Introduction
In every organisation, several issues affect workers’ effectiveness and entity performance. As time passes, specific issues become more dominant as internationalisation becomes more prevalent in the traditional business landscape. As a consequence of these changes, diversity in the workplace has become a critical topic in the modern workplace. Physical attributes, cultures, ethnicities, and generation variation increase as the work environment evolves. Diversity is a key attribute of Australia’s national identity that continues to impact its sociocultural and socio-economic potential. For this reason, there is a need to incorporate diversity in strategic human resource management (SHRM) strategies to consider cultural differences between employees for entity success. This paper delves into managing diversity for organisational success, potential challenges, and possible approaches to handling a diverse workforce in Australian organisations.
Diversity Management and its Importance to Individual and Organisational Success
Diversity refers to the differences in age, culture, race, sexual orientation, disability, creed, and nationality (Urbancová et al., 2020). Thomas et al. (2021) assert that human resource management (HRM) strategies and practices can result in work settings that value all workers. Australia has a high proportion of a diverse overseas-born population. As of 2020, approximately 30% of the population was born overseas, 69% have European ancestry, and African migrants represent 1.7% of the total population (Australian Bureau of Statistics, 2023). In Australia, it is illegal to discriminate based on protected traits, including age, race, disability, and sexual orientation, in civic life, including work and education.
Human resources programs such as diversity training can develop a more equitable workplace by diminishing discriminatory staff conduct and motivating the workforce to seek solutions for employment-related discrimination. As it may, organisational diversity can be classified into primary and secondary. The primary dimensions include sexual orientation, age, and gender. These primary attributes are noticeable upon first encounter with an individual. Secondary dimensions such as education, religion, geographical location, and income are not visible in the first experience. They can be altered throughout encounters (Cain et al., 2021). These individual characteristics are apparent after some interactions with individuals. Recently, globalisation has triggered more interaction among individuals from different ethnic backgrounds and cultures than ever before. For this reason, individuals are now more liberal in the marketplace worldwide, with intense competition emanating from almost every corner of the globe. Managing diversity comes with advantages and disadvantages. The task, therefore, is to extract the benefits of diversity and strategically utilise it to advance the workforce and the entity in general.
Diversity brings a high level of productivity in the workplace. Urbancová et al. (2020) assert that escalating productivity at the workplace is one of the major impediments of today’s managers. Due to the concept that every entity has its distinctive structure and objectives, different strategies may be used to improve productivity. One of those solutions is to adopt workplace diversity and manage it effectively. As such, when employees feel respected and recognised irrespective of their cultural backgrounds, they tend to remain loyal and hardworking, which helps improve the company’s bottom lines. Although workstation diversity is shared respect, adjusting to accommodate all diverse workers can be burdensome to other employees. Some workers’ work constraints, such as religion, country of origin, and race, can be overwhelming if the diversity in the entity tends to be excessive to the extent that the enterprise has to hire full-time employees to keep track of accommodating workers’ diverse needs. For instance, some Muslim employees may opt not to work on Fridays since it is their prayer day. In such contexts, organisations must make provisions for someone to assume their shift when needed (Cain et al., 2021).
Additionally, diversity enhances the exchange of ideas and teamwork. According to Ezzy et al. (2020), teamwork is highly advocated by entities as a way of guaranteeing better outcomes on projects. An individual taking on multiple projects can perform at a different pace than a group could. Hence, each working group member brings distinct ideas to the table and provides unique perspectives during problem-solving, effectively developing the best solution in the shortest time possible, thus reducing the turnaround time for the company’s tasks and decisions. This enhances organisational success by churning out high-quality work that improves the company’s productivity.
While it is true that diversity is advantageous to organisations, employees also benefit from the successful management of diversity. Diversity in the work setting creates opportunities for the workers’ personal growth. When employees are exposed to new ideas, cultures, and perspectives, it can aid them in intellectually reaching out and having a profound insight into their workplace. Thomas et al. (2021) allude that more time spent with culturally diverse colleagues can slowly eradicate the subconscious impediments of ethnocentrism and xenophobia, thus encouraging workers to become more informed members of the company and society. However, it is essential to note that while diversity has many merits, it also has disadvantages.
