Bassett-Jones-2005-Creativity_and_Innovation_Management.pdf

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© Blackwell Publishing Ltd, 2005. 9600 Garsington Road, Oxford OX42DQ and 350 Main St, Malden, MA 02148, USA. Volume 14 Number 2 200

DIVERSITY MANAGEMENT, CREATIVITY AND INNOVATION 16

The Paradox of Diversity Management,

Creativity and InnovationNigel Bassett-Jones

This conceptual and discursive paper argues that diversity is a recognizable source of creativ-ity and innovation that can provide a basis for competitive advantage. On the other hand,diversity is also a cause of misunderstanding, suspicion and conflict in the workplace that canresult in absenteeism, poor quality, low morale and loss of competitiveness. Firms seekingcompetitive advantage therefore face a paradoxical situation. If they embrace diversity, theyrisk workplace conflict, and if they avoid diversity, they risk loss of competitiveness. The

advantages and disadvantages associated with workforce diversity put organizations in aposition of managing a paradoxical situation. To give support to this assertion, the paperconsiders what is meant by diversity, how it is best managed, what its relationship withcreativity and innovation might be and how the problems created by the management ofdiversity, creativity and innovation might be resolved.

Introduction

The paper examines the relationship betweendiversity, creativity, innovation and competi-tive advantage in firms that operate within a

high-commitment context. High-commitmentorganizations are those with an approach tohuman resource management (HRM) thatfosters and supports the creation and mainte-nance of an internal labour market and a high-level skills base. Employees are managed bymeans of an outcome-driven rather than a pro-cess-driven approach. This approach, in turn,is founded on a reliance on employee skillsand knowledge, rather than high levels of supervision to ensure required levels of qual-ity and output (Bamberger & Meshoulam,2000; Lepak and Snell, 1999).

Unfortunately, managers operating in a

high-commitment context face a dilemma.They can either seek to harness diversity inorder to promote creativity and innovation orthey can ignore the diversity dimension,within the constraints of the law. If they aresuccessful in embracing diversity, then organi-zational agility, founded upon creativity andinnovation, can ensue (Cox and Blake, 1991).

Organizations that adopt a high-commit-ment orientation are confronted by a numberof challenges. Because their approach to HRMrelies on low staff turnover and retention of scarce skills, they may find it difficult to create

a diverse workforce, preferring as they do, theconflict-reducing influence of homogeneity.

While much of the argument presented herecan be applied to all organizations, it ishigh-commitment organizations that are thepaper’s focus, because the issues raised areespecially evident in these firms.

The paper begins by defining diversity anddiversity management. It then explores thegenesis of diversity as a management concept, before going on to consider the complexinterrelationship between diversity, creativity,innovation and competitive advantage, sug-gesting that creativity is a precondition forinnovation, and that creativity and innovationare enhanced by the existence of diversity.This discussion leads to a consideration of theissue of managing diversity. Then HRMappropriate for diversity management is

discussed. The final section makes the casefor embracing diversity management soonerrather than later, particularly in high-commitment organizations.

Definitions of Diversity andDiversity Management

For the purposes of this paper’s argument,the term ‘diversity’ encompasses a range of differences in ethnicity/nationality, gender,function, ability, language, religion, lifestyle or


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170 CREATIVITY AND INNOVATION MANAGEMENT

Volume 14 Number 2 2005 © Blackwell Publishing Ltd, 2005

tenure (Kossek & Lobel, 1996). Additionally,‘diversity’ in the workplace includes morethan employees’ diverse demographic back-grounds, and takes in differences in cultureand intellectual capability. It takes more thandemographic or ethnic diversity to result increativity that leads companies to perform

better (Leonard & Swapp, 1999).The term ‘diversity management’ refers tothe systematic and planned commitment onthe part of organizations to recruit and retainemployees with diverse backgrounds andabilities. It is an activity that is mainly to befound within the HRM training and develop-ment domains of organisations (Betters-Reed& Moore, 1992; Thomas, 1992). In the contextof this paper, diversity management is definedas the aggregate effect of HRM sub-systems,including recruitment, reward, performanceappraisal, employee development and indi-vidual managerial behaviours in delivering

competitive advantage through leadershipand team work.

The Genesis of Diversity as aManagement Concept

It is worth noting that while the notion of man-aging diversity has evolved out of social poli-cies designed to promote equality, and thatwhile, historically, these policies in both theUK and the USA have been focused on deliv-ering equality of access to opportunity for dis-advantaged social groups, the approach andthe agenda in each national context has beendifferent.

