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Diversity Management – Meaning, Types, Characteristics and Challenges

Last Updated : 18 Apr, 2024
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What is Diversity Management?

Diversity Management is an integral process within organizations, aimed at fostering diversity and embracing inclusion in the workplace. Through various strategies and policies, such as hiring, management, and training, diversity management strives to promote fairness, and equal opportunities, and harness the benefits that come with having a diverse workforce. It is a crucial step towards building a more equitable and dynamic organizational culture.


Geeky Takeaways:

  • Diversity Management involves implementing proactive strategies to cultivate a workplace that embraces and utilizes the differences among employees – ranging from race, gender, age, ethnicity, sexual orientation, and abilities.
  • By having diverse teams, there is a natural infusion of diverse perspectives, experiences, and skills, which sparks innovation, creativity, and improved problem-solving.
  • Diversity Management promotes fairness, equal opportunity, and the avoidance of discrimination.
  • Organizations that prioritize diversity often see financial success, attract top talent, enhance customer satisfaction, and effectively adapt to evolving markets.
  • The concept of diversity goes beyond what we can see and encompasses elements such as cognitive diversity, which refers to varying thinking styles, as well as educational backgrounds and work experiences.
  • Effective leaders hold a significant responsibility in managing diversity by creating an environment of inclusion, valuing diversity, and guaranteeing fair opportunities for all members of their team.

Characteristics of Diversity Management

1. Voluntary: Diversity Management is a proactive effort taken by organizations to promote inclusivity within their workforce. Unlike mandated legislation with potential penalties, this action is initiated by the organizations themselves and is not influenced by external pressures or incentives from the government. It is a voluntary and self-driven effort to embrace and support diversity within the workplace, including individuals from various ethnicities, religions, nationalities, and demographics.

2. Provides Tangible Benefits: In contrast to the previous mindset that saw diversity management as a mere legal obligation, companies now recognize the value of fostering a diverse workforce. This strategy not only harnesses the unique abilities of all employees but also gives the company a competitive edge in their industry. Embracing diversity means each individual regardless of their race, religion, ethnicity, or background can contribute their talents and expertise to the organization. This diverse blend of employees also positions the company to effectively cater to a global client base, as they have a deeper understanding of their diverse needs.

3. Broad Definition: Legislation and affirmative action have a limited scope as they target a specific group, but diversity management takes a more expansive approach, as the possibilities for diversity metrics are endless. This inclusive definition allows diversity programs to be more effective and avoids potential resistance from those in the majority or privileged sectors of society.

Best Practices of Diversity Management

1. Commitment from Top Management: The success of a diverse workforce hinges upon the adoption of a unified vision by top management, as they are the ones responsible for shaping company policies. Senior executives hold the power to either support or hinder workplace diversity. When these leaders lack conviction towards implementing diversity strategies, the potential for true diversity within the organization is greatly diminished.

2. Find Fresh Sources of Talent: One pressing challenge for organizations facing a growing workforce deficit is the need to infuse fresh talent into their teams. While relying on traditional sources like other companies and graduate schools may seem like the safest bet for finding top talent; companies need to expand their search to other untapped talent pools. For instance, military veterans, minority groups, and international recruits all offer valuable and diverse skill sets that can enhance a company’s ability to cater to diverse clients on a global scale.

3. Offer a Secure Forum for Discussion of Matters about Diversity: Organizations should prioritize the creation of safe and inclusive spaces for employees to openly discuss diversity-related issues. By establishing resource groups for individuals with shared backgrounds, organizations can foster a sense of belonging and address concerns in a supportive environment. This can also aid in decreasing employee turnover among minority groups feeling overlooked by the organization. Moreover, implementing mentorship, networking, and social events can enhance employee engagement and drive performance. This provides opportunities for accomplished employees to showcase their success within the organization and serve as mentors for new staff, promoting growth and development within the workplace.

4. Include Diversity in the Company’s Goals: Incorporating diversity into a company’s goals and values is crucial to create an inclusive and welcoming work environment. An organization that truly values diversity should proudly showcase its commitment by actively supporting and promoting events and causes that champion diversity, such as disability walks or HIV/AIDS awareness forums. This can also be demonstrated through initiatives like sponsoring fundraisers to support marginalized communities and providing opportunities like internships and scholarships for underrepresented groups.

5. Differentiating Affirmative Action from Diversity: In today’s world, many governments have taken action by introducing affirmative action programs to promote equal opportunities for underrepresented groups, such as women and minorities. However, organizations must understand the distinction between affirmative action and diversity. Diversity, unlike affirmative action, is a proactive approach that requires organizations to make deliberate changes. By embracing diversity, organizations open themselves up to a wealth of different perspectives, ideas, and work styles from individuals of various cultures, backgrounds, and beliefs. This not only improves efficiency but also cultivates a creative environment for product development.