Diversity management is associated with colossal costs. When an organisation aims to manage diverse staff effectively, it undergoes compulsory diversity training, in which workers and management receive lessons relating to interaction between employees and clients. Additionally, diversity results in incorporation issues. According to Thomas et al. (2021), it is challenging to influence social incorporation to the maximum degree. The formation of exclusive work teams is often a natural procedure that is hard to control. Consequently, organisations tend to encounter informal groupings amongst staff, thus creating situations where diverse employees refrain from associating with each other during leisure. Even though this circumstance is not essentially wrong, it can suppress the effectiveness of knowledge dissemination and, therefore, hurt the overall productivity of individuals.
Potential Challenges for Australian Companies
One of the key challenges of managing diversity is increasing organisational costs. For example, long-term costs include training staff, record-keeping databases, and communicating new plans to the employees. Additionally, diversity-related opportunity costs demonstrate a loss of benefits since scarce resources cannot be utilised in other productive endeavours. For example, senior management could divert time to address the diverse needs of each employee. Persons living with a disability need special accommodations such as ramps to move around the building. Business perils related to diversity exist since many initiatives designed to change corporate cultures take longer than expected or fail. Wolbring and Nguyen (2023) assert that sustainable diversity policies result from successfully altering the company culture.
Additionally, managers may be challenged with high labour turnover and losses in work productivity due to discrimination and prejudice, as well as complaints and legal disputes against the company. Miles-Johnson and Fay (2022) assert that negative attitudes and behaviours can impede organisational diversity since they injure positive working relationships and suppress morale and work performance. Negative attitudes and conduct, such as stereotypes, prejudice, and discrimination, should not be the basis of hiring, promotion, retention, and dismissal.
Queensland’s anti-discrimination law is one of the most comprehensive in fostering equality in employment, safeguarding from unfair discrimination, and prohibiting sexual harassment and other objectionable behaviour that impedes workforce diversity. The Australian legislation defines four target groups that are widely recognisable as being traditionally disadvantaged in the workplace, including individuals from non-English speaking settings, Aboriginal and Torres Strait Islander groups alongside women, and persons living with disabilities. Notably, these target groups require private and public entities to develop equal employment opportunities (EOO) policies to suppress discrimination against these people in the work environment. Despite Australia’s profound history of effective legislation, these groups remain under-represented in the workplace because of embedded historical bias, which hurts the effective implementation of diversity programs in Australian work settings (Wolbring & Nguyen, 2023).
From the perspective of managing diversity, the legal frameworks in Australia exhibit a passive focus on eradicating discrimination in employment. Even with the EOWA Act, which focuses on the inclusion of women in the workplace, no specific act has been enacted to monitor and eliminate discrimination in the workplace. According to Muir et al. (2020), discrimination laws are inconsistent across Australian territories and states. For instance, in some states, vilifying another person is forbidden. This loophole has sometimes given rise to complex situations for workers and employers. For example, in Sydney, a Muslim IT worker was threatened with dismissal after conducting prayers during working hours (Ezzy et al., 2020). However, the Race Discrimination Act has not made religious discrimination unlawful.
Additionally, the Racial Hatred Bill 1994, which deters offensive conduct, suggests that Muslims are encompassed in the expressions of ethnic or racial aspects. However, cases that have incorporated this issue in other jurisdictions have demonstrated that Muslims are not part of the common group that constitutes ethnic origin because Muslims profess a common belief structure. Their faith is spread in many nations, colours, and languages (Wolbring & Nguyen, 2023). This shows that the spread of Islam across many countries disadvantages Muslim employees within the legal context of Australia. These legal complexities made it difficult for Australian companies to fully realise the benefits of diversity.
