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Diversity management in India: A study of organizations in different

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Article  in  Human Resource Management · May 2010

DOI: 10.1002/hrm.20360

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DIVERSITY MANAGEMENT IN

INDIA: A STUDY OF ORGANIZA-

TIONS IN DIFFERENT OWNERSHIP

FORMS AND INDUSTRIAL SECTORS

F A N G L E E C O O K E A N D D E B I S . S A I N I

Strategically managing workforce diversity is a value-adding HR function that enhances organizational performance. Managing diversity is a complex and unique HR issue in India due to its religious and cultural diversity and the use of legislation by the Indian state to tackle societal inequities and complexi-ties. This paper contributes to existing knowledge on diversity management and strategic HRM in the Indian context through an in-depth case study of 24 fi rms of different ownership forms in a number of industries in India. The main method of data collection was semi-structured interviews with 110 man-agers at various levels and 102 non-managerial employees. Each interview was conducted individually. This paper takes the U.S.-originated concept of diversity management in the HRM context as a starting point. It uses this as a guide to investigate how the concept is understood and operationalized in several leading business organizations across different ownership forms and industrial sectors in India. Results reveal the differences between Western MNCs and Eastern fi rms as well as the varying views of Indian managers and employees on issues related to diversity management. © 2010 Wiley Periodi-cals, Inc.

Keywords: diversity, inclusiveness, equal opportunity, MNC, strategic HRM, India

Introduction

Th e concept of diversity management (DM) is increasingly promoted as a strategic people management tech-nique that will enhance organiza-tional competitiveness. Some U.S.-

owned multinational corporations (MNCs)

have been rolling out domestic-designed DM programs to their global operations (Nishii & Özbilgin, 2007). This is occurring in spite of the fact that some researchers have ques-tioned the utility of DM (as a U.S.-originated concept) in other societal contexts (e.g., Agocs & Burr, 1996; Ferner, Almond, &

Correspondence to: Fang Lee Cooke, visiting professor of Southwestern University of Finance and Economics, China and Professor of HRM and Chinese Studies, School of Management, RMIT University, 239 Bourke Street, Melbourne 3000, Australia, E-mail: fang.cooke@rmit.edu.au, phone: +61 3 99255977, fax: +61 3 99255960.

Human Resource Management,Human Resource Management, May–June 2010, Vol. 49, No. 3, Pp. 477– 500

© 2010 Wiley Periodicals, Inc.

Published online in Wiley InterScience (www.interscience.wiley.com).

DOI: 10.1002/hrm.20360

478 HUMAN RESOURCE MANAGEMENT, MAY–JUNE 2010

Human Resource Management DOI: 10.1002/hrm

Colling, 2005; Healy & Oikelome, 2007; Nishii & Özbilgin, 2007).

A growing number of studies have emerged in the last decade that investigate DM prac-tices at country and organizational levels (e.g., Dameron & Joffre, 2007; Ferner et al., 2005; Kramar, 1998; Maxwell, Blair, & Mc-Dougall, 2001; Nishii & Özbilgin, 2007; Sip-pola & Smale, 2007; Soni, 2000; Subeliani & Tsogas, 2005). These studies, however, often focus on Western countries, using survey

studies or case studies of a very small number of firms. Few studies have investigated systematically the extent to which DM has been deployed as part of strategic HRM across different ownership forms in a less developed country, where the approach to HRM may be less sophisticated and the DM context may differ significantly from that in the West. This study aims to fill a portion of this research gap through in-depth, multiple-case studies of 24 companies of differ-ent ownership forms in a number of industries in India. We do so for three reasons.

First, a comparative study of several ownership forms and in-dustrial sectors is helpful in illus-trating various operating environ-ments and hence firms’ HR strategies. This is because firms in different ownership forms are sub-ject to different business environ-

ments and may interact with institutional environments in diverse ways (Boisot & Child, 1996; Brewster, Wood, & Brookes, 2008; Peng, Tan, & Tong, 2004; Shenkar & Von Glinow, 1994). This is particularly the case in developing countries, where the state is both the regulator and a main employer. Also, public-sector firms in these countries retain strong bureaucratic and monopoly fea-tures despite an increasing level of market forces. In contrast, managers in private firms may have more autonomy and competence in making strategic business decisions. They may also take more risks in pursuing profit and therefore be more receptive to HRM

practices that will enhance the firm’s com-petitive advantage. Consequently, the per-sonal preferences of senior managers in pri-vate firms may play an important role in shaping HRM practices. As Brewster et al. (2008) noted, “organizational outcomes will reflect the real choices made by individual actors” (p. 325). Indeed, the impact of owner-ship forms on HR practices has been observed in studies of HRM in East and Southeast Asia (e.g., Bartlett, Lawler, Bae, Chen, & Wan, 2002), China (e.g., Cooke, 2009; Wei & Lau, 2005), and India (e.g., Amba-Rao, Petrick, Gupta, & Von der Embse, 2000; Budhwar & Khatri, 2001). MNCs differ in their HRM practices from domestic firms, particularly public-sector firms. MNCs tend to be more strategic and systematic in their HRM, fol-lowed by domestic private firms.

It is worth noting that not all private firms are strategic in making various business decisions. In addition to senior managers’ characteristics and the firm’s strategic intent, the firm’s positioning in terms of its product market and labor market is also an important factor in influencing HRM practices (e.g., Brewster et al., 2008). Further, the character-istics of the firm’s industrial sector help de-fine managerial behavior and choices of HRM practices. Where firms enjoy a monopoly po-sition in the industry for whatever reasons (e.g., government protection, high entry bar-rier), incentives to adopt progressive HRM practices to enhance organizational perfor-mance may be reduced. In contrast, firms operating in knowledge-intensive and highly competitive industries may be keen to adopt strategic HRM practices to remain competi-tive (e.g., Boxall & Purcell, 2008).

Second, we selected India as a venue for study as it is a rising economic powerhouse in the global economy with sustained high growth rates (see Astill, 2008; United Nation Conference on Trade and Development [UNCTAD], 2005). MNCs are attracted to India not just because of the less expensive resources it offers for production activities, but also because of its vast potential markets (Khanna, 2007). A major HR challenge to MNCs operating in India, however, has been the shortage of a skilled/professional work-

In addition to

senior managers’

characteristics and

the firm’s strategic

intent, the firm’s

positioning in terms

of its product market

and labor market is

also an important

factor in influencing

HRM practices (e.g.,

Brewster et al., 2008).

DIVERSITY MANAGEMENT IN INDIA 479

Human Resource Management DOI: 10.1002/hrm

force (Budhwar, 2009). They are increasingly involved in a “war for talent,” and some have deployed DM as one of the key HR initiatives to attract and retain talent (Cooke, 2010). On the domestic front, the opening up of the Indian economy since 1991 has led to the dramatic rise of several privately owned In-dian firms that have been growing into glob-ally competitive MNCs. Meanwhile, height-ened market competition has resulted in public-sector enterprises’ restructuring their organization and reconfiguring their business strategy (e.g., Khanna, 2007; Som, 2007). This requires a new way to manage human resources. Despite major organizational changes, however, key characteristics that define public-sector firms may persist, albeit continuously diluted by market forces. In ad-dition, India is a diverse nation with multiple religions, languages, social classes, and eth-nicities (Budhwar, 2009; Venkata Ratnam & Chandra, 1996). It thus offers a rich ground for studying DM. It also makes DM an impor-tant HR issue. Conducting a study on DM in India, therefore, responds to Tsui’s (2004) call for more high-quality indigenous (context-specific) studies to produce contextualized knowledge and make a value-added contribu-tion to our global management knowledge. It also responds to Tung’s (2008) call for more attention to intra-national diversity and the dynamics of cultural changes when conduct-ing cross-cultural research.