Types of Diversity Management

1. Intranational Diversity Management: One important aspect of effective diversity management is the management of a workforce that is made up of both citizens and immigrants within a single nation. The goal of diversity programs is to not only create job opportunities for minority groups and recent immigrants but also to cultivate a workplace culture that promotes inclusivity and understanding. For instance, a company based in France may develop and implement policies that foster sensitivity and provide equal employment opportunities to individuals from various ethnic backgrounds living within the country.

2. Cross-national Diversity Management: Managing a diverse workforce consisting of individuals from various countries is known as Cross-national or International Diversity Management. This includes not only employees who are citizens of different nations but also those who have migrated from other countries seeking employment opportunities. As an illustration, imagine a company based in the United States that has branches in Canada, Korea, and China. To effectively manage diversity, this company would need to implement inclusive programs and policies in both its headquarters and overseas offices. The primary difficulty faced by companies practicing cross-national diversity management is the need to consider the legal and cultural norms of the host countries where their employees reside. This adds an extra layer of complexity to effectively managing diversity across different nations.

Benefits of Diversity Management in the Workplace

1. Range of Diverse Viewpoints: Having a diverse workforce allows for a myriad of perspectives to be represented. This is because individuals from different backgrounds and with various traits bring a diverse range of skills and experiences to the table. As a result, companies with a strong focus on workplace diversity can tap into a wealth of viewpoints, making them well-equipped to develop and implement effective business strategies.

2. Enhanced Ingenuity: The deliberate inclusion of diverse individuals, each with their own unique experiences and viewpoints, has been proven to greatly enhance creativity. By bringing together a diverse mix of perspectives, the potential for a dynamic exchange of innovative ideas is heightened, resulting in a highly creative and dynamic workforce.

3. Greater Creative Output: Embracing diversity in the workplace results in a greater capacity for innovation. Findings from Josh Bersin’s study reveal that inclusive organizations have a 1.7 times higher chance of being at the forefront of innovation in their industry. This is because a diverse workplace allows for a multitude of perspectives and cultural backgrounds to intersect, often resulting in fresh and innovative ideas.

4. Quicker Solution of Problems: Companies with a diverse workplace are more efficient at solving problems at a quicker pace. According to the Harvard Business Review, teams with diverse members can tackle problems at a faster rate compared to those made up of similar-minded individuals. What makes this possible is the variety of experiences and perspectives brought to the table by employees from diverse backgrounds. Such a wealth of different ideas allows for a more diverse range of solutions and ultimately leads to a faster and more effective problem-solving process.

5. Improved Decision-making: According to a recent white paper published by Cloverpop, having a diverse workforce has a direct impact on the quality of decision-making. Their research revealed that when diverse teams are involved in making business decisions, they outperform individual decision-makers a staggering 87% of the time. This is because individuals from varying backgrounds bring a multitude of ideas and approaches to the table, resulting in a more thorough and informed decision-making process. As a result, diverse teams can achieve better outcomes and drive greater success for their organizations.

6. Higher Earnings: According to a study by global management consulting firm McKinsey & Company, companies that embrace diversity in their workforce not only perform better financially but also have a serious competitive edge. Their research, which analyzed 180 companies in France, Germany, the United Kingdom, and the United States, revealed that those with more diverse top teams were top earners. This can be attributed to the fact that a diverse workforce brings a range of perspectives and experiences, allowing for quicker and more effective decision-making. Ultimately, it’s clear that companies with a commitment to diversity achieve greater business success and reap greater profits as a result.

7. Increased Involvement of Employees: Deloitte carried out a comprehensive study, gathering insights from 1,550 employees across three major Australian companies in the manufacturing, retail, and healthcare sectors. Through this research, it was evident that diversity and inclusivity result in higher employee engagement. The correlation between workplace diversity and employee engagement is clear and concise – when employees feel valued and included, they are more motivated and committed to their work.

8. Decreased Attrition among Employees: Fostering diversity in a company invites a wide range of identities and viewpoints to the table. This creates an inclusive and accepting atmosphere that makes all employees feel valued and respected. Consequently, when employees feel a sense of belonging and appreciation in their workplace, they are more satisfied and tend to stay longer with the company. As a result, businesses with a diverse workforce experience lower turnover rates. By prioritizing diversity and promoting a strong commitment to inclusion, companies can cultivate a sense of loyalty and belonging among their employees, leading to higher retention rates.

