1 INTRODUCTION

Diversity can generally be defined as recognising, understanding and accepting individual

differences irrespective of their race, gender, age, class, ethnicity, physical ability, race. Sexual
orientation, spiritual practice and so on. Grobler (2002:46) also supports this view by adding that
each individual is unique but also share any number of environmental or biological
characteristics. Diversity can be classified into two dimensions. The primary dimension such as
age, gender, sexual orientation and so on, exhibits the main differences between various
individuals. These primary differences also have the most impact on initial encounters and can
be easily noticed and serve as filters through which people view the world. The secondary
dimensions such as religion, education, geographical location, income etc, are those qualities that
are not noticeable in the first encounter and can even change throughout different encounters.
These qualities are only noticed after some interactions occur between individuals. (Ashton
2010). Globalization in this recent time has triggered more interaction amongst people from
different cultures and backgrounds than before. People are now more open-minded in the
marketplace worldwide with competition coming from almost everywhere in the continent.
Diversity can be a problem to an organisation but could also be a solution, It also comes with its
disadvantages but also benefits and dangerous but also constructive. The challenge then is to
extract the very essence of diversity and tactically manage it for the improvement of the people
and the organization. Most organizations in their own perspective, adopt diversity at their
workplace or organization to become more creative and open to change. Increasing and
improving workplace diversity has become an important issue for management in the recent
years due to the recognition of how the workplace is changing. Since managing diversity still
remains a challenge in organisations, managers tend to learn managerial skills needed in a
multicultural working environment and prepares themselves to teach others within their
organizations to value cultural differences and treat all employees with dignity. For some
business leaders and managers point of view, diversity is a big challenge to them although it
knows no organizational boundary and has no limitations. Ref D 6
Very few researches on this phenomenon have been conducted in African continent; some of
them fall short of a comprehensive examination of workforce diversity. The previous studies are
conceptualized workforce diversity as multi-ethnic concept. Ethiopia like many nations of the
world is ethnically heterogeneous, and is characterized by other demographic diversities, which
are reflective in workplaces. Business organizations in the developed and developing countries
are all caught up in the globalization web, which has heralded increased demographic diversity
in the workforce. This phenomenon is one of the most challenging human resource and
organizational issue. Academicians and practitioners have sought to understand the impact of
diversity and its management on organizational effectiveness. Empirically, work place
(workforce) diversity is found to have a contrasting dual implication on organizational
effectiveness. Milliken and Martins (1996), opines that 'diversity appears to be a double-edged
sword, increasing the opportunity for creativity as well as the likelihood that group members will
be dissatisfied and fail to identify with the group’. Some studies have found that various forms of
diversity area associated with greater innovation, improved strategic decision making, and
organizational performance. Other research shows that various types of organizational diversity
sometimes increase conflict, reduce social cohesion, and increase employee turnover (Jackson,
Joshi, & Erhardt, 2003; Webber & Donahue, 2001). The demographic composition of today‘s
workplace, occasioned by the international trend toward increased immigration and the
globalization of firms is increasingly becoming diverse (Johnson, 2002; Yaprak, 2002). The
demographic trends in developed and developing countries—aging workforce, growing
representation of women and minorities in the workplace, and the rising number of young people
in developing countries has altered homogeneous work settings of the recent past (Mor-Barak,
2005; Gorski, 2002). Thus, given these demographic and organizational trends, business
organizations are contending with the challenges of effectively managing a diverse workforce.