In the USA, policy has tended to be driven by a commitment to ‘affirmative action’. In theUK, however, affirmative action has, to date, been perceived as positive discrimination, andhas been effectively proscribed by law.

To understand some of the dynamics thatgave rise to this divergence, it is necessary toreview the demographic patterns of the twocountries. America was first alerted toimpending changes in the demographic com-position of its labour market in a report

entitled Workforce 2000 (Johnston & Packard,1987). In the flurry of interest that followed, arange of data pointed to the extent to whichthe American economy was changing(Latimer, 1998; Watson, 1996). The UnitedKingdom is different. Whereas in America,ethnic minority populations accounted for26% of the total, in the UK, it was 5.5%.

It is hardly surprising, therefore, that equal-ity of opportunity was perceived as an issue of greater political urgency and social conse-quence in the USA. Opinion differs on whydiversity management emerged in the way

that it did. Kirton and Greene (2000) andKossek and Lobel (1996) have suggested thatthe diversity paradigm evolved because it wasperceived to be less threatening and contro-versial than affirmative action driven bynotions of equality of opportunity. Writers likeYakura (1996) have asserted that diversity

management was an attempt to enlist the sup-port of disenchanted white males. Others,such as Prasad et al. (1997), have suggestedthat the diversity approach, with its emphasison corporate initiative and human capital the-ories, resonated more harmoniously withAmerican individualism than state interven-tion imposed through policies of equality of opportunity.

Moreover, whilst the USA and the UK are inthe vanguard when it comes to recognizingthat diversity constitutes a major managementchallenge, commentators have noted that otherWestern economies are confronted by dramatic

shifts in their demographic balance that willpush the effective management of diversity upthe management agenda. The United Nationsprojects that the European population couldshrink by as much as 94 million or 13% by 2050and that, amongst the G8, only the USA,Canada and the UK will have growingpopulations. By 2020, it is estimated that theworld’s population will consist of more than1,000 million people aged 60 and older.

Governmental and organizational re-sponses to these challenges might includeimporting young skilled labour from thoseregions of the world that are well-endowedwith skilled and educated young people, andthe development of social policies and taxa-tion regimes that encourage child-rearing andthe retention of the skills of older workers forlonger. Organizations with a high-commit-ment strategy and a largely homogeneousworkforce may well find that low staff turn-over fosters cultural inertia and inhibits thecreation of diversity.

HRM sub-systems define the limits of man-agerial discretion in managing what can betermed the spectrum of diversity. It is theaggregate effect of the attitudes, skills and

behaviours of individual managers that deter-mines the extent to which organizations areable to sustain high commitment within adiverse workforce.

The Interrelationship of Diversity,Creativity, Innovation andCompetitive Advantage

The recognition of the relationships betweendiversity, creativity, innovation and competi-tive advantage has stimulated both academics


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© Blackwell Publishing Ltd, 2005 Volume 14 Number 2 200

and the business community to search for fac-tors and situations that give rise to creativityin individuals, and for the catalysts of creativ-ity in teams (West & Anderson, 1996).

Creativity is a necessary precondition forsuccessful innovation. King and Anderson(1995) highlighted the problematic nature of

defining creativity. The growth of interest inthe field has been accompanied by a prolifer-ation of definitions that have polarized aroundfour themes: the creative person, creative pro-cess, creative product and the creative envi-ronment (Isaksen et al., 2000).

It is difficult to separate process from prod-uct because products can be intangible, andprocesses often result in the creation of prod-uct. There is, however, considerable consensusaround what constitutes a creative product.King and Anderson (1995) define its key char-acteristic as novelty, i.e. the conception mustdiffer significantly from what has gone before.

It should also be appropriate to the situation itwas created to address, be public in its effectand deliver a perceived benefit. Competitiveadvantage is as much about incremental sys-tem and process innovation, therefore, as it isabout radical product innovation.

The link between innovation and competi-tive advantage has long been understood.Interest in the field was first given impetus by researchers like Abernathy and Utterback(1978). They demonstrated that industry out-siders usually adopted radical innovation as astrategy for overcoming barriers to entry. In sodoing, they created a situation in which thedominance of particular players, either withinan area of the industry or across the industryas whole, began to lose their hegemony because of an inability to innovate quicklyenough to respond to the competitive chal-lenge. In the ensuing confusion, many of theestablished players found themselves too psy-chologically and financially committed tothe preservation of the status quo to embracechange.

