Effects of Diversity on Organizational Outcomes: Literature Review

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Effects of Diversity on Organizational Outcomes: Literature Review

Differences between individuals of group of organizations in any characteristics like race, ethnicity, gender, and age refers to diversity (Olsen and Martins, 2012). diversity is any dimension that can be used to differentiate groups, workers, and people from the others. That means people should respect for and appreciation of differences in ethnicity, gender, age, national origin, education, and religion (GÖKÇEN, 2019).

Some researchers found that diversity has both positive and negative effects of demographic diversity on organizational outcomes (see Milliken & Martins, 1996; Van Knippenberg & Schippers, 2007; and Williams & O’Reilly, 1998). other researchers have proposed that diverse grows the ideas, perspectives, and knowledge that are fundamental as inputs into creative processes and decision-making as a result, enhancing performance (Williams and O’Reilly, 1998).

There are two arguments concerning with the forms of diversity:

One study discusses the effect of racial and gender diversity on business performance from two competing perspectives. The value-in-diversity perspective makes the business case for diversity, the argument that a diverse workforce generates better work outcomes compared to homogenous workforce. Diversity is helpful to business because it offers a direct return on investment with a commitment to increase corporate profits. Also, diversity allows companies to think outside the box, so it is connected to business success. This process improves an organizations creativity, performance, and problem-solving. As well as, the scientists believe that diverse teams may outperform homogenous ones in decision making because they process information more carefully.

In contrast, the diversity-as-process loss perspective argues that diversity can be counterproductive and doubts the benefits of diversity. This view emphasizes that in addition to the division of nation, diversity leads to conflict and problems that reduce the effectiveness of the organization and profitability. Briefly, this view display that diversity hinders group functioning and will have negative impacts on business performance (Herring & Cedric, 2009).

Other study said that the diversity matters research showed that more diverse companies implement better for the most important reasons recruit the best talent, improve the decision-making process, and increase employee satisfaction. Also, companies with greater level of diversity obtaining better performance.

As well as, diverse workforce creates better business outcomes relative to a homogeneous one. Because it gives a direct return on investment, promising greater corporate profits and earnings so, diversity is thus good for business. Companies and organizations with greater level of diversity attains better performance. Organizations also have more work to do on their talent pipeline to attract, develop, mentor, sponsor, and retain the next generations of diverse leaders at all levels. But with the rewards of diversity set to increase, investing now is the best plan. (Assets.mckinsey.com, 2019).

This paper agrees with the argument said that one form of diversity isn’t enough. More than one form of diversity is important to business due to increase the creativity, improve the work process and increase the profitability. Also, more diverse organization perform better than those with one form of diversity. As well as, when organizations have multiple forms of diversity, they can foster innovation and creativity through a greater variety of problem-solving approaches, perspectives, and ideas. Also, more diverse organizations have more staff able to change, helping them to develop faster.

More diverse companies are better able to gain top talent and develop their customer orientation, decision making, and employee satisfaction leading to a virtuous cycle of increasing returns. Diversity that transcends gender and race such as age diversity as well diversity of experience such as a cultural fluency is likely to achieve a level of competitive advantage for companies that can attract and retain these diverse talents. Diversity is also important because we increasingly live in a global world that has become deeply interconnected. It should come as no surprise that more diverse companies and institutions are perform better than those that are less diverse (Assets.mckinsey.com, 2019).

Diversity is useful to businesses because it provides a direct return on investment with a promise to increase corporate profits. Also, diversity permits companies to think outside the box, so it is related to business success. This process develops an organizations creativity, problem-solving, and performance. As well as, the scientists believe that diverse teams may outperform homogenous ones in decision making because they process information more carefully (Herring & Cedric, 2009).

For examples:

This paper discusses the relationship between gender and age diversity of the board and four types of innovation, included product, process, organizational, and marketing. The results show proof of the impact of board diversity on all types of innovation except process innovation. This paper finds a positive relationship between gender diversity on boards and marketing innovation, and a negative relationship between gender diversity and product innovation. Age diversity shows a positive relationship with product innovation, and a negative impact one on organizational innovation. So, the two types of diversity here support the organization and makes each one of diversity is integral to other (Galia and Zenou, 2012).
This paper aims to explore the relationship between culture, ethno-linguistic diversity and national innovativeness. The paper found that culture and ethno-linguistic diversity are positively associated with national innovation (Puia and OforiDankwa, 2013).
This paper discussed the impacts of gender and ethnic diversity on the performance of employees in a selected higher education institution in South Africa. The study was performed to determine whether gender and ethnic diversity influences the performance of employees in a higher education institution in South Africa. The results display that gender diversity and ethnic diversity are positively and significantly related to employee performance (Zhuwao et al., 2019).
Unprecedented movement of labor across borders and globalization of business have created organizations that comprise a mixture of people from many different cultures, age, gender, race origins and education backgrounds. The aim of this study was to locate the relationship between workforce diversity and employee performance in public universities in Kenya. The study found that age diversity, gender diversity, race diversity and education background diversity affect employee performance positively and majority of the employees are positive about workforce diversity practices in public universities (Mande and Awiti, 2019).

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