Managing Diversity – Challenges for India Inc
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Transcript of Managing Diversity – Challenges for India Inc
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AIMA-Bosch Limited 34th NATIONAL COMPETITION FOR YOUNG MANAGERS
THEME : Managing Diversity Challenges for India Inc
Team : 1) PRAVIN KUMAR
2) TARUN RAWAT
3) AVNPK CHAITANYA
Organization: INDEPENDENT TEAM
Address: FLAT 371, BLOCK 37, BPCL COLONY, AZIZ BAUG, MAHUL ROAD, CHEMBUR
EAST, NEAR ASHISH THEATRE, MUMBAI, PIN 400074
Tel No : 09324329851
Fax No: (022) 25540486
E-mail : [email protected]
Number of words: 2790
Date of Submission: 05/07/08
Signature of the Team Member:
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MANAGING DIVERSITY CHALLENGES FOR INDIA INC.
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CONTENTS
1. Diversity What does it really mean and how important is it?2. Building Diversity How do you do this?3. Managing Diversity The Pros and the flip side4. Challenges for the India Inc What do you do with the Diversified Workforce?5. Measuring Diversity The Practical side to the theory; DROI (Diversity Return On
Investment)
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MANAGING DIVERSITY CHALLENGES FOR INDIA INC.
AN ABSTRACT
Diversity a reality that we cannot refuse to acknowledge in this world that is getting
smaller by the day. We will, as we go on, realize that Diversity is an advantage for
organizations than a problem as perceived by many. Successful corporations learn to
manage this to their full advantage. By adopting new structure and work practices that
are radically different from those traditional minded management, these organizations
managed to acquire a competitive advantage in the global market place. The whole
purpose of managing diversity is to bring out the best of employees talent, abilities,
skills and knowledge for the benefits of individual employees as well as the well-being of
the corporations. When workforce diversity is well managed, no employee in the
organization feels disadvantaged.
At the first level, the organization has to value and utilize individual and inter-group
differences within its workforce. In order to accommodate these differences, the
organization needs to conduct assessment, training, and interventions that will change
the organizational culture.
With the advent of the New Indian Multinationals, organizations are beginning to have a
very diverse workforce. Changing demographics of the Indian work place indicates that
managing diversity is far from being a passing fad-but is rather a business issue affecting
the bottom line. In an organization, diversity can be defined as the presence of
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employees who differ from each other in terms of age, gender, ethnicity, region,
religion, skill level, race etc. There are various approaches for managing diversity. These
approaches can be applied at the individual level or at the organizational level. The
'individual' approaches to managing diversity include 'learning' and 'empathy.' The
organizational approaches include testing, training, mentoring and the use of alternative
work schedules as some initiatives.
An organization progresses through various stages before it develops into a
multicultural organization. These include the exclusionary organization, the club
organization, the compliance organization, the affirmative action organization, and the
redefining organization. Since most organizations have to employ a diverse workforce,
they must strive to develop into multicultural organizations. A multicultural organization
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is one which is determined to eliminate all forms of social oppression within it and
includes members of various cultural and social groups in the decision-making process.
Given this scenario it is quite a challenge for the evolving India Inc to manage diversity,
not only in the global context but in the national context which is like dealing with
different countries within a country, knowing the regional variation.
Managing Diversity, though not new to Indians who are themselves very exposed to
dealing with many cultures within the country, the term itself has attained new
connotation with the Indian Multinationals crossing the vistas. It is in this context that
we need to clearly outline how the India Inc will need to harness the power of diversity
for an advantage of its own and its hugely talented workforce.
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DIVERSITY WHAT DOES IT REALLY MEAN AND HOW IMPORTANT IS IT?
Diversity, at the outset might seem to be very simple. If it does, then we are actually
looking at its one dimension. There are different levels, or layers of diversity that we will
take a look in this section.
FOUR LAYERS OF DIVERSITY
There is more to diversity than gender and race differences. There are four major
dimensions of diversity: internal, external, organizational and the individuals
personality itself. Each dimension has characteristics that help one identify with
individuals in different ways. The characteristics that make up each dimension are as
follows:
Internal dimensions These characteristics are genetically acquired.
External dimensions These characteristics influence our lives and our value systems,
and contribute to the development of our personalities.
Organizational dimensions These characteristics affect our experiences and work
status, and create inferior and superior cultures and attitudes.
Diversity is not limited to the obvious characteristics of gender and race. Many different
traits characterize an individual. The diversity wheel shown below represents those
traits in terms of four layers of diversity. Each layer identifies a different dimension that
defines who we are. No single element carries more weight than another. The
combination of these elements gives each person a unique personality.
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The combination of personality and internal, external and organizational dimensions
makes people distinctive from each other. As employees get to know others within an
organization, they notice what makes each person unique.