Whilst innovation in the West has tendedto be defined in terms of breakthrough tech-nologies and products, the kaizen philosophy

encouraged Japanese manufacturers to thinkmore broadly and to devise strategies forpromoting involvement, not only across theorganization, but also across the supplychain.

During the late 1980s and early 1990s,Western organizations came to recognize thatindustry leadership through radical innova-tion was being ceded to fast-followers, skilledin reverse engineering and cost reductionthrough process improvement. Theirresponse was to promote greater involvementfrom their people through the application of

HRM as a device for improving systems anddriving down costs. At the same time, Hameland Prahalad (1994) provided considerableimpetus to the resource-based view of thefirm by demonstrating that Japanese cor-porations sought to sustain their leadershipposition by forging and exploiting strategic

alliances.Both of these responses can be seen asstrategic moves towards the management of diversity. In the case of the Western corpora-tion, Japanese techniques for the managementof functional diversity, such as quality func-tion deployment, were embraced, whilst Japa-nese corporations used strategic alliances toinfuse new ideas and know-how into their cul-turally homogeneous corporations.

There is conflicting evidence as to the extentto which diversity can deliver competitiveadvantage. On the one hand, exponents of theinformation decision approach (for example,

Cox and Blake, 1991; Iles & Hayers, 1997;Richard & Shelor, 2002) argue that when diver-sity is managed well, it can enhance creativity,resulting in increased commitment, job satis-faction and a better interface with the marketplace. In contrast, advocates of social identitytheory (for example, Ely and Thomas, 2001;Ibaarra, 1993; Kanter, 1977; Tafjel, 1982) aremore pessimistic. They argue that diversitydamages cohesiveness, reduces communica-tion and produces in-groups and out-groups.This results in discord, distrust, poor qualityand lack of customer focus and marketorientation.

If innovation results in a product, system orprocess that is new to a context, and delivers adefinable benefit to a social constituency, thenthe antecedent lies in the creativity of individ-uals, whether working independently or inteams. Cummings (1998) has shown that thedelivery of a successful innovation involvesthree stages – conception (which includes cre-ativity), successful development and success-ful application.

The closer the concept comes to the market-place, however, the greater the number of peo-ple involved. This results in the emergence of

two distinct types of challenge – technical andhuman. Technical problems require the cre-ative energy of teams, whilst human problemsarise because of the need to promote diffusionand buy-in to the new idea, initially across theorganization and sometimes across the supplychain.

Diversity, combined with an understandingof individual strengths and weaknesses, andworking relationships that are founded uponsensitivity and trust, have been shown toenhance creativity and problem-solving capability (Hennessey & Amabile, 1998). Indeed,


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Isaksen and Lauer (2002) identified key factorsthat contribute to creativity and provide a col-laborative climate. These are trust, team spirit,unified commitment, principled leadership,an elevating goal, a results-driven structure,standards of excellence, participation in deci-sion-making, external support and recogni-

tion, and an aptitude to adjust roles and behaviours to accommodate new emergentvalues.

Employees either work in teams, defined byKatzenbach and Smith (1993) as ‘people withcomplementary skills who are committed to acommon purpose, set of performance goals,and approach, for which they hold themselvesmutually accountable’, or they work ingroups. The latter are differentiated as ‘peopleworking together who are not as coherent orpurposive as team members’. Teams are com-posed of individuals who have the ability torecognize the personal strengths and limita-

tions of their colleagues. They adjust their behaviours so as to respond to the needs of their peers. These patterns of mutual adjust-ment result in reduced levels of interpersonaltension and conflict. It falls to the HRM func-tion to promote significant investment indeveloping managers and encouraging themto accept the emotional labour inherent inmanaging diversity within the organization(Ruscio et al., 1995).

Managing Diversity

The literature on diversity highlights a rangeof responses to the challenge of diversity man-agement. Dass and Parker (1999) identified nofewer than twelve strategic responses to thechallenge of managing diversity. Moore (1999)reduced the number of behavioural stereo-types to four – the diversity hostile, the diver-sity blind, the diversity naïve and the diversityintegrationist. Whilst the first three behav-ioural stereotypes fail to recognize that differ-ent management skill sets are required torespond effectively to different diversity chal-lenges, the fourth stereotype is proactive in its

approach. Moore’s stereotypes recognize thatneither functional nor cultural diversityautomatically leads to positive or negativeoutcomes. However, different patterns of diversity present different managerial chal-lenges, to which some organizations respond,whilst others do not.

