This article talks about managing work force diversity within the organisation. It has been co- authored by Dr. Uday Salunkhe, Director of the prestigious Welingkar Institute of Management and Research.

1. 1
MANAGING WORK FORCE DIVERSITY
- Need for a Contingency Approach in IHRM
Prof. Dr. Uday Salunkhe Prof. Dr. P. S.Rao
Director Dean
Prin. L. N. Welingkar Institute of Prin. L. N. Welingkar Institute of
Management Development & Research Management Development & Research
Matunga , Mumbai – 400019 Matunga , Mumbai – 400019
ABSTRACT :
The attitudes, beliefs, values and customs of people in a society are an integral
part of their culture. Naturally, their culture affects their behaviour on the job
and the environment within the organization, influencing their reactions to
work assignments, leadership styles, and reward systems. Like the external
and internal environments of which it is a part, culture is undergoing continual
change. HR policies and procedures therefore must be adjusted to cope with
this change. In this paper an attempt was made to examine the workforce
diversity and cultural diversity and discussed the role of IHRM and its
challenges in International Business and also how Inter country culture
differences affect HRM with Indian perspective.
Work Force Diversity -what it means?
Work force diversity means those organizations in general and Multinational
Corporations (MNC’s) in particular, which are becoming more heterogeneous
in terms of gender, race, and ethnicity. One of the most important and broad –
based challenges currently facing these organizations is adapting to “people”
who are different. The traditional “melting pot approach” to differences in
organizations conveniently assumed that people who were different would
some how automatically want to assimilate. But it is now increasingly
recognized all over the world that employees do not set aside their cultural
values and life style preferences when they come to work. The challenge (and

2. 2
also opportunity) for organizations, therefore, is to make themselves more
accommodating these diverse cultural groups of people by addressing their
different life styles, family needs, and work styles. However, the melting pot
assumption is being replaced in recent years by one that recognizes and values
differences
Work Force Diversity –Management Implications:
Work force diversity has important implications for management practices.
Managers will need to shift their philosophy from treating everyone alike to
recognizing differences and responding to those differences in ways that will
ensure employee retention and greater productivity – while, at the same time,
not discriminating. Workforce diversity is a “doubled-edged sword”. It cuts
both ways. If positively managed, diversity can increase creativity and
innovation in organizations as well as improve decision making by providing
different perspective on problems. When diversity is not managed properly,
there is potential for higher turnover, more difficult communication, and more
interpersonal conflicts.
Review of Literature:
Dramatic increases in international activity in the last decade have raised
attention on the management of human resources in firms operating across
borders. Much literature discusses IHRM in terms of how it differs from
domestic HRM. Morgon (1986) discusses three factors:
1. Type of employees (local nationals, expatriates, third country nationals);
2. Countries of operations (host, home, other); and
3. Human resources function operations (procurement, allocation,
utilization).
4. Others (Flokowski and Nath, 1990; Kidger, 1991; Gronhaug and
Nordhaug, 1992) argues that IHRM differs from and is more difficult to
manage than domestic HRM because of macro environmental factors such

3. 3
as cultural, socio-economic, institutional, and political dissimilarities
across countries. Schuler et al. (1993) define IHRM as, “human resource
management issues, functions, and policies and practices that result from
the strategic activities of multinational enterprises and that impact the
international concerns and goals of those enterprises.” In a multicultural
context, IHRM comprises four critical components :
1. A firm’s various environments or context (both inside and outside of
the firm);
2. The IHRM function (activities of finding, allocating, developing and
valuing human resources plus supporting systems and processes);
3. Employees involved in work that transcends borders (mode of
international interaction. Level / type, and “source) and
4. Outcomes or contribution of HRM.
These components of IHRM create a three-part framework or process of
diagnosing organizational environments, designing and managing human
resources activities, systems, and processes in organizations that operate
across borders and evaluating IHRM’s contribution.
In a multicultural context, IHRM function focuses on activities, polices and
practices of managing human resources. Four types of human resource
activities include: Finding, allocating, developing and valuing employees.
1. Finding consists of planning for, recruiting, and selecting employees
(Kane and Stanton, 1991).
2. Allocating includes issues relating to staffing, promoting, demoting, and
transferring employees (Gregersen and Black, 1992).
3. Developing employees embraces policies and practices associated with
preparing employees for current and future jobs in terms of formal and
informal training, development programmes, and career management
(Evans, 1992).

