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Secure organizational trust. In diverse workforces, people share more feelings and ideas. Tensions naturally arise. Demonstrate your commitment to diversity by acknowledging tensions—and resolving them swiftly. Why should companies concern themselves with diversity? Until recently, many managers answered this question with the assertion that discrimination is wrong, both legally and morally. But today managers are voicing a second notion as well.

A more diverse workforce, they say, will increase organizational effectiveness. It will lift morale, bring greater access to new segments of the marketplace, and enhance productivity. In short, they claim, diversity will be good for business. Yet if this is true—and we believe it is—where are the positive impacts of diversity? Numerous and varied initiatives to increase diversity in corporate America have been under way for more than two decades. Rarely, however, have those efforts spurred leaps in organizational effectiveness.

This article offers an explanation for why diversity efforts are not fulfilling their promise and presents a new paradigm for understanding—and leveraging—diversity. It is our belief that there is a distinct way to unleash the powerful benefits of a diverse workforce. Although these benefits include increased profitability, they go beyond financial measures to encompass learning, creativity, flexibility, organizational and individual growth, and the ability of a company to adjust rapidly and successfully to market changes.

And that will come only when senior managers abandon an underlying and flawed assumption about diversity and replace it with a broader understanding. We soon found that thinking of diversity simply in terms of identity-group representation inhibited effectiveness. Organizations usually take one of two paths in managing diversity.

In the name of equality and fairness, they encourage and expect women and people of color to blend in. Or they set them apart in jobs that relate specifically to their backgrounds, assigning them, for example, to areas that require them to interface with clients or customers of the same identity group. African American M. In those kinds of cases, companies are operating on the assumption that the main virtue identity groups have to offer is a knowledge of their own people.

This assumption is limited—and limiting—and detrimental to diversity efforts. Diversity should be understood as the varied perspectives and approaches to work that members of different identity groups bring. The new understanding of diversity involves more than increasing the number of different identity groups on the payroll. And in doing so, they are able to bring more of their whole selves to the workplace and identify more fully with the work they do, setting in motion a virtuous circle. Certainly, individuals can be expected to contribute to a company their firsthand familiarity with niche markets.

But only when companies start thinking about diversity more holistically—as providing fresh and meaningful approaches to work—and stop assuming that diversity relates simply to how a person looks or where he or she comes from, will they be able to reap its full rewards. Two perspectives have guided most diversity initiatives to date: the discrimination-and-fairness paradigm and the access-and-legitimacy paradigm.

But we have identified a new, emerging approach to this complex management issue. This approach, which we call the learning-and-effectiveness paradigm, incorporates aspects of the first two paradigms but goes beyond them by concretely connecting diversity to approaches to work. Managers can learn to assess whether they need to change their diversity initiatives and, if so, how to accomplish that change.

The following discussion will also cite several examples of how connecting the new definition of diversity to the actual doing of work has led some organizations to markedly better performance.

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The organizations differ in many ways—none are in the same industry, for instance—but they are united by one similarity: Their leaders realize that increasing demographic variation does not in itself increase organizational effectiveness. They realize that it is how a company defines diversity—and what it does with the experiences of being a diverse organization—that delivers on the promise. Using the discrimination-and-fairness paradigm is perhaps thus far the dominant way of understanding diversity.

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Leaders who look at diversity through this lens usually focus on equal opportunity, fair treatment, recruitment, and compliance with federal Equal Employment Opportunity requirements. Prejudice has kept members of certain demographic groups out of organizations such as ours. As a matter of fairness and to comply with federal mandates, we need to work toward restructuring the makeup of our organization to let it more closely reflect that of society.

We need managerial processes that ensure that all our employees are treated equally and with respect and that some are not given unfair advantage over others. Although it resembles the thinking behind traditional affirmative-action efforts, the discrimination-and-fairness paradigm does go beyond a simple concern with numbers. Companies that operate with this philosophical orientation often institute mentoring and career-development programs specifically for the women and people of color in their ranks and train other employees to respect cultural differences.

Under this paradigm, nevertheless, progress in diversity is measured by how well the company achieves its recruitment and retention goals rather than by the degree to which conditions in the company allow employees to draw on their personal assets and perspectives to do their work more effectively.

The staff, one might say, gets diversified, but the work does not. What are some of the common characteristics of companies that have used the discrimination-and-fairness paradigm successfully to increase their demographic diversity?


