The changing workforce demographics have significantly increased
the importance of managing diversity at Australian workplaces Effective
diversity management is argued to be a potential source of competitive
advantage. Diversity has several dimensions such as age, gender, marital
status, religion, race, nationality, work styles, cultures, values and
so on. This paper focuses on one particular aspect of diversity
'multi-culturalism'. This paper presents a case study of a
privately owned small retail organisation in South Australia, popular
amongst ethnic minorities as a migrant friendly employer. Practitioner
and scholarly literature advocates certain best practices in the area of
HRM for effective diversity management. The aim of the case study is to
examine the extent to which the recommended 'best practice'
work force diversity management practices were implemented in the HRM
area that makes it successful. It was found that the diversity
management practices in the HRM arena were informal and typically
managed by the owner. The owner/manager is able to create a positive
multicultural environment without systematic application of best
practices prescribed by the experts. It would be reasonable to say that
this small business has developed its own HR management practices
suitable to its requirements and the constraints that small businesses
generally face as compared to medium or large business.
Keywords: Workforce diversity, multicultural, human resource
management, equal employment opportunity, affirmative action, case
Workforce diversity is recognition of the fact that people differ
in many ways, visible or invisible, mainly age, gender, marital status,
social status, disability, sexual orientation, religion, personality,
ethnicity and culture (Kossek, Lobel & Brown 2005); different
attitudes, needs, desires, values and work behaviours (Rosen and
Lovelace 1991; Deluca and McDowell 1992; Morrison 1992). Demographic
trends indicate that the composition of workforce in the western world
is becoming increasingly diverse and consequently human resource
managers face more and more issues in relation to workforce diversity in
organisations today. Diversity has several dimensions such as age,
gender, marital status, religion, race, nationality, work styles,
cultures, values and so on. This paper focuses on the
'multicultural' aspect of diversity and its management in the
human resource management functions. Multiculturalism is one of the most
important dimensions of diversity, more so in Australia where people
born overseas constitute 24% of the Australian population (ABS 2004).
There is a strong argument in literature that workplace diversity
is a potential source of competitive advantage for business if managed
effectively (Cassell 1996). There is evidence that a diverse workforce
has better-quality solutions on brainstorming tasks, displays more
cooperative behaviour, relative to homogenous groups, and can raise
organizational efficiency, effectiveness and profitability (McLeod,
Lobel and Cox, 1996; Wilson and Iles 1999). Full utilization of the
skills and potential of all employees may enable access to a changing
marketplace by mirroring increasing diverse markets (Cox & Blake
1991; Gardenswartz & Rowe 1998; Iles 1995) and improving corporate
image (Kandola 1995).
Practitioner and scholarly literature advocates certain best
practices in the HRM arena for effective diversity management. These
practices are believed to enhance employee and organisational
performance (Adler 1986; Deluca & McDowell 1992; Morrison 1992;
Fernandez 1993; Hall and Parker 1993; Schreiber et al. 1993; Grace
1994). However, literature on HR diversity management largely ignores
the needs and constraints of small businesses and pertains to the
resource rich larger organisations. Small organisations normally find
themselves unable to implement the best practice as they are more
suitable to large organisations. For examples small businesses may not
have extensive budgets for staff recruitment, to advertise and to hire
Small organisations are a vital contributor to the overall
performance of the Australian economy (Wijewardena & Tibbits 1999).
This paper presents the findings of a case study of a privately owned
small retail organisation in South Australia. This particular
organisation is popular amongst people from multicultural background as
a migrant friendly organisation. The aim of the case study is to examine
the extent to which diversity management practices were implemented in
the HRM area that make it successful. The findings of the study could
contribute towards development of best practices for small businesses to
manage diversity effectively. The paper first provides a brief
background to the development of diversity management, then discusses
the best practices as found in HRM literature, and goes on to present
the findings of the case study followed by discussion and conclusion.
2. DIVERSITY MANAGEMENT
Historically, diversity management has its roots in EEO and AA
legislation and has been used to provide a legally defensible position
against charges of discrimination. A firm with a diverse workforce could
argue in legal proceedings that they were not guilty of discrimination
since their workforce demographics represented the local community.
