Read and answer the question below.

EMBRACE DEMOGRAPHICS AND SOCIETAL CHANGES Using Differences to Drive Value Force 7: Demographics and Societal Changes. One of the most important forces that is affecting all workplaces is how the workforce has changedhow the lives of people making up the workforce have shifted. The principal drivers are the pronounced changes in the age, gender, race, and ethnic background of employees. The challenge of having five generations at work, the rising role of females in organizations, the migration of employees across cities and countries, the shifts in the makeup of families, various causes of distrust in institutions, and declining happiness dramatically affect the quantity and quality of members of the workforce. The way in which these factors are managed can make a major difference in the success or failure of an organization, and the human capital strategy is the starting point in addressing these major changes.

This chapter outlines six major shifts that have a dramatic effect on the success of the workforce:

The increasing longevity of the workforce and the population in general

The mixture of generations at work, including the emergence of Gen Y

The growing role and power of women in the workplace

The changing structures of families

The evolving challenges and opportunities of racial and ethnic differences

The increasing emphasis on trust, happiness, and work-life balance

The chapter ends by describing the way diversity must be approached in organizations so that it is managed for value.

Opening Story: Dropbox Dropbox is a free service that lets you upload and store your photos, documents, and videos, access your files easily from anywhere and share them with just a few clicks. Dropbox was founded in 2007 by Drew Houston and Arash Ferdowsi, two MIT students who were tired of emailing files to themselves to work on across multiple devices.1 Today, more than 300 million people across the globe use Dropbox to share files with family, friends, and work teams. A recent article in USA Today highlighted the struggle at Dropbox to confront diversity.2

Employees in the company's San Francisco headquarters have enjoyed many perks such as: a Michelin-rated chef, a music lounge for late-night jam sessions, and major-league views of the San Francisco Giants' ball park and the San Francisco Bay. Yet beneath the gleaming surface, the promising young start-up was wrestling with a serious problem. Like other major technology companies, Dropbox employed mostly white and Asian men.

"Press on the issue wasn't good, which further impacted morale on the topic internally," said Blaire Mattson, head of engagement and monetization at Dropbox. "There were a lot of people working on increasing diversity within Dropbox, and the efforts were showing results. So, for all the people who had worked really hard, the press was distressing."

Because of this, Dropbox's CEO, Drew Houston, resolved to change the culture of his own company much in the same way he changed the way to transport files seven years ago.

The founders had always envisioned Dropbox as a place where everyone would feel welcome, and with more than two-thirds of Dropbox users hailing from outside the United States, they knew they had to build a diverse workforce to design products and services that appeal to a global marketplace.

The CEO thought that Dropbox is still young and agile enough to make profound changes to how it recruits and treats employees, including building an inclusive community and culture. Dropbox is also determined to increase the number of women and underrepresented minorities going into technology.

For years, Silicon Valley companies have downplayed the racial and gender imbalance in the technology industry. But now they are serious about making their workforces more diverse. Silicon Valley has good reason to care about bringing more women and minorities into the fold: Studies show that companies with gender and ethnic diversity are more creative and more profitable. Yet reports from major technology companies like Apple, Facebook, and Google paint a sobering portrait of an industry with too few women and even fewer blacks and Hispanics in all roles and at all levels.

On November 5, 2014, Dropbox became the latest high-tech company to release its diversity numbers. The report shows that Dropbox looks much like other tech companies:

More than half of the Dropbox workforce (nearly 56 percent) is white, and nearly a third (30 percent) is Asian.

Women account for about a third (33.9 percent) of the Dropbox workforce but nearly 50 percent of staff in nontechnical positions.

Women account for just 12.8 percent of staff in technical positions and about a third of staff in management (32.7 percent).

The percentage of blacks is low even compared to other tech companies. Blacks account for 1 percent of the Dropbox workforce, Hispanics for 3.7 percent. In technical positions, 0.3 percent of the staff are black and 2.3 percent are Hispanic.

Company executives consulted leading experts in diversity, including Joan Williams from the Clayman Institute. They also spoke with prominent women in the technology industry who are passionate about the issue, notably Facebook's chief operating officer, Sheryl Sandberg, and Megan Smith, a former Google executive who is now the chief technology officer of the United States. In fewer than ten months, Dropbox doubled the percentage of women working in engineering and tripled the percentage of women working in design, according to Dropbox general counsel Ramsey Homsany, who also oversees public policy and people operations.