9. Increased Reputation of the Business: Companies that prioritize building and promoting diversity in their workplaces are viewed as exemplary, empathetic, and socially conscious organizations, ultimately enhancing their brand’s reputation. Furthermore, having a diverse workforce adds an element of intrigue and captivation to a company’s image. Ultimately, promoting diversity makes it easier for a wide range of individuals to connect with your company and brand, unlocking opportunities to reach new markets, customers, and business partnerships.

10. Increased Hiring Performance: Fostering diversity within a company has undeniable perks for its employer brand, painting the organization as an attractive place to build a career. Embracing diversity in the workplace is particularly advantageous for drawing top-notch talent from a variety of backgrounds. As revealed by a Glassdoor study, a staggering 67% of job seekers prioritize workplace diversity when evaluating job opportunities.

How to Structure your Diversity Management?

Diversity management is a crucial component of any successful company’s HR or People function. However, in larger global corporations, there are dedicated teams or departments solely focused on this important initiative. These teams and employees are instrumental in driving diversity and inclusivity in the workplace, overseeing key tasks such as:

1. Developing inclusive hiring plans and processes.

2. Developing comprehensive workplace policies that go beyond just hiring practices.

3. Offering diversity training and educational opportunities for all employees.

4. Acting as facilitators in communication and conflict resolution related to diversity.

5. Fostering meaningful interactions that promote and celebrate diversity in the workplace.

Due to the variety of responsibilities involved, it’s no surprise that diversity management often necessitates a collaborative effort. For this organizational undertaking to be successful, diversity management must be thoroughly executed across all levels of the company.

Challenges of Diversity Management

1. Communication Issues: Having a diverse workforce can pose challenges for communication among team members. For some employees, English may not be their primary language, creating potential language barriers that can hinder effective communication and understanding. This can result in decreased productivity and hindered team synergy if instructions are not fully comprehended. Organizations with diversity initiatives aim to address issues of gender and age gaps. However, these differences in demographics can also lead to difficulties in understanding each other, as employees may use slang or specific language styles.

2. Too Many Opinions: With their unique backgrounds and experiences, employees from diverse backgrounds bring a variety of approaches and ideas to the table. Their contributions are crucial to the success of the organization as they constantly drive innovation and identify potential issues. Yet, when opinions become overwhelming, the organization may struggle to reach a consensus. This can also result in innovative solutions being overlooked amidst the influx of other ideas. Ultimately, an excessive number of opinions can hinder the organization’s productivity and ability to meet tight deadlines.

3. Hostility: Human decision-making is often swayed by biases rather than objective facts and logic. This holds even within the workplace, as employees unknowingly rely on unconscious biases to make judgments and decisions. As a result, distrust can arise among colleagues, as they doubt each other’s abilities based on their differences. Common thoughts such as “They’re not like me, so I can’t trust them” or “They don’t know what they’re doing” further perpetuate this cycle.

4. Diversity Implementation Challenges: It is the duty of hiring managers and senior decision-makers to prioritize diversity in the workplace. However, due to their agendas, managers may not always have the capacity to effectively manage this complex operation. As a result, diversity initiatives often do not receive the necessary attention and support they deserve. This can lead to frustration among employees if the transition towards a more diverse future is not seamless.

5. Retain Poor Talent: To effectively diversify the workforce, companies may be tempted to retain employees who contribute to their diversity statistics. However, keeping underperforming employees can lead to decreased productivity, morale, and innovation.

How can you Improve your Diversity Management?

1. Analyse the Structure and Culture of your Organisation: To promote greater diversity within the workplace, it is crucial to first assess the current composition and culture of the company. A productive approach to this assessment involves comparing the company’s racial, ethnic, and gender demographics to those of the surrounding community, providing a target for the company to strive towards achieving greater representation. Additionally, examining the company’s culture is essential as it can offer valuable insights on how to create a more inclusive and welcoming environment for diverse candidates. A key starting point for understanding the company’s culture is by identifying the overall employee experience. Countless companies strive to enhance diversity by fostering a culture of inclusivity. In addition to current accommodations for varying cultures, lifestyles, and traditions, further cultivate an inclusive environment by continuously seeking innovative ways to promote employee comfort.

2. Examine the Diversity of Executives: A compelling way to assess a company’s stance on diversity is by examining the diversity within the top-tier executives and managers. By showcasing diversity throughout all levels of recruitment, the company can showcase its commitment to valuing diversity. This inclusivity at the highest echelons of the organization can serve as a powerful signal to diverse applicants that the company is deeply dedicated to fostering diversity and inclusion.

