The Importance of Cultural Diversity and its Effect on Organisational Performance

Cultural diversity reflects today’s marketplace and it should not be disregarded. Various studies investigating this phenomenon have highlighted both positive and negative effects of diversity (McLeod, Lobel, & Cox, 1996; Kirkman, Tesluk & Rosen, 2004). To identify the real benefits and challenges that cultural diversity can bring, this study focuses on understanding different views constructed by social actors within the field. This research aims to identify the way cultural diversity affects organisational performance. Therefore, to gain a better understanding of the relationship between cultural diversity and organisational performance, this paper examines the organisational working climate through which diversity is accepted. In addition, this study aims to identify the way organisations implement diversity initiatives to efficiently manage workforce differences. This paper also examines the implications of workforce diversity on aspects such as commitment, job satisfaction and workplace coherence as these eventually influence group performance. In order to grasp an interrelationship of cultural diversity and performance in the workplace, this research takes the view of interpretivism as its philosophical stance. Two multinational organisations were selected to obtain empirical evidence interpreting the beliefs of social actors on workplace diversity. The findings revealed, there are more positive views towards cultural diversity and, organisations believe it can add value to their business. However, poor diversity management poses one of the main challenges within organisations. Thus, adopting the right diversity initiatives and in particular implementing diversity training programs is deemed to be of high importance. This type of training is recommended in order to achieve positive outcomes by enhancing team productivity and at the same time minimize the negative ones.