3.1 Diversity and Multiculturalism


Learning Objectives

  1. Define, explain, and identify your own power and privilege.
  2. Provide reasoning as to why diversity is important to maintain profitability.

Many people use the terms diversity and multiculturalism interchangeably, when in fact, there are major differences between the two. Diversity is defined as the differences between people. These differences can include race, gender, sexual orientation, religion, background, socioeconomic status, and much more. Diversity, when talking about it from the human resource management (HRM) perspective, tends to focus more on a set of policies to meet compliance standards. The Equal Employment Opportunity Commission (EEOC) oversees complaints in this area. We discuss the EEOC in Section 3.3.1 “Equal Employment Opportunity Commission (EEOC)” and in greater detail in Chapter 4 “Recruitment” and Chapter 5 “Selection”.

Multiculturalism goes deeper than diversity by focusing on inclusiveness, understanding, and respect, and also by looking at unequal power in society. In a report called “The 2007 State of Workplace Diversity Management Report1,” most HR managers said that diversity in the workplace is

  1. not well defined or understood at work,
  2. focuses too much on compliance, and
  3. places too much emphasis on gender and ethnicity.

This chapter focuses on the advantages of a diverse workplace and discusses multiculturalism at work and the compliance aspect of diversity.

Power and Privilege

As defined in this chapter, diversity focuses on the “otherness” or differences between individuals and has a goal of making sure, through policies, that everyone is treated the same. While this is the legal and the right thing to do, multiculturalism looks at a system of advantages based on race, gender, and sexual orientation called power and privilege. In this system, the advantages are based on a system in which one race, gender, and sexual orientation is predominant in setting societal rules and norms.

The interesting thing about power and privilege is that if you have it, you may not initially recognize it, which is why we can call it invisible privilege. Here are some examples:

  1. Race privilege. Let’s say you (a Caucasian) and your friend (an African American) are having dinner together, and when the bill comes, the server gives the check to you. While this may not seem like a big issue, it assumes you (being Caucasian) are the person paying for the meal. This type of invisible privilege may not seem to matter if you have that privilege, but if you don’t, it can be infuriating.
  2. Social class privilege. When Hurricane Katrina hit New Orleans in 2005, many people from outside the storm area wondered why so many people stayed in the city, not even thinking about the fact that some people couldn’t afford the gas to put in their car to leave the city.
  3. Gender privilege. This refers to privileges one gender has over another—for example, the assumption that a female will change her name to her husband’s when they get married.
  4. Sexual orientation privilege. If I am heterosexual, I can put a picture of my partner on my desk without worrying about what others think. I can talk about our vacations together or experiences we’ve had without worrying what someone might think about my relationship. This is not the case for many gay, lesbian, and transgendered people and their partners.

Oftentimes the privilege we have is considered invisible, because it can be hard to recognize one’s own privilege based on race, gender, or social class. Many people utilize the color-blind approach, which says, “I treat everyone the same” or “I don’t see people’s skin color.” In this case, the person is showing invisible privilege and thus ignoring the privileges he or she receives because of race, gender, or social class. While it appears this approach would value all people equally, it doesn’t, because people’s different needs, assets, and perspectives are disregarded by not acknowledging differences (Plaut, et. al., 2009).

Another important aspect of power and privilege is the fact that we may have privilege in one area and not another. For example, I am a Caucasian female, which certainly gives me race privilege but not gender privilege. Important to note here is that the idea of power and privilege is not about “white male bashing” but understanding our own stereotypes and systems of advantage so we can be more inclusive with our coworkers, employees, and managers.

So what does this all mean in relation to HRM? It means we can combine the understanding of certain systems that allow for power and privilege, and by understanding we may be able to eliminate or at least minimize these issues. Besides this, one of the best things we can do for our organizations is to have a diverse workforce, with people from a variety of perspectives. This diversity leads to profitability and the ability to better serve customers. We discuss the advantages of diversity in Section 3.1.2 “Why Diversity and Multiculturalism?”.