Third, a multiple case study method was adopted because studying DM issues at the firm level requires detailed information, mak-ing the case study approach more suitable than quantitative survey study (Yin, 2003). Existing studies on HRM in India have pri-marily adopted a quantitative method, often with a single respondent from each surveyed firm (e.g., Amba-Rao et al., 2000; Biswas & Varma, 2007; Bhatnagar, 2007; Björkman & Budhwar, 2007; Budhwar & Boyne, 2004; Chand & Katou, 2007; Rao, 2007; Singh, 2003). Survey studies offer useful statistical information on HRM practices across a rela-tively large number of organizations sur-veyed. It does not, however, reveal organiza-tional nuances and complexities in the process of adopting and implementing HR

policies or perceptions of these practices from different groups of employees. A case study approach is therefore needed to address our research questions.

In light of the paucity of empirical studies on DM practices across different ownership forms in a less developed country, this paper investigates how diversity is managed in firms of different ownership forms and the extent to which DM has been adopted as a strategic HRM technique for firms to gain com-petitive advantage in India. In particular, we address the follow-ing research questions:

1. How are diversity management issues understood and managed at workplaces in India?

2. To what extent have business organizations in India devel-oped a strategic approach to managing diversity to enhance their performance?

3. What, if any, are the differences in the approach to DM between firms across different owner-ship forms, particularly between domestic firms and MNCs oper-ating in India?

4. Are there any differences in the perception between managers and non-managerial employees in the way workforce diversity is and should be managed in their organization?

Diversity Management as Part of Strategic HRM

Despite growing academic interest in DM, it has been noted that “diversity management” is a poorly understood, increasingly slippery, and controversial concept that is used “in an all-embracing fashion to include not just the social categories of AA [affirmative action] such as race and sex but a wide range of per-sonal characteristics” (Ferner et al., 2005, p. 309). For this paper, we adopt the broad definition of DM Arredondo (1996) suggested and Wentling (2000) adopted: “diversity

Conducting a

study on diversity

management in

India responds to

Tsui’s (2004) call

for more high-

quality indigenous

(context-specific)

studies to produce

contextualized

knowledge and

make a value-added

contribution to our

global management

knowledge.

480 HUMAN RESOURCE MANAGEMENT, MAY–JUNE 2010

Human Resource Management DOI: 10.1002/hrm

initiatives are defined as specific activities, programmes, policies, and any other formal processes or efforts designed to promote organizational culture change related to diversity” (p. 436). Examples of DM initia-tives we looked for in the case study organi-zations included flexible working arrange-ments, work-life balance initiatives, education and training programs to raise cultural aware-ness, and equal opportunity (EO) policies and practices.

It has been suggested (e.g., Cox, 1993; Soni, 2000) that the objective of DM is for organizations to increase awareness of cul-tural differences; develop the ability to recog-

nize, accept, and value diversity through organizational interven-tion to minimize patterns of in-equality experienced by those not in the mainstream; and modify organizational culture and leader-ship practices so that “members of all socio-cultural backgrounds can contribute and achieve their full potential” (Cox, 1993, p. 225). It has also been argued that there are three important reasons for DM: effective people manage-ment, tackling market competi-tion, and enhancing corporate reputation (e.g., Chartered Insti-tute of Personnel and Develop-ment [CIPD], 2006; Jayne & Dip-boye, 2004; Konrad et al., 2006). DM is regarded as a better ap-proach than equal opportunity

(EO) as it “focuses on valuing people as unique individuals rather than on group-re-lated issues covered by legislation” (CIPD, 2007, p. 6). In line with proponents of the importance of strategic HRM to organiza-tional performance, advocates of DM have argued that organizations committed to DM out-perform those that are not (e.g., CIPD, 2006; Cox, 1993; Jayne & Dipboye; 2004; Konrad et al., 2006; Soni, 2000). Indeed, ex-isting studies have provided some evidence to support the assumption that strategic DM can lead to enhanced HR outcomes, such as attracting talent (e.g., Ng & Burke, 2005).

Other studies, however, have revealed that the benefits of DM rhetoric can be over-stated (e.g., Williams & O’Reilly, 1998; Wise & Tsehirhart, 2000) and that DM initiatives may actually undermine efforts in EO pro-grams (e.g., Subeliani & Tsogas, 2005). Ko-chan et al. (2003) questioned whether or not the business case rhetoric of DM has run its course. Nevertheless, they argued that while one may be skeptical about the positive im-pact of DM on organizational performance, diversity is a labor market imperative and a societal value and expectation. Therefore, “managers should do their best to translate diversity into positive organizational, group and individual outcomes” (Kochan et al., 2003, p. 18).

Furthermore, authors on strategic HRM (e.g., Bowen & Ostroff, 2004; Nishii, Lepak, & Schneider, 2008; Purcell, 1999) have argued that the way firms adopt HRM practices has a significant impact on employees’ perceptions of the intention of these practices. This per-ception will in turn affect the outcomes of the practices implemented. The employees’ voice, however, is often unheard in studies related to strategic HRM. This is partly because exist-ing studies on HRM have often relied on quantitative studies with senior/HR managers as the key informants (Nishii et al., 2008). This study, therefore, targets both managerial and non-managerial employees as the two key groups of our informants in order to com-pare and contrast their perceptions on DM in their organizations in order to evaluate its likely impact as an HRM practice.

Diversity Management in the Global Context

A number of country-specific studies have revealed unique societal contexts in which diversity issues are embedded. For example, Jones, Pringle, and Shepherd (2000) showed that the language used to describe diversity and the perception of diversity issues in New Zealand were markedly different from those manifested in the dominant discourse of DM embedded with U.S. cultural assumptions. In African countries, politics assumes supreme

It has also been

argued that there

are three important

reasons for diversity

management:

effective people

management,

tackling market

competition, and

enhancing corporate

reputation.

DIVERSITY MANAGEMENT IN INDIA 481

Human Resource Management DOI: 10.1002/hrm

importance in DM, while ethnicity domi-nates “most national debates on diversity” as the central issue (Healy & Oikelome, 2007, p. 1923). This is because some disadvantaged ethnic groups have been oppressed histori-cally, and there are now increasing calls for radical remedial actions to address racial grievances. In contrast, ethnic groups in Japan and Korea are relatively homogeneous; as a result, gender, women’s marital status, and their related employment status may be the key source of workforce diversity (Cooke, 2010).

In the U.S. and UK, workforce diversity may include gender, race, ethnicity, religion, age, disability, immigration status, social class, political association, marital status, parental status, sexual orientation, and ex-offenders, among other categories. Soci-ety accepts many of these differences, protecting them by law and acknowledging them in company policy. Some characteris-tics, however, may not be acceptable socially or legally in Asian countries such as China and India (Cooke, 2010). Furthermore, significant differences may exist even within Asian countries. For example, caste, ethnic-ity, religion, and gender are the main sources of diversity in India, whereas age, gender, disability, and place of origin (e.g., rural vs. urban) are the main causes of social inequality in China. India is a democracy in which “in-clusiveness” is the major politico-economic discourse at present. In furtherance of this thinking, the talk of empowerment of socially disadvantaged groups is emerging as a pow-erful weapon for political parties to connect with their constituencies.

It is perhaps not surprising that studies on DM in MNCs have found that attempts to roll out U.S. domestic diversity programs globally often meet with strong resistance in the host country and fail to achieve their objectives (e.g., Ferner et al., 2005; Nishii & Özbilgin, 2007). This is mainly because the U.S.-specific program fails to reflect the specific demo-graphic profile and the legal, historical, politi-cal, and cultural contexts of equality in the host countries. Many U.S.-owned MNCs stud-ied, in fact, made little attempt to adapt their

U.S.-designed diversity programs to capture local characteristics (Nishii & Özbilgin, 2007). As a result, MNCs may encounter “regulatory, normative and cognitive challenges” (p. 1895) when designing and implementing their global DM initiative (Sippola & Smale, 2007). While the diversity philosophy may be ac-cepted globally within the corporation, a more multi-domestic approach has been found necessary to implement the diversity initiative, as was revealed in Sippola and Smale’s (2007) study.

