Managing Diversity As a Key Organizational Resource: An Interview with David Thomas
by Kali Saposnick

from Leverage Points Issue 37

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David Thomas, Harvard Business School professor and coauthor of the acclaimed book Breaking Through: The Making of Minority Executives in Corporate America (Harvard Business School Press, 1999), is a recognized authority on mentoring, executive development, and the challenges of creating and managing a diverse workforce. David will be a keynote speaker at this year's 2003 Pegasus Conference in October in Boston, where he will share a new paradigm for managing diversity that allows an organization to tap into the benefits of differences and gain a new repertoire of actions for designing processes, reaching goals, managing projects, building teams, communicating ideas, leading, and allowing people to do their work more effectively. The following is a preview of the insights he has gained from his research on diversity. Look inside your organization today.

How many people who are not from the dominant culture are employed there? How have their different approaches to the work you do contributed to improvement of the organization as a whole? If there's a wide variety of people but little impact on your organization's culture from the different perspectives they bring to the table, your organization is typical of many companies today trying to understand how diversity influences overall performance.

Part of the failure to tap into the benefits of diversity comes from a lack of understanding of what it is and how to manage it. To address this misunderstanding, in 1990 David Thomas and his colleague Robin Ely began to examine how U.S. organizations successfully achieve and sustain racial and gender diversity in their executive and middle-management ranks; how diversity affects an organization's practices, processes, and performance; and how leaders influence whether diversity enhances output or distracts people in an organization. As a result, they identified two predominant diversity paradigms used by many companies as well as a new model for effectively managing differences.

Two Prevailing Paradigms
They call the first the "Discrimination-and-Fairness" paradigm, in which companies focus on achieving demographic variation in order to comply with federal Equal Employment Opportunity requirements. When carried out effectively, these efforts do produce a critical mass of people from different backgrounds in the organization, but they also bring about conflicts that leaders rarely resolve. Thomas attributes this problem to the fact that, in this model, leaders assume differences don't matter and as long as nobody is being racist or unfair, the person with the minority view should conform to the expectations of the organization's existing culture.

Thomas and Ely call the second diversity paradigm "Access-and-Legitimacy." In this approach, companies accept and celebrate differences so they can better serve their diverse pool of customers. Although this model has created opportunities for people from less represented groups to grow in organizations, it has also isolated and marginalized many, because it gives the message that differences matter at the fringe but not at the core. So, for instance, when employees try to pass along information they glean from working with their non-white, non-English-speaking customer base, they find organizational leaders unreceptive to rethinking the way work gets done or products get sold.

A New Framework
Once they achieve a multifaceted workforce with one of the two dominant models, thoughtful leaders from some of these companies start to ask, What are conflicts around diversity telling us about the impact of difference on the workplace? How can we incorporate a broader set of ideas into the main work of the organization or reconceptualize the way we actually do the work? According to David, the answers to these questions often require developing tolerance for ambiguity and constructive conflict, becoming open to learning from various perspectives, and changing the organizational culture to create conditions so all people can fully contribute. Companies that make this shift have moved to what he and Robin call the "Learning-and-Effectiveness," or integration, paradigm.

In this view, diversity is not simply a reflection of the cosmetic differences among people, such as race and gender; rather, it is the various backgrounds and experiences that create people's identities and outlooks. "When we talk about managing diversity," Thomas says, "we're referring to creating an environment where people's differences in perspective can be valued and allowed to influence positively their experience in and contribution to the work of the organization." For example, leaders in one organization found that the salesperson who sold the most in terms of sales revenue dollars—a woman working in a field dominated by men—did not receive the highest salary. Unlike her male counterparts, who sought high-volume sales through aggressive cold calling, she focused on providing high-quality service for a smaller number of customers. When her superiors examined this difference in style, they recognized that it could add to the organization's repertoire of sales strategies. They eventually altered the sales compensation system as well as the way they thought and talked about sales.