Today, diversity is part of everyday business at Dropbox, from all-hands meetings to hackathons. Dropbox has overhauled recruiting, promotion, compensation, engagement, and retention, said Mattson. From changing the questions it asks job applicants to training moderators to detect bias in the recruiting process, Dropbox is going for "an objective lens" when making hiring decisions, she said. Dropbox has also identified areas where bias may creep into performance evaluations and stymie career advancement. A new program called "Matchbox" pairs employees with mentors. "Droptalks" feature women and people of color, including Task-Rabbit Chief Operating Officer Stacey Brown-Philpot and Hewlett-Packard CEO Meg Whitman. Justin Bethune, an account manager who is African American, came up with the idea for a "Dropbox Dreamcode Tour" during hack week in the summer of 2014. Bethune is visiting high school kids in the Bay Area to share what it's like to work inside a tech company and to encourage them to explore tech as a career. He also led Dropbox's first tour of historically black colleges and universities. This brief story highlights the problems facing organizations that ignore diversity and inclusion. It also highlights the challenges they face to bring about the changes needed as described in this chapter.

Increasing Longevity The average lifespan of people has changed dramatically in the past century. For example, in Western Europe in 1800, less than 25 percent of males survived to age sixty, while by 2010, that figure was up to more than 90 percent. A sixty-year-old man in Western Europe today has the same life expectancy as a forty-three-year-old man in 1800. In the United States, the portion of the population over the age of sixty in 2000 was 16.5 percent. In 2025, it will be 25 percent.3 This collective aging has become a disruptive force in many countries and economies. For example, Japan's population by midcentury may reduce by half, and nearly a third will be over age sixty-five. Seventy-seven million American baby boomers born between 1946 and 1964 are now passing age sixty-fivenearly one every seven seconds. The expectations, experience, and value systems of these older people have changed. They usually have better health, more education, and more income than previous generations, and they expect improved quality of life from having access to healthcare, connecting to love ones, and remaining engaged in rather than retired from society. These dramatic shifts raise important issues for organizations.

Longer Careers The trends are showing that more people want to work longer. Figure 9.1 shows how workforce participation is changing and has shifted dramatically. In 1992, 11.5 percent of the workforce was sixty-five and older. This will be doubled by 2022, when 23 percent will be sixty-five and older. This is being driven by several forces. First, there are now fewer restrictions on people working into old age. In the United States, for example, in most occupations, it is illegal to force a person to retire based on age; it has to be based on job performance and other objective issues. Second, it is well-known that a person who is active and continues to work will live longer. Retirement spells death for many individuals; working longer means a longer life. Third, the need for more money has prompted some individuals to continue to work. Retirement financial planning has not worked for many, as the lifestyles they enjoyed while working require an income stream. And finally, some people just enjoy their work. If you have enjoyable work and you want to stay involved, then why should you retire? This is a question faced by many knowledge workers and professionals who really enjoy the type nd nature of the work they do.

Figure 9.1. Labor force participation rates for age sixty-five and older.

Retirement Income Longer lifespans mean that people need more retirement funds to survive. Unfortunately, not every individual has properly planned for this, and company pensions are less than what they used to be. This often leaves huge gaps. Compounding this is the inability of many governments to continue to fund retirement benefits or increase retirement benefits to keep up with the rising cost of living. This means that many retirees are poor, and more of them will be poor in the future. This creates a huge burden for society and sometimes also for employers who provide fixed retirement benefits. In some extreme cases, bulging retirement costs have caused organizations to go into bankruptcy. Cities and counties in the United States have had to declare bankruptcy or default on bonds for the same reason. This generates a serious crisis for funding the lifestyles of people who are growing older.

The increase in longevity is driven in part by advances in healthcare technology, medicines, and new procedures. Increasing the average lifespan comes at a very high cost. The budgets of countries, organizations, and individuals are being strained to cover these increases in healthcare costs. This issue was explored in previous chapters.

Creative Solutions With this myriad of retirement cost and income issues, many organizations are seeking creative solutions. It may indeed help to encourage the older members of the workforce (traditionalists and baby boomers) to work more years and to tap into their expertise and knowledge. They can serve as subject-matter experts. Traditionalists can work fewer hours on a part-time basis in lieu of full-time work. Employers can take advantage of their expertise and knowledge by assigning them to special projects in the organization. These could involve tackling a pesky problem, developing a new product, or implementing a new system. These employees can work on social-service projects while they are actually on the payroll instead of giving money to charitable trusts. This provides employment, either full time or part time, to this segment of the community and perhaps adds more value than a donation in money would.