Company-based case studies of DM in various countries have further revealed the distance between the reality and the aspira-tion projected in DM’s rhetoric. For instance, Dameron and Joffre’s (2007, p. 2053) study of the integration team established to manage the post-merger integration of France Telecom Mobile and Orange UK found that the coexistence of the French and English cultures was “never seen as an opportu-nity, a differentiation, and a source of creativity.” Rather, “cultural diversity was always experienced by the members of the integration team as a diffi-culty to overcome” (Dameron & Joffre, 2007, p. 2053). Subeliani and Tsogas’s (2005) study of DM in a large bank in the Nether-lands showed that diversity ini-tiatives were designed and im-plemented in large cities whereby the bank could benefit from a large ethnic market that existed. Employees with immigrant back-grounds were mostly recruited for lower positions, where they could be visible to customers, but promotion for them was very difficult, if not impossible. They were trapped at the lower end of the organizational hierarchy, with little freedom to express their cultural and religious views. In this case, it was clear that business motives had taken precedence over moral concerns when adopting the DM program.

It is perhaps not

surprising that

studies on diversity

management in

MNCs have found

that attempts to roll

out U.S. domestic

diversity programs

globally often

meet with strong

resistance in the

host country and

fail to achieve their

objectives.

482 HUMAN RESOURCE MANAGEMENT, MAY–JUNE 2010

Human Resource Management DOI: 10.1002/hrm

Societal Context of Diversity in India

To understand the organizational context for DM in India, it is important to first un-derstand its societal context. India has a markedly different societal context for di-versity from Western countries and is one of the most diverse nations in the world (Sow-ell, 2002). The country must address a range of diversity issues, including age, education, religion, caste, socially disadvantaged (e.g., scheduled castes, scheduled tribes, and other depressed classes), gender, language, re-gional background, ethnicity, economic well-being, and lifestyle (e.g., vegetarian vs.

non-vegetarian) (Som, 2007; Venkata Ratnam & Chandra, 1996). India is a multi-religious country, with Hinduism being the dominant religion practiced by 81% of the population (Soci-ety for Human Resource Manage-ment [SHRM], 2007). Hundreds of languages are spoken by the Indian people; 18 of them are of-ficially recognized by the Consti-tution (Venkata Ratnam & Chan-dra, 1996). Gender inequality in education is relatively high, even in urban India. Dowry payments for marriage and the loss of return on human capital investment upon marriage make parents unwilling to invest in their daughters’ education and health (Kingdon, 2002; Patel & Parmen-

tier, 2005). Women make up around 20% of the workforce in urban areas. For personal or family-related reasons, a large proportion of women will opt out of the workforce by age 30. Religion, caste, and language remain major determinants of social and political organization, despite economic moderniza-tion and laws countering discrimination against the lower end of the class structure (SHRM, 2007; Som, 2007). As Sowell (2002) noted, diversity is not just a matter of de-mographics, but also a matter of identity and identity politics. These sources of social diversity may feature prominently in some workplaces.

In addition, managers and other catego-ries of employees, especially those belonging to the higher castes, resent reservation poli-cies and concessions through which socially disadvantaged people may enter organiza-tions (Kundu, 2003). Consequently, despite the fact that three rounds of anti-caste legisla-tion have been passed in India since 1955, caste stratifications continue to play a domi-nant, though diminishing, and divisive role in governing Indians’ lives (Foster, 2007). This is, to some extent, reflected in organizational life as well. For example, Kundu’s (2003) sur-vey of 1,083 male and female employees across categories regarding their perception of workforce diversity in Indian organizations revealed “the prevalence of gender and cate-gory (racial) discrimination” (p. 225) in work-places. This finding suggests that workplace inequality and potential discrimination are a reality that is accepted and to some extent reinforced by groups of employees.

Research Methods

A qualitative (case study) approach was adopted using multiple methods, including semi-structured interviews, document analy-sis, and on-site observations to collect data. This approach allowed us to collect data from different sources, explore the issues by seek-ing views from different groups of employees, and validate the data (Denzin & Lincoln, 2000). In-depth case studies were carried out with 24 business organizations based in India in 2007 (see Table I). In view of the broad consensus among researchers that strategic HRM will lead to better organizational perfor-mance and that DM is increasingly being considered an important part of strategic HRM, we purposefully targeted companies that were well performing when selecting case study firms. This was done with the as-sumption that well-performing firms are more likely to adopt a strategic approach to HRM, are more likely to be aware of the no-tion of DM, and are more likely to take action on it. We define “well-performing” organiza-tions by looking for firms that meet at least one of the following criteria: they are listed in the Fortune 500, listed in BT 500 (by the In-

A qualitative (case

study) approach

was adopted

using multiple

methods, including

semi-structured

interviews,

document analysis,

and on-site

observations to

collect data.

DIVERSITY MANAGEMENT IN INDIA 483

Human Resource Management DOI: 10.1002/hrm

T A B L E I Interviews and Case Study Companies CodingNo. Case Study

Company

Industry Employees

in India

Number Interviewed

1 USA MNC1 Pharmaceutical R&D lab

2,500� 10 (2 HR managers, 2 line managers, 6 employees)

2 USA MNC2 Air conditioner manu-facturing, distribution, and maintenance

400 3 (1 HR manager, 2 functional managers)

3 USA MNC3 Consulting and marketing

400� 8 (1 HR offi cer, 3 functional managers, 4 employees)

4 USA MNC4 IT 1,200� 8 (1 HR manager, 3 line managers, 4 employees)

5 USA MNC5 Health product 1,100� 8 (1 HR manager, 2 line managers, 5 employees)

6 UK MNC1 Telecom 1,000� 6 (1 HR offi cer, 2 functional managers, 3 employees)

7 Australian MNC1 Construction project consultancy

700� 12 (1 HR manager; 2 managers; 9 employees, including 1 expat)

8 Japanese MNC1 Automotive technol-ogy, systems and components supply

600� 9 (1 HR manager, 3 line managers, 5 employees)

9 Japanese-Indian Joint Venture

Automotive manufac-turing

800� 8 (1 HR manager, 3 line managers, 4 employees)

10 Indian MNC1 Pharmaceutical manu-facturing

800 8 (1 HR manager, 3 line managers, 4 employees)

11 Indian MNC2 Telecom 12,300� 15 (2 HR managers, 6 functional managers, 7 technical employees)

12 Indian MNC3 Telecom 22,000 8 (1 HR manager, 1 functional manager, 6 technical staff)

13 Indian MNC4 Luxury hotels 22,000� 7 (2 HR managers, 4 functional managers, 1 employee)

14 Indian MNC5 Luxury hotels 20,000� 7 (2 vice presidents, including 1 on HR; 3 functional managers; 2 employees)

15 Indian MNC6 IT 32,000� 8 (1 HR manager, 3 line managers, 4 employees)

16 Indian MNC7 Telecom 7,000� 5 (1 HR manager, 2 line managers, 2 technical leaders)

17 Indian Private1 Commercial 8,000 4 (1 HR manager, 3 functional managers)18 Indian Private2 Tobacco retail 20,000� 8 (2 HR managers, 3 functional

managers, 3 employees)19 Indian Private3 Health care and food

products15,000� 8 (2 HR managers, 3 functional

managers, 3 employees)20 Indian Private4 Confectionery 2,550� 8 (1 HR manager, 3 line managers,

4 employees)21 Indian Private5 Banking 48,500� 15 (2 managers; 13 on different types

of jobs, e.g., sales, rep, contract staff)22 Indian Public1 Tourism 4,000� 8 (1 HR manager, 3 line managers,

4 employees)23 Indian Public2 Energy 7,400� 12 (all managers)

24 Indian Public3 Transport 4,500� 19 (4 line managers, 4 supervisors, 11 offi cers)

484 HUMAN RESOURCE MANAGEMENT, MAY–JUNE 2010

Human Resource Management DOI: 10.1002/hrm

dian magazine Business Today), or ranked as industry leaders by business magazines in India or have won national awards (e.g., best quality, innovation) sponsored by the Indian government or associated bodies. In addi-tion, the companies we chose were all profit-making at the time of the research.

