Diversity Management. Opportunities, risks and options for action

Table of contents

1. Introduction
1.1 Problem / Relevance
1.2 Objective and structure

2. Diversity Management (DiM)
2.1 Definition of terms
2.1.1 Diversity
2.1.2 Diversity management
2.2 Opportunities and risks of DiM for companies
2.2.1 Opportunities
2.2.2 Risks
2.3 Levels of diversity
2.4 Options for action and instruments

3. Final part
3.1 Conclusion
3.2 Limitations
3.3 Factors / Outlook

Bibliography

1. Introduction

1.1 Problem / Relevance

The object of observation of this term paper is the management orientation of Diversity Management (DiM). The DiM is a relatively young management concept, which as such has its origins in the Anglo-Saxon area. The beginnings are dated to the women's and civil rights movements of the 1960s¹. The scientific discussion about diversity as a concept of corporate management began in the early 1990s. In Germany, this topic was only written more intensively towards the end of the 20th century, so the number of publications on diversity increased exponentially from 1998 to 2005². The concept is receiving more and more attention, especially because of the problems faced by industrial and service societies. Demographics, for example, are creating an ageing society, and the low birth rate and longer life expectancy will increase the proportion of older people, including in working life.³. It is also becoming increasingly difficult for companies to find skilled workers, which means that companies are increasingly competing on the labor market. Increasingly, companies must court potential employee groups that they would not have advertised to if they had a sufficient labor pool⁴. Furthermore, over the years there has been a change in values in society towards more personality development, individuality and gender equality⁵. In Germany, the free development of personality is supported by various anti-discrimination measures, such as the General Equal Treatment Act (AGG). In the course of the Internet and expanded transnational relationships, companies are increasingly acting globally and are coming into contact with many cultures, so that diversity is also indispensable within the corporate structure. In order to be able to react flexibly and in line with the market to all these changes, a confrontation with DiM is inevitable for companies.

1.2 Objective and structure

The aim of this term paper is to generate a comprehensive knowledge about the DiM as such, to be able to rationally weigh up opportunities and risks and to know the various options for action of the respective dimensions of diversity. In order to establish the knowledge base required for this, chapter 2.1 deals with the concepts of diversity and management. Building on this, chapter 2.2 outlines the opportunities and risks for companies associated with implementing the DiM concept. With this background knowledge, the four-level model according to Gardenswatz and Rowe is presented in the following chapter 2.3 to illustrate the complex topic. In connection with the knowledge gained from the various levels, chapter 2.4 changes to the operational level and presents concrete options for action within the framework of the DiM concept. The conclusion summarizes the findings, followed by a critical examination of the assignment. Finally, an outlook on possible changes is given.

2. Diversity Management (DiM)

2.1 Definition of terms

2.1.1 Diversity

The free translation of the term often refers to the German word “Vielfalt”. In the literature, various definitions of the term diversity can be found in the context of social life. The definition according to Wagner and Sepehri is often used, so diversity includes "... everything in which people can differ, and at the same time both externally perceptible and subjective differences."⁶ The perceptible differences in this regard include characteristics such as age, gender, race or physical impairments. Subjective characteristics therefore reveal themselves later than the perceptible ones, this group includes characteristics such as lifestyle, set of values, religion, or similar⁷. The authors Loden and Rosener have already carried out this segmentation before, distinguishing between the primary and the secondary dimension. The primary dimension is innate and visible to third parties, analogous to the perceptible differences according to Wagner/Sepehri. In contrast, the secondary dimension is changeable and not directly visible, which is the counterpart to the subjective differences⁸. From this definition, it is evident that diversity involves some degree of stereotyping.

2.1.2 Diversity management

After the term "diversity" has been defined in advance, this subchapter focuses on the word combination of diversity management. According to Koall, the DiM is to be defined "... as a human resource and organizational orientation of management action with the aim of developing and using the existing human diversity in a business-relevant orientation."⁹. The creativity and motivation of the employees should be optimally used by taking into account the individual backgrounds¹⁰. For the present term paper, diversity management, analogous to the definitions, should be decisive as a management action to maximize the existing resources using the existing personnel diversity.

2.2 Opportunities and risks of DiM for companies

Every concept requires in-depth planning before it is introduced, including the consideration of opportunities and risks, and this chapter is devoted to these in detail.

2.2.1 Opportunities

The diversity of the DiM opens up numerous opportunities for companies, some significant ones are outlined below:

