The division of the workforce into distinct categories that (a) have a perceived commonality within a given cultural or national context and that (b) impact potentially harmful or beneficial employment outcomes such as job opportunities, treatment in the workplace, and promotion prospects – irrespective of job-related skills and qualifications (Mor Barak 2014, p. 136).
Organizations have become more diverse over the past decades, among others, due to globalization and women entering the labor force. The increasing reliance on teamwork and loosening of hierarchical boundaries have further created an increase in the extent to which individuals who differ from each other work together. Another main impetus for diversity in organizations was the Civil Rights Act of 1964 in the USA, which prohibited all employment practices that discriminated on the basis of race, color, religion, sex, or national origin (age and disability were added later). Subsequent equal employment opportunity (EEO) and affirmative action (AA) policies and programs led to a gradual increase of minorities in organizations and, hence, an increase in diversity (Kochan et al. 2003).
In spite of the increasing representation of minorities in the workforce, over time, a number of unintended consequences of the antidiscrimination policies and programs became apparent. There was an increase in immigration from developing countries, beneficiaries of AA policies faced backlash effects, and in particular, in times of job insecurity, there was a strong opposition from anti-affirmative action groups (Graham 1998). Lawsuits involving reverse discrimination pointed at the shortcomings of EEO and AA policies and initiated their decline in the 1990s. In face of these shortcomings, companies, and diversity consultants shifted their rhetoric on diversity by developing a business case rationale that emphasized how diversity could be of value to the organization (Kelly and Dobbin 1998). International companies soon adopted the business case rationale and caused it to spread across the globe (Lorbiecki and Jack 2000), resulting in the adagium in organizations as well as the popular press nowadays that diversity enhances organizational performance (Eagly 2016).
With its focus on the positive consequences, the business case perspective is clearly grounded in utilitarianism (van Dijk et al. 2012a). Specifically, the business case perspective suggests that diversity adds value to organizations in a number of ways (Kochan et al. 2003; Lorbiecki and Jack 2000). First, diversity has been argued to lower the likelihood of litigation due to accusations of discrimination. Second, diversity is expected to increase customer understanding and access to customers. Third, diversity is suggested to enlarge the talent pool and enhance the extent to which the full capabilities of all employees are used. These three arguments have been readily accepted. However, the final and fourth business case argument for diversity is the most crucial, as well as the most debated. It suggests that diversity improves performance because diversity is supposed to provide a richer pool of knowledge, information, and perspectives (Ely and Thomas 2001; van Knippenberg et al. 2004). Although numerous studies have aimed to validate the claim that diversity enhances performance, several recent meta-analyses (e.g., Pletzer et al. 2015; Post and Byron 2015; van Dijk et al. 2012b; see also Rhode and Packel 2014) show mixed findings.
An important reason why research on the relationship between diversity and performance is inconclusive is that the exact process of how diversity affects performance is unclear. Whereas prior studies suggested that diversity can positively affect performance when diverse employees are able to discuss and integrate their knowledge, information, and perspectives (van Knippenberg et al. 2004), more recent studies suggest that the main benefit of diversity may lie in cuing employees that varied knowledge, information, and perspectives may be present (Loyd et al. 2013; Srikanth et al. 2016) and in coordination benefits by indicating whom is an expert (van Dijk et al. 2017). Further, diversity is known to negatively affect performance when the differences create divides and causes conflicts between employees, which inhibit the extent to which members’ collaborate and discuss and integrate task-relevant information (van Knippenberg et al. 2004). Research on the exact processes and determinants of how and when diversity positively affects performance thus is ongoing (for a recent review, see van Dijk et al. 2017), and it may take a while before more conclusive statements can be made.
