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Talent Management Perspectives

Published August 2007

Diversity Management: Maximizing the Value of Variety

Tegan Jones

In today's market, diversity management is no longer about just filling quotas, and it's not about just sex and race. As members of Generation Y flood the job market, and companies scour the globe for top talent, businesses are facing the demands from a more multicultural workforce.

For this reason, corporate diversity practices have expanded to include issues related to age, sexual orientation, physical ability, etc., and they have become focused on inclusion and leadership practices that will help diverse teams function as a whole.

According to a recent survey by global consulting company Novations, 72 percent of respondents said their senior managers accept the business case for diversity, that diversity efforts contribute to the bottom line by improving performance and developing new leadership. Yet, 24 percent said these managers don't know how to leverage these business benefits.

This confusion often comes from the misconception of diversity management as "the right thing to do" rather than a strategic business decision, said Michael Hyter, Novations CEO.

"Provided it's managed properly, the benefit is the expanded capacity that different experiences, perspectives and backgrounds offer the creative process, the productivity of teams, etc," Hyter said. "Proper management is key — it doesn't happen on its own."

According to the 2005 Workplace Diversity Practices Survey Report published by the Society for Human Resource Management (SHRM), the most important outcomes of diversity practices were reduced costs associated with turnover, absenteeism and low productivity, as well as improved profits and a decrease in complaints and litigation.

The Novations survey found organizational commitment to these types of practices to be up 60 percent over 2005, the last year it was conducted. This jump is primarily driven by workforce demographics and increased competition to recruit and retain top talent, Hyter said.

Still, more than a quarter of companies aren't convinced that diversity practices affect the bottom line. Much of this doubt stems from a distrust in the traditional quota system, Hyter explained.

"The biggest fear is that it will promote a lowering of standards to make room for quotas and will upset the majority population," he said. "Some leaders have the idea that diversity is only about race — and, in some cases, gender — and as a result, to focus on it threatens the career potential of those who are already in the company. Although lowered standards and quotas are not the case, the fear of them creates some reservations."

In lieu of quotas, many organizations have embraced diversity practices that promote inclusiveness and education. The SHRM survey found the most common diversity initiatives involved allowing employees to take unpaid leave to observe a religious or cultural holiday not already observed by the company, using recruiting strategies designed to increase diversity and reaching out to community institutions.

The SHRM study also found two-thirds of organizations provide a combination of mandatory and voluntary diversity training for their employees. Sixty percent of those companies required diversity training for their top-level executives, and 70 percent required it for all managerial-level employees.

Hyter said training leaders on how to understand and implement diversity practices is critical to seeing the best business results.

"Diversity training has to have relevant components that specifically provide leaders and managers with the skill to objectively evaluate and position all talent for learning," he said. "How to incorporate that ability within the company's development process, with managers having the skills for providing honest and direct feedback for performance improvement, is the basis for the diversity training to address what matters most: how to develop all talent, not just have them onboard."