- Prevention of the shortage of skilled workers: There is an increasing demand for underrepresented groups of workers such as women or migrants, rather than predominantly men. There is a larger pool of applicants from which to select appropriate specialists and managers¹¹. The company is gaining in attractiveness on the job market, and attributes such as cultural openness and individuality are attributed to the employer brand¹². For Germany, too, there is great potential on the labor market in connection with the free movement of labor in the EU, with inflows rising steadily since 2008.¹³. In addition, employees with a migration background are often willing to work at lower salaries and also to fill positions that do not enjoy a high reputation in society.¹⁴.
- Increase in creativity and social competence: Due to the different knowledge base and diversity of the heterogeneous teams, creativity increases¹⁵. Furthermore, this diversity achieves more viable solutions than is the case with homogeneous teams.¹⁶.
- Advantages on the sales market: A diverse workforce can respond more differentiated to customer requirements and thus also better occupy market niches in some cases¹⁷. Customer communication is also improved by a diverse workforce, for example, banks in large cities use employees with a migration background to simplify communication with non- or only sparsely German-speaking customers. Furthermore, the aforementioned increase in creativity means that there is greater potential for innovation in product policy.
- Cost reduction potentials: As a result of the observance of individual personality development, employees are more satisfied, because of this satisfaction, the fluctuation rate decreases and costs for applicant recruitment are saved¹⁸. Direct costs such as discrimination claims are also prevented¹⁹.
- Increasing flexibility: monocultural organizations are often relatively cumbersome due to the homogeneity of the dispositive factor and react inflexibly to changes²⁰. A high degree of diversity in the company, on the other hand, promotes the confrontation with divergent opinions and thus ensures faster adaptability to changing markets.

2.2.2 Risks

After considering the possibilities that arise, this chapter takes an analogous, obligatory look at the inherent risks of DiM.

- Economic success not empirically proven: A success-enhancing effect of the DiM concept is not proven, many studies can not confirm the increased productivity proclaimed by the DiM concept. Although increased creativity is also beneficial in innovative processes, it has a detrimental effect on routine tasks.²¹. There are also compulsive costs due to the establishment of the DiM concept in the corporate structures, for example, applicant recruitment processes have to be changed and, if necessary, staff positions have to be created at larger companies to monitor compliance with DiM.
- DiM too abstract: The DiM concept lacks sharpness in terms of content, so there is no uniformly formulated objective²². Furthermore, there are no precise specifications for the design of the DiM, so that the companies have to find individual solutions²³.
- Risks of heterogeneous working groups: There is no scientific agreement on whether heterogeneous working groups perform better or worse than their homogeneous counterpart. However, the diversity of heterogeneous groups often leads to misunderstandings and conflicts within the group. These are therefore more voted-intensive and require more time for meetings²⁴. Individuals may also feel excluded from the collective, reducing motivation and productivity.
- Leadership style: For a successful integration, the leadership styles of the dispositive factor must also be aligned with the DiM concept. For example, managers should allow open communication, promote cooperation, treat every employee equally, and more²⁵. If the respective manager does not have the required social competence, a holistic implementation of the DiM concept cannot succeed.

2.3 Levels of diversity

This chapter distinguishes the levels of diversity listed by Gardenswartz and Rowe (1993). This model, which is often described in the specialist literature, basically distinguishes four levels of diversity²⁶.

1st level: Dimension of personality, at this level the personality of the individual is taken into account. This is determined by components such as values, dispositions, life path, etc.²⁷. The personality thus represents the uniqueness of each person and should thus counteract stereotyping²⁸.

2nd level: Internal dimension, this dimension is characterized by the fact that the contained elements are difficult or even unable to convert. This includes elements such as the origin, the social background, the sexual orientation or the physically given characteristics of the individual.²⁹.

3rd level: External dimension, these are predominantly given by the integration of the individual into social life. Elements of the external dimension can be influenced and thus versatile. This includes elements such as place of residence, marital status, schooling and education, leisure activities³⁰.

4th level: The last level describes the organizational dimensions. Elements contained herein are shaped by working life. They are therefore directly dependent on the respective companies and their internal processes. Accordingly, there are characteristics such as union membership, the responsible department, the status or even the respective function within the company³¹.

[...]

¹ cf. Wondrak (2012), p. 2

² cf. Süß; Kleiner (2007), p. 1937

³ cf. Franken (2015) p. 4 f.

⁴ cf. Moers (2013), p. 783

⁵ cf. Franken (2015) p. 4 f.

⁶ Wagner; Sepehri (1999), p. 18

⁷ cf. Wagner; Sepheri (1999), p. 18 ff.

⁸ cf. Klaffke (2008), p. 6

⁹ Koall (2002), p. 5

¹⁰ cf. Köppel, Yan, Lüdicke (2007), p. 5

¹¹ cf. Franken (2015), p. 9

¹² cf. Klaffke (2008), p.10

¹³ cf. Gathmann; cellar; Monscheuer (2014), p. 160

¹⁴ cf. Ortlieb; Sieben (2008), p. 75

¹⁵ cf. Klaffke (2008), p. 8

¹⁶ cf. Krell (2008), p. 69

¹⁷ cf. Klaffke (2008), p. 8

¹⁸ Cf. ibid., p. 8

¹⁹ cf. Krell (2008), p. 68

²⁰ Cf. ibid., p. 69

²¹ cf. Langhoff (2009), p.236

²² Cf. ibid., p. 236

²³ cf. Süß; Kleiner (2007), p. 326

²⁴ cf. Franken (2008), p. 8

²⁵ cf. Langhoff (2009), p. 246

²⁶ cf. Voigt (2013), p. 34

²⁷ cf. Herzberg; Roth (2013), p. 8

²⁸ cf. Franken. (2015), p. 23 ff.

²⁹ Cf. ibid.

³⁰ Cf. ibid.

³¹ Cf. ibid.