IMPORTANCE OF DIVERSITY
INFORMATIONAL DIVERSITY A POWERFUL TOOL
The researchers found that informational diversity stirred constructive conflict, or
debate, around the task at hand. That is, people deliberate about the best course of
action. This is the type of conflict that absolutely should be engendered in organizations.
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On the other hand, demographic diversity can sometimes whip up interpersonal
conflict. This is the kind of conflict people should fear. "People think, 'I have a different
opinion than you. I don't like what you do or how you do it. I don't like you. This is what
basically can destroy a group.
The third type of diversity is based on goals and values, and it actually generates both
types of conflict. This is the most potentially damaging of all the diversities. Without
value-goal homogeneity, a team can accomplish little. But once a team recognizes and
accepts a goal, it makes problems easier to deal with because each person knows the
intentions of the others are the same.
The importance of diversity has clearly come out in an experiment conducted to
understand the effects of diversity on the throughput. The experiment is shown below.
THE MURDER MYSTERY
In a related lab study in Kelloggs Institute, behavioural scientists looked at the effect
social and informational ties had on how groups shared information. They set up groups
of three people who were told to solve a murder mystery.
In each group two members were social friends. The third member was a stranger. In
half the groups, the friends had a common piece of information and the stranger was
given a piece of unique information essential to solving the problem. In the other
groups, one friend and one stranger had common information, while the other friend
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had the unique information. Which group was more likely to share information more
effectively?
The groups with two friends having common information and the stranger with unique
information did the most productive information sharing. The reason could be that the
two friends know each other and expect that they have similar information because of
their mutual experience. A stranger knows he or she is different and is more likely to
share unique information.
In groups where one of the friends had the special information, the friend suppressed
the informational difference in order to keep social ties intact, researchers speculate.
There are a number of reasons why diversity is fast gaining importance in the current
scenario.
1. Changing Customer Base: For companies to remain competitive in the globaleconomy, the composition of their workforce must reflect their changing
customer and market populations. Companies with a diverse workforce are
better able to market their products and services to an increasingly diverse
market population.
2. Enhanced Financial Performance: Several studies have demonstrated thateffective diversity programs are linked to the company's financial performance:
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A 1997 study by the University of Houston found that companies with diversity
programs performed better than those without such programs.
3. Improved Productivity: Anecdotal information from several companies -including Intel, DuPont, General Motors, Inland Steel and Pitney Bowes - shows
that a more diverse and team-based workforce helps generate new ideas and
increase revenues.
4. Increased Job Satisfaction and Employee Morale: The Families & WorkInstitute's "1997 National Study of the Changing Workforce" reports that, when
looking at a range of issues including equal opportunities for advancement, lack
of discrimination, and respect, "employees in supportive workplace
environments are the most satisfied with their jobs," and "employees whose
workplaces are supportive and responsive to their individual needs are the most
loyal."
5. Decreased Vulnerability to Legal Challenges: Companies that have establisheddiversity programs and management systems to address and resolve potential
discrimination and harassment issues are less vulnerable to lawsuits and
penalties.
6. Enhanced Reputation: A company's ability to be known as a great place to workwith an open and inclusive environment can enhance its reputation in the
marketplace. This inturn leads to increased belief in company culture which
increases its share value.
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BUILDING DIVERSITY
NEW INDIAN MULTINATIONALS
"Infosys to Hire 300 US Grads"
"Infosys to hire from European Universities"
"Infosys Technologies said on Friday that it was recruiting 30 interns from 17 European
technology and business schools as part of its Global Internship Programme InStep.
"We firmly believe that the future success of Infosys lies in its ability to create an
environment that is open to people from different nationalities and ethnicities," --
Infosys Chairman Narayana Murthy
"Talent is imperative in today's economy and the increase in globalisation means the
competition for global talent is rife. At Infosys, we recognise the importance to invest in
skills globally and provide opportunity for future business leaders to understand the
changing dynamics of a flat world." -- Mr Nandan M. Nilekani, CEO, Infosys
Technologies.
Taking this topic to the global playground, above statements are the leading indicators
that companies have a need to build a globally diverse work force. As companies expand
abroad, they will need people with diverse skill sets and with deep knowledge of doing
business in those countries. Employees from home country - say India for example will
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never be able to match the deep knowledge on Brazilian business by a Brazilian. This
makes it essential for companies to hire talent from other countries.
Global IT giants such as IBM and Accenture have already built a multiethnic,
multinational, multicultural work force. Indian IT companies are now starting to do the
same.
India itself has a diverse group of people: Different Religions, Languages, Ethnicity and
lifestyles. India is home to 50+ languages and 200+ dialects. India probably has all the
worlds religions represented and also has people from almost all ethnicity (African,
Caucasian, Aryan, Dravidian, Chinese, Polynesian). Yet a workforce of Indians alone is
not enough. Firms will need people from other nationalities too.