A total of 47 firms in the Delhi and Gur-gaon areas were contacted for access for this study; we restricted the geographic range to minimize regional effects, given India’s vast regional differences in culture and economic development. Only 24 companies agreed to participate, and all wished to remain anony-mous (see Table I). The majority of these or-ganizations have been in business at least 10 years, some much longer. All organizations are relatively large employers, although sub-sidiaries of foreign MNCs in India generally have a much smaller number of employees than Indian firms. It should be noted that the number of employees in the Indian firms in-cluded employees from all sites in India, not just the number employed at the site where interviews were conducted. Only one site for each case study company was visited to col-lect data due to resource constraints. The companies represented a range of business areas, including telecommunications, phar-maceutical production and research and de-velopment, automotive production, com-mercial, hotel and tourism, health care products, and transportation. Many of them are leaders in their industry. They were se-lected from both public and private sectors. Specifically, there were five U.S.-owned MNCs, one UK-owned MNC, one Australian-owned MNC, one Japanese-owned MNC, one Japanese-Indian joint venture, seven Indian-owned MNCs, five Indian-owned private firms, and three Indian public-sector enter-prises. Given the difficulty in getting access for academic research, we have not been able to provide equal numbers of companies in each business ownership category. This study is of an exploratory nature; therefore, we felt that the number and spread of the cases we obtained were sufficient to provide informa-tion needed for discussion in this paper.

A total of 212 semi-structured interviews were conducted. Twenty-six were conducted

with HR director/managers/officers; 84 with vice president/line managers/supervisors; and 102 with non-managerial employees to ob-tain views from different groups. As far as possible, the HR manager, line managers, and non-managerial employees were interviewed in each case study organization to elicit their perception of DM policies and practices in their organization. Given that a large propor-tion of these organizations operate in high-tech or knowledge-intensive business areas (e.g., telecom, consulting, and laboratory), the majority of the non-managerial employ-ees interviewed were professionals. They were selected for interview by their line managers, often on the basis of availability on the day interviews were conducted with the line managers. We specified that employees se-lected for interview must have worked for the company for at least two years, which would allow them to have a sufficient understand-ing of the firm. With the exception of one Australian expatriate, all interviewees were Indian. A prepared list of interview questions guided the conversations with managers, and a similar list was adopted for non-managerial employees. Issues explored included formal HR and DM policies and initiatives the com-pany adopted and informal DM practices managers deployed. Interviewees’ percep-tions were sought regarding the need for and effectiveness of DM schemes, if they existed.

Interviews with managers typically lasted between 40 and 50 minutes, whereas inter-views with non-managerial employees lasted between 20 and 30 minutes. All interviews were conducted face to face on site. The ma-jority of interviewees were unwilling to be tape recorded for the interviews; therefore, no tape recording was used for the interviews. Instead, extensive interview notes were taken and written up as soon as possible after each interview. With the exception of 17 inter-views with employees, interviews were con-ducted by two researchers. This allowed one researcher to focus on asking questions and the other on taking notes, although both re-searchers were taking notes during the inter-views. A limited amount of observation was carried out during site visits for interviews. Interview information is supplemented with

DIVERSITY MANAGEMENT IN INDIA 485

Human Resource Management DOI: 10.1002/hrm

company documents, particularly HR policy statements, when they existed and were made available. These documents were either in hard copy or taken from company Web sites. The researchers visited all company Web sites prior to the interviews for back-ground information and after the interviews to confirm interview data. Written-up inter-view reports were then analyzed by the au-thors independently. Qualitative data were highlighted to identify emerging themes. Quantitative data were processed to provide support to qualitative analysis. The authors then met to discuss and agree upon the inter-pretation and use of data for the paper. No major differences were found between the two authors when interpreting the data.

Findings and Analysis

This study’s findings reveal a spectrum of practices in the study’s organizations in terms of the availability of formal DM policy, im-plementing DM initiatives and informal prac-tices, and the managers’ and employees’ per-spectives on diversity management (Table II). The differences displayed are to some extent influenced by the nationality, ownership form, and age of the organizations, as well as the industrial sector in which they operate and the nature of their business. Senior man-agers’ attitude toward DM is also an impor-tant factor in deciding whether to adopt a DM initiative and, if so, how it is imple-mented.

Adopting a Formal DM Policy

Sixteen of the 24 case study organizations have embraced some form of diversity man-agement policy statements (Table II). Nine of the firms have explicit DM/EO policies; the other seven have included DM elements in their general HR policy statements. The eight organizations that do not have a clear DM policy statement are spread across dif-ferent ownership forms, including a U.S.-owned firm. Reasons put forward by manag-ers interviewed for the lack of an espoused DM policy vary. Some held that India is al-ready a diverse country where people are

accustomed to living and working alongside others with diverse backgrounds. It is part of their daily life and therefore there is no need to make a special policy to address this accepted aspect of life (e.g., USA MNC2). Others see DM as a relatively low priority of their business activities and believe in a pragmatic approach to dealing with DM is-sues as and when they occur (e.g., Indian Private1). Still others doubt the efficacy of a DM policy (e.g., Australian MNC1) in the Indian context.

Whether a DM policy state-ment exists or not, however, does not necessarily mean that the policy is fully supported by prac-tices. Likewise, the absence of a formal DM policy statement does not necessarily mean that the organization does not take an ac-tive approach to managing diver-sity (e.g., Japanese MNC1). We found that the majority of orga-nizations have some form of DM initiatives or programs in place, including those that do not have a formal DM policy statement. In other words, some DM practices are there but may not be con-sciously articulated as a strategic HR tool.

Approaches to DM and Major Initiatives

Based on management’s attitude and the extent and types of DM initiatives the organizations have adopted, we divided them into five catego-ries, each indicating the organization’s ap-proach to DM (Table III). More specifically, the strategic DM approach is close to the business (value adding) case approach in which organizations design DM initiatives deliberately to harness greater productivity and performance from employees. Six orga-nizations are allocated into this category. Four companies adopted a social justice ap-proach to DM in which they emphasize their corporate social responsibility and in-

Whether a diversity

management policy

statement exists or

not, however, does

not necessarily

mean that the policy

is fully supported by

practices. Likewise,

the absence of a

formal diversity

management policy

statement does not

necessarily mean

that the organization

does not take an

active approach to

managing diversity.

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T A B L E I I Level of Adopting DM Policies and PracticesNo. Case Study

Company

Industry Existence of DM

Policy*

DM Initiatives and Informal Practices:

Managers’ and Non-Managerial

Employees’ View on DM

1 USA MNC1 Pharmaceuti-cal R&D lab

DM mentioned in Code of Conduct

In-built job rotation and geo-graphic rotation to sensitize em-ployees on different cultures.Managers see DM as embedded in the organizational culture.Female employees feel workplace is discrimination free and treat-ment of everybody the same.

•

•

•

2 USA MNC2 Air condi-tioner manu-facturing, distribution, and mainte-nance

No espoused policy, no plan to introduce one as India is seen as a diverse country

Work-life balance considered be-ing introduced to some.Male dominant workforce. HR and line managers felt no need for diversity in the workforce.Future diversity issues, if they arise, are to be handled at opera-tional level.