These are only a few of the possible solutions that need to be explored as organizations try to maximize the contribution of the aging population as efficiently and effectively as possible. This all has to be accomplished with an eye on the unemployment issue. After all, millennials will quickly suggest that one way to improve the unemployment rate of millennials is to force baby boomers to retire. Both viewpoints have to be taken into account.

The Emergence of Gen Y It is now possible for organizations to have five generations of employees at work at the same time. Figure 9.2 shows the breakdown of these different groups, ranging from the traditionalists to Generation Z. In 2005, the boomers were obviously a big part of the workforce, while Gen Z had not made it to employment age yet. In 2010, shifts started to occur. In 2015, Gen Z is included, and then the projections are that the millennials, Gen Y, will make up 75 percent of the workforce by 2020.

Figure 9.2. The five-generation workplace.

Source: Bureau of Labor Statistics and Chess Media Group. Adapted from Jacob Morgan. The Future of Work: Attract New Talent, Build Better Leaders, and Create Competitive Organization. Hoboken, NJ: Wiley, 2014.

The millennials have been perhaps the most talked about group in organizations. They grew up in an environment connected to technology, are communicating in different ways, and have different value systems than previous generations. They have evolved with some very pronounced changes in the way they perceive work and the kind of work that they want to do.4,5 Although some would argue that millennials want the same qualities in a job as others do, the difference is that millennials put a much higher priority on these desired qualities than previous generations. Having a high salary and a prestigious title is of less interest to millennials. However, a work-life balance is very critical, and an opportunity to learn and develop one's own competencies is very critical as well. This means that millennials want to constantly learn from others. They also want to serve a greater good, and this often brings them into concerns about the environment and sustainability. Sometimes, this motivates them to work for nonprofits. Millennials also want to engage with the latest technology and devices. They grew up this way, and they want to continue to connect with others this way. They want to use text messages and social networks to communicate with others. They want a respectful workplace that will give them the autonomy and freedom to do their work without close supervision or micromanaging. They want a chance to be creative and challenge their intellectual capabilities.

The reality is that an employer must be willing to meet these requirements or risk having millennials leave an organization. After all, by the year 2020, these value systems will be held by 75 percent of employees.

Millennials also bring some new behaviors. While some of the classic behaviors are still very important, there are new behaviors particularly appropriate for millennials. As shown in Figure 9.3, these individuals want to be proactive and self-directed on their projects. Employers have to foster, reward, and encourage these behaviors. This generation needs to work independently, and this will need to be supported by the organization. Millennials need to filter information, because they are bombarded with so many different kinds of information. The ability to put filters on different information systems and processes will be an important skill set. Because there are so many possibilities, and so many things that would take their time, they have to constantly focus on what must be done. Some argue that millennials have a way of not following through with things, so this particular skill set helps them determine priorities. Since the workforce, the workplace, and the work itself are constantly changing, the ability to embrace change is critical, and it has to be supported and developed.

Being proactive

Operating independently

Filtering information

Focusing on important priorities

Embracing change

Enhancing communication skills

Learning to learn

Figure 9.3. The crucial behaviors of millennials.

Source: Adapted from Jacob Morgan. The Future of Work: Attract New Talent, Build Better Leaders, and Create Competitive Organization. Hoboken, NJ: Wiley, 2014.

Finally, enhancing communication skills will be critical, as well as learning to learn. Although millennials communicate in different ways than other generations, they must have an outstanding communication skill set. They are often criticized as not communicating properly and sometimes not closing the loop in follow-up, so the critical issue is to make sure that these skills are properly in place.

There is no doubt that the millennials will create some challenges, but for some, these are necessary challenges. When managed and supported properly, millennials can add much value to organizations.

Shifting Roles of Women and Men The progress of women and their changing leadership roles are evident in all types of organizations. The German chancellor, the head of the International Monetary Fund, and the chair of the Federal Reserve Bank in the United States are all women. In Fortune 500 companies, the CEOs of General Motors, Hewlett Packard, IBM, PepsiCo, Lockheed Martin, DuPont, Oracle, General Dynamics, Duke Energy, and Xerox Corporation, among others, are all women. Today, 60 percent of the world's university graduates are women, and women control the majority of consumer-goods buying decisions. In the United States, women under thirty out-earn their male peers, and 40 percent of American households have women as their breadwinners.