A good thing about India though is that the country and its culture has been diversity
friendly. This creates a suitable base for Indian firms to create a globally diverse
workforce. A diverse work force can create diverse ideas which are superior and that
can provide competitive advantages.
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MANAGING DIVERSITY
Managing Diversity involves those activities that integrate nontraditional employees
into the work force and using their diversity to the firms competitive advantage.
EMPLOYEE DIVERSITY TRAINING
Leaders are beginning to understand that diversity training within their organizations is
a key component to supporting diversity initiatives. Through diversity training, a
company can create a common frame of reference and establish a solid foundation
upon which employees can understand each other and eliminate biases and barriers
that often impede on the companies overall ability to effectively promote a culture of
inclusion.
Companies can offer a variety of flexible training programs to meet the needs of all
employees. However, it is best to avoid one-shot training efforts that stir up emotions
without channeling them in productive directions. Preferably, ongoing training must be
employed that encompasses diversity as only one facet of needed change in the
corporate culture.
MANAGEMENT TRAINING
Training program to focus on diversity training geared specifically for managers,
education in leadership skills and development of personal potential, to transform the
challenge of diversity into an opportunity for inclusion in the business.
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It is not the differences among people, but the emotional reactions to the differences
that can distract employees and reduce utilization. In addition, every executives and
managers performance review to be linked to his/her role in supporting the companys
diversity policies and goals.
EMPLOYEE PERFORMANCE EVALUATIONS
Maintaining a nondiscriminatory, objective performance evaluation system is an
important element of diversity, establishing impartial performance criteria and not
getting tainted by the evaluators personal prejudices promotes a work environment
that values every employee, regardless of his/her age, gender, racial or ethnic
background.
The performance evaluation system should center on five core competencies:
teamwork, leadership/vision, judgment, creativity/innovation and accountability. Rather
than experience or skill set measures to help the business and better support an
objective assessment of performance. Managers, in particular, should be trained how
to offer constructive criticism and feedback.
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The following grid will help us identify the TOWS Threats, Opportunities, Weaknesses,
and Strengths of Managing Diversity as an issue.
STRENGTHS
Greater Creativity Better Problem
Solving
Greaterunderstanding and
flexibility
WEAKNESSES
May lead to sacrificingthe individual for group
fairness
Might be misunderstoodfor reservations and
equal opportunities
THREATS
Resistance to Change Interpersonal Conflict Resentment Backlash
Attrition
OPPORTUNITIES
Malleability of Indianworkforce
Exposure to workingwith varied cultures
within the country
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CHALLENGES FOR THE INDIA INC WHAT DO YOU DO WITH THE DIVERSIFIED
WORKFORCE?
The challenge for the companies is to manage this diversity. The company will now have
to create an environment that is based on appreciation and respect to different ideas,
different points of view, and different opinions - and at the same time minimize friction
within the organization. Once a reputation of being "diversity friendly" organization is
created, it becomes easier to attract talent from other nations and thus create a
perpetually diverse organization. Thus a well managed diverse work force can create
new growth opportunities and innovation that the organization had never imagined
before.
CHALLENGES
The benefits of diversity are not instantaneous. Diversity creates differences and this
often means conflicts. In MNCs, people from different countries tend to form their own
groups and these groups cannot get along easily with each other. The same is applicable
to the work force within a company.
Differences in communication styles, work attitudes, or behavior can create friction
within teams - and when these differences are not controlled, it can cripple a team.
Research has found that a diverse team often goes through an extended period of time
in the storming phase. It becomes important and essential for the management and
team leaders to take concentrated efforts to integrate the team.
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These global mangers are very difficult to find - let alone hire.
To make diversity succeed, a strong and committed leadership is needed. These leaders
who are from top management must understand the benefits of diversity. They must be
committed to create a diverse workforce - by creating suitable staffing strategy and
cultural integration plans.
Leaders must be able to standup to these beliefs and demonstrate their appreciation to
different ideas. A weak leadership or if leaders show any signs of favoritism, inter-group
fights will reign which results in low morale and high employee turnover. And over a
period of time if the problem is not corrected, the company loses its image and that can
turn away customers and potential good employees.
INTEGRATING A DIVERSE WORK FORCE
Integrating a diverse work force is not easy neither it is instantaneous. Intel, Microsoft,
IBM, Accenture etc., have created a high performing global work force by taking a series
of steps over an extended period of time. The same will hold true for Indian firms.
The first and the most essential step in managing diversity is to have commitment from
the top leadership. Leaders of the company should wholeheartedly endorse diversity
and should also create diversity in the leadership cadre.