•

•

•

3 USA MNC3 Consulting and marketing

Formal DM policy Equal Employment Opportunity (EEO) and Affi rmative Action Program.Flex-time for employees.Considerable difference between managers’ and non-managerial employees’ perception about fair-ness and organizational practices.

•

•

•

4 USA MNC4 IT Formal DM policy with high-profi le DM programs

Equal opportunity programs, Celebration of Women’s Day, Take Our Kids to Work Day, World Dis-ability Day, etc.

•

5 USA MNC5 Health product

Formal DM policy to use diversity

Corporate defi nition of global di-versity as “thinking style” that val-ues different ways of thinking and fosters innovation and creativity.

•

6 UK MNC1 Telecom Formal DM policy Employment policy of minimum 3% of ethnic minorities.DM issues dealt with by project manager.Non-managerial employees felt that recruitment procedure was fair.

•

•

•

7 Australian MNC1

Construction project con-sultancy

No formal HR policy or DM policy

Managers use their own contacts, skills, authority, regular com-munication, and interaction with employees to address individual diversity issues. Employees suggest company celebrate Indian festivals, allow fl ex-time, provide better canteen and well-being facilities to im-prove working life.Mixed views from interviewees on the need for a formal DM policy due to perceived lack of effi cacy.

•

•

•

Continued on next Page

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T A B L E I I Level of Adopting DM Policies and Practices (Continued)No. Case Study

Company

Industry Existence of DM

Policy*

DM Initiatives and Informal Practices:

Managers’ and Non-Managerial

Employees’ View on DM

8 Japanese MNC1

Automotive technology, systems, and components supply

No espoused HRM or DM policy, but many practices to address diversity issues

Fair treatment and equal opportunity issues are addressed in monthly meetings by senior management team. Egalitarian approach that bans any differential treatment as a result of organizational hierarchy.Workplace welfare committees with representatives from each group to address workplace welfare issues regularly.Line managers started to be in-volved in people management issues through the “HR partner” training program.

•

•

•

9 Japanese-Indian Joint Venture

Automotive manufactur-ing

DM policy as part of HR policy

Flex-time.Poor implementation of DM policy, age bias favorable to older employ-ees.

•

•

10 Indian MNC1 Pharmaceuti-cal manufac-turing

No espoused policy Flex shift, day-care center, maternity leave, career breaks to accommo-date female workforce (a large pro-portion of the workforce is women).

•

11 Indian MNC2 Telecom Diversity Board at corporate level

Presence of women on the board— “breakthrough” initiative.Fixed female:male ratio, anti-dis-crimination against women from recruitment stage.Line managers not aware of DM policy, although they admitted hav-ing to adhere to female:male ratio policy, which they fi nd a nuisance.

•

•

12 Indian MNC3 Telecom No espoused policy Try to maintain a female:male ratio (25%:75%) at various positions by benchmarking competitors’ prac-tices; aim to increase the ratio to 50%:50% in the next fi ve years.Line managers believe “no issues of workforce diversity and no for-mal policy on DM is required.”Non-managerial staff reported “no DM policy in place but a formal HR policy for DM should be adopted.”

•

•

•

13 Indian MNC4 Luxury hotels Clear policy of providing employ-ment to disabled and physically- challenged people

HR manager reported no DM issues.Non-managerial staff reported that employment for disability is restricted only to jobs that do not require face-to-face interactions with customers.Some non-managerial staff felt Par-sis are given undue advantage.

•

•

•

Continued on next Page

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T A B L E I I Level of Adopting DM Policies and Practices (Continued)No. Case Study

Company

Industry Existence of DM

Policy*

DM Initiatives and Informal Practices:

Managers’ and Non-Managerial

Employees’ View on DM

14 Indian MNC5 Luxury hotels Non-discrimination policy that de-mands and pro-motes professional behavior and re-spectful treatment for all employees

Fostering meritocracy in organization.Promoting diversity and a gender friendly work environment.

•

•

15 Indian MNC6 IT Formal DM policy Global Village Initiative for cross-cul-tural management.Flexible Basket of Benefi ts.Training programs include DM con-tent.Varying views on the existence of DM between the HR manager and other interviewees.

•

•

•

16 Indian MNC7 Telecom No mention of DM in policy statements, but fl ex-time and anti-sexual harassment policies are in place

Flex-time. Various communication forums to promote friendly working environ-ment and sharing of information and ideas.Performance-based reward and pro-motion. After-work clubs for employ-ees to demonstrate and develop their talent and interests and to achieve work-life balance. Employees believe DM is managed effectively albeit through an unconscious way.Disadvantaged social groups are un-der-represented in the workforce.

•

•

•

17 Indian Private1 Commercial No espoused policy, no plan to introduce one

A mentoring scheme is adopted in which older employees mentor younger and new employees.Pilot work-life balance scheme for executives to gain a healthier work-life mix.Managers felt no need for a DM policy.

•

•

•

18 Indian Private2 Tobacco retail Non-discrimination policy that de-mands and pro-motes professional behavior and re-spectful treatment for all employees

Open-door policy is adopted for em-ployees to approach managers with grievances.A committee is set up to deal with complaints.

•

•

19 Indian Private3 Health care and food products

No espoused policy, no plan to introduce one

No DM initiative reported.Company faced post-acquisition cultural integration problem in which employees from the acquired fi rm felt dominated by the acquiring fi rm (the “Big Brother” syndrome).

•

•

Continued on next Page

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troduce DM policies to regulate behavioral norms, such as fair treatment and dignity in the workplace. These policies go beyond the legal obligations of EO but are not used in a utilitarian manner aimed primarily at en-hancing organizational performance. We found that firms that adopted these first two approaches are mainly MNCs.

We also found six firms whose DM ap-proach focuses on gender equality and to a lesser extent ethnic/religious equality. These DM initiatives are typically affirmative action plans that go beyond legal requirements. Two organizations adopted a legal compliance ap-proach to DM and do no more than comply with the equal opportunity requirement. Six

T A B L E I I Level of Adopting DM Policies and Practices (Continued)No. Case Study

Company

Industry Existence of DM

Policy*

DM Initiatives and Informal Practices:

Managers’ and Non-Managerial

Employees’ View on DM

20 Indian Private4 Confectionary Formal Fair Em-ployment Practices and DM policy statement; Code of Business Conduct

Equal Opportunity program. Non-managerial interviewees felt DM policy is preached but not necessarily prac-ticed; guiding principle in recruitment is recruiting “talent” and not “diverse talent”; equal opportunity focused instead on allowing for diversity, e.g., lunch break must be taken at the same time for everyone.

•

21 Indian Private5 Banking High profi le gender equality statement and family-friendly policy

Women made up 30% of senior man-agement and the workforce. Parental leave. Career break and career rede-velopment for women with children.

•

22 Indian Public1 Tourism No formal DM policy

Interviewees reported that the domi-nant Punjabi culture in the offi ce has led to some people of other cultures feeling offended and discriminated against.Performance appraisal and promo-tion not related to performance.

•

•

23 Indian Public2 Energy DM policy as part of HR policy

Promoting an inclusive work envi-ronment. Work-life balance initiative being developed.Creating opportunities for co-workers to teach each other.Advocating performance-based pro-motion. Unitarist approach to HRM— “there is only one best way” and “we are all the same.” DM to be dealt with as problem solving. Women made up only 4% of the workforce and people of color made up 0%.

•

•

•

•

•

24 Indian Public3 Transport Equal Opportunity and Affi rmative Action (reservation policy) program

Flexible working time and concession given to employees at discretion of supervisors.

