Reasons for Growing Interest in Workforce Diversity (Management-1 24April 2021)

Reasons for Growing Interest in Workforce Diversity by the Modern Organisations

There are several reasons for growing interest in workforce diversity by the modern organisations.

The prominent ones are described below:

 

(1) Growth of Service Economy:

In many developing economies, there has been a shift from manufacturing economy to service economy. This has resulted in creation of many jobs in the service industries like hotel and tourism, banking, insurance, financial services, retailing, etc.

 

The jobs require understanding the needs of the customers and taking steps for their satisfaction. It has been observed that companies can communicate better with their customers through employees who are similar to their customers. (Language, Gender etc)

 

(2) Globalization of Markets:

With the emergence of globalized markets, business firms around the world compete for customers by offering choices unavailable to them domestically. With more options to choose from, customers have more power to insist that their needs and preferences be satisfied. (E.g., Call Centres)

 

To satisfy them, firms have to get closer and closer to their customers. Some MNCs have established a strong local presence while others have forged strategic alliances (e.g., Maruti Udyog Limited with Suzuki of Japan). Either way, diversity must be managed to create and sustain competitive advantage in the market.

 

(3) Mergers and Strategic Alliances:

For the successful management of mergers and strategic alliances, workforce diversity must be managed effectively. The main source of problems in mergers, and acquisitions, and strategic alliances is differences in corporate cultures of the two entities.

 

Corporate cultures may differ in many ways, such as the customs of conducting business, how people are expected to behave, and the kinds of behaviour that get rewarded. Both workers and managers need to understand and capitalize on diversity as companies combine their efforts to offer products and services to customers in far-flung markets.

 

(4) Increasing Role of Work Teams:

For survival and growth, modern organisations follow many strategies like innovation, quality improvement, cost control, product differentiation. Such strategies require work teams in the organisation in place of the traditional job roles.

 

It has been found that work teams promote greater flexibility, reduced operating costs, faster response to technological change, fewer job classifications, better response to new values (e.g., empowerment of lower-level workers, increased autonomy and responsibility) and the ability to attract and retain talent. Teams also facilitate innovation by bringing together experts with different knowledge bases and perspectives.

 

(5) Changing Composition of Workforce:

The composition of workforce in the Indian organisations is changing. They are employing more of women, physically handicapped persons, and persons belonging to scheduled castes and scheduled tribes. Moreover, workforce, today, is more mobile. The organisations have also people coming from different states and cultural backgrounds.

 

Cultural diversity can be used to its advantage by the organisation. The employees must be taught to understand and value different cultures, languages, orientation, etc. so as to serve the customers belonging to different cultural and ethnic backgrounds.

 

(6) Managing Labour Market:

The rapidly changing labour market is also responsible for injecting diversity at the workforce. Increasing demand for knowledgeable workers and also more and more women taking up jobs add an important dimension in workforce diversity.

 

(7) Legal Requirements:

Under the provisions of the Constitution of India, certain portion of jobs in the government and public sector are reserved for scheduled castes, scheduled tribes, other backward classes, physically challenged, etc. It inevitably leads to diversity in the workforce in the concerned organisations.