4. 4
4. Finally, valuing employees entails appraising, rewarding maintaining
strong relations with, and assessing benefits and costs associated with
employees (Waston, 1992;Pennings, 1993)
Milliman et al. (1991) use organizational life cycle more specifically as a
means to asses what various units will need in term of IHRM practices.
Firms and IHR managers must acknowledge the impact of external and
internal influences on the way IHRM is developed and managed. Dowling et
al. (1994) contend that as firms grow or develop over time, they require
different types of IHRM practices.
Cultural Diversity and its Management:
Management is no longer constrained by national borders. For instance,
Exxon, a so-called American company, receives almost 75 per cent of its
revenues from sales outside the United States. Toyota makes cars in
Kentucky; General Motors makes cars in Brazil; and Ford (which own part of
Mazda) transfers executives from Detroit to Japan to help Mazda manage its
operations. These examples illustrate that the world has become a global
village’. In turn, managers have to become capable of working with people
from different cultures. The dictum in a multicultural context is “think
globally and act locally”.
Cultural diversity from the point of multiculturalism management can be
examined at two levels – international diversity and intranational diversity.
International level of analysis assumes that people from different countries
have common characteristics that differentiate them from people in other
countries (cross-national differences). On the other hand, intranational
diversity which synonymous with the tem ‘work force diversity’, recognizes
the importance of differences within any specific country.

5. 5
International Diversity:
The familiar phrase “When in Rome, do as the Romans do” captures the
essence if why it is crucial to understand international diversity. Those
managers who understand and appreciate cross-national differences and can
adjust their managing styles appropriately when working with people from
other countries will be more effective than those who naively assumes “all
people are alike‫.״‬
Managerial styles and practices will have to be tailor-made to fit into the cross
national differences in a specific country. For instance the British protect
their privacy and avoid asking personal questions. In contrast, asking
personal questions in Greece is a sign of showing interest. In Denmark, they
would use professional titles when addressing people; but avoid it in Greece
where such a formality is frowned upon. In Japan, all business transactions
begin by the formal exchanging of business card; but knowledgeable
managers know not to expect this practices in Italy. While August may be
like any other month in most countries, managers should know not to do
business during this month in France. It should be noted that the British are
very prompt in sticking on to the schedules, managers who understand
national differences would not be wondered if an Indian turned up 20 or 30
minutes late for an appointment.
Intranational Diversity:
From the above discussion it follows that it is relatively easier to say ”When
in Rome, do as the Romans do” than it is to know exactly what it is that “the
Romans do”. Managers should also understand the characteristics common to
people within a specific country in order to manage successfully in a global
economy.

6. 6
Multinational corporations (MNCs) maintain significant operations in two or
more countries simultaneously. They are a natural outcome of the global
economy. MNCs use their worldwide operations to develop global strategies
and gain sustainable competitive advantage. For instance, a photocopying
machine might be designed in Toronto, have its microprocessing chips made
in Taiwan, its physical case manufactured in Japan, be assembled in South
Korea, and then be sold out of warehouses located in Melbourne, London, Los
Angeles, and India.
A global economy presents challenges to managers that they never had to
confront when their operations were confined to within national borders.
They face different legal and political systems. They confront different
economic climates and tax policies. Besides, they must also effectively deal
with varying national cultures the primary values and practices that
characterize particular countries - many of which are nothing like those in
which they have spent their lives.
Sometimes, it is agued that the creation of a true global village is making the
concern over cultural differences irrelevant. It is predicted that in the long
run, the global village will become a single homogeneous culture – a world
melting pot in which cross-cultural differences will all but disappear.
Research demonstrates that organization strategies, structure, and technologies
are becoming more alike. However, there are still differences among people
within organization in different cultures. In other words, culture continues to
be a powerful force in explaining a large proportion of culture–specific and
contingency approach in managing culturally diverse organizations. Since the
various components of an organization–people, structure, task, technology,
environment – interact in a highly complex manner, multiculturalism
prospective in management intends to establish, develop and sustain
synergistic and symbiotic relationships among these components by adopting