Although diversity management underpins a commitment to EEO and AA, the
actual scope of diversity management is a lot broader (Kossek et al.
2005). First, diversity management seeks to overcome labour market
segregation through addressing inequalities based on individual
differences, such as race, gender, class, etc. (Horwitz,
Bowmaker-Falconer & Searll 1996). Second, diversity management
extends beyond legal requirements and emphasizes on valuing and taking
advantage of individual differences, mainly cultural pluralism, in order
for all people to maximize their potential.
Other objectives include mainly creativity, flexibility, employee
attraction, employee retention and better marketing capabilities.
Through effective diversity management, diverse teams aim at achieving
greater innovation and creativity, enabling them to outperform
homogenous teams (Cox & Blake 1991; Richard 2000). Whilst there is
evidence that short-term progress may be affected by conflict and
communication problems, by bringing a wider range of perspectives to
problem solving, diverse teams foster speed and innovation and produce
substantially higher quality solutions over whole development cycles.
Moreover, by bringing equality to employment relations, organisations
tend to attract and retain an adequate and qualified workforce. Cox and
Blake (1991) argue that the benefits of effective diversity management
include reducing turnover, absenteeism and attracting the best
candidates as the labour market shrinks. They argued that heterogeneous
organisations that valued diversity would have higher quality group
decision making, greater creativity and innovation, more organizational
flexibility due to the possession of divergent thinking, greater ability
to attract and retain best talent and greater marketing capability.
2.1 Diversity Management and HRM
HRM is a set of distinctive activities, functions and processes
that are directed at attracting, directing and maintaining an
organization's human resources (Lado & Wilson 1994). The HR
function has grown substantially over the past few decades and now
covers the whole array of people management processes. There are
different views about the nature of HRM and there exists an enormous
variety of HR practices adopted by various organisations (Boselie, Dietz
& Boon 2005). Nevertheless, it is widely recognized that the key
practices of HRM includes recruitment and selection, training and
development, performance management and compensation (Shen & Edwards
Recruitment is defined as searching for, and obtaining, potential
job candidates in sufficient numbers and quality for the organisation to
select the most appropriate people to fill its jobs (Goss 1994). A
number of 'best' practices have been recommended for
management to use (Morrison 1992; Schreiber et al. 1993). These include
a number of attributes that work to promote diversity when using
traditional standards and procedures to recruit people. Diversity
selection practices might involve developing a job description and
selection process that reflect diversity needs criteria, specific to
individual positions. Such criteria should cover duties, language
fluency, qualifications and experience needed and should comply with
antidiscrimination legislation. Other practices include attracting
applicants by including advertisements in ethnic language press in
addition to daily newspapers, presence of diverse managers on selection
committees and implementing techniques that allow diverse people to
answer questions to the best of their ability and potential. When
interviewing, the focus should be on the skills required for the
position and not on other factors such as country of origin, skin
colour, and race (Morrison 1992; Schreiber et al. 1993).
A number of studies in Australia and overseas have indicated that
steps and criteria followed by organisations to select and test
applicants are inadequate or inappropriate for a number of applicants
including minorities (Loveman & Gabarro 1991; Rosen and Lovelace
1991; Morrison 1992; Schreiber et al. 1993). For instance, blanket
literacy and language testing in recruitment are increasingly used for
language and literacy levels which bear no relationship to the specific
job requirements. Interviews are also important factors in the selection
process. However, researchers have found that interviewers have little
or no understanding of techniques suitable for interviewing applicants
from different ethnic backgrounds (Caudron 1990; Morrison 1992).
2.1.2 Training and Development
Training is a systematic acquisition and development of the
knowledge, skills and attitudes required by employees to adequately
perform a task or job or improve performance in eth job environment
(Goldstien 1980; Latham 1988; Schuler et.al. 1992; Tharenou 2006).
Effective management of diversity in the area of training and
development warrants specific consideration to be given to identifying
training needs within the framework of the organisation's goals and
objectives. Roberson, Kulik and Pepper (2003) suggest that organisations
should systematically conduct a training needs assessment and design
programs in accordance. Education and training should be tailored to the
specific needs of the organization, division, level, team or individuals
and can be technical or non-technical.
