Arbeit, Demografie

Diversity Management and the Business Case

29.11.2007 | HWWI Research Paper | von Michael Fischer

Managing for diversity is a management strategy that intends to make productive use of (ethnic and other) differences between individuals. It is based on the premise that – at least if they are well managed – diverse teams will produce better results and diverse companies will gain market advantage. In contrast to other employment equity policies, diversity management is primarily driven by the "business case", i.e. by the argument that diversity and/or its management will increase organizational efficiency and profitability. With diversity management as a business practice becoming more and more popular in Europe, the question of whether this policy actually delivers the business benefits its advocates promise, becomes increasingly relevant to anyone involved in the discussion and implementation of employment policies relating to ethnic and other minorities. An examination of the literature, however, shows that there is no unanimous answer regarding the business benefits of diversity and its management. While for many advocates of diversity management the business case seems to be rather self-evident, academic research on the effects of diversity provides mixed and inconclusive results and has led critics to see a "mismatch between research results and diversity rhetoric" (Kochan et al 2003: 5). This paper will first describe the characteristic features of diversity management and its benefits as described by its proponents, and give an overview of the way in which diversity management is implemented. Then the business case for diversity is examined. This will include a discussion of research results regarding the effects of diversity upon performance and a discussion of intervening variables that will influence this impact. Finally I will examine the relevance of the question about performance-related diversity effects for the business case for diversity management. I will argue that this relevance is limited as the business case for diversity management and the business case for diversity are two interconnected, but different issues.