What is Diversity Management?

Diversity Management is a branch of Human Resources Management. It adopts specific actions and strategies to promote diversity in the workplace and to benefit from the creation of a diverse workforce. These include hiring employees from all backgrounds, with unique individual characteristics, attitudes and skills.

According to The Global Diversity Report carried out by Oxford Economics, in the US, both gender and ethnic diversity decrease sharply at the managerial level: of the 1.5 million chief executives in the US, just one-quarter are women, and only one in 10 are ethnic minorities. Nevertheless, the truth is that Diversity Management regards many other issues, not only the misrepresentation of minorities at the management level. However, this example shows that the companies’ organisation does not sufficiently reflect our society’s heterogeneity.

Our society is changing, but “the face of power doesn’t change,” said journalist and brand strategist Arwa Mahdawi. “The boardroom and management still look the same,” Mahdawi stated.

Some more facts: According to the Gender Diversity Index Report, women comprise one third of board members in STOXX Europe 600 companies: 28 companies have a female CEO, and only 7% of Chairs of Boards are women. On the other hand, a study provided by the German Expert Council on Integration and Migration states that in Germany, people with German-sounding names are more likely to be called for job interviews than people with Turkish-sounding names. There is still a long way to go.

Diversity Management begins already with the recruiting process. It is easy to identify the reason for discrimination when people with disabilities, different beliefs, sexual orientations and from different ethnic backgrounds are underrepresented within the companies’ staff.

Often, applications from candidates of a certain age also quickly end up on the rejected applicants pile. Therefore, by implementing Diversity Management Strategies, companies can make sure they recognise a candidate’s true potential and hire the most suitable and skilled one.

Do Companies Properly Practice Diversity Management?

Diversity Management has a longer history than many believe. The concept arose in the USA in the early 1960s. Today, Diversity Management is an integrated part of many American companies.

In other countries, however, things can look very different. In Germany, for example, Diversity Management strategies are also well known, but companies rarely actually adopt them. In 2011, four out of five companies started to consider Diversity Management important for the company’s success. This data emerges from the study “Diversity & Inclusion – a business investment” provided by Roland Berger. Seven years later, according to the study run in 2018 by PageGroup, around 63% of German companies were dealing with the topic of Diversity Management. Nevertheless, very few companies have taken concrete measures so far.

However, cultural awareness of diversity is rising within the companies, especially by realising that its downside is discrimination. Managing diversity can be complicated. It takes time, resources and energy. The offer of Diversity Training Programs in companies is often still welcomed with eye-rolling.

Wrong approaches to diversity can even reinforce prejudices. Many confuse Diversity Management Strategies with a “lift to the top [of the corporate ladder] for employees belonging to minority groups,” says Mahdawi. This is not true at all.

What Are the Objectives of Diversity Management?

Diversity Management Strategies are gaining more and more importance within the Corporate Culture. “Not only because it is the right thing to do, but also because [having a diverse workforce] is more fruitful,” claimed Arwa Mahdawi.

According to a study run by McKinsey, the job performance of diverse teams is 35% higher than that of homogenous teams. Besides, teams that consist of 50% women and 50 men generate 41% more profit. Moreover, heterogeneous teams are proven to be more creative.

Diversity Management aims at making optimal use of the existing skilled workforce in the labour market. This allows companies to pursue various goals:

To Decrease Employee Turnover Rate

A high turnover in the company often indicates a high level of dissatisfaction among employees. Companies can improve the working environment by increasing diversity and inclusion efforts and by hiring employees according to cultural fit.

To Improve Innovation Capability

Long-established companies sometimes struggle with the lack of innovation. Heterogeneous teams help here, too. It is proven that they have a more creative problem-solving process than the homogeneous ones. Since a diverse workforce brings a wider variety of perspectives and skills to the table, this results in diverse teams having more creative approaches.

To Conquer the International Market

If companies have not yet been able to gain a proper foothold in the international market, intercultural problems may be responsible. Employees of different ethnic backgrounds and with different skills can help to better understand international customers’ needs.

To Fight the Skilled Labour Shortage

The shortage of skilled workers is a well-known issue to the companies, and it will become even more visible in the future due to demographic change. Companies will have a competitive advantage if they make sure to hire the best employees today.

Which Solutions Does Diversity Management Provide?

Diversity Management does not provide quick solutions to complicated problems. Adopting Diversity Management strategies takes time and effort. The first step for successful implementation of Diversity Management is efficient communication, recommends expert Arwa Mahdawi.

Having open communication about it – whether at the management level or among the employees – is where the real change begins. For Diversity Management to be really effective and not just remain a buzzword, the company’s leadership must adopt it by a shared vision.

Leadership has to share the same values and principles beyond the decision to implement Diversity Management. Otherwise, undertaken measures will remain just a facade. Therefore, it is recommended to write down the company’s guidelines and to make them public within the company.