Human Resource Recall

Take this week to examine your own power and privilege as a result of gender, race, or social class. Notice how people treat you because of your skin color, gender, or how you dress and talk.

Stereotypes and the Effect on Privilege

This video discusses some racial stereotypes and white privilege through “on the street” interviews.

Please view this video at https://www.youtube.com/watch?v=aQK8H0z-irM

Why Diversity and Multiculturalism?


Figure 3.1


While there may be no “money fairy,” diversity has proven to result in higher profits for companies.


When many people look at diversity and multiculturalism, they think that someone’s gender, skin color, or social class shouldn’t matter. So diversity can help us with policies to prevent discrimination, while multiculturalism can help us gain a deeper understanding of the differences between people. Hopefully, over time, rather than look at diversity as attaining numerical goals or complying with the law, we can combine the concepts to create better workplaces. Although many books discuss laws relating to diversity, not many actually describe why diversity is necessary in the workplace. Here are a few main reasons:

  1. It is the law.
  2. We can better serve customers by offering a broader range of services, such as being able to speak a variety of languages and understanding other cultures.
  3. We can better communicate with one another (saving time and money) and customers.
  4. With a multicultural perspective, we can create better ideas and solutions.

Fortune 500 Focus

Hilton is one of the most recognized names in the hotel industry. Hilton employs 130,000 people in 3,750 hotels in 84 countries. The hotel chain, with some locations franchised, focuses on diversity and inclusion as part of its operations. First, it has a director of global diversity and inclusion, who plays a key role in executing the Hilton global diversity and inclusion efforts, which are focused on culture, talent, workplace, and marketplace diversity strategies. Each Hilton brand must establish its own diversity performance goals and initiatives, which are monitored by the diversity council. The diversity council is made up of the company board of directors, the CEO, and vice president of human resources. At any given time, Hilton has thirty or more diversity initiatives in place (Forsythe, 2005), which are managed by the diversity council.

Hilton has created several diversity programs within the communities in which the hotels operate. For example, Hilton was one of the first hotel chains to develop an outreach program to educate minority and female entrepreneurs for franchise investments. One part of the program includes invitation-only seminars that discuss what it takes to be a successful hotel owner. Hilton says its diversity seminars are driven by the fact that it wants employees to reflect the diversity of the customers.

In addition to the outreach program, Hilton partners with historically black colleges and universities for recruiting, which creates an effective tie to jobs once students graduate. It has developed a supplier tracking system, so it knows the total number of supplier payments made and how many of those suppliers are female or minorities. William A. Holland, the vice president for workforce planning and analysis says, “It takes leadership to make diversity work, and our diversity initiative comes from the highest levels of our organization” (Forsythe, 2005)

Promoting a multicultural work environment isn’t just the law. Through a diverse work environment and multicultural understanding, organizations can attain greater profitability. A study by Cedric Herring called Does Diversity Pay? (Herring, 2006) reveals that diversity does, in fact, pay. The study found those businesses with greater racial diversity reporter higher sales revenues, more customers, larger market shares, and greater relative profits than those with more homogeneous workforces. Other research on the topic by Scott Page, the author of The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies (Page, 2007) ended up with similar results. Page found that people from varied backgrounds are more effective at working together than those who are from similar backgrounds, because they offer different approaches and perspectives in the development of solutions. Often people believe that diversity is about checking a box or only providing window dressing to gain more customers, but this isn’t the case. As put by Eric Foss, chairperson and CEO of Pepsi Beverages Company, “It’s not a fad. It’s not an idea of the month. It’s central and it’s linked very directly to business strategy” (Holstein, 2009). A study by the late Roy Adler of Pepperdine University shows similar results. His 19-year study of 215 Fortune 500 companies shows a strong correlation between female executives and high profitability (Adler). Another study, conducted by Project Equality, found that companies that rated low on equal opportunity issues earned 7.9 percent profit, while those who rated highest with more equal opportunities resulted in 18.3 percent profit (Lauber, 2011). These numbers show that diversity and multiculturalism certainly is not a fad, but a way of doing business that better serves customers and results in higher profits.