The integration paradigm also asserts that diversity is the bridge between the workplace and the marketplace. "Without the full development of all people in, or available to, our organizations, we can't fulfill our potential in the market," says Thomas. "Why? Because we work in dynamic environments whose constantly changing labor and customer pools require adaptation. And much of our ability to adapt lies in our ability to leverage diversity." The integration paradigm supports adaptation significantly more than the access-and-legitimacy paradigm because, rather than simply linking the workplace and marketplace by exploiting already known differences (matching employee and customer demographics), it also focuses on learning from difference and reinforcing the development of skills to help people see opportunities and threats more astutely.

David cites healthcare organizations in the U.S. that are dealing with rapidly changing demographics as an example. In order to compete in the markets they serve, these organizations must develop cultural competence—that is, the ability to work with a broad spectrum of people and learn from the diversity that each person brings. Likewise, service delivery providers need to embrace different languages and cultures, races and genders, and physical abilities. For instance, doctors from one ethnic group must be able to competently assist patients from another; male doctors must successfully provide services to female patients (and vice versa for female doctors); and all healthcare workers must know how to undercover the less obvious cultural undercurrents, such as class or religion, that influence a person's experience with the healthcare system.

The good news about dealing with dynamic environments is that, rather than trying to acquire knowledge about every culture, we're better off learning the skills of managing diversity in general. These include:
• a systemic view of how change occurs
• an openness to learning from differences
• a perspective that diversity is a natural condition of the workplace and the marketplace
• the ability to practice advocacy and inquiry
• the willingness to check one's assumptions about what works and what doesn't

Using these skills, leaders can challenge any narrow views held by the organization and identify points in the system where they can leverage diverse perspectives to improve it.

A Commitment to Managing Diversity
But how do we get leaders to willingly transform themselves and embrace fluidity in policies that previously had been set in stone? "I don't have a recipe for taking leaders who are resistant and moving them to the point where they're willing to make this a core element of their leadership," says Thomas. "But there are a few common elements I've found among leaders committed to managing diversity. For one, they're not isolated; instead, they're immersed in a network of people who are helping them to think about the linkages between diversity and the work, and to learn from the times when the organization doesn't get it right. For another, when things have not gone right, they have not allowed it to be explained away."

He cites the example of a manufacturing organization with plants all around the United States. The plants in communities with high concentrations of African Americans and Hispanics had consistently underperformed those in which the workforce was predominantly white, even when they were managed by people of color. For a long time, the organization's leaders accepted this imbalance as the cost of following a socially responsible policy of locating plants in urban communities. Then a new vice president of manufacturing, overseeing all plant operations, took over and challenged this perspective, mandating that all plants be held to high standards. To support this directive, he took managers through an education process about managing diversity. Within two years, the plants staffed by people from communities of color achieved some of the highest performance in the entire system.

"What this leader demonstrated," says David, "was that the system's expectations, not the attributes of a particular group, led to underperformance. When managers refuse to let people off the hook but instead take problems connected to diversity and make them crucibles for learning how to do things differently, the entire system can move in a new direction. In turn, a ripple effect occurs. In this case, many diversity champions emerged out of this original group and, over a 10-year period, had a similar positive effect on many parts of the corporation."

Thomas believes that an increasing number of companies are adopting constructive approaches to diversity. But he cautions that diversity seems to have a positive influence on organizational performance only when the company follows the learning-and-effectiveness paradigm. He says, "In surveying 500 branch banks, we've seen that, as diversity increases in these banks, if they don't have the integration perspective in place, their performance declines. But if they do, their performance in areas such as sales, market growth, and customer satisfaction increases." To David, these findings offer a prescription for success. He concludes, "Those companies moving beyond numbers and categories to thinking about how to put in place the conditions for the diversity experience to be a resource for the organization will be the models in the future for how to effectively manage diversity."

Kali Saposnick is publications editor at Pegasus Communications.