Critical Examination of Best Human Resource (HR) Approaches to Diversity Management in Australian Companies
Figure 1: Workforce Diversity in SHRM (Tortia, 2022)
Short-Term Strategies
HR professionals should prioritise a diverse workforce and formulate immediate strategies to help them best manage an organisation. As shown in Figure 1 above, one of the best approaches is equality in reward and remuneration. Diversity in reward and remuneration guarantees equal pay and a reward system. Despite legislation to ensure fair remuneration, inequality in employment remains a critical issue in Australia. The causes of wage gaps emanate from discrimination through hiring, promotion, and dismissal procedures. Also, even if merit is developed in the performance appraisal stage, the employers continuously discount the productive ratings of employers either consciously or subconsciously based on gender, race, and nationality, culminating in evaluative discrimination. Hence, to suppress these problems, organisations should design compensation schemes based on individual employees’ abilities, skills, and knowledge (Vraňaková et al., 2021). If an organisation fails to prioritise fair remuneration and equality, it risks losing employees, which will, in turn, negatively affect the organisation, resulting in reduced output. According to Thomas et al. (2021), embedding diversity in the reward and remuneration system significantly burdens the company since some employees may value monetary relations more than non-monetary systems. However, as noted in Figure 1, HR professionals can tackle this problem by offering flexible working hours and work-life balance, which will likely boost employee performance.
For example, Qantas Airlines supports diverse rewards and compensation by rolling out a reward and recognition program that enables the employees to cast votes for colleagues they believe deserve to be rewarded and acknowledged for their superior performance. This brings transparency to the Qantas reward system. It is essential to note that Qantas tests this program annually by evaluating employee retention, turnover rates, and annual workforce surveys. In addition, Qantas has launched a program dubbed the Nancy Bird Walton Program, which is committed to merit-based inclusivity. This has helped Qantas to accomplish their goal of having at least 35% of senior leadership positions occupied by women.
As evident in Figure 1, effective management of diverse teams calls for objective appraisal practices that are job-relevant, equitable, and fair to all workers. HR professionals in Australia need to undertake performance assessments based on individual merits, not based on personality and demographic variations, and ought to be culturally impartial. Including multicultural HR professionals on the appraisal boards can aid in creating an objective process for fair productivity evaluations while guaranteeing that diversity issues are articulated and distinct ethnicities are comprehended(Vraňaková et al., 2021). Feedback given after performance appraisal and continued support is instrumental in helping minorities progress in the organisational career ladder. Effectively, diversity management in performance appraisal helps suppress the negative impacts of stereotypes. Additionally, operational diversity performance management initiatives diminish the likelihood of perceived biases against the non-conventional workforce. Performance evaluation burdens large organisations as managers require more time to evaluate the workers’ performance. Miles-Johnson and Fay (2022) assert that performance appraisal is subjective, and personal prejudice comes into play. Human resources professionals can embed diversity in performance appraisal by using management information systems to automate the performance appraisal process, which is costly to implement again.
Furthermore, Ezzy et al. (2020) note that Australian entities do not involve culturally diverse employees in performance evaluation panels. For example, Accenture Company in Australia has an initiative called the Skills to Success program to equip underrepresented groups in Australia with the skills to secure jobs (Accenture, 2020). Additionally, Accenture fosters a sense of equality by incorporating people of different cultural backgrounds in its management, including persons with disability and LGBTQ+, to assist in creating a sense of belonging.
Long-Term Strategies
HR professionals in Australia must also implement effective strategies to approach and manage diversity in the workplace. One of these strategies includes diversity training and development to eradicate inequality and discrimination. Diversity training entails creating awareness of diversity and addressing the needs of the diverse workforce. Vraňaková et al. (2021) assert that diversity training and development boosts the employees’ morale and assists in retaining qualified employees in the long run. Thus, Australian companies need to establish the developmental requirements for each diverse employee, such as English training language for employees originating from non-English speaking countries. Even though promotions should be based on individual employees’ merits, promotion panels in Australian companies need to consider ethnic and racial differences. Ghanbaripour et al. (2023) highlight that operational diversity development includes coaching, support, and uncluttered communications, suppressing the negative consequences of employment disparity on productive team processes. For example, the Dyson group of companies in Australia has a diversity training program that ensures all employees are trained on diverse issues relating to diversity, such as communication and the impacts of stereotypes. Some of the initiatives the company has taken to address diversity issues include crafting inclusive teams and hiring diverse work teams comprised of black and white people. Diversity training initiatives sensitise workers on the impact of prejudices on their performance and organisation. However, Ezzy et al. (2020) argue that the whites in Australia exhibit latent behaviours towards diverse communities. Inappropriate diversity training initiatives provoke and victimise whites for the errors of the past, and political correctness thus becomes a priority rather than a principle. For this reason, an effective diversity program should integrate both whites and minorities to reduce conflict and accomplish higher levels of productivity. Training employees and including diversity policies in the organisational model is expensive. It takes much time for the organisation to realise the benefits of diversity training programs. This is because training programs can bring about conflict and result in resistance to change as employees attempt to maintain the status quo. Hence, HRM should consider diversity training programs as a continuous initiative instead of a knee-jerk reaction that can emanate from legislation such as EEOC.