Thomas and Ely (1996) showed that cogni-tive and experiential diversity adds to the per-spectives available to the organization andencourages clarification, organiation and combination of new approaches for the accom-plishing of goals. Similarly, Donnellon (1993)

and Tushman (1997) found that work unitscharacterized by diversity have the capabilityto access broader networks of contacts. Thisenables them to acquire new information thatinforms decisions, increases commitment tochoices and enhances responsiveness to envi-ronmental turbulence.

Latimer (1998) argued that diversity interms of ethnicity, age, gender, personality andeducational background promotes creativityand problem-solving capability. He suggeststhat groups have been found to be less riskaverse than an individual’s ‘risky shift’.Increased diversity leads to lower levels of risk aversion and better decision-makingand problem-solving capability. This arises because diversity promotes a more robust crit-ical evaluation of the first solution to receivesubstantial support.

One of the objections to diversity is that itdamages cohesiveness. Cohesiveness, how-

ever, makes groups vulnerable to ‘groupthink’. Diversity acts as an impediment to thisphenomenon. Conflict is perceived to damagecohesiveness; however, when it is effectivelychannelled, it can lead to improved creativeproblem-solving and decision-making, because the diversity of perspective generatesmore alternatives and greater criticalevaluation.

Results pointing to ‘value in diversity’ have been countered by theorists who have shownthat heterogeneous groups experience moreconflict, higher turnover, less social integra-tion and more problems with communicationthan their homogeneous counterparts (Knightet al., 1999; O’Reilly et al, 1989; Williams andO’Reilly, 1998). Other studies have suggestedlower levels of attachment to employingorganizations on the part of individuals whoperceive themselves to be different from theirco-workers (Mighty, 1997; Tsui et al., 1992).These studies give a clear indication of thenature of the challenge confronting thoseseeking to promote commitment amongstdiverse work groups.

Appropriate HRM forDiversity Management

High-commitment organizations will tend toprefer an outcome-driven approach to manag-ing people. The required levels of quality andoutput are seen to result from employee skillsand knowledge, rather than high levels of supervision.

Suitable conditions to promote creativityand innovation in diverse contexts are associ-ated with the management of work routines,and the creation of appropriate teams. Indeed,


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currently, an increasing amount of work withinan organization is accomplished throughgroups or teams, rather than by individualaction.

When selecting individuals to join a team, ithelps if managers not only consider functionalcompetence, but also the preferences that peo-

ple have for different types of work and dif-ferent types of work context. The ways inwhich individuals like to work, and the activ-ities within their job roles that give them great-est satisfaction, will shape the way in whichthey choose to discharge their responsibilities,working individually or in teams.

These manifestations of personal style areimportant in a team context. Individuals withsimilar styles may well establish trust early;their homogeneity of approach, however, may become a significant blind spot. In building ahigh performance team, there is not only aneed to match functional competence and per-

sonality against the requirements of the job,there is also a need to produce a balance of work preferences, attitude to risk and an inclu-sive orientation to social identity. In high-commitment team contexts, a strong case can be made for blind selection to the shortliststage, based on a minimum threshold of func-tional competence and the results of a range of personality and work preference measuresthat are blind to age, ethnicity and gender, andthat are designed to ensure balance and diver-sity within the team.

Garvin (1998) has shown how functionaldiversity gives rise to a potential conflict. Heobserved that those versed in a particular dis-cipline or function, perceive and define qualityin different ways. To those tasked with pro-curement of resources, quality is perceived to be value for money. Those involved in designsee it as intangible and transcendent. Thoseworking in production define it as conformingto requirements. Marketers suggest that it isrelative perceived value, whilst sales peopleargue that quality is for the customer to define.Historically, these tensions produced compart-mentalized management practices, because of an absence of tools to reconcile differences of

perspective.Teams with diverse membership and a col-

lectivist orientation are likely to have a deeperwell of resource upon which to draw whengenerating ideas, combining them and subject-ing them to critical evaluation. The likelihoodof adopting a sub-optimal trajectory, thereforeis reduced, especially if the team’s approach tosystematizing creativity and problem solvingis highly developed.