With this tremendous progress comes some concerns. Women make up 51 percent of the U.S. population and 47 percent of the workforce, yet only 4 percent of CEOs and 17 percent of board members are women, according to Catalyst, a nonprofit market researcher. Women also earn, on average, 78 cents for every $1 men earn, according to the Institute for Women's Policy Research.6 "Almost no one understands that women have made no progress at the top in 10 yearsthat is true of any industry and government," Sheryl Sandburg says. Sandburg is the chief operating officer of Facebook and author of the bestselling book Lean In: Women, Work, and the Will to Lead.7 "I want to change the conversation from what we can't do to what we can do."8 If nothing else, Sandburg wants to erase workplace stereotypes and dispel the perception that a woman can't have it all. One common theme in her book is the observation that as men advance, they are more liked, but as women make such strides, they are less liked.

While Sandburg's personal crusade has earned her much admiration, it has detractors. They reject what they deem the "Superwoman ideal," especially one that comes from an executive-suite mom who has the finances to afford child care and other amenities.9

Trends Labor-force participation has changed. As Figure 9.4 shows, the labor-force participation of men has declined since 1992, and this decline is projected to continue through 2022. For women, the participation rate is about the same, which means the proportion of female employees has grown. There are still challenges. While 57.7 percent of women participated in the labor force overall in 2012, in some companies, their participation was still very low, when it should have been much higher. For example, in 2014, when Goggle released its diversity report, 30 percent of its workforce was female, while 70 percent was male.

Men

Women

2022

67.6%

56.0%

(Projection)

2012

70.2%

57.7%

2002

74.1%

59.6%

1992

75.8%

57.8%

Figure 9.4. Labor-force participation of men and women.

Source: Bureau of Labor Statistics, U.S. Department of Labor. "Changes in Men's and Women's Labor Force Participation Rates." Economics Daily. Accessed December 29, 2014. http://www.bls.gov/opub/ted/2007/jan/wk2/art03.htm.

In terms of ascending to leadership roles, however, the progress has been very impressive. According to 2020 Women on Boards, the percentage of women on boards has steadily increased, as shown in Figure 9.5. For the Fortune 100, 500, and 1000 companies, there have been increases each year in the last four years where they have been reported. In 2015, twenty-five of the Fortune 100 CEOs are female, as well as twenty-eight of the Fortune 500 to 1000 CEOs, for a total of fifty-three women CEOs in the top 1000. Although this is progress, this is woefully inadequate when considering the number of women in the workforce.

Female board membership

Female board membership

Female board membership

Fortune 100

Fortune 500

Fortune 1000

2014

22.2%

2014

19.0%

2014

17.7%

2013

20.6%

2013

18.0%

2013

16.6%

2012

19.9%

2012

17.1%

2012

15.6%

2011

19.6%

2011

16.4%

2011

14.6%

Figure 9.5. Women on boards.

Source: Beth Kurth. 2020 Women on Boards Gender Diversity Index. Accessed April 3, 2015. http://www.2020wob.com/sites/default/files/2020GDI-2014Report.pdf.

Current female CEOs are making important strides to try to help with this situation. For example, Karen Abramson of Wolters Kluwer, a company with nineteen thousand employees in information software and services, indicates that their progress is very important:

At Wolters Kluwer, we're very fortunate that, as a result of our efforts to bolster the senior team with women, today 50 percent of our senior team is female, and we really try to promote and foster female leadership. In accounting, 40 percent of the people coming into the field are women, but they account for only 14 percent of the people who have partnership and executive positions in the industry. The question is why. I think what we do differently at Wolters Kluwer is we foster general management skills by giving women P&L [profit and loss] responsibility. It's really important that women take the jobs that are going to get them noticed. Those are always the jobs that have clear P&L responsibility.10

Regarding some specific occupations, there is some good news as well. Since 1970, some dramatic changes have been made in female participation in certain jobs. For example, in accounting, the percentage of women in the profession moved from 24.6 percent to the current rate of 60 percent; for pharmacists, it moved from 12 percent to almost 53 percent; for physicians and surgeons, it moved from 9.7 percent to 32.4 percent; while for lawyers and judges, it moved from 4.9 percent to 32.4 percent. For positions that were predominately filled by women for many years, such as cashiers, registered nurses, and elementary and middle school teachers, female participation has declined, which is good news. This means that more men are moving into those jobs.11

Skills and Competencies Do females have much better leadership skills than males? An article in the Harvard Business Review featured a study of 7,300 leaders and yielded interesting results.12 According to the findings, women are rated higher than men in leadership effectiveness in every single stage of company growth, whether they are individual contributors, middle managers, or executives.