Workplace diversity impacts organizational outcomes indirectly
through effects that begin at individual level (Rynes & Rosen 1995;
Kossek, Lobel & Brown 2005). Employers also face the challenge of
integration of diverse workforce with the dominant workforce. Diversity
awareness has been found to be an effective tool to foster effective
diversity management (Society for Human Resource Management Diversity
Surveys 1998, 2000, 2002). It is aimed at building a common
understanding of the value of diversity, assisting in building social
cohesion so that it improves individual and organizational outcomes.
Rynes & Rosen (1995) found in their study that seventy five percent
of trainees, who took diversity training, left the training with
positive diversity attitudes, while only nine percent trainees actually
entered with favourable attitudes. Ford & Fischer's (1996)
review states that training programs aim to change employees'
attitudes (affective and cognitive) and behaviours to 'value
diversity' and reduce subtle forms of discrimination and exclusion
that hinders effective working relationships.
Different strategies have been suggested by researchers at
individual level. Mentoring is one strategy targeted at the individual
level. It involves one successful senior staff mentor who is attached
with a junior member of staff from minority group. The objective of
individual mentoring is to enable underrepresented demographic groups to
move through the glass ceiling- the traditional, invisible barriers to
advancement say Ragins (2002) and Thomas & Gabarro (1999). Pettigrew
(1998) suggest that developing 'affective ties' with out-group
members which increases information and empathy regarding the out-group
members and fosters social connections, reduces prejudice. Kossek, Lobel
and Brown (2005) conclude from their literature review that HRM
practices such as diversity training and mentoring have the potential to
change attitude and career outcomes. Kossek et al. (2005) suggest that
external facilitators involved in diversity training may help to achieve
higher levels of productivity in a shorter time given work group
diversity can lead to increased conflict among members in the
Professional development and career planning is another area that
requires careful attention while designing diversity management
policies. If the HR practices concerning career progression do not
effectively reflect diversity issues, diverse employees would have
negative perceptions of the whole process (Richard & Kirby 1999).
Organizations should ensure providing equal opportunities for promotion
and personal development to all employees. Diverse workers should be
regularly included on panels that evaluate, select, and promote
managers. The problem of assessing candidates for promotion who are
'different' can be reduced if some of the decision makers are
non-traditional managers. Direct intervention by top-level executives in
the promotion process is sometimes necessary to ensure that diversity
goals are not overlooked. The main point is that candidates must not
only be recruited, but they must be adequately prepared to take on
demanding managerial assignments (Loden & Rosener 1991; Morrison
1992). Scholars have suggested that mentoring is another strategy for
managing diversity. A successful senior mentor is matched with a more
junior women or minority employees, with the objective of enabling
under-represented demographic groups to move through the invisible
barriers and advance in their careers (Ragins 2002).
2.1.3 Performance appraisal systems
Carroll and Schneier (1982) describe performance appraisal systems
as identification of measurement factors or criteria against which to
evaluate performance, measurement of performance against such criteria,
review of performance levels attained by individuals, and development of
subsequent performance. A performance appraisal system should be
objective not subjective, relevant to the job and the company, and fair
to all employees and offer no special treatment (Schuler et al. 1992).
Effective performance appraisal practices in the area of diversity aim
to build diversity in decision making bodies. For instance, minorities
could be included on panels that evaluate, select and promote employees.
The problem of assessing promotion involving candidates who are from
non-dominant population can be reduced, if some of the decision makers
are from ethnic backgrounds. It can also help to create objective
criteria and fair performance appraisal practices. When conducting an
appraisal, the language of appraisal should focus on the
individual's performance not personality. If this general rule is
violated, "multicultural" employees could be adversely
affected. Fulkerson and Schuler (1992) argue that appraisal should be as
culturally neutral as possible. Effectiveness of the practices can be
ensured by relating performance appraisal efforts to compensation. For
instance, when assessing each manager's performance, actions taken
by the manager to hire and promote minorities and women can be used as
performance criteria (Morrison 1992; Sessa 1992).
Remuneration is the activity by which organisations 'evaluate
the contributions of employees in order to fairly distribute, direct and
indirect monetary and non-monetary rewards' (Schuler et al. 1992).