A large number of scholars have criticized the instrumental take of the business case perspective on diversity (e.g., Noon 2007; Zanoni et al. 2010). Based on the deontological argument that no individuals ought to be treated merely as a means, they pointed out that the business case perspective does not celebrate diversity in itself, but only if and as long as it adds value to an organization (van Dijk et al. 2012a). In light of the mixed findings regarding the relationship between diversity and performance, the business case perspective indeed suggests that organizations are better off excluding minorities in situations where diversity negatively affects performance. By indicating that power inequalities continue to exist in societies and organizations that create discrimination and exclusion in organizations (Plaut 2010), these scholars promote an equality perspective that contends that organizations should pursue diversity to empower minority groups and alleviate inequalities (Noon 2007). There is among proponents of the equality perspective some debate about how equality in organizations can best be created, but the equality perspective in general suggests that EEO and AA programs are still needed. Specific examples of more accepted measures toward equality are transparent recruitment practices, flexible work arrangements, and alternative career paths (Benschop and Verloo 2011). An example of a more radical measure to alleviate inequality is the installment of quota, such as Norway’s law that requires at least 40% women on the board of public limited companies. Whereas such gender quotas have been effective in increasing women’s representation, they are contested for a number of reasons, including that they presumably discriminate against men, can stigmatize quota beneficiaries (and potentially women at large), and may decrease performance (Leslie et al. 2014).
Although the business case perspective and the equality perspective essentially thus both plea for more diversity, there are some marked differences between the two (van Dijk et al. 2012a). First, the business case perspective addresses diversity from the perspective of the organization and therefore arrives at recommendations that mainly promote the interests of the organization. The business case perspective thus tends to be more considerate toward outcomes that are favorable for organizations in comparison to outcomes that are favorable for individuals. In comparison, the equality perspective approaches diversity from the perspective of the individual employee and asks what would serve individuals’ interests based on fundamental human rights. As such, the equality perspective tends to promote the interests of the individual over that of organizations. Second, the utilitarian nature of the business case perspective provides a contingent argument (Noon 2007), meaning that diversity should only be pursued when it adds value to the organization. In contrast, the equality perspective provides a deontological argument by suggesting that it may be necessary to recruit, select, or promote minorities, regardless of the consequences for the organization.
Managing Diversity: A Focus on Inclusion
In theory, the business case perspective and the equality perspective are difficult to reconcile due to their contrasting moral underpinnings (van Dijk et al. 2012a). However, because both perspectives favor diversity, organizations tend to draw from both perspectives, such that most diversity management practices represent a blend of both perspectives by promoting diversity for disparate reasons (Pendry et al. 2007; Tomlinson and Schwabenland 2010). A risk here is that the inconsistent arguments backfire and either lead to a disbelief in the value of diversity or inhibit an integration of minorities into an organization. In fact, there are several examples where diversity management practices aimed to foster intergroup relations between minorities and majorities but created opposite effects by enhancing stereotyping, prejudice, and discrimination (Leslie et al. 2014; Pendry et al. 2007).
Accordingly, managing diversity appears to be a daunting task. A number of studies on inclusion (e.g., Mor Barak et al. 2016; Nishii 2013; Pless and Maak 2004; Shore et al. 2011) however suggest that creating an inclusive climate improves intergroup relations and may, in part as a consequence, also positively affect individual- and group-level outcomes. Inclusion refers to “the degree to which an employee perceives that he or she is an esteemed member of the work group through experiencing treatment that satisfies his or her needs for belongingness and uniqueness” (Shore et al. 2011, p. 1265). Accordingly, a climate for inclusion is an environment where all employees are treated fairly, are valued for who they are, and are included in the decision-making (Nishii 2013). Initial studies show positive relationships between inclusive climates and various positive outcomes at the individual (Mor Barak et al. 2016) as well the group level (Nishii 2013) and therefore presents a way forward for the business case perspective as well as the equality perspective (for recent reviews, see Dwertmann et al. 2016; McKay and Avery 2015). That leadership plays a pivotal role in creating and sustaining inclusive climates is axiomatic (Shore et al. 2011), but how leaders can and should go about doing that remains to be studied (Nishii and Mayer 2009).
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