Diversity in Organizations

Diversity in organizations

Final paper

Organizations have many opportunities of developing a competitive advantage over their competitors. Nevertheless, this has to be sustained over time and to enable them to profit from this advantage over the long term. The focus of this paper is one of the aspects which, according to recent literature, can contribute to building a competitive advantage, namely diversity. The most important factor in determining the nature of the impact of diversity on performance is organizational context.

In this context, discrimination can be an important process affecting the impact of diversity on performance. Based on literature, we will view 2 forms of discrimination, race and sexual discrimination. In this paper we will evaluate the cost-effectiveness of discrimination using business, economical and political arguments. I determined the process of discrimination as cost effective when the relative expenditures (costs) are less then the outcomes (effects) of discrimination on the performance of the organization. I assume this positive effect on performance can result in a competitive advantage. Also I assume that creating diversity in the organization is the opposite of discrimination in the organization.

Discrimination

“Despite laws prohibiting employment discrimination, the economic costs of unequal treatment accorded African-Americans has risen steadily. But such discrimination doesn't hurt only blacks. In 1991, racial bias deprived the American economy of about $215 billion and was equal to roughly 3.8% of gross domestic product (GDP). While part of the loss can be traced to the lag in black educational achievement, the bulk is related to bias that hampers access to higher-paying jobs.

Applying a modification of a Census Bureau technique, I have updated the estimates of discrimination's economic cost (see chart). The figures show that over the last 25 years or so, the American economy has lost between 1.5% and 2.2% of GDP because racism limits the full use of black educational attainment in 1967; this loss amounted to $12.1 billion, or 1.5% of GDP. Another $11.1 billion, or 1.4% of GDP, was lost because of the failure to improve and fully use the educational level of African-Americans. In combination, lost GDP amounted to $23.2 billion, or 2.9% of the $814.3 billion total. By 1991, the GDP shortfall was $122.5 billion. Failure to improve the black education level cost $92.5 billion, or 1.6% of GDP. This totaled 3.8% of GDP, or $215 billion. (1)

“On the basis of employee surveys and in-plant research, the total cost of discrimination to American Business and Industry and Industry in Actual Dollars is estimated at roughly $35 Billion annually. Discrimination in Industry Begins at the hiring Gate where minority groups are refused employment because of race, color, religion, nationality, political, political affiliation, or other reason within the plant, discrimination is evident in ceilings on advancement opportunities and the prevention of promotion based on merit. Discriminatory practices extend to the foreman and supervisory selection process employee benefits lay-off policy, profit-sharing plans, and even to the time allotted for vacation and sick leave. Another form of discrimination within a company is refusal to enforce standards, set by law or contract or protect certain groups of workers. Woman and Children are particularly affected by the violation of work standards. The Psychological, Social, and Economic costs of Industrial Discrimination are that High-Discrimination Destroys Employee Morale, reduces productivity, disrupts foremen-worker relationships and adversely affects the effectiveness of trade unions. The economic implications of the added revenue and added nations income which would result if it were not for discrimination are many. Discrimination represents a blot on the American Democratic system which must be removed if the American Ideal is to Extend to all facets of our society. (2)

“This article analyzes the recent wave of large class action employment discrimination suits to determine their effects on the firms that are sued and the members of the plaintiff class. The first part of the paper includes an event study that measures the effect the lawsuits and their settlements have on stock prices of the companies that are sued, and the second part of the paper involves three case studies (Texaco, Home Depot and Denny's) to explore how the lawsuits actually change corporate practices. The study finds that the lawsuits do not generally affect stock prices, and rarely provide meaningful benefits to the plaintiff class. Although the damages obtained in the cases are substantial, they are generally not sufficient to affect large-corporations, which