The article also went on to reveal that out of the top sixteen competencies that leaders exemplify most, women rank higher than men in fifteen of them, often by a considerable margin. These include things such as taking initiative, developing others, building relationships, innovating, developing technical and professional expertise, collaborating, and championing change. The only area where men narrowly edged ahead was "developing strategic perspective," where men scored a 51 and women a 49but in every other area, women ranked higher.

The aim here isn't to say that women are better than men or vice versa. Instead, it is to point out that women are actually very valuable to the future of organizations and possess many of the desired skills and attributes needed to lead organizations. Men do well, which is why it is important to have an equal balance.

The management consulting firm McKinsey has a group called "Women Matter." When this group asked business executives around the world what the most important leadership characteristics are, the top four attributes were intellectual stimulation, inspiration, participatory decision making, and setting expectations and rewards. According to Women Matter, all four of these qualities are more commonly found among women leaders.13

Dr. Alice Eagly, a professor at Northwestern University who specializes in gender differences and leadership styles, writes that there are several unique differences between men and women in terms of leadership.

Men's styles are characterized as the following:

Task oriented

Autocratic

Command-and-control oriented

Punishment oriented

Women's styles are characterized as the following:

Collaborative

Democratic

Transformational

Reward oriented

Clearly, this isn't to say that all men lean more toward leadership focused on punishment and all women toward leadership focused on rewards. However, this does provide some interesting things to think about and observe in the workforce. The future organization simply cannot be as competitive without having more women in senior leadership roles.14

Issues This development of females and the need for more females to be in powerful roles has created some issues for organizations as well as family units.

The first is the role of the "balance male." It is estimated that 20 to 30 percent of households have females as breadwinners and males assisting in the classic, traditional roles of females. The stay-at-home "Mr. Mom" is not an unusual occurrence in many families. The stigma of this role reversal is being removed, and it is now often applauded instead of ridiculed.

Career development is another issue. As Sheryl Sandburg has highlighted, it is possible to be able to progress in a career and have a good family life as well. The CEO of Yahoo demonstrated that even childbirth is possible while you are a CEO. Career development policies need to be adjusted or modified to support some of the issues faced by females as they try to progress.

Another issue is changing the mindsets of individuals. Previously, men were taught to realize the differences between men and women and then ignore them or learn to work with them. The more proactive mindset is to understand and manage these differences in a way that helps all parties. Finally, showing the business value of women in the workplace is critical.

Shifting Families The structure of families has shifted dramatically in the last two decades. The classic nuclear family (a married couple with a small number of children) now represents less than 25 percent of families. In 1970, it was at 40 percent.15 Figure 9.6 lists the variations of the family and includes all kinds of arrangements, with or without children, with or without marriage, and including marriages of the same sex.

Nuclear family

Single, no plans to marry

Blended family

Same-sex couple

Extended family

Senior domestic partners

Female-headed household

Gay parents

Single-mother household

Living together anticipating marriage

Single-father household

Waiting for marriage

Grandparents as primary caregivers

Childless family

Figure 9.6. The new family.

Although it may come in different variations, the family is still important, as illustrated in a study from the Harvard Medical School. This study, based on the lifetime health and happiness of thousands of people, revealed that those who are happiest in their lives are not the richest or the most accomplished. Research has found consistently that the greatest predictor of lifetime happiness is the extent to which people have close friends in their lives, while loneliness is associated with ill health. That is why easy, close, relaxed friendships have been described as such a key part of human mental health and happiness.16

Also, a study from the Pew Research Center showed that three-quarters of adults (76 percent) say their families are the most important element of their lives. Seventy-five percent say they are very satisfied with their family life, and more than eight out of ten say the family they live in now is as close or closer than the family in which they grew up. Interestingly, in this same research, 39 percent said that marriage is becoming obsolete.17

The changes in families will mean that organizations will have to provide different kinds of support processes and networks for these evolving lifestyles. Work-life balance becomes a critical issue for employees in these family arrangements, and considering many of the options that were covered in Chapter 6 may be helpful or needed here. Also, the health benefits that are provided can change dramatically because the makeup of the family has shifted.