7. 7
a cross-cultural approach to management. If people were becoming more
homogeneous, one could take a culture-free approach to management. But
such an approach does not appear to hold water at present owing to the
following reasons:
1. There are differences in managing people at work across national cultures;
2. Their differences explain a large proportion of the variance in attitudes,
values, belief and behaviour pattern; and
3. For now at least, and probably for a number for years to come, these
differences are not decreasing at any significant rate. Despite the
tremendous increase in cross-cultural communication, these continue to be
unique country-specific traditions and customs that shape the attitude and
behaviours of the people in those countries.
Characteristics of Multicultural Organization:
The true multicultural organization is characterized by core cultural values
and an ongoing commitment to eliminate social oppression throughout the
organization. All members of diverse cultural and social groups are involved
in the decisions that shape the mission, structure, technology, psychological
dynamics, and products and services of the organization.
The foundation and point of departure for effectively managing diversity is
the development of a truly multicultural organization (Nemetz and
christernsen, 1996). A multicultural organization has been described by
Jackson et al. (1992) as one that
1. reflects the contribution and interests of diverse cultural and social groups
in its mission, operations, and product or service;
2. acts on a commitment to eradicate social oppression in all forms within the
organization;
3. includes the members of diverse cultural and social groups as full
participants, especially in decisions that shape the organization; and

8. 8
follows through on broader external social responsibilities, including support
of other institutional efforts to eliminate all forms of social oppression.
Role of HRM and its challenges in International Business:
When researchers asked senior international HR managers in eight large
companies, “What are the key global pressures affecting human resource
management practices in your firm currently and for the projected future?”
The three that emerged were:
1. Deployment. Easily getting the right skills to where we need them,
regardless of geographical location.
2. Knowledge and innovation dissemination. Spreading state-of-art
knowledge and practices throughout the organization regardless of where
they originate.
3. Identifying and developing talent in a global organization and developing
his or her abilities.
How Intercountry culture differences affect HRM?
Companies operating only within the borders of the United States generally
have the luxury of dealing with a relatively limited set of economic, cultural,
and legal variables. The United States is a capitalist, competitive society. And
while the U.S. workforce reflects a multitude of cultural and ethnic
backgrounds, shared values (such as an appreciation for democracy) help to
blur potentially sharp cultural differences. Although the different states and
municipalities certainly have their own laws affecting HR, a basic federal
framework helps produce a fairly predictable set of legal guidelines regarding
matters such as employment discrimination, labour relations, and safety and
health.

9. 9
A company operating multiple units abroad isn’t blessed with such
homogeneity. For example , minimum legally mandated holidays range from
none in the United kingdom to 5 weeks per year in Luxembourg. And while
Italy has no formal requirements for employee representatives on boards of
directors, they are required in Denmark for companies with more than 30
employees. The point is that the need to adapt personnel policies and
procedures to the differences among countries complicated HR management
in multinational companies.
For example consider the following :
American, European and Asian Experiences:
The findings of Hofstede (1991), Trompenaars (1993), and other have made it
clear that management theories and practices are constrained by national
cultures. National culture shapes behaviours and structures the perceptions
that managers have of the world. Managers are guided by implicit theories
of managing and organizing that can neither be divorced form society nor
guided by universals ( Hickson, 1993). HRM impacts directly on culturally
specific ways of doing things and is buttressed by national institutions and
value system, so HRM researchers need considerable historical and cultural
insight into local conditions to understand the processes. Philosophies, and
problems of national models of HRM (Hofstede, 1993).
Countries differ widely in their cultures – in other words, in the basic values
their citizens adher to and in the ways these values manifest themselves in the
nation’s arts, social programs, politics, and ways of doing things.
Cultural differences form country to country necessitate corresponding
differences management practices among a company’s subsidiaries. For
example, in a study of about managers from Hong Kong, the People’s
Republic of China, tended to be most concerned with getting the job done.