•

* The formal DM policy in these case study organizations, where one exists, is normally espoused as part of the HR policy. Only a small number of organizations, mainly the U.S./UK MNCs, have a separate statement of the DM policy.

490 HUMAN RESOURCE MANAGEMENT, MAY–JUNE 2010

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organizations were found to have an ad hoc approach to DM. In these cases, neither DM policies nor initiatives exist and no plans were made to introduce DM policy. As they emerge, any DM issues are to be dealt with by line managers. This range of five DM ap-proaches falls within what is argued in the DM literature (e.g., Mor Barak, 2005). That is, there is an escalation from the legal compli-ance approach and social justice approach to the business case approach to strategic DM, assuming strategic DM is the most progres-sive.

Interesting and revealing from the find-ings is that within the social justice category, three firms (Australian MNC1, Indian MNC1, and Japanese MNC1) have no formal DM policy. They do have, however, relatively ex-tensive employee welfare and well-being programs and mechanisms aimed to satisfy employees’ diverse needs, including work-

life balance. In particular, Japanese MNC1 (automotive) exhibited a high level of Asian cultural value—egalitarianism—in its DM programs. Although there is no formal HRM and DM policy in the company, as all inter-viewees revealed, there are a range of mecha-nisms in place to ensure that all employees are treated fairly and all needs are taken care of as effectively as possible. In monthly meetings, the senior management team ad-dresses fair treatment and equal opportunity issues. The company adopts an egalitarian approach that bans any differential treat-ment as a result of organizational hierarchy. All employees are called “team members,” and equal rules apply to all, including a com-mon canteen and the same uniform and welfare for all. In addition, various workplace welfare committees with representatives from each group address workplace welfare issues regularly to ensure that the diverse

T A B L E I I I Approaches to and Main Initiatives of DM

Approaches to DM Main Initiatives of DM Firms Adopting the

Approach and Initiatives

Strategic DM, valuing DM for competitiveness

Cultural awareness for workforce integration/bonding.Work-life balance.Flex-time.Encouraging diverse thinking to foster innovation and creativity.

•

•

•

USA MNC1, USA MNC3, USA MNC5, Indian MNC6, Indian MNC7, Indian Public2

Social justice that goes beyond legal compli-ance obligation but DM not yet used as part of strategic HRM

Dignity at work that is free from discrimination.Promotion of professional behavior.Employee welfare and well-being programs (e.g., canteen, transport, social club).Maternity policy and child care provision. Engagement of employees’ family (e.g., Open Day, Family Visit Day).Removal of hierarchical status or differen-tials among different groups of employees.

•

•

•

•

•

•

USA MNC4, Australian MNC1, Indian MNC5, Japanese MNC1

Affi rmative action be-yond legal requirement typically from a gender approach

Setting gender or ethnicity ratio in the workforce and board level.

• UK MNC1, Indian MNC1, Indian MNC2, Indian MNC3, Indian Private5, Indian Public3

Legal compliance EO policy.• Indian MNC4, Indian Private4

Ad hoc approach DM issue to be dealt with as it comes at operational level.

• USA MNC2, Japanese-In-dian JV, Indian Private1, Indian Private2, Indian Private3, Indian Public1

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needs and preferences of all employees are met as far as possible. Despite these efforts, interviewees pointed out that equal treat-ment for everyone is a major issue in that if one person is given something, for example, training, others would expect and demand the same treatment. Japanese MNC1’s docu-ments reflect a typical Japanese technical firm that focuses on quality, technology ad-vancement, and customer service. It also adopts a unitarist approach with rituals and ceremonies specifically designed to elicit em-ployees’ identification with the firm, includ-ing a company song. In the meantime, it appears to be adapting to the local culture effectively. This is notably through its pater-nalistic policies such as engagement with employees’ families and local communities. The company has a “Family Open Day” that aims to build a strong mutual bonding be-tween employees’ family members and the company. Cultural performances and sports events are also held periodically. Interview-ees readily admitted, however, that the com-pany’s HR policy is not well developed. Line managers only began to be involved in peo-ple management issues through the “HR partner” training program about a year ago. This is in contrast to the notion of HR profes-sionals needing to be strategic business part-ners, as is promoted in Western HR literature (Ulrich, 1997).

From the range and content of DM initia-tives the case study organizations imple-mented, it is discernible that the majority of them have not reached the “strategic DM” stage. The DM content is largely equal oppor-tunity focused and targeted at groups of em-ployees rather than catering to diverse needs at the individual level. Our findings also re-veal the inherent difficulty of satisfying di-verse individual needs without being seen as “unfair” by other employees who might de-mand similar treatment. As a result, compa-nies appear to be focusing on equal opportu-nities for all instead of allowing for diversity. This finding echoes that of existing studies in different parts of the world that firms are still focusing on equal opportunity and affirma-tive action legislation rather than valuing, developing, and using diversity for advantage

(e.g., CIPD, 2006; Shen, Chanda, D’Netto, & Monga, 2009).

Factors Infl uencing Firms’ Approach to DM

We discovered a number of factors influential in the way organizations adopted their DM approach and initiatives.

Industrial Factor

A first factor is the industrial sec-tor in which the firm operates. In heavy manufacturing, engineer-ing, and energy industries, the vast majority of the workforce is male. For example, Japanese-In-dian Joint Venture (automotive manufacturing) is a male-domi-nant organization in which men were given preference in recruit-ment. The HR manager explained that the nature of work is such that men tend to be more suitable and hence the male-dominant environment. Similarly, women made up only 4% of the work-force of Indian Public2 (energy). While this firm is strategic in using DM initiatives to enhance employees’ work experience and hence productivity, it is not mak-ing proactive efforts to recruit more women or other socially disadvantaged groups of people into the workforce. By contrast, banking (e.g., Indian Private5) and low-skilled manufacturing jobs (e.g., Indian MNC1) are staffed by a higher proportion of women, although women still make up no more than a minority of the total workforce in the orga-nization. For example, only about 30% of the workforce of Indian Private5 (banking) are women. These organizations tend to im-plement gender-specific DM initiatives to accommodate women’s family care commit-ments. For instance, Indian MNC1 has intro-duced flexible shift, crèche (day-care center), maternity leave, and career breaks (Table II).

[F]irms that operate

in the high-tech

environment,

notably those in IT/

telecom businesses,

typically have a

highly educated and

young workforce.

Individual diversity

may be promoted

more compared to

group diversity and

equal opportunity

of disadvantaged

groups.

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At the other end of the skill spectrum, firms that operate in the high-tech environ-ment, notably those in IT/telecom businesses, typically have a highly educated and young workforce. Individual diversity may be pro-moted more compared to group diversity and equal opportunity of disadvantaged groups. These organizations tend to develop a high-performing culture that might be difficult for

certain disadvantaged groups to follow. Merit-based recruitment and promotion mean that disad-vantaged groups may be grossly underrepresented in the high-tech and knowledge-intensive firms because members of these groups are also underrepresented in higher education. Indian MNC7 (telecom) is an example.

Background of Leadership

A second factor that influences the adoption of DM policy and initiatives are the personal back-ground and attitude of the CEO and management toward DM. For example, Indian Private5 (bank-ing) has a high-profile campaign to support women employees, in-cluding increasing the presence of women on the executive board. Indeed, India Private5’s CEO is a woman and strongly believes that women have a unique advantage of creative thinking that is helpful to the organization’s performance.

Despite the apparent passion for DM of a small number of CEOs and HR directors/managers, however, the majority of non-HR managers interviewed appear to hold the view that “DM is not an issue” in their orga-nization and that there is no need for a for-mal DM policy. DM is seen as being already embedded in the organizational culture. As one manager from Indian MNC1 observed, “India is a diverse population, the Indian workforce in general are said to be tolerant. Therefore, we don’t see the necessity for in-troducing a formal policy to address diversity issues.” This finding is in line with that of

Bartlett et al.’s (2002) study, which suggested that top management’s perception of the relative value of human resources and the degree of empowerment of the workforce is positively related to the firm’s HRD strategy and activities. It also supports studies by Rao (2007) and Björkmang, Budhwar, Smale, & Sumelius (2008), which found that managers’ background and organizational profile are important to effectively implementing HRM practices in India.

