Racial Diversity and Company’s performance
Diversity in business is a big issue
right now. Increasing globalization results in racial diversity in workplace.
The U.S. workforce is undoubtedly becoming more diverse. As of June 2012 people
of color made up 36 percent of the labor force (Center for American Progress, 2017). By race, Whites made up the
majority of the labor force (79 percent). Blacks and Asians made up an
additional 12 percent and 6 percent, respectively (Bureau of labor statistics, 2016).
Racial diversity can affect the
workplace in numerous ways. Negative effects can include miscommunication,
creation of barriers, and dysfunctional adaptation behaviors (Martin, G. C. 2014). Positive effect
can be the interaction across race and discussion of racial and ethnic issues
greatly predicts people’s retention, intellectual and social self-concept (Antonio, A. L., Chang, M. J., Hakuta, K.,
Kenny, D. A., Levin, S., & Milem, J. F. 2004).
Google’s latest diversity statistics
reveal that 59 percent of Google employees are white, while 32 percent are
Asian, 3 percent are Hispanic, and 2 percent are black. (TIME, 2016). Facebook is still predominantly white and Asian, with
each group respectively representing 49 and 40 percent of Facebook’s nearly
21,000 employees, and has 5 percent Hispanics and 3 percent black people (The Verge, 2017). According to
Microsoft’s annual statistics report, 56.2 percent of Microsoft’s employees are
white, 31.3 percent are Asian and 5.9 percent are Hispanics or Latino (Inside Microsoft, 2017)
Although most academic research has been
primarily concerned with the impact on individual and group outcomes of
diversity in dyadic relationships and groups (Richard, O. C. 2000, Dwyer, Richard, & Shepherd, 1998; O’Reilly,
Caldwell, & Barnett, 1989), most of them are more concerned with the
management of the Human Resources. Many research had been applied to the increasingly
racially diverse workforce and to the aspect of how to recruit and select
different people in different color. However, few of them point out the direct
relationship between the racially diverse and company’s outcome. Race always
been the most frequent issues related to Human Resource (HR) managers and CEOs (Carrell & Mann, 1995). Firms are
more likely to pick employees who have the same culture as they do. In prior
studies, researchers define the race as one of the culture diversity dimension
and tried to explore the solution of how to manage this diversity, few of them
directly treat race as an independent dimension.
This paper is to positively analysis the
effect of racial diversity in firms, different from its management. Distinguish
from the past researches which indicate the impact on individual and group
outcomes of racial diversity, this paper will pay more attention to the firm
level, demographic conception, and race dimension.
intuitively recognize the importance of diversity. The
labor pools from which establishments hire may be important relative to the
effects of diversity on business outcomes. It is also increasingly clear that
pure commercial terms are justified. A 2015 McKinsey report on 366 public
companies found that those in the top quartile for ethnic and racial diversity
in management were 35% more likely to have financial returns above their
industry mean, and those in the top quartile for gender diversity were 15% more
likely to have returns above the industry mean. (McKisney research, 2015).
Minority views stimulate consideration of nonobvious alternatives in work
settings (McLeod & Lobel, 1992) The
heterogeneity of decision making and problem-solving style makes better decisions
in the broader view and more thorough problem analysis (Jackson, 1992).
A few laboratory studies have provided
support for the idea that racial diversity benefits decision making, for
example, research from Tufts University (2006), which involving 200
participants on 29 mock juries, indicates that panels of whites and blacks
performed better than all-white groups by a number of measures, so they draw
into conclusion that diverse groups perform better than homogenous groups when
it comes to decision making. Working with people who are different from you may
challenge your brain to overcome its stale ways of thinking and sharpen its
performance. (Grant, D. R. 2016). Another research done from a controlled experimental
brainstorming study (McLeod et al., 1996) showed that the ideas produced by
ethnically diverse groups were judged to be of higher quality than the ideas produced
by homogeneous groups. In general, these few studies indicate the value obtained
from cultural diversity.