Ref D 5
With the earlier years, organizations take workforce diversity seriously otherwise there was no
acceptance to add a new hire which is of some other race etc. organizations are hiring a
diversified workforce not to avoid immense fine against Equal Employment Opportunity (EEO)
but to attract, retain, motivate and satisfy stockholders. There are so many definitions of
workforce diversity; one cannot define it in a single sentence. Workforce diversity simply means
difference or variety in the workforce. It can be a difference with aspect to age, gender,
education, culture, geographic location, ethnicity, race, religion and many more. According to
Thomas (1995), diversity does not necessarily mean just about differences but also about
similarities as well. Google truly support and encourage diversity. They also have increased the
ratio of diversity and take several initiatives to enhance the diversity ratio. Ref D 4

Problem Statement
With the rapid increase of changes occur in the modern world the organizational culture is also
getting changed with a fast pace. Like in the same way, changes occur in the workforce which is
varied from previous years which we called diversification in the workforce or a diversified
workforce. Now, it is very important to analyze the consequences of a diversified workforce.
There is a common saying that diversification in workforce affects the employee performance. In
this group assignment paper, it is going to discover whether it impacts the organizational
performance or not.

Research Question
1. Is there a significant relationship between workforce diversity and organizational
performance?
2. How does it impact the whole organizational performance? Does it impact positive or
negative?
3. Which type of diversity has a strong impact on organizational performance with respect to its
profitability?
4. Does diversity create conflicts between team members? If yes, does it hinder the productivity
of the organization?
5. Is a diversified workforce the reason of producing pressure and stress in the organization?
6. Is it true that diversity always bring innovations and creativity?
7. Does diversity create miscommunication?
Research Objective
The basic objective of this study is to determine the impact of workforce diversity on overall
Organizational Performance. Further, it also discovers which kind of diversification has a
significant effect on the firm’s overall performance.
Scope of the Study
The study is about Workforce Diversity and exploring the impact on overall Organizational
Performance. The chosen variables are Age Diversity, Gender Diversity, Educational Diversity,
Geographical Diversity, Income Diversity, and Religion Diversity. These all are Independent
Variables and Organizational Performance is the Dependent Variable. This study covers every
type of industry which benefits all of them. It benefits Industrialists, Managers, Employees,
Institutes and Students as well. This research also tells why companies acquire different groups
of people how it impacts.

Significance of the Study

This study has a much-broadened scope which is useful for many purposes. The reason behind
this is that it not only covers one type of Industry but all the industries working presently which
has diversification in their workforce. Almost all the industries have a diversified workforce so,
it is important for all types of industries because it identifies why a diversified workforce has an
impact over all organizational performance. This research also tells why companies acquire
different groups of people how it impacts.
2. Literature Review
According to (Carrell, 2006), Workforce diversity refers to the ways that people differ that can
affect a task or relationship within an organization such as age, gender, race, education, religion,
and Culture. It is the exploration of these differences in a safe, positive, and nurturing
environment. It is about understanding each other and moving beyond simple tolerance to
embracing and celebrating the rich dimensions of diversity contained within each individual
within the organization. Diversity management practices enhance productivity, effectiveness and
sustained competitiveness. Organizations that promote and achieve a diverse workplace will
attract and retain quality employees and increase customer loyalty Greenberg (2004) also defines
workplace diversity refers to the variety of differences between people in an organization
including race, gender, ethnic group, age, personality, cognitive style, tenure, organizational
function, education, background and more. The U.S National Partnership for Reinventing
Government (NPR) Diversity Task Force in conjunction with the US Department of Commerce
in their sponsored benchmark study of diversity (2007) defined diversity as including all the
characteristics and experiences that define each of us as individuals. It is clear from these
definitions that most scholars concur on the definition of workforce diversity. The main sources
of diversity include age, race, gender, ethnicity (culture) and education although there are other
sources of diversity like personal demographics; knowledge, skills, and abilities; values, beliefs,
and attitudes; personality and cognitive and behavioral style; and organizational demographics.
