Organizational Dynamics, Vol. 30, No. 2, pp. 149-161, 2001 2001 Elsevier Science, Inc. www.organizational-dynamics.

com

ISSN 0090-2616/01/$-see frontmatter PIl S0090-2616(0I)00049-3

Applying an Organizational Development Approach to Creating Diversity

RICHARD S. ALLEN KENDYL A. MONTGOMERY

iversity is fast becoming a business imperative in the new millennium. The U.S. Labor Department predicts that by 2005, 85% of new workers entering the labor force will be women or minorities. A 1998 study by the Society for Human Resource Management found that 75% of the Fortune 500 and 36% of firms of all sizes already have some sort of diversity program underway. Studies of diversity in organizations have shown that that an exposure to diverse colleagues helps managers make better decisions and cultivate new ideas by drawing on a larger pool of information and valuable experiences. A diversified staff can also help an organization increase market share by better enabling the organization to understand how to market to an increasingly diverse customer base. This serves to increase the agility and adaptability of the organization. Additionally, minority customers often feel that a company's diversified staff can better identify with their everyday experiences, thus enhancing company credibility. McDonald's Corp. and Wal-Mart Stores are prime examples of organizations that are reaping the benefits of an increased understanding of how to market to ever more diverse customers, based on their own internal diversity strengths. Both organizations, realizing that the U.S. Hispanic market grew at a

tremendous rate in the 1990s, decided to attempt to improve their marketing to the Hispanic community. Because of an increased understanding of the importance of the extended family in Hispanic cultures, McDonald's has reconfigured the seating in many of its restaurants to provide larger group areas where extended families can sit together. Similarly, Wal-Mart has begun to advertise heavily in Hispanic areas during the period between Christmas and Three Kings Day (January 6) in recognition of the tradition of Hispanics exchanging gifts on Three Kings Day. An organization that has achieved diversity throughout ail levels of management also stands a much better chance of recruiting, motivating and retaining talented minority eniployees. Diversified leadership in the organization increases productivity and innovation through the generation of new ideas, and the development of more motivated minority employees. Minority employees at lower levels in the organization feel more committed to the company, because they find it easier to identify with minority managers at higher levels in the organization. This results in employees who feel valued, competent, and enjoy coming to work. Further benefits include improved decision making and better quality management instilled by increased breadth and openness from a happier workforce.
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A Typology of Diversity
Taylor Cox has developed a framework that helps explain why organizations on the forefront of diversity are significantly different from other organizations and better able to reap the benefits of diversity. Cox's typology concerns the attitudes that organizational members have towards diversity. There are three levels of organizations in the typology: monolithic, pluralistic, and multicultural. Monolithic organizations are at the least developed level with regard to diversity. One large majority demographic group (typically white males) manages them. Women and minorities are present in these organizations, but they are expected to conform to the norms and values of the majority group. The next level of diversity development is known as a pluralistic organization. This type of organization is typically populated by a much more diverse set of employees, because the organization has made a special effort to hire and promote minority group members. A pluralistic organization may have special affirmative action programs or minority mentoring programs to help ensure more representation of minorities throughout the organization. But minority members of these organizations are still expected to adhere to the norms and values of the overriding majority group. The organizations leading the pack in terms of diversity and reaping the greatest benefits have reached the final level of development. They are classified as multicultural orgaruzations. These organizations actually value the diversity that they have created within their workforce. Unlike the pluralistic organization, multicultural organizations encourage members of different groups to learn from each other; they adopt some of the norms and values of minority groups. These practices help create an environment in which differing viewpoints are valued and given consideration. Multicultural organizations have created a unique organizational culture. This new organizational culture is better suited to deal with an increasingly multicultural and fast-changing

Richard S. Allen is an assistant professor of management at the University of Tennessee at Chattanooga. Allen received his B.S. from Pennsylvania State University and his Ph.D. from the University of Pittsburgh. Before entering academia, he spent over 15 years in a variety of corporate management, training and consulting roles at FedEx Ground (formerly RPS) and Texas Instruments Inc. He has also done extensive consulting with a wide variety of businesses in organizational development and change, management skill development, teambuilding, process improvement and reengineering. Allen's research interests are in the area of organizational development and change. His current research projects and publications examine the role of the reward system in support of organizational strategy and the relevance of equity sensitivity.

