Competitive Pressures - Organizational Behavior

Still another reason for the emergence of the importance of diversity to organizations is the realization that diversity can help them meet the competitive pressures they currently face. Firms that aggressively try to hire and promote women and minorities are going to end up with a more talented and capable workforce than those that do not take such a proactive, affirmative action approach. For example, a recent large study by the American management association found that the more accurately the senior team of a company represents the demographics of its market, the more likely it is that the company will design products, market services, and created ad campaigns that score a hit. Moreover, companies that again a reputation for "celebrating diversity" are more likely to attract the best employees regardless of age, gender, or ethnicity. The most talented and qualified people will feel that opportunities are better with these firms than with others. In others words, diversity can provide an organization with competitive advantage. For example, a recent study examined the relationships among racial diversity, business strategy, and firm performance in the banking industry. It was found that racial diversity interacted with business strategy in determining company performance as measured in three different ways: productivity, return on equity, and market performance. This study concluded that the results demonstrated that diversity not only add value but, in the proper context, also contributes to a firm's competitive advantages.

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