As managers, we need to recognize this and develop policies that recognize not only the importance of diversity but the importance of nurturing multicultural understanding in the workplace. Many employees, however, may be resistant to a discussion on diversity and multiculturalism. Much of this may have to do with their own power and privilege, but some resistance may be related to the discomfort people may feel when faced with the realization that change is a necessity and the cultural makeup of the workplace is changing. Some people may feel “We’ve always done it this way” and are less willing to change to the new ways of doing things.

Perhaps one of the best diversity statements by a Fortune 500 company was made by Jose Manuel Souto, the CFO for Visa in Latin America. He says, “A diverse workforce is critical to providing the best service to our global clients, supporting our business initiatives, and creating a workplace environment that promotes respect and fairness2.”

Now that you have an understanding of the meaning of diversity, power, and privilege, as well as the importance of diversity, we will discuss specific diversity strategies in Section 3.2 “Diversity Plans”.

Key Takeaways

  • Diversity is the real or perceived differences between individuals. This can include race, gender, sexual orientation, size, cultural background, and much more.
  • Multiculturalism is a term that is similar to diversity, but it focuses on development of a greater understanding of how power in society can be unequal due to race, gender, sexual orientation, power, and privilege.
  • Power and privilege is a system of advantages based on one’s race, gender, and sexual orientation. This system can often be invisible (to those who have it), which results in one race or gender having unequal power in the workplace. Of course, this unequal power results in unfairness, which may be of legal concern.
  • Diversity is important to the success of organizations. Many studies have shown a direct link between the amount of diversity in a workplace and the company’s success.


  1. Perform an Internet search to find a specific diversity policy for an organization. What is the policy? From what you know of the organization, do you believe they follow this policy in reality?
  2. Visit the website http://www.diversityinc.com and find their latest “top 50 list.” What criteria are used to appear on this list? What are the top five companies for the current year?

1Society for Human Resource Management, The 2007 State of Workplace Diversity Management Report, March 2008, accessed August 3, 2011, http://www.shrm.org/Publications/HRNews/Pages/DiversityBusinessImperative.aspx.

2National Latina Business Women Association, “Women and Minorities on Corporate Boards Still Lags Far Behind National Population,” accessed August 24, 2011, http://nlbwa.org/component/content/article/64-nationalnews/137-procon-and-asian-global-sourcing-conference.


Adler, R., “Women in the Executive Suite Correlate to High Profits,” Glass Ceiling Research Center.

Forsythe, J., “Leading with Diversity,” New York Times, 2005, accessed July 13, 2011, http://www.nytimes.com/marketing/jobmarket/diversity/hilton.html.

Herring, C., “Does Diversity Pay? Racial Composition of Firms and the Business Case for Diversity” (paper presented at the annual meeting of the American Sociological Association, Montreal, Canada, August 11, 2006), accessed May 5, 2009, http://citation.allacademic.com/meta/p_mla_apa_research_citation/1/0/1/7/9/pages101792/p101792-1.php.

Holstein, W. J., “Diversity is Even More Important in Hard Times,” New York Times, February 13, 2009, accessed August 25, 2011, http://www.nytimes.com/2009/02/14/business/14interview.html.

Lauber, M., “Studies Show That Diversity in Workplace Is Profitable,” Project Equality, n.d., accessed July 11, 2011, http://www.villagelife.org/news/archives/diversity.html.

Page, S. E., The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies (Princeton, NJ: Princeton University Press, 2007).

Plaut, V. C., Kecia M. Thomas, and Matt J. Goren, “Is Multiculturalism or Color Blindness Better for Minorities?” Psychological Science 20, no. 4 (2009): 444–46.


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