Ref D 5
3. Managing Workforce Diversity
According to Ellis and Sonnenfield (1994) argues that the challenge of meeting the needs of a
culturally diverse workforce and sensitizing workers and managers to differences associated with
gender, race, age and nationality in an attempt to maximize the potential productivity of all
employees, has made effective management of diversity to become a prerequisite in Human
Resource Management. Workforce diversity can be managed through various approaches such as
affirmative action to the minority groups, diverse recruitment policies, diversity management,
and strategic diversity management. Performance According to (Rue and Byars, 1993).Cascio
(2006), performance refers to the act of performing; the carrying into execution or recognizable
action, achievement or accomplishment, in the undertaking of a duty, employee performance
refers to the effective discharge of one‘s duty for good results. It is how well an employee is
fulfilling the requirements of the job defines performance as working effectiveness, that is, the
way in which somebody does a job, judged by its effectiveness. Relationship between
performance and workforce diversity Fernandez (1993) argues that good workforce diversity
practices in the area of human resources are believed to enhance employee and organizational
performance. This is because managing diversity involves leveraging and using the cultural
differences in people‘s skills, ideas and creativity to contribute to a common goal, and doing it in
a way that gives the organization a competitive edge. Haylesand Mendez (1997) add that even
recent studies have shown a strong correlation between good diversity practices and profits.
Workplace diversity is a complex, controversial, and political phenomena (Janssens&Steyaert,
2003). It has been conceptualized by researchers from several viewpoints. Several have looked at
it from a narrow perspective, while some others from a broad view (Nkomo, 1995). Scholars
favorably disposed to a narrow definition argue that the concept of diversity should be restricted
to specific cultural categories such as race and gender (e.g. Cross, Katz, Miller & Seashore,
1994). Some opine that diversity based on race, ethnicity and gender cannot be understood in the
same way as diversity based on organizational functions, abilities or cognitive orientations
(Nkomo, 1995). Moreover, the key issues of diversity are those that arise because of
discrimination and exclusion of cultural groups from traditional organizations (Cross etal.,
1994).Therefore, if diversity is a concept that is inclusive to all individuals, it will become very
difficult to identify discrimination practices. The main concern of this standpoint is that a broad
definition may imply that all differences among people are the same. Thus, diversity studies
would then be reduced to the conclusion that ‗everyone is different‘ and, if this conclusion is
accepted, the concept of diversity may become ―nothing more than a benign, meaningless
concept‖ (Nkomo, 1995). The danger in narrowly defining diversity, however, is that only one
dimension of cultural diversity (race, age, ethnicity, or gender) is by and large the subject of
research at a time. Since a cultural diversity dimension interacts with other dimensions of
diversity, a narrow concept of diversity would be deficient by failing to recognize these
interactions (Michaéla, Deanne, Paul, &Janique, 2003). Jackson, May & Whitney, 1995, argues
that diversity encompasses all the possible ways people can differ. Individuals, according to this
school of thought, do not only differ because of their race, gender, age and other demographic
categories, but also because of their values, abilities, organizational function, tenure and
personality. They contend that an individual has multiple identities and that the manifold
dimensions cannot be isolated in an organizational setting. Apart from bringing their race, age,
ethnicity, and gender, individuals also come with their particular knowledge, personality, and
cognitive style to the work place. Therefore, in order to understand the dynamics of a
heterogeneous workforce, the interactive effects of multi-dimensional diversity have to be
addressed. In addition, it is argued that a broadening of the concept of diversity has a potential
positive effect on diversity management programs, as it will be more acceptable if it is all
inclusive i.e. not only oriented towards specific demographic groups of employees McGath,
Berdahl& Arrow (1995) conceptualized workplace diversity by developing a five cluster
classification. This often cited categorization is as follows: demographic characteristics such as
age, ethnicity, gender, sexual orientation, physical status, religion and education; task- related
knowledge, skills and capacities; values, views and attitudes; personal, cognitive and attitudinal
styles; Status in the organization such as one‘s hierarchical position, professional domain,
departmental affiliation and seniority. Michaéla, Deanne, Paul, &Janique2003, Social