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marketplace. In short, these organizations gain a competitive advantage.

WHEN DIVERSITY FAILS

Organizations that fail to make the transition from the monolithic stage run the risk of serious public relations incidents and negative bottom-line financial implications. There have been many highly publicized examples of organizations failing this diversity test. Texaco Inc. provided one example, when tapes surfaced of executives using racial epithets and planning to destroy evidence of their discriminatory practices. The Denny's racial discrimination suit that alleged that black customers were being discriminated against, and that black employees were being systematically fired, was another highly publicized case. Likewise, MitsubisW Motor Manufacturing and Astra Pharmaceuticals are prime examples of organizations that lost big sexual harassment suits. State Farm Insurance also lost a gender bias suit. These are all extreme examples of monolithic organizations that have struggled with the issues of diversity, discrimination and bias, and have paid a high price in terms of corporate reputation and customer goodwill. Given the serious implications of failing the diversity test on one hand, and the previously discussed potential benefits of achieving diversity on the other hand, it is a much more common practice today for companies to actually attempt to create diversity. U.S. companies spend an estimated $200 to $300 million a year on diversity training programs. But unfortunately most diversity programs tend to meet with mixed results or even failure. Discrimination lawsuits filed by women and minorities continue to rise. Organizations typically attempt to achieve diversity through a special program or a series of initiatives. These attempts at creating diversity are often poorly planned and disjointed in their implementation. At best, many of these organizations move to the pluralistic level of diversity development. More minorities are hired and eventu-

KendylA. Montgomery is currently a doctoral student at Emory University concentrating on organizational and stratification theories. In addition, she is completing her M.B.A. at the University of Tennessee at Chattanooga, She received her B.S, from the University of Tennessee at Chattanooga. Her current research interests include organizational culture, diversity issues, industrial sociology, globalization and organizational comparisons, with a special interest in health-care systems. Montgomery was previously employed as a client services officer for Human Resources Development Canada, where she specialized in interpretation of unemployment insurance law.

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ally promoted, but they are expected to conform to the majority organizational culture. A truly diverse, multicultural work environment is never realized. These organizations become stuck in the pluralistic stage of development and fail to reap the true competitive rewards of a multicultural workforce. An excellent example of a company not doing enough to bring about full multiculturalism in their organization is Publix Super Markets. In January 1997, this company settled an $81.5 million gender discrimination suit. To avoid such suits in the future, Publix immediately responded with a diversity program. Their program included increased job postings, the ability for employees to apply for openings, the administration of standardized skill assessment tests and increased information dissemination about the different jobs that the corporation offers and the skills necessary to qualify for them. While this ser\'ed to improve the equity of promotion decisions, and Publix exhibited an increase in women and African Americans within their management ranks, they failed to directly target the imderlying cultural aspects of the lawsuit. As a result, Publix has been subsequently hit with two additional suitsone for racial discrimination and a second for gender discrimination. The new lawsuits suggest that Publix's diversity program is not having a corporate-wide impact on its organizational culture. It appears that Publix has become stuck at the pluralistic stage of development. Why Diversity Programs Typically Fail Diversity programs are doomed to fail if they are instituted in the wrong way or for the wrong reasons. Diversity consultants have identified a number of reasons why diversity programs typically fail. First and foremost are companies that start these programs because diversity is viewed as the latest human resource fad or because an outside consultant or agency recommends that they implement a diversity program. Unless the impe152 ORGANIZATIONAL DYNAMICS

tus to create a program comes from within, the battle often becomes hopelessly difficult. Many companies, even if they recognize the need for a diversity program, fail to implement a plan that is custom-made for their organization. Instead, many organizations tend to choose an off-the-shelf, one-size-fits-ali pn> gram. Unless the program is based on tlie organization's own unique culture, internal sti^engths, weaknesses and needs (disco\'ered through research), and implemented by an intonial consultant who knows the organization, the likelihood of buy-in from the staff in not great. Another common reason why diversity programs often fail is that they go only as far as awareness training, and never get to the point of providing employees with the tools necessary to put the theory into practice. Management may give lip service to the program and not take the time or effort to ensure that there is adequate follow-up. In these cases, individuals are not encouraged to practice what they have learned, and no real culture change takes place. Frequently resources are not allocated to support the change, and if money is made available, managers often fail to expend personal effort to practice what they preach. Shoney's Inc. restaurants are a case in point. When the chief executive officer (CEO) attempted to organize diversity sensitivity sessions for top managers, the board fought the sessions based on their cost. In summary, diversity initiatives often fail because they typically use a scattershot approach instead of a planned apprtiach to organizational diange. Top managers often identify a need for diversitytliey want tlio benefitsbut the implementation is frequently disjointed and takes on a "program of the year" approach. Employees instinctively realize this, and real cultural change is not enacted.