Racial and Ethnic Diversity The racial and ethnic makeup of organizations has changed dramatically, not only in the United States, but in other countries as well. Consider this statistic: the U.S. Census Bureau reported that 50.4 percent of children born in a twelve-month period that ended July 2011 were Hispanic, African American, Asian American, or from other groups, while non-Hispanic whites accounted for 49.6 percent of births during that period.18

Currently, 30 percent of the U.S. workforce comprises racial or ethnic minorities. It is projected that by 2050 about 50 percent of the workforce will be nonwhite. Hispanics have become the largest growing segment of American society. It is estimated that there are fifty-two million Latinos/Hispanics in the United States, including Puerto Rico, and that by 2017 Latinos will make up the largest bulk of entrants into the workplace. It is also estimated that by 2050 the Latino/Hispanic population will represent more than half of the U.S. workforce.

With 50 million, the United States has the second-largest population of Latinos/Hispanics in the world, after Mexico's 108 million. There are more Latinos/Hispanics in the United States than there are Canadians in Canada or Spaniards in Spain.19

Rates of migration across countries have also changed dramatically. In 1965, for example, 2.5 percent of the world population migrated across borders, representing about 75 million people. In 2010, the figure was 3 percent, representing about 214 million people, a much greater percentage of population becoming migrants. Figure 9.7 shows the racial and ethnic status of the U.S. workforce in 2012 according to the U.S. Census Bureau. When compared to the diversity makeup Google released in 2014, it is easy to see the underrepresentation of blacks and Hispanics.

Figure 9.7. Racial and ethnic status of U.S. workforce and Google.

While much has been gained in racial and ethnic progress, primarily because it has been such an important political and societal issue for many years, there is still room for improvement. This is particularly true for business, as people of color are underrepresented in many professional and managerial occupations. At the same time, people of color also are underrepresented in certain industries, such as the high-tech industry. One approach to correcting this is to constantly remind organizations of the business value of a diverse workforce. This is underscored by the Center for American Progress, which lists the top ten economic benefits of workplace diversity,20 presented in Figure 9.8.

1. A diverse workforce drives economic growth.

2. A diverse workforce can capture a greater share of the consumer market.

3. Recruiting from a diverse pool of candidates means a more qualified workforce.

4. A diverse and inclusive workforce helps businesses avoid employee turnover costs.

5. Diversity fosters a more creative and innovative workforce.

6. Businesses need to adapt to our changing nation to be competitive in the economic market.

7. Diversity is a key aspect of entrepreneurialism.

8. Diversity in business ownership, particularly among women of color, is key to moving our economy forward.

9. Diversity in the workplace is necessary to create competitive economy in a globalized world.

10. Diversity in the boardroom is needed to leverage a company's full potential.

Figure 9.8. Top ten economic benefits of workplace diversity.

Trust, Happiness, and Work-Life Balance The final area to examine involves some interesting and perhaps disturbing trends that are evolving with the workforce. First, there is declining trust in institutions of all types. For example, we have been bombarded with data on the distrust of politicians. While this is a problem in almost every country, politicians currently have some of the lowest approval ratings in history in the United States. This distrust also moves to the leaders in companies. A study by the Davos World Economic Forum found that trust in leaders across all organizations is low and declining.21

There is also distrust in news sources and news reporting agencies, as well as banks, financial institutions, and stock-trading firms. There is a particular distrust in hospitals, as hospitals have the reputation of being one of the most dangerous places to be. This distrust will have to be addressed by organizations, particularly when they are working directly in that area.

Another trend is the decline in happiness. As far back as the 1990s, political scientist Robert Lane found that happiness had declined in many developing countries over the previous decade. Lane and others are trying to understand what defines happiness, and it is becoming clear that money or achievements are not necessarily what generates happiness. There has been a movement to actually redefine happiness on a national basis.22 This effort is attempting to place more value on measures that relate to human development rather than just economic outcomes. For example, the United Nations measures three basic aspects of quality of life to develop a human development index: health and longevity, knowledge, and income. When these are adjusted for inequality, they show that the top countries in terms of human development are Norway, Australia, Sweden, the Netherlands, Iceland, Ireland, Germany, Denmark, Switzerland, and Slovenia. This is a dramatic shift in the idea of what makes a country truly outstanding.