categorization and similarity-attraction theory predict negative effects, such as reduction in
within-group communication, decreased satisfaction and commitment, and increased labour
turnover. However, from the information and decision-making perspective, positive effects of
diversity are hypothesized, mainly because more diverse work-teams are expected to process
information differently, as team members may bring together differing viewpoints (Williams &
O'Reilly, 1998; Cox, 1993; Pollar& Gonzalez, 1994). This, in turn, is expected to lead to more
creativity and increased performance. Pelled,Cummings, &Kizilos, 1999; Tsui, Egan, & O’
Reilly, 1992have proposed that identifying individual group members with distinct groups may
disrupt group dynamics. Consistent with this, research on self- categorization theory has shown
that out-group members evoke more disliking, distrust, and competition than in-group members
(Hogg, Cooper-Shaw, &Holz worth, 1993). Moreover, biases against out-group members seem
to unfold automatically: the perception of a salient quality (e.g., race, sex) more or less inevitably
triggers a corresponding categorization (Fiske&Neuberg, 1990). Jackson et al., 2003, Social
categorization theory, emphasize that similarities and dissimilarities can lead to categorizations
which, in turn, lead to favoring one‘s in-group to the detriment of one or more out-groups social
(Tajfel& Turner, 1986). On an intra-group level, this approach is typically referred to as
relational demography. Thus, categorizations within a work group (based on an attribute such as
gender, race, or age) can lead to the problematic formation of sub-groups (―us‖ versus ―them‖).
Ref D 5
3.1. The concepts in diversity management
“Diversity Management can be defined as the process of planning, directing, organizing and
applying all the comprehensive managerial attributes for developing an organizational
environment, in which all diverse employees irrespective of their similarities and differences, can
actively and effectively contribute to the competitive advantage of a company or an organization.
According to Kreitner, (2001:37) diversity “Stands for the various differences in individuals as
well as similarities that exist among them. ” Kreitner’s definition emphasizes on three crucial
issues about diversity management: Diversity applies to all employees and do not only
encompass certain range of differences but the entire spectrum of individual differences that
makes people unique. Therefore diversity cannot be viewed as only racial or religious
differentiation, but it is the combination of all differences. The concept of diversity defines
differences among people and also their similarities. The act of managing diversity requires that
these two aspects be dealt with and managed at the same time. Managers are therefore expected
to integrate the collective mixture of similarities and differences between workers into the
organization. As such, diversity can be described as having four layers (Kreitner, 2001:38):
Personality: This describes the stable set of characteristics that establishes a person’s iden15
tity. There are many different types of personality traits that an individual can portray. These
types of traits could be a person’s action, the behavior they process and their attitude. Moreover,
the personality traits could be classified into two types, namely positive personality trait and
Negative trait. Some of these traits could be classified in the below table as follows:
Table 1. Some Personality traits of a diverse workforce (yourdictionary.com)

Internal dimensions: These dimensions are characteristics that have a strong influence on
people’s perceptions, expectations and attitudes towards other people. These include factors such
as gender, sexual orientation, ethnicity, age, physical ability and race External dimensions: These
dimensions are personal traits that we have a certain amount of control or influence over. They
are factors such as income, personal and recreational habits, religion, education, work
experience, appearance, marital status, and geographic location. Organizational dimensions:
These dimensions are relevant or significant to the organization itself. They include factors such
as management status, Unit or division, work field, seniority, union affiliation and management
status. Currently affirmative action is used as a method of attaining a diversified and integrated
workforce. Kreitner is of the view that (2001:40) “affirmative action is an artificial intervention
aimed at giving management a chance to correct an imbalance, an injustice, a mistake or outright
discrimination” and that it does not foster a need to change leadership’s thinking about diversity
management. Jeffery (1996:11-13) argues that although affirmative action and black economic
empowerment is necessary, the private sector should be allowed to focus on wealth and
economic opportunity creation rather than just giving jobs to the previously disadvantaged. A
higher level of “diversity awareness” from affirmative action is known as valuing diversity.