Whilst early success and recognition help tocement a sense of identity and belonging, peo-ple and processes need to be supported by a

set of HRM sub-systems that focus on con-stantly reinforcing these processes. The litera-ture suggests that the greater the diversity, thegreater the collectivist orientation needs to be.Systems like the Kaplan and Norton’s bal-anced scorecard (1996) and 360-degree feed- back, when combined with reward systems

that empower managers to implementemployee ideas on their own initiative, helpcreate the supportive infrastructure necessaryto deliver results.

Concluding Remarks

In the context of this paper, diversity manage-ment is defined as the aggregate effect of HRMsub-systems, including recruitment, reward,performance appraisal, employee develop-ment and individual managerial behaviours indelivering competitive advantage through

leadership and team work.The combustible cocktail of creative tension

that is inherent in diverse organizational con-texts must be contained within a multilayeredvessel. The outer layer must be composed of carefully crafted HRM sub-systems that are both vertically integrated with the businessobjectives and horizontally integrated onewith another (Bamburger & Meshoulam,2000). The inner layer consists of effectiveleadership, which can only be provided bysuitably trained managers. They need tounderstand the challenges of diversity man-agement, and to have the emotional intelli-gence and commitment necessary to build apersonal relationship with each individual, orgroup/team member.

In support of the view that the existence of diversity in a firm can lead to competitiveadvantage, the paper considered questionssuch as ‘What is meant by diversity? ‘How is itmanaged, especially from an HRM point of view?’ ‘What is its relationship with creativityand innovation?’

It has been argued that embracing diversitymanagement is a risky business. Organiza-tions that embrace high-commitment HRM

strategies do so because the systems and pro-cesses through which they add value aretoo complex for managers to control directlythrough supervision. Instead, they adopt anoutput orientation. This approach demandsthat they delegate authority to individuals andteams to make operational decisions. Organi-zations that adopt an output orientation needinnovation and continuous improvement in both products and processes to support a strat-egy for delivering high-perceived value to thecustomer. Diversity facilitates the processwhen managed well.


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Unfortunately, there is a paradox. Organi-zations with an internal orientation to thelabour market measure the success of theirapproach to HRM through high retentionrates, low employee voice and a willingnessto go beyond contract. This militates againstdiversity, unless senior managers are highly

diversity sensitive and are prepared to putin place HRM sub-systems that supportdiversity.

Whilst the risks associated with strategiesthat embrace homogeneity and heterogene-ity are different, this paper has questionedwhether organizations seeking an innova-tion advantage really have a choice. Thisrather deterministic position is predicated onthe view that the combination of demo-graphic trends, legislative pressure and mar-ket forces in respect of competition for scarceskills will render the barriers to entry forminority groups more permeable. If this

view is correct, then in the long term, theneed to manage diversity will becomeunavoidable. In this event, organizations thathave adopted high-commitment HR strate-gies will not be asking whether they shouldembrace diversity, but rather, how it can best be done.

The challenge that confronts the pioneers ishow to achieve the transition. What this paperhas sought to show is that it is possible to cap-italize on lessons already learned in managingfunctional diversity – although this is only oneof the many types of diversity to be foundwithin firms. We have seen that a number of tools already exist. These will require furtherdevelopment. Others must be added. The shiftthat has already taken place from the low-trust, functionally divided organization toteam-based, interdepartmental working thatpresaged the quality revolution, offers us atemplate for managing the transition.

High-commitment organizations that startearly can develop an advantage. If they are tosucceed, they must demonstrate a commit-ment to deploying HRM strategies that aredesigned to foster trust and inclusivenessthrough effective leadership, on the one hand,

with creativity and innovation techniques thatcapitalize on diversity to deliver an innovationadvantage on the other.

In this connection, the literature suggeststhat the old adage that there can be no gainwithout pain, is true. However, it is almost cer-tainly better to experience growing pain, thanthe pain associated with loss of competitive-ness and decline arising from an inability toadapt quickly enough to changing conditions.In short, in a high-commitment context, man-agers are caught between the devil and thedeep blue sea.

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Nigel Bassett-Jones is currently a principallecturer at Oxford Brookes University Busi-ness School, where he lectures in HRM,strategy, and innovation and change mainlyto post-graduate students. Current researchinterests include, creativity and innovation,creativity and diversity management andsystems perspectives on diversity mana-gement. He is also an experienced ODconsultant.

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