10. 10
Chinese managers were most concerned with maintaining a harmonious
environment, and Hong Kong managers fell between the se extremes.10 A
classic study by Professor Geert Hofstede identified other international
cultural differences. For example, Hofstede says societies differ in power
distance – in other words, the extent to which the less powerful members of
institutions accept and expect an unequal distribution of power. He
concluded that acceptance of such inequality was higher in some countries
(such as Mexico) than in others (such as Sweden).
Studies show how such cultural differences can influence HR polcies. For
example, compared to U.S. employees, “Mexican workers expect managers to
keep their distance rather than to be close, and to be formal rather than
informal. “ Similarly, compared to the United States, in Mexican
organizations “formal rules and regulations are not adhered
to unless someone of authority is present.” In Mexico, individualism is not
valued as highly as it is in the United States. As a result, Some workers don’t
place as much importance on self-sufficiency. They tend to expect to receive
a wider range of services and benefits (such as food baskets and medical
attention for themselves and their families) from their employers.
In fact, the list of cultural differences is endless. In Germany, you should
never arrive even a few minutes late and should always address senior people
formally, with their titles. Such cultural differences are a two-way street, and
employees from a broad need orientations avoid the culture shock of coming
to work in the United States. For example, in the Intel booklet “ Things You
Need to Know About Working in the U.S.A.,” topics covered include sexual
harassment, recognition of gay and lesbian rights, and Intel’s expectations
about behaviour.

11. 11
Reanalyzing his IBM data for European subsidiaries along the four statistical
dimensions of individualism, uncertainty avoidance, power distance, and
masculinity, Hofstede (1993b) pursues two themes : first, culturally Europe
does not exist; and second, Europe is becoming a cultural laboratory for the
world. Europe is not becoming more similar but is, rather, learning to
collaborate. Cultural accommodations, not assimilation, is the key to
understanding European management practices.
European managers approached during 1990s with a number of different
cultural assumptions about some of the most value-laden aspects of HRM,
such as the role of collectivism, the definition of managerial skills, attitudes
toward authority, need for interpersonal feed back, assumptions about rewards
and equity, and the social and cognitive constructs that mangers use to think
about organizations and their careers (Sparrow, 1995). The most obvious
links between national culture and HRM in a country are to be found through
the following mechanisms:
1. the attitudes and definitions of what makes an effective manager and their
implications for the qualities recruited, trained, and developed.
2. the giving of face-to-face feedback, levels of power distance, and
uncertainty avoidance and their implication for recruitment interview,
communication, negotiation, and participation processes.
3. Readiness to accept international assignments and expectations of what
will get you promoted
4. Expectation of managers – subordinate relationships and their implications
for performance management and motivation.
5. Pay systems and differential concepts of distributive justice, socially
healthy pay, and the individualization of reward.
6. The mindsets used to think about organizational structuring or strategic
dynamics

12. 12
Empirical studies in the recent past reveal that significant differences still
exist between European countries in terms on centralization and vertical
hierarchy, role of flexible work practices, emphasis on rewarding customer
service, rewards for innovation and creativity, and an emphasis on corporate
responsibility (Sparrow, Schuler, & Jackson, 1994). Britain, Germany, and
Italy, however appeared to be on a path of convergence in their overall pattern
of HRM, although France can be expected to continue to diverge. A large
number of common emphases and convergent areas of HRM were emerging
such as: promoting an empowerment culture, an increased role of
communication, the need to improve horizontal management processes, the
use of IT to help structure the organization, the role of recruitment, the
importance of training and career management, and the increasing link being
forged between pay and performance.
Multiculturalism and IHRM – Indian Perspective:
Compared with U.S. concepts for HRM, an Indian perspective needs to take
the following into account:
1. More restricted levels of organization autonomy in HRM decisions such as
recruitment, dismissal, and training:
2. A history which has produced a lower exposure of organizations to market
process;
3. A greater emphasis on the role of the group over the individual;
4. The increased role of social patterns (trade unions and employee
representatives) in the management of the business and the people within
it.