Valuing diversity emphasizes the awareness, recognition, understanding and appreciation of
human differences. By valuing diversity, employees feel valued and accepted, and are
recognized as a valuable resource that contributes directly an organization’s overall success
(Kreitner, 2001:41). Grobler (2003:49) states that for an organization to value diversity it must
first understand the differences between valuing diversity and employment equity. The
fundamental difference is that employment equity is enforced by legislation. The management
values diversity due to its desires to gain competitive advantage by using the talents of a diverse
workforce. The highest level of “diversity awareness” is the discipline of diversity management.
It is the deliberate and focused creation of organizational changes that enable all employees to
perform up to their maximum potential (Kreitner, 2001:42). Israel is a typical example of how
the valuing of diversity can turn this issue into an asset to be used for the benefit of
the organization (Vermeulen, 1998:1). South Africa is a country with a very diverse population
that contains many cultural, social religious groups, much like Israel. The South African
population consists of many immigrants bringing with them the diverse ethnocultural practices of
their countries of origin. This challenged the state to convert these differences into a national
asset (Hirsh, 1993:195). Achieving competitive advantage through the management of diversity
has become an important managerial, and hence leadership, consideration (Thomas, 1996:17). It
is therefore obvious that management discipline needs effective leadership in order for it to be
successfully implemented. According to Kreitner (2001:551) leadership is defined as “a social
influence process in which the leader seeks the voluntary participation of subordinates in an
effort to reach organizational goals.” Changing existing attitudes toward diversity in the
workplace clearly involves more than just decisive leadership but also the cooperation of all
employees as it affects their inter-personal relationships with each other. Therefore managers
must exhibit leadership traits and move beyond the normal tasks of planning, organizing and
control. Managing diversity is a business imperative, strategic priority and a competitive
necessity (Mc Enrue, 1993:18-29). Daniel (1994:14) agrees with this viewpoint and adds that if
diversity is not utilized as a tool it might become business’ downfall.

2.5.1 Advantages
High level of Productivity: Increasing productivity at the workplace has been one of the major
challenges for managers and leaders and to the company in general. Due to the fact that every
organisation has its own unique company structure and objectives, different strategies may be
used to challenge or address the company in order to increase productivity. One of those
strategies involves adopting workplace diversity and managing it effectively. When management
takes the welfare of its workers at heart by means of offering them proper compensation, health
care and employee appraisal, It enables workers to feels they belong to the company irrespective
of their cultural background by remaining loyal and hardworking which helps to increase the
company’s productivity and profit. Exchange of varieties of ideas and Team work: In recent
times teamwork is increasingly advocated by businesses and organisations as a means of
assuring better outcomes on tasks and also for the delivery of goods and services. A single
person taking on multiple tasks cannot perform at the same pace as a team could; therefore each
team member brings to the table different ideas and offers a unique perspective during problem
solving to effectively arrive at the best solution at the shortest possible time. Learning and
growth: Diversity at the workplace creates an opportunity for employee’s personal growth. When
workers are being exposed to new cultures, ideas and perspectives, it can help each person to
intellectually reach out and have a clearer insight of their place in the global environment and
hence their own surroundings. The more time spent with culturally diverse co-workers can
slowly break down the subconscious barriers of xeno-phobia and ethnocentrism, thereby
encouraging workers to be more experienced members of the society. Effective Communication:
Workplace diversity can immensely strengthen a company’s relationship with some specific
group of customers by making communication more effective. Customer service department is
one of the areas where effective communication is crucial. A customer service personnel or
representatives can be paired up with customers from their specific area or location, making the
customer feel at home with the representative and thus with the company. For example some
companies in the south-western part of the United States often prefer to hire customer service
personnel’s who are bi-lingual to deal with customers who speaks Spanish in their native
language. Diverse Experience: Employee and their co-workers that come from a diverse
background bring to the table some amount of unique perceptions and experience during
teamwork or group tasks. Pooling the diverse skills and knowledge of culturally distinct
employees together can immensely benefit the company by strengthening the responsiveness and
productivity of the team to adapt to the changing conditions. Every diverse culture has its own
strengths and weaknesses, therefore in addition to their individuality, every diverse employee
possesses a unique strengths and weaknesses that is derived from their culture. When each
workers´ unique trait is managed properly and effectively in the organization, it can leverage the
strengths and complement its weaknesses to highly impact the workforce.

