ORGANIZATIONAL DIVERSITY: HOW CAN IT AFFECT FIRM PERFORMANCE?

Organizational diversity: How can it affect firm performance?

Organizational diversity: How can it affect firm performance?

Introduction

While many organizations have adopted diversity, others still consider it as only an issue of compliance with lawful requirements. In more latest years, the outlook of diversity has altered to a more strategic concept. Many present business leaders accept as factual that diversity has significant presentation benefits. Shifting demographics in the United States show that the community is evolving increasingly more diverse. In alignment to more competently understand and cater to the needs of the quickly increasing base of few consumers, businesses must have a more diverse workforce. (Arredondo, 2001)ity in the workforce can be a comparable benefit because distinct viewpoints can help exclusive and creative approaches to problem-solving, thereby increasing creativity and discovery, which in turn leads to better organizational performance.

Discussion

Researchers suggest that diversity provides benefits to organizations, including: the ability to attract and retain the best talent available; reduced costs due to lower turnover and fewer lawsuits; enhanced market understanding and marketing ability; greater creativity and innovations; better problem solving; greater organizational flexibility, better decision making; and better overall performance.(Benest, 2001) These benefits have the potential to affect organizational performance and the bottom-line.

Organizational performance

There is great debate in the performance measurement literature regarding whether the use of objective or subjective measures provides the most valid results. Both types of measures carry with them advantages and disadvantages. Objective measures tend to be more concrete but are often limited in scope to financial data. They often limit the breadth and scope of organizations that can be included in a study since organizations from a single industry are needed for valid comparison purposes with objective measures.

Subjective measures on the other hand lack concreteness or reproducibility, but often provide the researcher with a richer description of the effectiveness of an organization with respect to their competitors. Subjective measures allow a broader range of organizations to be compared within a single study. Researchers are not confined to studying comparable organizations from only a single industry. Thus the generalizability of the findings is bolstered by using subjective measures. (Arredondo, 2001)

Subjective measures also include the perceptual component of analysis. This slight shift in thinking is particularly important to this research project. We not only want to understand what the employee thinks of diversity but also what the employee thinks of the firm's performance and how these two components might be related. Our research thus uses perceptual measures of performance as well as diversity. (Benest, 2001)

When defining firm performance it is important to consider a wide variety of potential organizational performance measures. This research considers firm performance relative to the competition from multiple organizational perspectives including quality, productivity, market share, profitability, return on equity, and overall firm performance.

Increasing Awareness Of Diversity And The Benefits Of Diversity To Leaders

Diversity programs have been implemented in many multinational organizations, primarily, in an effort to improve working relationships between white males, whose relative numbers continue to decrease, and demographically different ...