13. 13
Indian managers and academic researchers need to appreciate four major sets
of factors:
1. Cultural factors, such as national understanding of distributive justice and
manager – subordinate relationship.
2. Institutional factors, including the scope of labour legislation and social
security provisions and role of trade unions.
3. Differences in business structure and system, such as the degree of state
ownership and fragmentation of industrial sectors.
4. Factors relating to the roles and competencies of HRD professional.
Similarly, there is no such thing as a single European pattern of HRM, and,
marked differences exist between countries in terms of their practice (Sparrow
and Hiltrop, 1994). The field of comparative HRM is long on description but
short on analysis.
Conclusion: IHRM- Need for contingency approach:
These discussions lend credence to the fact that a multicultural, multinational
organization cannot impart and implement “best practices” in HRM without
suitably modifying or aligning them to the firm’s internal and external cultural
environment. The belief that there is an identifiable set of best practices for
managing employees (the universal approach to IHRM) that have universal,
additive, positive effects on organizational performance seems to be a myth
rather than a reality. There is, of course, one level at which IHRM is
universal. All organizations operating across the borders have to utilize, and
hence to manage, human resources. In the ultimate analysis it could be stated
that IHRM philosophy, policies, procedures, programmes, and practices
would substantially influence the organizational performance when aligned
with nation and culture – specific IHRM strategies, there by supporting a
contingency view of IHRM in the multicultural context.

14. 14
References:
Andrew M Pettigrew, 1979. On studying organizational cultures.
Administrative science Quarterly (December ):574
Bailey W.Jackson, Frank Lafasto, Henry G. Schultz, and Don Kelly,
1992. Diversity. Human Resource Management (Spring /Summer) :22
Dowling, P.J., schuler, R.S. and Welch,D. 1994. International dimension of
human resource management. Boston: PWS-Kent.
Glary Dessler 2003,Human Resource Management , Prentice Hall Inc.465
Greer, C.R. and Ireland, T.C. 1992. Organizational and financial correlates
of a “Contrarians” human resource investment strategy. Academy of
Management Journal. 35(5)956-84
Gill, c. 1993. Technological change and participation in work organization:
recent results from a European community survey. International Journal of
Human Resource Management 4(2):325-47
Gronhaug, K. and Nordhaug, O. 1992. International human resource
management: An environment perspective. International Journal of Human
Resource Management. 3(1): 438-44
Hofstede G. 1991. Cultures and organizations: software of the mind.
London: McGraw-Hill. Hofstede G. 1993. Riding the waves of culture
London: The Economist Books.

15. 15
Hofstede G. 1993 Cultural constraints in Management theories. Academy of
Management Executives 7(1):81-93
Kidger, P. J. 1991. The emergence of international human resource
management. International Journal of Human Resource Management.
September (2): 149-64.
Mandrell B. and Keller-Gray S. 1990. Management Development that
values diversity. Personnel (March). 41-47.
Milliman, J, Von Gilnow, MA and Nathan, M. 1991. Organizational human
resource management in multinational companies: Implications for
congruence theory. Academy of Management Review 16(2): 318-39
Patracia L. Nemtez and Sandra L. Christensen, 1996. The challenge of
cultural diversity: Harnessing a diversity of views to understand
multiculturalism. Academy of Management Review (April):434-462.
Richard Pasacle. 1984 Fitting new employees into the company culture.
Fortune (May 28):28
Sparrow P.R. and Hiltrop,J.M.. 1994. European human resource
management transition, London: Prentice-Hall
Trompenaars,F. 1993. Riding the Waves of Culture. London: The
Economist Books.
Thomas R.R. J. 1990 from affirmative action to affirming diversity. Harvard
Business Review (March-April) 107-117.

16. 16
Author’s Profile
Prof. Dr. Uday Salunke Director - Welingkar Institute of Management is
a mechanical engineer with a management degree in 'Operations', and a
Doctorate in 'Turnaround Strategies'. He has 12 years of experience in the
corporate world including Mahindra & Mahindra, ISPL and other companies
before joining Welingkar in 1995 as faculty for Production Management.
Subsequently his inherent passion, commitment and dedication toward the
institute led to his appointment as Director in 2000. Dr. Salunkhe has been
invited as visiting fellow at the Harvard Business School, USA and European
University, Germany. He has also delivered seminars at the Asian Institute of
Management, Manila and has been awarded "The Young Achievers Award-
2003" in the field of Academics by the Indo American Society recently.