A final issue is the increasing need for work-life balance. This was mentioned previously in this chapter, and Chapter 6 devoted much effort to this topic as well. In general, more efforts are needed to address issues around families, work arrangements, commute times, work places, and working hours. These issues have a significant effect on the happiness and well-being of employees.

Managing Diversity This chapter has presented several issues about the diversity of the workforce, and this final section brings it all together in terms of how organizations must manage them. First, diversity must be defined to reflect all the issues in this chapter.

Global Diversity Definition Diversity can be defined as a collective mixture characterized by differences and similarities that are applied in pursuit of organizational objectives.23 Diversity management is the process of planning for, organizing, directing, and supporting this collective mixture in a way that measurably adds to organizational performance.

Diversity can be organized into four interdependent and sometimes overlapping aspects: workforce diversity, behavioral diversity, structural diversity, and business and global diversity.

Workforce diversity encompasses the group and situational identities of the organization's employees (i.e., their gender, race, ethnicity, religion, sexual orientation, physical ability, age, family status, economic background and status, and geographic background and status). It also deals with changes in the labor-market demographics.

Behavioral diversity encompasses work styles, thinking styles, learning styles, communication styles, aspirations, belief/value systems, as well as changes in employees' attitudes and expectations.

Structural diversity encompasses interactions across functions, across organizational levels in the hierarchy, across divisions and between parent companies and subsidiaries, and across organizations engaged in strategic alliances and cooperative ventures. As organizations attempt to become more flexible, less layered, more team-based, and more multi- and cross-functional, measuring this type of diversity will require more attention.

Business and global diversity encompasses the expansion and segmentation of customer markets, the diversification of products and services offered, and the variety of operating environments in which organizations work and compete (i.e., legal and regulatory contexts, labor-market realities, community and societal expectations/relationships, and business cultures and norms). Increasing competitive pressures, globalization, rapid advances in product technologies, changing demographics in the customer bases both within domestic markets and across borders, and shifts in business-government relationships all signal a need to measure an organization's response to and impact on business diversity.

Lawrence Baytos suggested that three Ds have generated widespread corporate concern and interest in addressing diversity management issues, whether an organization has 100 or 100,000 employees. The three Ds are as follows:

Demographics. Females, minorities, and foreign-born personnel are projected to produce 85 percent of the net new growth in the U.S. workforce, while white males are fast becoming a minority in the workforce. In 1960, nine out of ten U.S. consumers were white. Currently, it is estimated that only six out of ten are white. The changing demographics of the workplace are also the changing demographics of the marketplace. Organizations are looking at ways to align themselves to the new realities of their customer bases.

Disappointment. The traditional U.S. method for handling diversity was to bring women and people of color into the workforce under the banner of affirmative action. In doing so, it was often assumed that those individuals possessed some deficiencies and may not have been hired if not for affirmative action. It was also assumed that they should be willing to minimize their differences to better fit the norms of the majority group (usually white males) and thereby enhance their opportunities for recognition and advancement. In other words, to "make it," females and people of color would have to leave their needs and differences at the organization's front door. After a little more than two decades of affirmative action, it seems clear that this model has resulted in females and people of color being trapped in lower levels of the organizational pyramid. Turnover, discontent, and underutilization of talent are by-products of using this approach for more than two decades.

Demands. The demands for new approaches to diversity come from employees, who have become less willing than their predecessors to minimize their points of difference in hopes of gaining the elusive acceptance into the club. Furthermore, the intense pressure of industry and global competition to reengineer the organization requires that organizations tap the full potential of all their human assets.24

The Phases of Managing Diversity Figure 9.9 shows the different phases of diversity management and how it has evolved, particularly in the United States. As this figure shows, the early efforts in diversity were basic experiments of organizations trying to bring in females and people of color. Sometimes it was out of necessity, as when a company needed employees, but only black employees would take the job. The rationale for inclusion was, "Let's give this a try, and maybe the employees and customers will be satisfied." The measures were simply the number of people in the jobs and the success of those individuals. This was the early version of diversity management, before it became a political and legal issue.

Phase

Rationale

Measures

Experimentation/necessity

"Let's try this, and maybe employees and customers will be satisfied."

Number of people in the job, success of those individuals.

Compliance

To comply with regulations and laws.

People in jobs, recruiting efforts, retention, complaints.

Public pressure

To yield to demands of customers and special interest groups.

People in jobs, progress made, image, programs initiated, job satisfaction.

Business value

To improve results of the organization.

Business measures such as productivity, retention, quality, and innovation.