These rewards are base pay, performance related pay, cost of living
adjustments, incentives, perquisites and other benefits. Remuneration
serves to attract potential job applicants, retain and motivate good
employees, administer pay within legal regulations, facilitate
organisational strategic objectives, and reinforce and define structure
(Armstrong & Murlis 1994).
Diversity management in remuneration requires complete application
of the principle of equal pay and performance-based pay system.
Moreover, the compensation structure, the wage determinants and the
benefit schemes should be designed not only on common principles but
also considering each individual in terms of their ability, knowledge
and skill. An individual-driven remuneration system facilitates
individual lifestyles and further promotes diversity.
Pay inequality is a main cause of job dissatisfaction and
de-motivation and therefore a major HR diversity issue (McLoughlin &
Carr, 1997; Van den Bos, Lind, Vermunt, & Wilke 1997). Kramar has
been supported by Dagher et al (1998) who reported that diversity
practices in remuneration are widely used by Australian organizations.
Only a small percentage of companies tie manager's rewards or
compensation to the achievement of diversity goals (Allen et al. 2004).
The main problems that affect culturally diverse employees are
inequality of income and bonuses, job recognition, promotion and
assignment of responsibilities (Jackson et al. 1992; Grace 1994).
Researchers have indicated that a lack of, or differences in career
planning, and organisational discrimination may be responsible for the
loss of promotional opportunities that would better prepare
nontraditional managers for senior-level positions (Loveman and Gabarro
1991; Schreiber et al. 1993; Kogod 1992).
Recognition is seen, however, as a necessary component in
developing leaders for the future. Hence, it is important to recognise
individual performance so more significant roles are given to minorities
appropriately, and more challenging assignments are allocated in return
for their improved performance (Rosen and Lovelace 1991; Schreiber et
al. 1993). Morrison (1992) stated that the tendency in some
organisations is to develop non-traditional managers until they are
guaranteed success in a position. Traditional managers still prefer to
give non-traditional employees responsibilities on a 'trial'
period before they become permanent. This could certainly create
mistrust, decrease morale, and demotivate the nontraditional workforce.
Cabezas and Kawaguchi (1988) have stated that an income gap exists
between white managers and minority groups for the same amount of work
and qualifications. This was found to be related to barriers, creating
some discrepancies in recognition. Prejudice, for instance, may
contribute to an unwillingness to pay higher salaries, grant benefits,
or give minorities freedom to do their jobs without constant monitoring.
Studies by Goldin (1990) and Gerhart and Rynes (1991) revealed that
there is still reluctance to give nontraditional managers the same
authority and rewards that go to their white male counterparts. Unequal
pay, low salaries, fewer benefits, and slower promotions, for example,
are documented in both staff and management jobs. While research
conducted overseas indicates that there appears to be some amount of
discrimination in the type of rewards multicultural employees receive,
the position in Australia has not yet been established.
This is a qualitative and exploratory study of a small retail
organisation located in South Australia which deals in household
electrical appliances. The organisation made an interesting case for
study because it is reputed for its culturally diverse workforce and is
known as a 'migrant friendly' amongst multi-cultural
communities. The objective was to examine which diversity management
practices are implemented in the HRM area that effective.
Focus group discussion technique is an effective and efficient way
to gather rich qualitative data in natural settings. All of the
employees were invited to participate in separate focus group
discussions--for employees from dominant culture and for employees from
multi-cultural background. Multi-cultural employees defined as those
employees whose country of origin is not Australia and who have
different ethnic background. Ten multi-cultural and nine employees from
the dominant culture volunteered to participate in focus group
discussions. Separate focus groups were conducted for Australian and
multi-cultural employees so that the participants of each of the groups
felt comfortable to freely express their views. There were two focus
groups of Australian employees (4 participants in each group) and two
focus groups of the employees from multicultural background (4
participants in each group). Semi-structured interviews were also
conducted separately with the two senior managers- the white goods
manager and the brown goods manager, and with the CEO/owner of the firm.
3.1 The organisation
The case study organisation is a privately owned small retail
organisation located in South Australia, and is a franchise of a
national company dealing with household electrical appliances. It
employs 30 employees on average depending upon the 'retail
season'. At the time of this study over 50% of the staff was from a
multi-cultural background from a number of nations such as Bosnia,
Poland, Vietnam, El-Salvador, Thailand, India, Brazil, Nepal, Korea and
Malaysia. The organisation has a turnover of 44% which is lower than the
70% benchmark set by the head office of the company.