Diversity Management starts within the Human Resources branch. HR staff should even pay attention that job advertisements are written in an inclusive and non-discriminatory manner. The HR staff can then continue with the Blind Hiring process.
Instead of reading through applicants’ resumes, HRs can send out anonymous aptitude tests and arrange interviews only with the candidates that obtained the best scores. In this way, companies can find the most talented employees and make sure that appearance, gender or ethnic background do not play a decisive role in the recruitment process.

Sceptics often imply that Diversity Management overlooks job performance. We can overturn this assumption by using aptitude tests which, on the other hand, take into account only the skills. Since the labour market is lacking in a skilled workforce, as this report commissioned by The Open University shows, this is a great method for a company to find talents and thus increase its competitiveness.

The Most Effective Measure Is Promoting Authentic Diversity

Diversity Management does not start and end with an inclusive recruiting strategy. Having a recruitment process run by an equal opportunities officer, establishing cross-departmental collaboration and well-functioning mentoring programs, as well as providing diversity training programs are also sensible measures. Other suggested measures include, for example, teaching intercultural skills and shaping job announcements according to the cultural fit of the company.

The best measure to undertake is to shape a diverse workforce. That is when the real dialogue and exchange of creative ideas occur. Even the best workshop for breaking stereotypes will not be as effective as honest human interaction. When the company promotes open communication culture, employees can freely address any issues. That contributes to the organic change of the company.

Each employee can contribute themselves to shaping a diverse workforce. They can do it, for example, by referring friends or acquaintances that they consider suitable for an open position within the company. Or by standing up for colleagues who belong to a minority.

Sometimes speaking out in a meeting seems harder than expected. But it is worth it.

How Do Companies Implement Diversity Management?

The cornerstone of an inclusive company is non-discriminatory recruiting. If the company’s attitude gears toward diversity, there won’t be complaints against employee referrals. Moreover, through an employee referral program, companies make sure that new employees share the company’s values. Due to this recruiting method, the workforce itself takes part in the recruiting process.

One of the advantages of this recruiting channel is that the referrals are often very different from each other. The employees share the company’s job offers on their social networks or via word-of-mouth with their friends and acquaintances and refer them for the open positions. This allows the company to reach a broader group of targeted skilled workers.

Such employee referral programs can also significantly contribute to boosting employee motivation. This is due to the employees realising that the company trusts them and values their referrals. Moreover, they receive a monetary reward for each successful referral. The company, in turn, hires skilled employees. It is a win-win situation for everyone involved in the recruiting process.

To implement a successful employee referral program, strong support is recommended. Firstbird can help here. The company is specialised in the HR sector, and our mission is to connect people with their vocations. Moreover, we are aware of how important Diversity Management is.

Firstbird helps large companies such as Edeka, Caritas, Deloitte and Ubisoft, and many more discover talent through employee referrals. The implementation of the employee referral program is the first step toward Diversity Management and, with Firstbird’s support, it can be carried out quickly.

Learn more about the Firstbird digital employee referral program in a demo.

Stumbling Blocks in the Correct Implementation of Diversity Management

The so-called Tokenism of Diversity Management is a dangerous downside of incorrect implementation. We often see a phenomenon similar to Tokenism in the media: some talk shows invite a black person or a person with a migration background to join the discussion just when its topic is “racism”. Their participation is used as a sort of alibi. It should show that they are not racist, homophobic or sexist!

In the workplace, Tokenism is criticised for being a showcase for diversity since the company is not really engaged in promoting inclusion to employees from diverse backgrounds. For example, we speak about Tokenism when some companies hire employees from diverse backgrounds in key roles, while the company itself keeps having a discriminatory and non-inclusive working environment. An authentically diverse corporate culture can not be developed this way.

Often, a “female employee” or a “migrant employee” has a mere representative function of the categories they are part of. During the hiring process, the company does not take into account their individuality. Moreover, these employees often do not have the opportunity to speak only for themselves. The company sees them as spokespersons for their category. For example, evidence of that is the following sentence: “That was pretty good for a woman!”

Arwa Mahdawi draws attention to this problem with her “Rent a Minority” project. Many people did not recognise the site as a satire because it closely depicts what happens in the real world. Mahdawi states that this is the evidence of how many companies actually deal with Diversity Management. Instead of addressing structural inequalities in meaningful ways, to some companies diversity is just something to show off, affirms Rent a Minority’s staff.

Hire the Best Fitting Employees According to Good Diversity Management Strategies

“We must not only learn to tolerate our differences. We must welcome them as the richness and diversity which can lead to true intelligence,” Albert Einstein once said.

An inspiring example of a successful Diversity Management is “Blind Auditions” at orchestras. Orchestra musicians traditionally used to be white men. The introduction of blind auditions brought about change among orchestra’s chairs: candidates played behind a curtain so that their appearance, their origins and their gender stayed hidden.

The results were the following: women gained 46% of the chairs. Previously, they had only filled around 25% of the roles. Thus, blind auditions allowed orchestras to choose the most skilled musicians rather than those who most closely matched their idea of the best fitting musician. This is exactly the result companies can achieve by implementing Diversity Management: to hire the most skilled and fitting candidate for an open position.