Another long-term strategy that HR professionals in Australia can use to manage a diverse workforce is the implementation of diversity in recruitment and selection. According to Ghanbaripour et al. (2023), entities that appreciate diversity in recruitment and selection are considered socially responsible and bound to develop positive corporate reputations. As such, recruiters from ethnic or minority groups can help the company develop recruitment and selection policies that are friendly to ethnic candidates. Muir et al. (2020) suggest that diversity management in recruitment and selection processes is anchored on anti-discrimination principles, demographic data analysis, and equal representation of minority groups in the selection panel. Social cognitive theory (SCT) explains how diversity can result in negative organisational results. SCT implies that people use categorisation to ease and cope with colossal amounts of information. Categorisation allows employees to easily compartmentalise individual attributes based on visible attributes such as age, sex, and race. Hence, when an individual sees a person of a particular race, automatic processing happens, and beliefs about this particular race are triggered. For instance, when scheming through resumes, HR managers might get entangled in gender categorisation because the name on the resume may provide information about the person’s gender or race. Stereotypes are related to this categorisation and may result in the generalisation of attributes about large teams. In a related context, using stereotyping that emanates from these categorisations is illegal in Australia, and this value is not consistent with the principle of valuing diversity.
Many Australian companies, such as Marriot Hotels and Johnson and Johnson, have adopted zero tolerance of work setting discrimination in staffing and selection processes to get new talent and expand their client base. Australian HR professionals can incorporate diversity monitoring practices in hiring by advertising in ethnic circulations, websites, and magazines and calling for applications from ethnic minorities such as immigrants and Aboriginal and Torres islander Strait people. Also, it is essential to screen job candidates on attitudes towards diversity to guarantee that the new workers fit into the ecosystem of diversity in the organisation and support its goal of implementing diversity policies.
Social identity theory explains the negative aspects of diversity. According to Rato and Prada (2021), the theory proposes that when individuals interact with others, they tend to label them as belonging to the same or a different group. Members perceived to be in the group are seen as heterogeneous, while members belonging to a different group are seen as homogeneous. There is a strong group favouritism and often derogation of members belonging to another group. When favouritism occurs, most in-group people tend to be hired, rewarded and promoted habitually in the desecration of equal employment opportunity laws (Rato & Prada, 2021). However, hiring diverse employees will not guarantee a favourable working environment. Muir et al. (2020) assert that hiring diverse people brings confusion to executing tasks, especially when employees have rigid cultures and dialects that differ from other employees. For this reason, HR managers should hire people based on their merits instead of protected attributes. However, they must strike a balance between white people and minority populations.
Conclusion
A diverse staff mirrors the changing business landscape; diverse working groups bring value to enterprises. Respecting and recognising individual differences benefits the workplace by creating a competitive superiority and increasing workers’ performance and productivity. Diversity management benefits individuals and organisations by creating just and safe working settings where every person has access to resources, opportunities and challenges regardless of individual differences. While diversity management is seen as the sole function of the HR team, managers, supervisors, and staff should be enlightened about diversity alongside laws and regulations that guarantee equal employment opportunities. Since people no longer work in insular settings, organisations need to learn how to manage diversity and remain competitive in ever-changing business environments.
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