Diversity Management Hinges on Firm's Learning Capabilities
Why are some companies able to manage diversity in the workplace so successfully and to prevent or quickly resolve discrimination lawsuits, while other firms seem to be grappling constantly with diversity and discrimination problems?
The answer, says Lynn Perry Wooten of the University of Michigan Business School, may depend upon a firm’s corporate culture and its ability, or inability, to learn from experience and make appropriate changes in organizational behavior.
“Despite the widespread focus on diversity issues from both scholars and practitioners and the frequency and notoriety of discrimination lawsuits, we are surprised at the difficulty some organizations continue to have with diversity management,” said Wooten, assistant professor of corporate strategy and international business. “Firms seem to squander these learning opportunities and, as a result, remain susceptible to future discrimination lawsuits.”
Wooten has won awards from the Academy of Management and the McKinsey consulting firm for her research, which focuses on how firms strategically manage changes in their human-capital markets. These changes may include workforce diversity, work-life balance, the “professionalization” of the workforce, knowledge work and women’s issues. She has written a book chapter and several journal articles on strategic human-resource management and has served as a consultant to professional-service firms, hospitals, universities and food-industry companies.
In an essay, “When Firms Fail to Learn: The Perpetuation of Discrimination in the Workplace,” which is forthcoming in the Journal of Management Inquiry, Wooten and co-author Erika Hayes James of the University of Virginia’s Darden School of Business analyze the widely publicized experiences of major companies that have faced discrimination lawsuits.
Coca-Cola, for example, reacted defensively and responded slowly to discrimination charges in a class-action lawsuit filed by African-American workers in 1999. In contrast, Georgia Power Corp., which faced a racial-discrimination lawsuit a year later, acknowledged the problem upfront, expressed concern and promised to take swift, effective action. Coca-Cola perpetuated its poor diversity management and was hit by a subsequent $1.5 billion racial-discrimination lawsuit in 2000.
Wooten contends that failures in managing discrimination and discrimination lawsuits reflect failures in learning by companies. She identifies key organizational barriers that prevent that essential learning:
- Dysfunctional routines, which include negative company behaviors that perpetuate rather than eliminate discrimination, encourage reactive rather than reflective learning processes, perpetuate defensive responses or cover-ups and fail to set in place positive procedures.
- History-dependent learning, where firms lack prior experience, feedback or documentation on the management and prevention of discrimination, or are unable to access and/or transfer that organizational knowledge, if it exists.
- Focusing on the wrong target by failing to identify and pursue discrimination prevention, rather than lawsuit resolution, as the firm's number-one priority.
A company can overcome these learning barriers by acknowledging existing problems, rethinking organizational norms, creating a work environment that values differences and capitalizes on diversity, and creating an organizational memory so information and responsibility are diffused throughout the organization, Wooten says. Even then, ingrained routines and organizational culture still may inhibit organizational learning, leading to a crisis such as a discrimination lawsuit, she adds.
“Learning often requires changes to an organization’s mental model, so a crisis provides an excellent opportunity to challenge the organizational routines that hinder diversity management,” Wooten said. “Ideally, a firm should strive to create a workplace where employee differences become an organizational asset instead of a litigation liability.”