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Government and Economy

Diversity Management Improving Business Performance

Mami Taniguchi,
Professor,
Faculty of Commerce, Waseda University

Diversity ---- Surface and Deep Level

Diversity is often misunderstood as merely the difference in gender, age, race, and ethnic group. However to be precise, the various attributes of each individual lie in the dimension of diversity. For instance, most human attributes such as place of residence, family structure, habits, affiliate organization, social class, education, communication style, management style, sexual preference, occupation, age, generation, martial status, interests, personality, mother tongue, skin color, religion, learning strategy, appearance, income, way of thinking, nationality, place of origin, position at work, height, physique, years employed, type of employment (full-time, part-time, short-time), fashion, social economic status, physical ability, etc. are all included in this dimension of diversity.

Cool Political Attitude

The dimensions of diversity can broadly be divided into two levels; surface and deep levels.

As its name suggests, surface level of diversity can be distinguished by appearance. Examples include sex, age, race, ethnicity, etc.

Deep level of diversity in contrast is difficult to judge from appearance. It includes internal characteristics such as personality, attitudes, habits, values professional background, skill level, etc.

Even the popular definition of diversity includes both these surface and deep level of diversity. "The term diversity refers to the distribution of personal attributes among interdependent members of a work unit. The attributes are those that can be readily detected upon first meeting a person (e.g., age, sex, racio-ethnicity), underlying attributes that become evident only after getting to know a person well (e.g., personality, knowledge, values), and attributes that fall between these two extremes of transparency (e.g., education, tenure). Some of the attributes we consider had direct relevance to the work (e.g., job tenure) while other attributes were only indirectly relevant to the work (e.g., sex)." (Jackson et al 2003).

Readers may well have realized that discussions in Japan center solely around surface level of diversity. This is probably due to the problem of unavoidable changes in the external environment of companies such as decreasing population and the expectations placed on women, elderly persons, and foreigners as potential labor force.

Focusing on Individual Skills and Experience

Expanding the dimension of diversity from superficial to deeper layers reveals the following points; The first is that law is not the only element that draws attention to personnel diversity at the workplace. When looking at surface level of diversity such as sex, age, race, ethnicity, and physical disability, the focus tends to be on observance of law; whether the "Equal Employment Opportunity Law" applies or not, closing up especially on cost incurring aspects to the company such as the need to establish benefit programs for women because "women" equal "people with housework load", "leave, short-time working hours, re-employment accompanying childbirth and nursing". However, by focusing on "deep level of diversity" such as individual skills and capacities, experience, etc., it provides the opportunity to think about what they can offer to the organization.

The second is the fact that deep level of diversity may differ even with the same "surface level". In integrated management based on stereotypes, it is impossible to draw out the best of each individual in the true sense of the word.

Corporate Behavior Causing Unfair Promotions and Leaving a Job

The actions of companies taken towards diversity can be classified into four: resistance, assimilation, separation, and integration. (Taniguchi 2005 see Figure 1 Corporate Actions towards Diversity)
"Resistance" is taking diversity to be a cost and risk, and trying to avoid it by taking no action at all. "Assimilation" is attempting no reforms in the current organization and culture in the aim to observe law and having minorities such as women and foreigners adapt to the current situation. "Separation" is acknowledging differences and using minorities only in areas where these differences exist in the aim to enhance business performance. "Integration" is acknowledging the value of diversity and applying it as a source of reform to achieve competitive superiority. It is with this last "integration" that companies can acquire the benefits of diversity in the true sense of the word.

Matsushita Electric is a representative company adopting the paradigms of "separation" which aims at excellent business performance, and "integration" which aims at enhancing corporate value by using diversity as a resource for reforms. They are however an exceptional company in Japan, since most companies seem to challenge their efforts in the context of "equal work opportunities" and "positive actions".

Of course, not all companies need to work on "integration", in other words diversity, together with organizational reforms. This is because the appropriate behavior towards diversity varies according to the environment placed in such as domain identity and market nature.

The problem here should be the companies advocating "focus on diversity" and "creating corporate value" to the outside world but actually adopting the "assimilation" paradigm without making reforms to their existing organization. This invites unfair promotion and turnover of minorities, and results in such companies blaming failure on the low morale of individual minorities.

Reforms Sought in Existing Organizations

Diversity management is a management approach of improving organizational and team performance, in other words, business performance, making use of diversity.

Most diversity researchers agree on the point that "the existing organization must be reformed in order to enhance business performance using diversity". It has also been emphasized that this is because competitive superiority is acquired not from diversity itself, but because consistency is realized between the external environment promoting diversity and internal systems of the organization which can apply diversity(Dass & Parker 1996).

Companies should therefore not just stop at establishing peripheral systems and policies, but review the whole business process, and take on challenges that make use of the diversity of human resources in the true sense of the word, such as increasing productivity and cultivating new markets by making use of diverse talents.

Mami Taniguchi,
Professor,
Faculty of Commerce, Waseda University

Profile:

Graduated from Kobe University Graduate School of Business Administration Doctorate Program in 1996. After specializing in Hiroshima University Graduate School of Social Sciences (Economics) Management and serving as assistant professor, joined Waseda University Graduate School of Commerce from 2003 (name changed to associate professor in accordance with School Education Law April 2007), and appointed to current position in April 2008. Between 2000 and 2001, served as executive roundtable guest research of U.S. Boston University Graduate School of Organizational Behavior Science. Publications include "Diversity Management" (Hakutou), and joint publication "Gender and Corporate Management" (Toyo Keizai Inc.).