3. Establish Objectives to Increase Diversity: After thoroughly assessing thecompany’s composition and ethos, it is possible to devise a strategy for enhancing diversity in the workplace. To begin, it can explore methods to promote an equitable hiring process that creates a comfortable environment for all candidates, including those from diverse backgrounds.

4. Change Workplace Regulations to make them more Welcoming: By reviewing the policies established by the company, which greatly influence the workplace culture, it can make progress towards achieving its diversity objectives. It’s crucial to integrate inclusion into these policies as it demonstrates a concrete effort toward accommodating individuals from diverse backgrounds. Implementing inclusive workplace policies not only benefits diverse hires but also enhances overall satisfaction among the entire workforce.

5. Offer Training on Diversity: Enhancing the company’s culture to embrace diversity and welcome a diverse pool of hires can involve hosting diversity training for the employees. This can take the form of a dynamic group presentation led by a skilled HR representative or an innovative online course that educates employees on the value and importance of individuals with diverse identities, cultures, and backgrounds. In addition to promoting inclusivity, diversity training offers a valuable opportunity to gather anonymous feedback from employees on how the company can further improve its practices. Consider developing surveys for the team to complete after the training, and establish an anonymous email inbox for addressing any future behavior that may not align with the company’s inclusive policies.

6. Share Job Openings on Employment Boards with a Varied Applicant Pool: Firms can tap into job boards that cater to specific segments of diverse candidates to maximize their hiring potential. By posting open positions on these platforms, it can draw the attention of talented and diverse applicants, greatly increasing the chances of a successful hire. This not only provides access to a wider pool of potential candidates but also reaches individuals who may not have otherwise been aware of the opportunity to join the team. Employing this approach demonstrates a firm’s dedication to promoting diversity and cultivating inclusivity within the workplace. Emphasizing the inclusive policies that are in place to support diverse employees can further enhance the attractiveness of the open position.

7. Prioritise Diversity on Business Webpages and Social Media Platforms: One effective approach to enhancing diversity and inclusion efforts is showcasing diversity on the company’s website and social media platforms. Highlighting photos and quotes from the team, can not only demonstrate the company’d pride in achieving diversity but also make inclusion a core component of its brand. This not only helps attract diverse candidates but also sends a strong message that the company places a high value on embracing differences among employees.

8. Prioritise Retention: The true benefits of hiring a diverse workforce are felt when these employees can stay with the company long-term. This not only shows potential diverse candidates that the company has made a genuine effort to cultivate an inclusive environment through policies and culture, but it also allows for the full potential of diversity to be realized. One of the biggest obstacles facing efforts to improve workplace diversity is the retention of diverse employees. To combat this, some companies have implemented development programs specifically tailored for those from underrepresented backgrounds. By investing in the growth and advancement of their diverse employees, these companies demonstrate their appreciation for their contributions and offer opportunities for career advancement, ultimately working towards a more diverse management and executive team. To further bolster the retention of diverse employees, mentoring programs have proven to be effective. By pairing junior employees with seasoned professionals, these programs foster a supportive environment for skill development and career growth. Not only does this promote retention, but it also helps to diversify leadership within the company.

9. Commit to keep getting Better: Even after successfully hiring and retaining diverse employees, companies should continuously strive to enhance diversity. This can include annually reassessing policies to ensure they remain aligned with diversity goals and actively seeking feedback from employees on ways to improve overall job satisfaction.

Frequently Asked Questions (FAQs)

1. What impact does leadership have on Diversity Management?


Leadership plays a vital role in driving successful diversity management efforts. Effective leaders must champion diversity, exemplify inclusive behaviours, and incorporate diversity into their overall business strategy.

2. In what ways can employees support Diversity Management?


Employees can actively contribute to diversity management by embracing diversity, valuing and respecting their coworkers’ differences, actively participating in diversity programs and initiatives, and promoting awareness of the significance of inclusivity.

3. Can you discern the distinction between Diversity and Inclusion?


Diversity refers to the unique characteristics and perspectives of individuals, while inclusion involves fostering an environment where all individuals are respected and valued, regardless of their differences.

4. How can companies effectively gauge their progress in promoting Diversity?


There are a few ways organizations can measure their diversity progress, such as evaluating workforce demographics, conducting employee satisfaction surveys, and monitoring the advancement of diverse individuals within the company.

5. Explain the concept of cultural competence in Diversity Management.


Cultural competence refers to the skill and confidence to effectively engage with individuals from diverse backgrounds. It plays a crucial role in diversity management by fostering mutual understanding and cooperation within teams of diverse individuals.

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