APPLYING AN ORGANIZATIONAL DEVELOPMENT APPROACH As we reviewed the literature regarding the current diversity landscape, it became appar-

ent to us that what has been learned by over 50 years of theory, research, and practice on how organizations can best implement change is essentially being ignored by the vast majority of organizations attempting to achieve diversity. We asked ourselves what a diversity initiative would look like, if it were based on what has been learned from the fields of organizational development and culture change. In other words, how can practitioners interested in applying a systematic and carefully planned approach based on theory and research help their organizational change into a diverse, multicultural environment? How can managers attempting to achieve diversity use this knowledge to make sense out of the wide variety of diversity practices and activities that are commonly available and develop a coherent approach with a greater chance for success? The remainder of this article discusses an approach that answers these important questions. What We Know About How Organizations Change It is not enough to say analytically that diversity is what an organization needs. A plarmed course of action is necessary. How is a company to go about gaining a diverse roster of skilled employees who come equipped with the necessary skills to generate corporate sustainability in the decades to come? We propose that diversity programs would stand much greater chances of success if they used a planned approach based on what is known about how organizations change from the fields of organizational development and culture change. An organization that wishes to develop diversity as an enabler of competitive advantage can be most effective if it follows a set plan. This organizational development plan of action must start with increasing awareness of diversity and its associated benefits. Once the organization, starting from the top down,, has gained awareness that diversity is beneficial, then the organization can move through a series of steps geared toward in-

stilling a new culture throughout the organization. Finally, an organization must put in place mechanisms that will ensure the new culture is perpetuated, and the organization does not revert back to its original state. The field of organizational development is based in large part on the original theory and work done by Kurt Lewin. In his seminal research on organizational change, Lewin theorized that the forces driving change must be increased and/or the forces resisting change must be decreased to a point at which the driving forces overcome the resisting forces. Lewin believed that organizations, with their associated patterns of attitudes, expectations and behavioral norms, behave much as other living biological systems and are influenced by the concept of homeostasis. In other words, organizations tend to resist change and retum to a previous state after a disturbance- In observing instances of successful organizational change, Lewin noted that they these organizations experience three distinct phases: freezing, moving, and refreezing. His model of organizational change and resulting research was built around these three stages. Edgar Schein, building on Lewin's work, has refined the model and extended it to the changes in psychological processes that are necessary for an organization to successfully change its culture. During the initial stage, it is critical that the motivation to change is increased to the point where the present organizational culture is ur\frozen. The present state must be disconfirmed and sufficient anxiety or guilt must be aroused in the members to create this motivation. A state of psychological safety must also be created to allow the organizational members to change without making them overly defensive. Once the uiifreezing has taken place, initiatives can be put into place that actually serve to change the existing culture and move it in a new direction. Once the change has taken place, systemic refreezing must occur to ensure that the change fits the organization as a whole and its various subsystems. Cultural changes must be accepted at the individual, group, and functional and organizational
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levels if they are to be long lasting. Otherwise, the organization, based on the concept of homeostasis, is likely to retum to its prechange state. Applying What We Know About Organizational Change to Diversity Initiatives Because the transition from monolithic or pluralistic organizations to diverse, multicultural environments is essentially a change in organizational culture, we propose that this model of planned change can be applied to increase the likelihood of achieving true organizational diversity. Failure to address all three phases of the model is likely to result in an organization either becoming mired in the pluralistic stage of diversity development or reverting back to the monolithic stage, thus foiling any attempt at achieving the potential benefits of true multicultural diversity. Our review of the business practices associated with diversity suggests that there are a wide variety of practices that help a business move forward on the path towards achieving competitive advantage through diversity. But most managers fail to view these practices as parts of a holistic, systemic effort of planned organizational culture change. In other words, many mangers see the individual trees {practices which they believe will promote diversity), but fail to see the forest (develop an overall plan that will use these practices to evoke lasting cultural change). In the remainder of this article we use the Lewin-Schein change model as a framework to organize common diversity practices into a coherent program of planned organizational change. Our model is summarized in Fig. 1, and each stage of the model is discussed in greater detail with examples from real-world organizations. Unfreezing For unfreezing to occur, the forces advocating change must be increased to the point that they overcome the forces resisting change. Something dramatic, such as serious
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financial problems or a high profile lawsuit or public relations fiasco like those experienced by Dermy's, Texaco, or Publix, can serve to unfreeze the organization. But there need not be such a high profile e\'ent for unfreezing to occur. It may be a gradual realization on the part of top management that diversity is necessary to be competitive in the present or near-term future. Top management support for diversity is certainly critical, Management needs to begin the process of unfreezing the current culture by changing the system within which it operates. One indicator of successful diversity programs is diverse company leadership. Companies with diverse top management teams and boards of directors are in a better position to gain the advantages of diversity. Diversity in high-profile positions sends a strong symbolic message to the rest of the organization. But monolithic or pluralistic organizations do not commonly start with diversity at the top. At the very least, the existing top management team must be exposed to and convinced of the potential benefits that diversity can provide their organization. Once committed, top management must then create a vision for the future and communicate it to the rest of the organization. Management must then begin to show symbolic support for the diversity vision in their words and actions. For example, speeches, letters, and other communications should include pro-diversity rhetoric. Xerox Corp. is an excellent case in point. As far back as 1972, then Xerox CEO Peter McCollough announced that diversity was as important a business responsibility as profitability. Likewise, then Corning Glass CEO James R. Houghton made diversity a primary business goal as far back as 1983. These organizations then went about the business of making their diversity visions a reality. Management must also devote adequate organizational resources to diversity. A diversity steering committee comprised of top managers should be formed to oversee and coordinate the organization's diversity efforts. This steering committee is responsible