Firm Ownership

A third factor relates to the ownership form of the organization. It is noticeable that In-dian public-sector organizations and private firms tend to lag behind foreign MNCs and Indian MNCs in their DM, with the major-ity of them (five out of eight) taking a legal compliance approach or no approach at all. This is perhaps also related to the age of the firms. Our study found that younger Indian firms appear to be more innovative and more proactive in their HR and DM policy than traditional Indian firms, which are pri-marily public-sector and private firms with a long company history. This is perhaps due to the fact that a large proportion of the younger firms are in the high-tech sector and other fast-growing industries. Managers in these firms may be more innovative and strategic, with rewards being more perfor-mance-based. These firms may be more likely to introduce DM initiatives such as flex-time in order to maximize the produc-tivity of key employees and to project an “employer of choice” image. By contrast, while traditional Indian firms are also ex-panding due to the country’s overall high economic growth, conventional thinking appears to persist in these firms with respect for age seniority and organizational, gender, and social class hierarchies. These firms are more likely to follow the affirmative action or legal compliance approach to DM. MNCs, both U.S.-owned and Indian-owned, appear to have the most comprehensive approach to DM compared with other organizations in the study. This is evidenced in the fact that firms that treat DM as a strategic man-

It is noticeable

that Indian public-

sector organizations

and private firms

tend to lag behind

foreign MNCs

and Indian MNCs

in their diversity

management,

with the majority

of them (five out

of eight) taking a

legal compliance

approach or no

approach at all.

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Human Resource Management DOI: 10.1002/hrm

agement tool and have developed relevant DM initiatives are mainly MNC firms.

This finding confirms observations from Brewster et al. (2008), which suggested that MNCs tend to manage their human resources distinctively from indigenous firms. It also supports findings from Amba-Rao et al.’s (2000, p. 76) survey that MNCs/joint ven-tures and private firms were more likely than public-sector firms to adopt a strategic approach to HRM, such as using merit-based performance appraisals to determine pay and promotion. Our findings, however, do not seem to lend full support to Aycan’s (2005) proposition that the “impact of culture on HRM practices is less evident in large organi-zations, operating in industries that make use of sophisticated technologies, public sector organizations or multinational corporations, compared to small organizations, operating in the service industry, owned privately or by families” (p. 1,1113). In particular, we found that firms in the Indian public sector are more likely to perpetuate national and orga-nizational cultural norms than those in the private sector. They are comparatively more sheltered from, and therefore more resistant to, external forces of change, including adopt-ing Western HRM techniques, particularly if such techniques require significant behav-ioral changes.

Country of Origin of MNCs

A fifth and related factor is that an MNC’s country of origin seems to emerge as a factor that influences the way diversity issues are managed. While data from our study does not allow us to provide a systematic com-parison due to the limited number of sample firms, we do find that U.S.- and UK-owned MNC subsidiaries are far more articulate in their DM policies compared with MNCs from other countries. These firms’ DM policy state-ments are also strongly influenced by their corporate statement. This is perhaps not sur-prising given that DM as a strategic HR con-cept was initiated in the U.S. and followed by the UK. In addition, the DM content of MNCs appears to be heavily influenced by their country of origin. Despite being the

forerunners of DM, U.S.- and UK-owned MNCs have been cautious in developing new DM initiatives that suit the local diversity environment. They tend to adapt their cor-porate DM policy and initiatives to local op-erations and focus typically on gender, dis-ability, and ethnicity.

The difference in country of origin is most prominent between MNCs that have a Western culture (e.g., U.S. and UK) and those with an Asian culture, particularly India and Japan. In the latter, Asian val-ues such as egalitarianism and re-spect for age are still prevalent in management style. For example, in Japanese MNC1, fairness and equality are emphasized and achieved by removing hierarchi-cal differences and offering full opportunities for all in sharing the company’s resources. HRM practices in Japanese-Indian Joint Venture also display typical Asian culture that respects age seniority, much to the frustration of the younger workforce.

Perceptions of DM Between HR Managers and Line Managers

This study observed some differ-ences between the HR managers and line managers in their per-ceptions about the existence of, and the need for, DM policies and initiatives in their organiza-tion (Table II). At least 37 manag-ers reported that there was no need to intro-duce a formal DM policy because DM “is not an issue” at their workplace. For those orga-nizations in which the HR managers inter-viewed reported having an espoused DM policy as part of the HR policy, line manag-ers did not seem to be aware of this; in fact, only a small number admitted having only a vague knowledge of the concept. For exam-ple, according to the HR manager from Indian MNC6 (IT), there is a formal DM policy in place:

More than 70% of

managers at the

mid/low ranking

interviewed were

not receptive to

the idea of having

a formal HR policy

on flexible work

arrangements

for employees in

order to enhance

work-life balance.

They prefer to deal

with it informally

on a case-by-case

basis rather than

institutionalizing the

arrangement.

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We face diversity due to our global operations. Conduct surveys, reports, changes in policy are made accord-ingly. Line Managers are instrumen-tal in managing diversity and the way they handle such issues depends on the context of each case. We have a formal set of policies to handle work-force diversity. (HR Manager, Indian MNC6)

Her statements were contradicted by one of the line managers interviewed. When asked if the company had a formal HR policy in place for DM, he replied, “There is no policy in place as of now. If there is, we have no knowledge of its existence…. Yes, having a formal DM policy would be beneficial.” His further comments, however, revealed that some DM initiatives were, indeed, in place:

There is a bias towards the female workers. Women are over protected to the extent that it may be unfair on the male counterparts…. Mechanisms used by the company to handle work-force diversity include: Cultural Inte-gration Committee and Cross-Cultur-al interactions.

This incident suggests that the company’s DM policy has not registered in the manager’s mind and that he actually holds a somewhat negative view about the fairness and effec-tiveness of the company’s DM initiative.

More than 70% of managers at the mid/low ranking interviewed were not receptive to the idea of having a formal HR policy on flexible work arrangements for employees in order to enhance work-life balance. They prefer to deal with it informally on a case-by-case basis rather than institutionalizing the arrangement. Managers did give exam-ples when they used their discretion to ac-commodate individual employees’ family commitments. They see this as a moral com-mitment that is informed by their societal culture (e.g., Budhwar & Khatri, 2001). They also see it as a reward or a reciprocal gesture to better-performing employees. Not adopt-ing a formal flexible-working policy safe-

guards against employees who are deemed uncommitted and take advantage of the policy; thus, the power of awarding this preferential treatment remains at the man-agers’ discretion.

In addition, there are differing views be-tween HR managers and line managers as to who should be driving the implementation of DM policy. Given the less than enthusias-tic attitude of a relatively large number of non-HR managers, it is perhaps not surpris-ing to find that even in firms that have an articulated DM policy and that demonstrate DM commitment at the corporate level, im-plementing DM policy may not be inte-grated with the HR function or handled by managers at the operational level. As a line manager from UK MNC1 (telecom) revealed, “Managers at the operational level don’t deal with diversity issues, it’s all done by project managers [i.e., team leaders].” This implies that the DM spirit may not have been internalized as part of the everyday life at all levels of the organization but is seen as a low-level issue to be dealt with by manag-ers at the lower level.