Figure 9.9. Phases of managing diversity.

When politics got involved and began to force organizations to prevent discrimination and to take affirmative action to make their workforce mirror the population in their particular area, this led to compliance: The point of diversity management was to comply with regulations and laws. The measures were the number of people in the jobs, recruiting efforts, retention, and complaints. The complaints were all varieties from internal complaints to charges, grievances, and even lawsuits. This approach worked for some, but it still did not lead to progress for most organizations, which lead to public pressure to bring attention to these issues. The major focus was employing more people of color and females in certain job categories and industries, though sometimes these efforts involved physically and mentally disadvantaged individuals as well. Companies and organizations often yielded to pressure tactics with exposure, and they began to measure diversity management in terms of people in jobs, progress made, their image, programs initiated, and even the job satisfaction of those in the organization, who often wanted to see an employee base more reflective of the general population.

Finally, the most recent phase, which has been evolving for some time, is to show the business value of having a diverse workforcehow diversity improves the organization's effectiveness and efficiency. In this phase, measures of success include not only job satisfaction, complaints, absences, and turnover but also productivity, quality, and innovation. This is an important milestone, because moving in this direction can capture the attention of the executive group. When the issue of diversity is presented in terms of business value, most executives will understand that it is important and that they must take action to make it work. They see that in addition to it being a legal, ethical, and moral requirement, having a diverse and inclusive workforce actually leads to more productivity, better-quality products and services, and more innovation. When this occurs, you really have the hearts and souls of the top executives, and this is where diversity management has now come.

Building Centers of Diversity Excellence Diversity management is a critical support to organizations. Learning to serve as a strategic partner within the organizational structure is not just a way for diversity practitioners to justify their existence or defend their turf. It has implications for the very survival of the diversity function and of the organization a whole. If the diversity function cannot show that it adds value, it risks being on the table for reductionor worse, dismantling. With the right diversity mindset and measurement tools, implementing strategic business objectives for diversity can make the difference between being an organization that is just keeping pace with the competition or being one that is making major strides ahead. In essence, it requires creating centers of diversity excellence, using behavioral and technical measurement capability, demonstrating commitment, and building communities of practice to sustain it over time.25

In order for an organization to take full advantage of the potential wealth in its diversity mixtures, it must completely embrace the level of diversity required to meet critical organizational challenges head on. This occurs when organizations foster a climate and culture that values differences and maximizes the potential of employees through utilizationin other words, when the organization and the individuals within it operate in a mature fashion.

According to Dr. R. Roosevelt Thomas, diversity maturity requires both an individual and an organizational set of behaviors that drive success. He states that diversity-mature individuals do the following:

Accept personal responsibility for enhancing their own and their organization's effectiveness.

Demonstrate contextual knowledge (i.e., they know themselves and their organizations, and they understand key diversity concepts and definitions).

Are clear about requirements and base inclusion/exclusion decisions on how differences impact an individual's ability to meet these requirements.

Understand that diversity is accompanied by complexity and tension and are prepared to cope with these in pursuit of greater diversity effectiveness.

Are willing to challenge conventional wisdom.

Engage in continuous learning.

Diversity-mature individuals see themselves, not others, as responsible for addressing diversity effectively. They understand the impact of organizational culture on diversity-related practices, but they do not use it as an excuse for inaction and indifference.26

Implications for Human Capital Strategy The material in this chapter clearly points out some great opportunities to improve the organization. The human capital strategy should involve several elements. These are consistent, for the most part, with what Jean Martin of the Corporate Executive Board recommends.27 Develop a global approach to diversity, so that all business units are involved, but have local ownership within each unit.

Reward progress made incrementally, and do not base judgment on the final outcomes that are desired.

Expand the pool of diverse talent to include sources that are underrepresented and most trusted.

Recruit aggressively with the diversity and inclusion targets in mind.

Emphasize the importance of diversity with all of the employee database and at different timeframes.

Make sure that diversity programs are aligned to the business needs.

Ensure that high-performing employees from underrepresented groups are placed in leadership roles and are properly supported in those roles.

 Minimize, confront, and change the biases in talent management decision making.

1. Reflect on the most important things that were discussed in the chapter.

2. The questions that came to your mind when you were reading the chapter: things that didn't make sense to you, things that you didn't understand, things that were baffling to you, or something that was interesting for you and you'd like to know more about

3.Discuss the things that you do not agree with from the chapter.