FIGURE 1 Model for Creating Diversity

Unfreezing Top Management Commitment and Vision Management Symbolic Communication And Actioos Goal-setting

Moving Recruiting and Outreach Programs Co-op and Internship Programs Training and Education Mentoring and Career Development

Refreezing Policies & Procedures Job Descriptions Reward System

Competitive Advantage
r

Improved Creativity and Decision Making More Agile and Adaptive Work Force Improved Ability to Market to a Broader Demographic Increased Market Share

for overseeing and guiding the overall diversity plan. It is also responsible for making sure that sufficient organizational resources are committed to achieving the plan and managerial follow-up is applied. Microsoft Corp. is an excellent example of a company that has achieved a multicultural level of diversity. Microsoft's top managers proclaim that their greatest assets are their employees, and that their continued success is reliant upon fostering diversity. They have created a diversity department, which works to uphold the firm's vision, "to

maximize the company's performance through understanding and valuing differences. " A key Initiative of the vision is to increase the number of women and minorities within company ranks. Microsoft believes that when a company sells products to people in 150 countries who speak 50 different languages, a singular point of view can be detrimental. The company has created a Diversity Advisory Council, which targets a number of specific groups and tries to keep Microsoft an attractive place for all individuals to work. These targeted groups include
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African Americans, employees with attention deficit disorder, Chinese, deaf or hard of hearing employees, Filipinos, gay, lesbian, bisexual and transgender employees, Hispanics, Indians, Koreans, Native Americans, single parents, women, and working parents. Santiago Rodriquez, Microsoft's diversity director, states that: We need to stress that all human cultures have common needs, a common sense of humanity. But there are differences, too. How in the world do yovi please a customer, for example, if you don't know what he or she values? That's what culture is all about, that's what differences are '' all about. Diversity assumes not only that people are differentwe know thatbut that their difference is value-added. If you know how to harness that difference, you'll be more competitive as a corporation than those firms that don't, whether in the domestic marketplace, and certainly in the global marketplace. As part of their diversity vision and planning process, top management and the Diversity Steering Committee should identify a list of critical diversity-related skills and competencies that will be required for the organization to be successful in the future and set measurable diversity improvement goals. -