The organisation has 3 levels of hierarchy. There is a CEO/owner, a
sales manager, a warehouse manager and an administration manager. There
are senior sales staff on the shop floor who report to the sales manager
and supervise rest of the sales staff and cashiers. The administration
manager and his administrator provide customer service as well as
information on retail management systems to the rest of the employees.
The HRM functions are managed by the owner/CEO himself.
The participants were between the age of 23 years and 46 years. The
period of employment within the organisation varied between 3 months to
4. FINDINGS AND DISCUSSION
4.1.1 Recruitment and selection
The organisation relies heavily on 'Word of Mouth' and
community networks to attract potential applicants. The products and
services are advertised within the community newspapers. It is felt that
there is no need to formally advertise any positions as, "We
don't advertise, and there is no special way, I think people are
always looking for a job or a new job that minimises the need to
advertise", said the CEO. The organisation accepts applications on
ongoing basis and maintains a database of applicants. Job seekers
complete a job application form available at the shop along with their
current resumes. The form includes information about the type of job
being applied, skills possessed and contact details. As and when a
vacancy arises the applications are short-listed and the candidates who
are successful in the first round are interviewed by the CEO. No formal
job criteria is used but the CEO stated that some of the factors he
takes into consideration are- prior retail experience; other work
experience; how far the candidate lives from the shop; job history, how
often jobs are changed; the attitude; communication skills and English
language proficiency. "You look at what jumps out on the
application, after 20 years of experience you have a gut feel and you go
with it", said the CEO. "I do consult my managers before
making an offer but in a more informal way than any formal panel".
The sales managers substantiated what the CEO said. The focus group
members of sales assistants believed that the selection process was fair
and was based on skills, experience and language proficiency.
There is an informal need based adhoc approach towards the
recruitment and selection process. "I don't think there is a
master plan to recruit migrants, we just have a good number of
multicultural employees" said the sales manager.
4.1.2 Training and Development
The organisation has an induction program for new employees. The
induction is brief and assisted by the induction handbook. New employees
are briefed about their role, duties and responsibilities. They are
introduced to the staff and shown around the organisation. The induction
handbook is elaborate and contains guidelines on customer service,
information on organisation structure and hierarchy, merchandising,
roles and tasks, personal development, the compulsory training on manual
handling, occupational health and safety risks and safe work guidelines.
The employee is expected to read and understand the information provided
and sign a declaration that they have read and understand the
information. Technical training called 'E-learning' is
provided on the use of the information system software used by the
organisation. All new employees are on a three month probation period
after which their performance assessment would determine whether their
services will be continued or terminated.
Although there is a strong contingent of culturally diverse
employees, the organisation does not provide any cultural sensitivity or
diversity training for employees from dominant culture and from
multicultural background. "We are successful in providing a safe
working environment where people from different backgrounds can work
together and be happy." The nature of retail business in Australia
is such that a high staff turnover is expected. The high employee
turnover seems to be a deterrent to any further investment in training.
The career management plans are in place for the more senior
employees who have worked in the organisation for longer period and
intend to continue to work there, as it relates to the issue of high
turnover. The organisation has recently introduced a buddy system for
staff development where a more experienced and senior staff is attached
to the junior staff who intend to pursue a career in retail.
4.1.3 Performance Appraisal
The performance appraisal is typically an informal process where
the CEO provides individual counselling and receives and provides
feedback to the employees. There is no formal performance review
process. The process is the same for all employees. The appraisal
includes the ability of employees to work in a multicultural work
environment. The multi-cultural employees were not expected to perform
at higher level then the Australian employees in order to secure their
4.1.4 Remuneration and Compensation
The organisation has a performance based pay system. Everyone is
paid according to the award they fall under. The organisation has a
policy of equal pay for equal work. "The surname does not matter
here, it is around the same basis", said the CEO and the managers
interviewed. It was supported by the employees that the remuneration is
equitable and based on performance and is not influenced by any other
factors. One best practice which is implemented in this organisation is
that all staff are appraised on their diversity performance.
