Why business owners have to manage diversity effectively?

Diversity means the similarities and differences that people do have based on their gender, backgrounds, cultures, ages, sexual orientations, religion, education, functions, tenure, etc. (Bauer & Erdogan, 2009). It is about uniqueness; how different people view the world. It is also about recognizing, respecting, and valuing differences based on where people are from, their ethnicity, gender, age, race, religion, disability, and sexual orientation.

Managing diversity effectively is beneficial to the company because it impacts both the stockholders and the stakeholders. They are impacted through profits gained, company performance, employee satisfaction, and community support. The following are the benefits of managing diversity effectively. On decisions that lead to higher profits, effective management of diversity brings in higher creativity in decision making, due to having a conducive environment that allows diverse opinions, perspectives, and experiences. With a diverse team, more options and possibilities can be considered, hence making creative and quality decisions. Making quality decisions due to diversity have a direct impact on a company’s performance and achievements of goals. Secondly, on customers, effective management of diversity enhances better customer service. This is because there will be a good understanding of customer needs as well as a good understanding of customer behaviors. Having a diverse workforce helps a company to produce products or provide services that can be well received and consumed by diverse customers. This also helps in ensuring customers are well served despite their difference in the way they look, talk, walk, or their gender, age, and what they believe in. 

Moreover, to employees, effective management of diversity produces a more satisfied workforce. This is because employees usually tend to feel good and become loyal to the company if they feel they are being well and fairly treated. Companies with effectively managed diversity usually have a very low employee turnover rate, with happy and satisfied employees who can work to ensure they help a company to perform well and achieve the goals. Effective management of diversity has a very positive outcome on stock prices. It has been proven that investors use the diversity information to judge how well the company is performing. This usually leads to a company having high stock prices as a reward for embracing and promoting diversity. Additionally, in terms of litigation expenses, due to having satisfied employees, the company won’t have to spend money and resources trying to defend themselves and the image of the business in litigation cases. This is because there will be no complaints or little complaints filed against the company. Lawsuits are usually expensive, including attorney fees and settlement costs, which may reach millions of dollars.

Managing diversity effectively and Understanding differences is important because it impacts both the shareholders and the stakeholders of the business. Regardless of gender, race, age, or background, people should communicate well with others they work with to achieve business goals. Managing diversity effectively benefits from diversity because the company will achieve higher creativity, better customer service, higher job satisfaction, higher stock prices, and lower litigation expenses.

References

Bauer, T., & Erdogan, B. (2009). Organizational Behavior. New York: Flat World Knowledge, Inc.

Victorian Government. (2019, July 30). What do we mean by diversity and inclusion? Retrieved from Victorian Government: https://www.vic.gov.au/dpc-diversity-and-inclusion-strategy-2019-2021/what-do-we-mean-diversity-and-inclusion