Moving
Once an organization has taken the initial steps to unfreeze the culture, management must then move through a number of steps to achieve a complete organizational culture change. This movement toward diversity should include such practices as recruiting and outreach programs, co-op and internship programs, training and educational programs, and mentoring and career development programs. The diversity vision and symbolic actions of top management in the unfreezing stage can only be translated into
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widespread organizational diversity through these sorts of concrete activities. But it is important to note that each of these practices, if done separately and not as part of a planned approach to organizational change, is much less likely to be successful in changing the organization's culture. The synergies between the practices and application at appropriate points in time help to ensure a more successful diversity implementation. Recruitment of new staff from underrepresented groups starts the process of cultural conversion. Targeting recruitment efforts in regions or schools with high percentages of minorities is one potential strategy. Likewise, placing ads in publications or Web sites with high minority readership is another method to help increase diversity in the candidate pool. These programs are useful in that they can supply the necessary minority candidates, but often fail to deliver what the organization really needscandidates with the skills necessary to succeed in corporate America. This issue is compounded by the lack of opportunity for minority students to gain practical work experience. As a result, minority students are often placed at a disadvantage when entering the workforce, resulting in the employer overlooking their true potential. Corporate recruiters, who have been frustrated with the experience of recruiting qualified minority applicants using these traditional approaches, may also turn to co-op curriculums and internship programs to help meet their needs. One way is to increase access and opportunities for minorities. We suggest that this take place through the use of targeted recruiting and development of those who have been traditionally overlooked. An example of this sort of recruiting and outreach is INROADS, a national internship and placement program for minorities, which helps corporations not only discover minorities, but also develop highly skilled employees. INROADS' mission is to develop and place talented minority youth in business and industry and prepare them for corporate and community leadership positions. College placement offices and corporate recruiters

can apply lessons learned from the INROADS model to more effectively promote minority placement and diversity in the workplace. INROADS seeks out high school minorities who are headed for college and prepares them for the corporate world by providing them with valuable work experience, business savvy, and developmental assistance throughout their collegiate experience. Through summer internships with companies, employers gain the opportunity to groom, pre-train, mentor and mold these prospective entry-level minority candidates for permanent employment. A survey of 258 corporations conducted by Northwestern University indicates that the INROADS approach is quite successful. A key barometer of success of co-op and internship programs is the percentage of participants who are eventually offered full-time positions. Only 37% of all students nationwide who worked in an internship capacity were offered fulltime employment. INROADS posted an impressive 75% offer rate. While the organization is recruiting its future diverse staff, and nurturing current minority employees, it also needs to provide existing staff with diversity training. Motorola Inc., for example, requires that all employees enroll in 40 hr of training per year. While not all of this training focuses specifically on diversity, any employee can enroll in courses covering diversity as a competitive advantage, the spirit of diversity, or the transition to diversity. Senior managers must attend two-day diversity seminars; there are diversity and sexual harassment courses for all managers, and diversity awareness and interviewing courses for managers and directors. Companies should approach this component of their diversity strategy with care. There are tradeoffs that must be weighed to ensure that each chosen practice fits well with the overall organizational diversity vision and plan. Diversity training, while useful in making people aware of differences, is often flawed, in that the training assumes there will be an immediate change in peo-

ple's behavior after training. This is not necessarily true. Training may address discrimination and oppression that is deep-seated, and often makes members of dominant groups uncomfortable. This creates resistance because it uncovers the true levels of tension that exist among organizational members and may point to specific conflicts that are present. It is for this reason that the organization first needs to go through the unfreezing stagein which members become psychologically prepared for the change, and a safety zone for change is created. Diversity training and education initiatives can then be more effective. The focus of this training should be on helping employees work better together, opening better lines of communication and dialogue between groups, increasing understanding of the value of individual differences, and aiding a realization of how individual differences can help make a company more competitive. Training and education programs can take two different approachesindividual awareness or systemic cultural change. We suggest that companies address both tracks by creating diversity awareness within the company, while also working on team-building and problem-solving efforts targeted at addressing systemic issues. These steps can be accomplished in tandem by creating workshops for increasing diversity awareness, airing complaints, and deriving solutions. Additional efforts can be expended through diversity support groups for minority employees. R.R. Donnelley & Sons Co., a leader in the printing industry, presents an excellent example of an organization that is following this approach. R. R. Donnelley, in response to a 1996 multimillion-dollar race-discrimination suit that effectively unfroze the organization, has implemented its own stepladder approach based on education and training. R.R. Donnelley employees have reached a point of diversity sophistication where, as they identify instances of non-diversity, they immediately stop to evaluate the underlying causes, develop solutions, and then take steps to ensure that the probFALL2001 157

