Cultural Diversity Management

Challenges and Advantages of Culturally Diverse teams in the company

Term Paper, 2021

14 Pages, Grade: 1,7


Table of contents

Table of contents

1 Introduction

2 Cultural Diversity
2.1 Diversity
2.2 Culture
2.3 Importance of Cultural Diversity
2.4 Challenges of Culturally Diverse teams in the company
2.5 Advantages of Culturally Diverse teams in the company
2.6 Managing Culturally Diversity

3 Conclusion


1 Introduction

Diversity management is indispensable for exploiting the potential of diversity in the field of organisation and teamwork. This paper shows the advantages that can result from diversity in the company or work groups. By describing the consequences that can arise, it is made clear how important it is to actively manage diversity. In addition, approaches are presented that will help to manage diversity effectively.

According to a study by McKinsey, companies (worldwide) that have a high ethnic or cultural diversity have a 36% higher probability of being profitable. For this purpose, 1,0 companies from 15 different countries were examined. However, the study also shows that progress on the issue of diversity is slow. According to the study, 30% of the companies have not made any progress in the area of diversity despite being profitable. In 33% of the companies, there was even a deterioration, while in the other 33% of the companies there was success.1

If you look at the numbers of companies that have already dealt with the topic of diversity, the relevance of this topic becomes clear. The Pagegroup published figures on this topic for 2018 and compared the figures from 2015 with those from 2018 to point out the increase in importance.

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Table 1: Responses oft he companies

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Table 2: Responses oft he companies

This Data’s illustrates the significant growth about the importance of the topic Diversity. Within 2 years. The number of people who have dealt with this issue increased from 45.10% in 2015 to 63.3% in 2018. That is an increase of a whopping 18.20%. Parallel there is a decrease from 35.5% to 18% of those companies where diversity is not yet an issue and is not expected to be in the future.2

2 Cultural Diversity

2.1 Diversity

There is a great deal of literature on how to understand the Term “diversity”. But all agree to describe diversity with the characteristic terms, such as individuality and variety. An fitting and good definition was made by Traven and Traven. They described the term “diversity” as follows: "diversity is a multitude of individual differences and similarities that exist between people.3 In the Cambridge dictionary the following can be found about diversity: “The fact of there being people of many different groups in society, within an organization, etc.: cultural/ethnic diversity”. In this Work, however, the cultural diversity is analysed.

2.2 Culture

As with the term diversity, there is also many definitions of the term culture. Above all Culture in the Literature described in different perspectives. This Paper focused only on the superficial understanding of culture and is understood as an aspect which proves to be something complex in the communication between people. The best way to describe culture in this context, is using an example of a Iceberg. Just like an iceberg, culture has a visible and a non-visible Part. It appears in a person through his feelings, behaviour, appearance and reactions, while the main motives that produce such is anchored in the depth of a person. It is important to mention, that culture is something dynamic and is not fixed. The following figure is intended to illustrate this idea:4

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Table 3: Visible and invisible characteristics of human being (source: Kühlmann and Heinz (2017), S. 3)

2.3 Importance of Cultural diversitsy

The rising Immigration in many countries has many affects but essentially for this paper we should analyse whether has also influences on cultural diversity in an organization. Migrant workers accounted for approximately 59 per cent of the international migrant population in 2017.5

However, it is much more important to examine the number of actual foreign employees. A survey from 2014 illustrates the following situation in Europa:

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Table 4: Foreign employees 2014 (age from 20 to 64 years) (source: Statista 2014)6

Taking the percentage of foreign employees in Europe as a basis, it becomes clear that there are significant numbers of foreigners employed in the labor market. This fact also illustrates how relevant the topic of cultural diversity is in the world of work.

2.4 Challenges of culturally diverse teams in the company

Cultural Diversity brings with challenges especially for companies. If these challenges are not observed this could have serious consequences. A big challenge is to manage cultural diversity. Because there is more to it than just managing cultural diversity. To manage it effectively, managers should understand and internalize the value of difference. In addition, they should accommodate discrimination and promote inclusion. Failure to take these actions can result in employee losses, productivity decreases, and even litigation, which can have financial consequences.7 The higher the proportion of cultural diversity is the more harmfully could negative behaviors and attitudes be for working moral, relationships and work productivity.8

Another challenge could be the lack in the communication. This lack can manifest itself in different ways. For an example Indian people are used to talking with gentle voice to each other. If it comes to the fact that a department manager assigns or directs to these people with a little loud voice their work, so they could misinterpret this. Furthermore, a lack could also manifest itself by leading to linguistic misunderstanding, because some associations are interpreted differently in the respective language.

Diversity could increase the risk of conflict in the work team. Conflicts can happen because of ignorance, derogatory comments, and prejudice feelings. This causes also a abnegation between the working team. Such conditions, if left untreated, can lead to cultural clashes, stereotyping and ethnocentrism.

The most common conflict comes from one feeling superior. If management ignores such conflicts, the company performance may suffer.

The Similarity-Attraction/Social Categorization perspective developed by Williams and O’Reilly illuminates the negative influence of diversity. This view based on years of study says that members of diverse teams tend to work together not readily. This fact could lead to social category processes which results in subgroups and with this in more conflicts, lower cohesion and lower team performance.

2.5 Advantages of culturally diverse teams in the company

Probably the most important advantage is mentioned by Hodgetts, Luthans & Doh. They argue that diversity generates more ideas that are better due the fact diverse people have culturally different approaches to solving problems. Diversity has the potential to open new opportunities in the marketing and it increases business image, enables more requirements as well as reduces lawsuit.9


1 Diversity wins (2020).

2 PageGroup (2018).

3 cf. Treven, Sonja/ Treven, Urska (2007)

4 cf. Kühlmann und Heinz (2017), S.3

5 OFFICE 2018.

6 Hedda Nier 2016.

7 Devoe, Deborah. (1999). Managing a diverse workforce. San Mateo, CA: InfoWorld Media Group.

8 cf. White (1999)

9 cf. Luthans und Doh (2011).

Excerpt out of 14 pages


Cultural Diversity Management
Challenges and Advantages of Culturally Diverse teams in the company
Heilbronn University of Applied Sciences
international human resources
Catalog Number
ISBN (eBook)
cultural, diversity, management, challenges, advantages, culturally, diverse
Quote paper
Ömer Cakir (Author), 2021, Cultural Diversity Management, Munich, GRIN Verlag,


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