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This literature review focuses on the examination between cultural diversity in the work place and the effects it has on productivity. Specifically, this paper analyzes the various factors that are believed to play a major influence on productivity. This includes homogenous work groups vs. heterogeneous work groups, applied settings vs. laboratory research, social factors that influence diversity in the work place, as well as cultural diversity in foreign countries and its effects on productivity. This analysis aims to add information to prior research in an effort to understand the roots of cultural diversity in the workplace and its impact on performance, as well as other influential variables.
In an effort to understand the roots of organizational productivity, it is vital to understand various components that have major influence. One of the many components of particular interest is cultural diversity. Diversity in the general population has had a long history of challenges and problems. The 1800's proved to be one of America's darkest hours. Slavery, a very common practice in the Antebellum South, made equality and diversity among the people almost impossible. Fortunately, hundreds of thousands of brave men, lead by President Abraham Lincoln, decided that the country could not survive with such apparent inequalities between the people. This clash between the North and South on the issue of slavery lead to the Civil War, a struggle to end slavery, create equality, and preserve the Union. Although America has come a long way in embracing diversity and equality, many believe we have not made the proper efforts that are necessary to remedy our situation; an overall lack of diversity in our communities.
Organizations also struggle with diversity and diversity management. Further, organizations experience many issues involving diversity and its affect on productivity. This has lead to a complex and fascinating topic in the field of Organizational Psychology; what is the history and roots of cultural diversity in organizations and how have they affected productivity? Furthermore, how have (or have not) organizations changed with regards to diversity and productivity in organizations? It is this contrast that will be the subject of this review. What is the relationship of cultural diversity and productivity in organizations currently, and what can be expected in the future?
In order to understand the theories and history of organizational diversity, it is imperative to define it in terms of the organization. “As Triandis, Kurowski, and Gelfand (1994, p. 790) note in their comprehensive review of diversity, all humans tend to be ethnocentric such that in intergroup relations people tend to use any attributes that happen to be available (are most salient) to make these categorizations, even if these attributes are trivial or explicitly random…Therefore, for our purposes, the effects of diversity can result from any attribute people use to tell themselves that another person is different (Williams and O'Reilly, 1998).” From this definition, we can begin to see some of the challenges and problems that cultural diversity may have in organizations. These challenges include; perceiving differences rather than similarities in group members, not sharing goals, ideals, expectations, and having different social networks and employees as friends and colleagues. Maintaining divergent perspectives within an organization may indicate workplace diversity internal dissonance. In order to remedy these challenges and various problems that organizations have with cultural diversity, we need to understand what they are and how they can be addressed by an organization.
Gaining an appreciation of dynamics between individuals within an organization is a topic of great interest to many I/O Psychologists. Understanding how employees socialize, interact, and work together can be shown to have effects on productivity and efficiency within organizations. When an organization has a highly heterogeneous group (for our case, a group with high cultural diversity) what kind of problems may this create? To start with, groups that are high in diversity may see major differences among each other not just in terms of beliefs or ideals, but color and ethnicity as well. This difference between group members has been a topic that has presented many problems in the past. As previously stated, individuals tend to focus on differences between each other rather than similarities. When organizational members focus on differences, drastic consequences on productivity and on the organization as a whole may be observed. Individuals may not cooperate, build positive working relationships, and may not be as effective when working on projects together. This has made cultural diversity in the workplace difficult for organizations.
Conversely, groups may be homogenous, comprised of members that have little or no cultural diversity. (All white employees, all black employees, etc…) These groups have shown that they have fewer differences among each other especially in terms of physical attributes. Can we deduct that homogenous groups will face fewer challenges then their heterogeneous counterparts? If they do not have to worry about their differences, would they experience greater comfort among employees and possibly greater productivity?