lem is corrected. This company's policy of inclusion begins with recruitment, and extends to hiring, training and promotion. Diversity councils are in place at each of the company's 40 plants and ensure that these practices are supported at the local level. The next two practices that can help a company evolve through the moving stage toward multicultural diversity are mentoring and career development. Mentoring is a way of ensuring that minority individuals who normally miss out on in-company networking and promotion possibilities gain this valuable opportunity while being advised by a more senior manager. Career development is the process of helping employees work toward and attain their personal goals through continued education and enhanced training. These two processes, while theoretically separate, work together in practice. They are paramount to retaining a diverse workforce and preparing minorities for higher-level management positions. Companies can improve employee loyalty by ensuring that individuals are inspired and challenged to perform at their best. Reassurance and support that proper opportunities and guidance w^ill be available to achieve personal goals must also accompany this challenge. Lucent Technologies and General Mills Inc. are examples of organizations that do an excellent job of combining these two aspects of diversity advancement. Lucent has designed leadership programs to develop future leaders. In addition to these comprehensive and proactive opportunities for advancement within their company, they additionally promote mentoring relationships through 30 women's employee networks that help to foster women's development. General Mills has a formal mentoring program in which mentors work with minority employees on individual development plans that will enhance personal growth and promo tability. All of these practices, when rolled out as part of a comprehensive plan following a period of unfreezing, will help to change the culture of the organization. Members will
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begin to understand the importance and potential payoffs of diversity. New minority candidates will be recruited, hired and eventually promoted. The organization will begin to value differences and assimilate new ways of thinking and problem solving into the organizational culture. A new multicultural type of organizational culture will result that will be better able to compete in the increasingly diverse marketplace. But a final critical stage still exists for the organization intent on gaining the fullest benefits of diversity. Refreezing *

Finally, the organization must ensure that the changes of the moving stage are institutionalized. This objective is accomplished by aligning the organizational policies, procedures and reward system to perpetuate the new culture. Without this critical, final step, the organization runs the risk of reverting back to its original pre-change culture. The refreezing process begins by reviewing existing policies and procedures to ensure they support rather than conflict with the new culture of diversity. Most notably, job description and job evaluation language should be edited to reflect inclusive language. This stage also entails updating existing performance appraisal and compensation plans to make sure that they reinforce values of diversity. This is often a difficult issue to tackle, and encompasses the issue of comparable worth. Creating fair pay standards that reward comparable pay for work of comparable value should eliminate pay disparities between niinority and majority employees. Programs that include manager accountability, directly linked to sustained diversity, and that are tied to manger bonuses, compensation and advancement are exceptionally effective in sustaining change. One corporation that has effectively created diversity as a business priority and has taken steps towards diversity sustainability is the Gannett Company. Gannett has established management responsibility for diversity and incorporated performance and accountabil-

ity measures that insure that managers are motivated to achieve diversity goals. Finally, they have created human resource policies that are supportive of their diversity vision and goals. Managers are responsible for perpetuating diversity and are accountable for their people as well as profit and product goals. Gannett calls this the three P's, and has been practicing them since 1980. Performance appraisals for managers at Garmett reflect the importance of diversity by holding management accountable for minority recruiting, development, promotion and retention. This process is backed up by incentives to managers as well as individual organizational units who use diversity to garner exceptional quality. The entire package is called Partners in Progress, a program which focuses not only on issues of race and gender, but also on issues of community demographics, harassment and discrimination, and matters of work/life, flexible benefits and training, in addition to general diversity initiatives. The success of the Partners in Progress program at Gannett is evidenced by the fact that minorities comprise 33% of the Board of Directors, 13"/,. of middle managers, and 15% of front-line managers. Accordingly, women comprise 25% of the Board, 25% of middle managers, and 35% of frontline managers. Motorola and Xerox are other prime examples of organizations that realize the importance of the refreezing stage. Much like Gannett's, the two companies' diversity initiatives also include manager appraisals and compensation packages tied to achieving diversity goals.