Second step is to replicate this diversity in all levels of the organization starting from the
top. This implies that the company will now need a global staffing strategy. Few firms
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have gone to the extent of having a policy that mandates it to have at least one woman,
one racial minority employee in each level of the organization.
The third step is to set target for the entire organization. Targets for every
group/division within the company in terms of workforce diversity have to be set. This
will mobilize the middle management to take proactive steps to create a diverse work
force. This should be followed by having a suitable employee rotation program -
wherein employees are encouraged to work in different locations and with different
sets of teams (these teams are diverse teams). A well crafted work rotation program can
create a truly integrated diverse work force.
STEPS IN INTEGRATING A DIVERSE TEAM
CREATE A DIVERSE LEADERSHIP
CADRE
REPLICATE THIS DIVERSITY ACROSS
THE HIERARCHY
SET DIVERSITY IMPLEMENTATION
TARGETS
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MEASURING DIVERSITY THE PRACTICAL SIDE TO THE THEORY; DROI (DIVERSITY
RETURN ON INVESTMENT)
Diversity, as elucidated in the previous sections, needs an investment. To build the
processes, to groom the workforce, to train them each of these steps would require
an investment. For a business, if there is an investment, there has to be return on it. And
Diversity Pays! Executives and other organizational personnel are beginning to recognize
the benefits of calculating the impact of seemingly intangible process like managing
diversity on something as tangible as the bottom-line. Conventional systems
encouraged limited, short-term thinking with respect to managing intangibles. Why do
they do this? Because, expenditures in these areas are treated as expenses than as
investment in assets. In direct contrast to this, investment in buildings and machinery is
capitalized and depreciated over their useful lives.
Consider for instance the following dilemma faced by executives and managers:
Decide whether to invest in 10 crores in hard assets or 10 crores in people. In practical
terms, when an organization invests 10 crores in a building or a physical asset, this
investment is depreciated and earnings are reduced gradually over a 20- 30 year period.
In contrast, a 10 crore investment in people is expensed in entirety (and therefore
earnings reduced by the same) during the current year. For executives and managers
whose pay is tied to this years earnings, the choice of which investment is pretty clear
by now.
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As a result, organizations under financial pressure, tend to invest in physical capital at
the expense of human capital even though the latter may very well generate more
value. This kind of pressure may result in poor decision making behaviour, such as
personnel layoffs, downsizing to generate short-term cost savings. Organizations will
sooner or later realize that people are a crucial source of competitive advantage rather
than an expensive luxury that is to be minimized.
The clear bottom line is this If current accounting methods cannot give diversity
professionals the measurement tools they need, then it is imperative that new tools are
developed to demonstrate diversitys contribution to the organizations performance.
Like any other discipline, diversity must be composed of both solid theory and applied
sciences to gain credibility as a key contributor to organizational performance.
Calculating Diversity Return on Investment:
There are seven steps to calculate Diversity Return-on-Investment:
1. Know what you want to know
Identify a Business Problem Related to the Organizations Strategy Formulate Research Questions Begin with the End in Mind -- Your Report Create the Diversity Measurement Study Objectives
2. Prepare and Collect data
Identify Data Collection Measurement Areas to Check Review Historical Data Conduct Interviews Conduct Focus Groups Analyze data using the Hubbard Diversity 9-S Framework *(See Annexure I) Create or Purchase Evaluation Instruments Survey the Organization
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3. Isolate diversitys contribution
Select a Method to Isolate Diversity's Contribution4. Convert the contribution to money
Identify the Hard and Soft Data Contained in the Diversity Contribution Select a Method to Convert the Hard Data Contribution to Dollars
5. Calculate the costs, benefits and DROI This step will help you:
Identify the Major Cost Categories Identify the Major Benefits Calculate the Benefit-to-Cost Ratio Calculate the Diversity Return-on-Investment (DROI %) Identify the Intangible Benefits
6. Report it to others
Identify the Report Timing / Other Needs Identify Reporting Vehicle(s) Create Report Deliver Report Evaluate Feedback
7. Track and periodically assess progress
Provide follow-up data for analysis and benchmarking purposes Introduce new automated Diversity Measurement Software Systems for
monitoring, tracking, and reporting results
Introduce a companion survey development software tool and its statisticalanalysis capabilities.
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ANNEXURE I
THE 9 S FRAMEWORK
The 9-S framework is adapted from the McKinseys famous 7-S model to understand
organizational variables that build corporate capability and pinpoint the causes of
Organizational Malaise.
The McKinsey model references seven variables that can be leveraged to make
organizational change easier: Strategies, Structures, Systems, Style, Skills, Staffing and
Shared values. Add to these, the two more variables that play an important role
Shared Vision and Standards. To effectively manage diversity, all of the variables within
the model must be examined to ensure their complete alignment with the
organization's diversity goals and to understand the options for increasing each
variable's effectiveness.