It is clear from the data that the organisation under study manages
diversity within the framework of EEO and AA. The management practices
implemented in the organisation are driven mainly by three factors- the
nature of retail business, the ethos and values of the CEO and owner of
the business and the size of the organisation. The management seems to
have accepted the attitude towards retail as career. "Retail is a
bridge and it is unfortunate", in the opinion of the CEO,
"Most people take up casual and part time jobs and remain casual to
have flexibility, or until they find something better and they move on.
We have many students completing their studies at the universities and
they work part time to earn some money".
The owner has developed a strong belief in the value of diversity
but concedes that this is not a thought out strategy from the start of
the business. It has developed over a period of time. According to
Australian Bureau of Statistics, 24.8% of the total Australian workforce
is born overseas. "We are lucky to have such high coverage of
cultural diversity. We also have a high turnover but this is the nature
of retail business. A reality I have to face", said the CEO.
Diverse workforce is seen as an advantage to the business because
customers feel comfortable talking to people from similar backgrounds.
"It also helps us (the business) understand the customers better
and provide better services". I am proud to say that my store has
the lowest turnover of 40% to 45% amongst all of the franchises.
The informal, ad-hoc and hands-on approach to manage diversity in
HR functions is typical of the small organisations due to the constrains
of their size and resources. Typically the HRM functions are controlled
by the owner / CEO. The small business owner of a firm employing up to
50 employees handles all of the personnel duties himself (Little 1986).
Employee referrals, walk-ins and community networks are used extensively
as recruiting tools (Hornsby and Kuratko, 1990). Training and induction
is quick aimed at speedy returns as the working span of the employee may
be short and not worthwhile to spend resources on extensive training
programs. Remuneration and compensation is consistent with EEO framework
and the equal pay for equal work policy. One thing that is important and
done differently in this organisation is embedding diversity performance
in performance appraisal of all employees. The employees have a clear
understanding of the ethos and values of the leader CEO/ manager.
The management has been successful in creating an environment where
employees are comfortable working together with people from diverse
backgrounds. The multicultural employees appreciate the opportunity to
work and in return feel obliged to do their best. The value in diversity
policy is applied as a top to bottom approach reinforced by the CEO on
continual basis. "We have had occasional inter-group and
interpersonal conflicts in the past but not often. I deal with issues as
and when they happen and may need to make a decision and take action for
the good of the greater", said the CEO. The employees found the CEO
and the managers very fair and equitable in their dealings with staff.
As said by Hambrick (2007) if we want to understand why organisations do
the things they do, or why they perform the way they do, we must
consider the biases and dispositions of their most powerful
actors--their top executives and in the case of small business it will
be the owner of the business.
5. CONCLUSION AND LIMITATIONS
Literature demonstrates a clear correlation between diversity
management practices in HRM and improved employee /organisation outcomes
such as low absenteeism, high morale. This case study suggests a
relatively informal, ad hoc approach to the management of diverse
employees. However, coupled with leadership shown by the CEO, diversity
is accepted and is working very well in this organisation. The best
practices as advocated in literature are relevant mainly to large
organisations and smaller organisations may have to develop practices
suitable to their requirements. This is because of the obvious
constraints due to their limited size and resources. Use of community
networks and word of mouth to attract and recruit staff may be an
effective method of recruitment. It gives confidence to both the
employee and employer, because there is a referee known to both parties.
Embedding diversity performance in performance appraisal sets the
scenario for employees that the organisation is serious about diversity
This study has several limitations. There is potential self
selection bias as the participants in focus groups decided to
participate in the study. More research is required in the area of HR
diversity management in small businesses. Perhaps one of the reasons
that businesses are reluctant to take a more systematic approach to
diversity management is that the evidence of the impact of diversity on
the bottom-line has not been systematically measured and documented for
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Dr. Manjit Monga received her Ph.D. from Panjab Univeristy,
Chandigarh, India. Currently she is a lecturer at the School of
Management, University of South Australia in Adelaide. Her research
interests are in the area of human resource management and
organisational behaviour, management and workplace ethics,
organisational culture, diversity management.
Manjit Monga, University of South Australia, Adelaide, AUSTRALIA