GAINING A COMPETITIVE ADVANTAGE THROUGH DIVERSITY Diversity is a competitive advantage that is indispensable in the 21^* century. Previous research has shown that diversity can provide the benefits of increasing and keeping market share, cost savings derived from reduced turnover, increased productivity and

innovation, better quality management, and a corporate resiliency born of a multicultural workforce. Diversity will allow an organization to better achieve a sustainable competitive advantage in a quickly changing global marketplace. To be successful in gaining these advantages it is important for diversity to be properly and completely implemented in a holistic, systemic, and planned fashion. This can be best accomplished by applying an organizational development and culture change approach such as is presented in this article. Implementation should start with the process of unfreezing at the top. Movement toward full diversity will evolve as the new philosophy fvmnels down through the organization with the help of new recruiting, outreach practices, diversity training and education of the current staff, mentoring, and career development. Once this momentum has been established and the organizational culture begins to transform itself, changes to the formal policies, procedures and reward system must be put in place to ensure institutionalization of the new culture of diversity. The organization will then be in a much better position to realize the potential benefits of diversity. The plarmed program of organizational change proposed in this article will assist the company in gaining a sustainable competitive advantage as opposed to the disjointed, piecemeal approach used by many unsuccessful organizations. One final example of a successful approach is Sears, and Roebuck & Co. In 1992, Sears posted its worst net loss of $3.9 billion. This major event effectively caused the Sears culture to unfreeze and become receptive to change. Sears responded with a moving phase of major restructuring, closing imderperforming stores, discontinuing its traditional catalog business, and spinning off non-core businesses. Part of the new organizational vision was to change the culture at Sears and become more diverse. Valuing diversity is now one of the 12 key leadership skills for managers. Various diversity initiatives were put in place at Sears to effect the change. For example, the ethnicity and genFAU2001 159

der of store location personnel are now expected to mirror the community that they service. Recruiting and hiring practices were changed to reflect this goal. Sears advertising and marketing strategies now incorporate diversity themes. The ranks of management are expected to more closely resemble the general population. Mentoring, career development and promotion practices have been changed to help achieve this goal. To ensure that these initiatives have a long-lasting impact. Sears has addressed the refreezing phase with a measurement system for tracking progress on diversity goals. Managers' appraisals and bonuses are tied to performance on these measures. The new emphasis on diversity appears to be showing positive results. Sears now reports that 17% of its employees are black and 11% are Hispanic. The company also reports that 17% of managers are minorities, with an even split between males and females. Women and minorities now account for 29"{j of executives. Sears reports that measures of employee and customer satisfaction are on the rise. They estimate that these improvements have translated into more than $200 million in additional annual revenues. Many forces are combining over the next few decades to make diversity an even greater concern to business leaders. The labor market will most likely remain tight. As baby boomers retire, the workforce will ac-

tually shrink, and unemployment is expected to stay in the 3.5 to 6.5% range. New entrants into the U.S. labor force are forecasted to be comprised of 70 to 80% women, minorities and immigrants. Minority and women consumers will control an even larger share of the U.S. marketplace. Globalization of corporations is expected to accelerate, which will force organizations to be able to think even more internationally. It certainly appears that multicultural diversity will be required to be able to effectively compete in the future. The bottomline, competitive implications of not achieving diversity are clear. Our htipe is that leaders of organizations interested in creating a diverse, multicultural environment will use our model, which incorporates what has been learned from over 50 years of research on organizational development and culture change, to develop and implement coherent, holistic plans for creating diversity within their organizations. This approach will help them attain the full benefit of multicultural workforce diversity and compete more effectively in the increasingly diverse marketplace.

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SELECTED BIBLIOGRAPHY For more on the advantages and different forms of diversity, see Ann Morrison, The New Leaders: Guidelines on Leadership! Diversity in America, 1^* ed. (San Francisco, CA; JosseyBass, 1992); Taylor Cox and Stacy Blake, "Managing Cultural Diversity: Implications for Organizational Competitiveness," Academy of Management Executive, 1991, 5(3), 4556; and Taylor Cox, "The Multicultural Organization," Academy of Management Executive, 1991, 5(2), 34-47. For more on the seminal work done on organizational development and culture change see Kurt Lewin, Field Theory in Social Science (New York; Harper and Row, 1951), and Edgar Schein, Organizational Culture and Leadership, 2"'^ ed. (San Francisco: JosseyBass, 1992).