2.5.2 Disadvantages
High Cost of Diversity Management: To increase job satisfaction, workplace diversity
management could sometimes be very costly, when an organisation strives to effectively manage
the diverse workforce, it undergoes a mandatory diversity training during which supervisors,
employees, and managers receive lessons on the best way to interact with employees and clients.
In recent times, there are lots of Diversity management program available where companies
could choose from, taking into account the size of the company and it’s employees. Some
training programs require a high travelling and participation cost. Discrimination: One
significant disadvantages of working with a diverse workforce is discrimination in the part of
both managers and employees. It can exist but hidden aspect of a poorly managed workplace.
When a worker is being discriminated, it affects his ability to perform well and it also affect the
perception of equity and raises issues of litigation. Communication issues: Workplace diversity
can negatively impact communication in the company. It can place an obstacle in the way of
effective communication, which can cause a decrease in productivity and dampen the
cohesiveness among workers. Even though spending time with employees by getting to know
them helps reduce and in some instances eradicate communication barriers during a long-term,
co-workers orientation periods and an individual´s first impressions can be difficult to control
when culture clash. Myriad Accommodation: Although the premise of workplace diversity is
mutual respect, making way to accommodate each diverse worker´s request can be burdensome
of employers, which makes it difficult to manage diversity. Some employee work constraints
such as race, religion, country of origin and gender can sometimes be overwhelming if the
diversity in the organisation tends to be so much to the extent that the company has to employ a
fulltime staff to keep track of accommodating the employees needs. For example, some Muslim
employees may decide not to work on Fridays, as it is a special day for prayers. In such instances
employers has to make provision for someone to take their shift when the need arises.
Incorporation issues: Social incorporation at the workplace cannot be influenced to the maximum
degree. Forming exclusive social groups is often a natural process that cannot be controlled
sometimes. Therefore, companies tend to experience some degree of informal divisions amongst
their workers thereby creating conditions where diverse employees avoid having contact with
each other during leisure times and when work is over. Although this scenario doesn´t seem
fundamentally wrong, it can reduce the effectiveness of knowledge sharing amongst teams and
hence decreasing productivity. (Ruth Mayhew 2013). Ref D 6
4. Role of Diversity Management in Organizational Performance Managing Workforce
Diversity effectively has a positive effect on Competitive Advantage. Competitive advantage is
an element of strategy that gives an organization a distinctive competence. This competence and
advantage stem from the process in which the management of diversity positively affects
organizational behavior and effectiveness (Kreitner and Kinichi, 2004). Effectiveness which
entails doing things right is an organizational performance factor (Unyimadu, 2006). Therefore,
to effectively manage workforce diversity will help to lowers costs and improve employees‘
attitudes. Costs are lowered in three ways. Firstly, it reduces health care expenses. Secondly, it
reduces absenteeism. Thirdly, employee recruiting and training expenses can be reduced by
effectively managing workforce diversity (Kreitner and Kinichi, 2004). Effectively managed
workforce diversity has a positive effect on corporate share and profits. This is because work
force diversity is the minor image of consumer diversity. (Kreitner and Kinichi, 2004).
Researchers such as Hofstede (cited in Schultz et al., 2003) have revealed that work force
diversity promotes creativity, innovative problem solving and productivity. Kinichi, 2004).
Similarly, effective education whether full or part time enhances exposure, training and
development. This is what Bransford et al (2000), assert would promote understanding and
congenial acceptance towards the realization of overall goals of the organization through
performance. Ref D 5