The Business Case

for Managing
Cultural Diversity
 Managing Cultural Diversity:
The Big Picture

In 1998-99 the Organisation for Economic Development and Cooperation (OECD)

conducted a global study of business and government organisations that identified
three key characteristics of excellent, effective organisations. (Bengtsonn, 1999)
The Macro
Environment
How might cultural diversity
influence your business
environment? Every business
operates within a broad macro
environment, which is commonly
analysed in terms of trends and
situations in four categories:
political, economic, social and
technological. These trends are
beyond the control of individual
enterprises.
Category
List of relevant trends in each
category in which cultural
diversity
is or might become influential.
Political e.g. immigration policy, changes in
source countries, numbers and
categories of immigrants, foreign trade
agreements
Economic e.g. interest rates, exchange rates,
personal disposable income, wage
rates, recession, boom, globalisation,
industry trends
Social e.g. ageing population, multicultural
communities, increased job
/Cultural mobility, increasing workforce diversity
Technological e.g. IT, robotics, nanotechnology,
communications, materials
Cultural Diversity and Business
Challenges
• Complying with equal opportunity, safety and anti-
discrimination regulations
• Competing for talent and overcoming skills shortages
• Adapting to the realities of increased workforce and
labour market diversity
• Managing and developing knowledge and innovativeness
• Managing workplace and customer relationships
• Developing and maintaining good community relations
• Meeting increased workforce expectations of conditions
and opportunities
• Marketing to and serving culturally diverse domestic and
overseas customers
• Competing in a culturally diverse international business
environment
Effective management of diversity - including cultural diversity - involves
identifying and addressing the human factors relevant to your general
business and specific project processes in three categories:

• Organisational Factors
• Compliance Factors
• Market Factors
ORGANIZATIONAL
FACTORS
The main organizational factors are:

1. Organizational Development
2. People Management
3. Knowledge Management
4. Product & Services Development
5. Customer Service System
ORGANIZATIONAL FACTORS

1.Organisational Development
The business case for including the management of cultural
diversity in the Organisational Developmentprocess is that it is
the central business function for making strategic and
business plans work. Competitive enterprises factor diversity
into organisational development strategies because diversity –
including cultural diversity – has been proven to strengthen
strategic planning and contribute to competitive advantage
ORGANIZATIONAL FACTORS

2. People Management
Attraction and Teams and International HR
Retention Teamwork Management

- reduce annual - Increased awareness - Wider choice of potential

workforce turnover of cultural factors overseas markets resulting
- saving money, - improves capacity of from increased cultural
retaining skills all members of the team competence.
- enhancing their to contribute. - flexibility in modes of
reputation in their - facilitates more entering overseas markets
industry. mobility between teams
and sections.
ORGANIZATIONAL FACTORS

3. Knowledge Management
is the range of practices involved in identifying, creating,
continuously expanding, improving and sharing the
knowledge, experiences and insights of members of the
organisation.
The learning organisation or knowledge organisation is
one which finds the most efficient ways of sharing
knowledge among workers to build its knowledge as a
strategic capability.
ORGANIZATIONAL FACTORS

3. Knowledge Management
Learning and Training Innovation
Development
- Cross-cultural training - Managing cultural
- Providing learning improves workplace diversity as part of a
opportunities for relationships and team knowledge management
continuous professional effectiveness strategy encourages
and personal - Tailoring training to make greater input from
development, increased it culturally inclusive and employees from diverse
staff loyalty and culturally appropriate backgrounds.
willingness to share increases learning.
knowledge
ORGANIZATIONAL FACTORS

4. Product and Services

Development
- Diverse enterprises can draw on the knowledge and
perceptions of culturally diverse employees in the
design and re-design of products and services.

- Employees who feel included and respected

contribute more suggestions than those who do not
feel included.
ORGANIZATIONAL FACTORS

5. Customer Service
Customer service systems that are sensitive to
the ways in which cultural background influences
customer perceptions and expectations are more
effective, efficient and responsive, generating
high levels of customer satisfaction.