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 also means that the lawsuits are unlikely to provide a sufficient deterrent against discrimination. An important subsidiary finding of the study is that employment discrimination class actions have lost their public nature and have evolved into private tort claim where there is little public oversight. The last part of the article proposes several reform measures, including increasing damages available in employment discrimination suits, and imposing a public monitoring function on the settlement. (3)

Sexual Harrassment

Next I will focus on sexual harassment in the work environment and Marion Shaub of Wrightstown, Pa and her suit against Fed-Ex. Sexual harassment in the work place is one of the most complicated areas of employment law. It is also one area that has received the most press. Most cases of sexual harassment are never reported because the harassed individual is uncertain of their options and rights. There are two forms of sexual harassments Quid pro Quo" and "hostile environment"

Although "quid pro quo" and "hostile environment" harassment are distinct claims, the line between the two is not always clear and the two forms of harassment often occur together. "For example, an employee's tangible job conditions are affected when a sexually hostile work environment results in her constructive discharge. Similarly, a supervisor who makes sexual advances toward a subordinate employee may communicate an implicit threat to adversely affect her job status if she does not comply. "Hostile environment" harassment may acquire characteristics of "quid pro quo" harassment if the offending supervisor abuses his authority over employment decisions to force the victim to endure or participate in the sexual conduct. Sexual harassment may culminate in a retaliatory discharge if a victim tells the harasser or her employer she