Does this mean that companies should not promote cultural diversity? Research has shown that it may not be that simple, “researchers have argued for diversity, when properly used, can be beneficial for organizations and ultimately improve performance, also known as value in diversity hypothesis (Cox, Lobel, & Mcleod, 1991).” From this, we can see that, depending on the individuals and the organization, there may be very different outcomes of productivity due to cultural diversity. For this reason, the topic warrants exploration and in depth study to understand the differences and effects of cultural diversity in various organizational environments.
One of the interesting research dilemmas in organizational diversity is the discrepant result found in laboratory and applied research. Lab research found that diversity in classrooms or laboratories have been beneficial for productivity. “First, most of the research that supports the claim that diversity is beneficial for groups has been conducted in the laboratory or classroom setting, instead of examining intact working groups within an organizational context. In the laboratory the results sometimes show that group diversity can improve the quality of a given decision or the creativity of an idea (e.g. Kent &McGrath, 1969; Harrison & Muir, 1995).” Contrastingly, applied research in the work place has found a much different outcome. “The intact research on intact working groups on the other hand, paints a less optimistic view of the effects of diversity and group functioning. It provides evidence of the possible dysfunctional aspects of heterogeneity in groups, include increased stereotyping, in-group/out-group effects, dysfunctional conflict, and turnover (e.g. Linville & Jones, 1980; Snyder & Boothe, 1993; Pelled, 1996; Tsui, Egan, & O'Reilly, 1992).”
What is the cause in these discrepancies between these two research studies? One possible reason could be that when individuals compete in an organization to attain respect and monetary benefits, race may become a trait that is more apparent. Competition may accent the differences between individuals causing increased tension and hostility in the work place. Much of the research conducted in classroom or laboratory setting often forces individuals to work as collective units or teams. This may have the effect of making differences between individuals more obsolete and less obvious. Concentrating on a team goal objective may help mitigate differences in race and ethnicity, making race a benefit in these settings, a benefit by having more input from more diverse sources.
It is crucial for I/O psychologists and practitioners alike to study these differences in research findings. In order to understand why diversity is such a complicated issue in the workplace, it is important to understand the differing variables that cause these different outcomes in research. Understanding differences may allow us to create situations in research and applied settings where diversity is beneficial.
Before continuing with cultural diversity topics in the work place, it is crucial to understand what organizational performance is and how it effects an organization. “Performance is defined by three criteria: (1) the productive output of the group meets or exceeds the performance standard of customer, (2) the social process used in carrying out the work maintain or enhance the capability of the members to work together on subsequent team tasks, (3) the group experience satisfies rather than frustrates the personal needs of the group members (Hackman, 1987).” This definition states performance is the degree to which an organization can deliver a product to the customer in the most efficient and effective manner possible. Anything that compromises the productivity or efficiency of the process or product is viewed as detrimental to the organization. In addition to understanding the general theories and ideas about organizational performance and what they truly mean, it is important to recognize the evolution and the changing standards in the work place.
Social and societal factors may have a significant impact on performance in the work place. Such changes may include the interests and objectives of the public. An example may be the Ford Motor Company wanting to change the performance of their products (cars and trucks) to become more efficient in a time where gas and oil prices are skyrocketing. Recognizing these social values and financial hardships the public may have is essential in creating a product that society values.
Another issue that affects performance goals in an organization are economic factors. Companies are looking to make products effective using the least amount of money and resources. Efficiency, the most output for the least input, is a primary objective that organizations strive to attain. In times of recession, slow business, or economic disparities, it is essential for companies to achieve high efficiency in order to survive economic waves that our country encounters.
So where does cultural diversity fit into performance and why should organizations care about how it affects them? The truth is that organizational psychologists face a serious dilemma. How do we attain cultural diversity in the work place while simultaneously maximizing work performance? Organizations are inherently interested in profits and growing the company. If cultural diversity in the workplace has been shown to hinder unity between employees and profits for the organization, why should it be encouraged? It is the job of I/O Psychologists to explore these different issues concerning work place performance and cultural diversity in order to understand how effective performance and cultural diversity can be compatible.