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Our research indicates that they are usually run by leaders who value due process and equal treatment of all employees and who have the authority to use top-down directives to enforce initiatives based on those attitudes. Such companies are often bureaucratic in structure, with control processes in place for monitoring, measuring, and rewarding individual performance.

And finally, they are often organizations with entrenched, easily observable cultures, in which values like fairness are widespread and deeply inculcated and codes of conduct are clear and unambiguous. Perhaps the most extreme example of an organization in which all these factors are at work is the United States Army. Without doubt, there are benefits to this paradigm: it does tend to increase demographic diversity in an organization, and it often succeeds in promoting fair treatment.

But it also has significant limitations. The company should operate as if every person were of the same race, gender, and nationality. Not only does the discrimination-and-fairness paradigm insist that everyone is the same, but, with its emphasis on equal treatment, it puts pressure on employees to make sure that important differences among them do not count. Moreover, if she were then to defend her opinion by citing, let us say, her personal knowledge of the ethnic group the company wanted to reach, she might risk being perceived as importing inappropriate attitudes into an organization that prides itself on being blind to cultural differences.

Workplace paradigms channel organizational thinking in powerful ways. And it also keeps people from identifying strongly and personally with their work—a critical source of motivation and self-regulation in any business environment. Like all the examples in this article, the company is real, but its name is disguised.

Indeed, other organizations had even begun to use the firm to benchmark their own diversity programs.

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Women and people of color were hired and charted on career paths toward becoming project leaders. High performers among those who had left the firm were persuaded to return in senior roles. The member management committee, once exclusively white and male, included five women and four people of color. Additionally, Iversen had developed a strong contingent of foreign nationals.

It was at about this time, however, that tensions began to surface. Senior managers found it hard to believe that, after all the effort to create a fair and mutually respectful work community, some staff members could still be claiming that Iversen had racial discrimination problems. But where they saw racial discord, we discerned clashing approaches to the actual work of consulting.

Our research showed that tensions were strongest among midlevel project leaders. Surveys and interviews indicated that white project leaders welcomed demographic diversity as a general sign of progress but that they also thought the new employees were somehow changing the company, pulling it away from its original culture and its mission. Common criticisms were that African American and Hispanic staff made problems too complex by linking issues the organization had traditionally regarded as unrelated and that they brought on projects that seemed to require greater cultural sensitivity.

For instance, minority project leaders had suggested that Iversen consultants collect information and seek input from others in the client company besides senior managers—that is, from the rank and file and from middle managers.

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Some had urged Iversen to expand its consulting approach to include the gathering and analysis of qualitative data through interviewing and observation. They urged Iversen Dunham to recognize and address the subjective aspect of its analyses; the firm could, for example, include in its reports to clients dissenting Iversen views, if any existed.

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For their part, project leaders who were women and people of color felt that they were not accorded the same level of authority to carry out that work as their white male peers. Moreover, they sensed that those peers were skeptical of their opinions, and they resented that doubts were not voiced openly. Meanwhile, there also was some concern expressed about tension between white managers and nonwhite subordinates, who claimed they were being treated unfairly.

But our analysis suggested that the manager-subordinate conflicts were not numerous enough to warrant the attention they were drawing from top management.

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We believed it was significant that senior managers found it easier to focus on this second type of conflict than on mid-level conflicts about project choice and project definition. It was relatively easy to diagnose problems in light of those concepts and to devise a solution: just get managers to treat their subordinates more fairly. In contrast, it was difficult to diagnose peer-to-peer tensions in the framework of this model. Yes, they were related to identity-group affiliations, but they were not symptomatic of classic racism.

Remember, we were asked to assess what was supposed to be a racial discrimination problem. Instead, the company needed a cultural shift—it needed to grasp what to do with its diversity once it had achieved the numbers. If all Iversen Dunham employees were to contribute to the fullest extent, the company would need a paradigm that would encourage open and explicit discussion of what identity-group differences really mean and how they can be used as sources of individual and organizational effectiveness. Companies need open and explicit discussion of how differences can be used as sources of individual and organizational effectiveness.

In the competitive climate of the s and s, a new rhetoric and rationale for managing diversity emerged. If the discrimination-and-fairness paradigm can be said to have idealized assimilation and color- and gender-blind conformism, the access-and-legitimacy paradigm was predicated on the acceptance and celebration of differences.