsored a symposium on "Diversity and Organizational Transformation," in which 30 sessions addressed diversity in the workforce. Practitioners have written extensively in their respective journals on the topic of workforce diversity. Diversity has become one of the most important issues in the workplace today (Dreyfuss, 1990; Fernandez, 1993; Gerber, 1990; Griggs, 1995; Henderson, 1994; Thiederman, 1991). (For a more detailed literature review, refer to Diversity in the Workforce Series: Report #1: Diversity in the Workforce: A Literature Review [MDS-934].)