Perceptions of DM of Non-Manage-rial Employees vs. Managers

Even in organizations where a formal DM policy is in place with commitment at the corporate level, the perceptions of managers and non-managerial employees on achieving DM and organizational practices may differ considerably (Table II). For instance, manag-ers of USA MNC3 (consulting and marketing) reported that there was no issue with DM (or more widely with HRM) in the company be-cause pay levels were above industrial aver-age; instead, employees were motivated by rewards and recognitions. In this case, there was an open culture in the firm. DM and equal opportunity policies were in place, flex-time was practiced, performance appraisal was transparent and based on merit, and the absence of unions helped promote flexibility in the organization. In contrast, however, employees also revealed that their work-life balance was affected due to the high inten-sity of work; work pressure was increasing

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and they had little involvement in decision making.

Our findings further show that firms that do not actively practice DM or EO ini-tiatives have attracted a higher level of criti-cism from their non-managerial employees than firms that are proactive in managing equal opportunity/diversity. While manag-ers interviewed were generally more positive about the DM situation in their organiza-tions, non-managerial staff was less positive. This is notably the case in firms that adopt an ad hoc approach to DM (see Table III). A small number of non-managerial staff iden-tified sources of discrimination, though these were admittedly not widespread. For firms that have not adopted a formal DM policy, non-managerial staff interviewed mostly agreed that although the workplace was largely free from discrimination and that managers handled diverse staff needs relatively well, there was a need for some form of formal DM policy to provide clear and consistent guidance. This is in contrast to managers’ views, as noted above.

At least 16 employees criticized their company for taking a pragmatic approach to DM commitment. For instance, Indian MNC4 (luxury hotels) made it clear in its HR policy that they supported providing employment to disabled and physically chal-lenged people. This category of worker, however, is restricted only to back office jobs that do not require face-to-face interac-tion with customers. Similarly, Indian Pri-vate4 (confectionery) has a detailed and publicized Fair Employment Practices and DM policy statement and a Code of Business Conduct that specifies the fair treatment of people and recruiting the best talent from a diverse candidate pool. Non-managerial interviewees, however, felt that while the DM policy was preached, it was not the driv-ing spirit behind most of the company’s HR policies. The company, they indicated, is more focused toward managing diverse cus-tomers than DM of its employees. The guid-ing principle for recruitment is seen as recruiting “talent” but not “diverse talent.” Few actions are taken to meet the needs of a culturally diverse workforce. These findings

echo those revealed in Subeliani and Tsogas’s (2005) study. In other words, firms are either paying only lip service to DM or implement-ing it in a way that suits business needs by placing token employees (e.g., disabled or ethnic) either on the front line (to attract ethnic minority customers as in Subeliani and Tsogas’s case) or in the back office (as in the case of Indian MNC4).

Discussion and Conclusion

This paper has explored the societal con-text of managing diversity at workplaces in India. It assessed how the notion is under-stood and operationalized in a number of leading business organizations across different ownership forms and industrial sectors. The dif-ferent views of managers and employees have been high-lighted. This study reveals that the majority of the case study organizations have not adopted a strategic approach to DM to enhance their performance. In-stead, the majority of managers from these organizations take a pragmatic and “problem solv-ing” approach to managing their workforce diversity. The lack of enthusiasm of line managers to-wards DM is perhaps not surprising, given the fact that line managers have often been criticized for their low priority of HR issues and being more concerned with immediate business needs.

This study has also found that the con-tent of and approach to DM differ across dif-ferent ownership forms and industrial sec-tors. This is in part due to the demographic nature of the workforce, the historical back-ground of the firm, and leadership prefer-ences. Younger and knowledge-intensive multinational operations are more likely to take a comparatively more proactive ap-proach to DM to leverage competitive advan-tage than long-established, domestic firms in traditional industrial sectors. The latter firms are more likely to implement DM policy as legal compliance and less likely to adopt DM

Instead, the majority

of managers from

these organizations

take a pragmatic

and “problem

solving” approach

to managing their

workforce diversity.

496 HUMAN RESOURCE MANAGEMENT, MAY–JUNE 2010

Human Resource Management DOI: 10.1002/hrm

initiatives as HR interventions. This is due to their relatively low level of awareness of stra-tegic HRM. In addition, differences appear to exist between Asian organizations and West-ern MNCs in their approach to DM and adopting DM initiatives in their Indian sub-sidiaries. An intuitively reasonable conclu-sion is that these differences may be attrib-uted to the national culture and level of

sophistication of corporate HR strategy. Given the relatively higher level at which DM is pro-moted in the U.S. and UK than in other countries, U.S.- and UK-owned MNCs operating in India are more likely to have more so-phisticated DM policy and initia-tives than other MNCs.

This study contributes to ex-isting knowledge on DM and stra-tegic HRM in the Indian context through its emphasis on firms in different ownership forms. Some DM practices are becoming wide-spread, though perhaps less well articulated in organizational doc-uments. India is a socially diverse country of rising economic im-portance that offers not only at-tractive foreign investment op-portunities, but also a fertile ground for DM and, more broadly, HRM studies, an area that remains under-researched. This paper has taken the Western-originated con-cept of diversity management in the HRM context as a starting point and used it as a guide to investigate how business organi-

zations in India understand the concept and manage DM issues. It is a “partial induction approach,” which Tsui (2004) argued is “par-ticularly useful in analyzing familiar issues in novel contexts that allows connection to the current body of literature while promising the discovery of new insight” (pp. 506–507).

This paper also contributes knowledge to the study of MNCs through the case study method. As De Cieri and Dowling (2006) pointed out, studies of strategic HRM

have been restricted largely to quantitative methods and suffered from small sample size and low response rates, often with “HR man-agers as the sole respondent for each MNE represented in their sample.” (p. 22). This study has addressed this imbalance using qualitative methods with a relatively large number of interviews with a relatively large sample of companies in India. We also elicited both managers’ and employees’ views.

This case study approach has yielded in-depth information that may not be obtained easily through quantitative survey studies. Furthermore, limited studies of MNCs have investigated the differences among them as a result of country of origin and ownership forms (Walsh & Zhu, 2007), particularly dif-ferences between Western MNCs and Asian MNCs. This study is a modest addition to this small, but growing body of literature.

Management Implications

This paper has revealed useful DM practices and management challenges that organiza-tions operating in the Indian context need to address. This study’s findings present a num-ber of important management questions: “Will strategic DM lead to greater organiza-tional performance?” If yes, then, “What kind of DM programs will be most suitable for the Indian context?” and “How should foreign MNCs adapt their corporate DM programs to suit local needs?” Our data sug-gests that the notion of and approach to DM developed in another country may not be appropriate to the Indian context. We cannot, therefore, simplistically adopt a resource-based approach to promoting DM as part of strategic HRM without taking into account the institutional environment and cultural preference for highly context-specific HR issues such as diversity. Societal differences have significant implications for Western MNCs that intend to adopt a global HR strat-egy and roll out their DM initiatives to their operations in different parts of the world. Adaptation is needed if these initiatives are to work effectively at the local level, as is noted in Björkman and Budhwar’s (2007) study of HRM practices of foreign MNCs in India.

We cannot,

therefore,

simplistically

adopt a resource-

based approach to

promoting diversity

management as

part of strategic

HRM without

taking into account

the institutional

environment and

cultural preference

for highly context-

specific HR issues

such as diversity.

DIVERSITY MANAGEMENT IN INDIA 497

Human Resource Management DOI: 10.1002/hrm

Our findings also suggest that managers hold various views towards DM as an HR activity; for example, they see diversity as already embedded in the society, view diversity as a low management priority, and are skepti-cal of DM. Richard, Barnett, Dwyer, and Chad-wick (2004) suggested that entrepreneurial orientation plays an important moderating role for diversity to enhance organizational performance. If our case study organizations leveraged DM for competitive advantage, there-fore, then there is much work to be done to engage line managers in DM initiatives. A con-siderable gap also exists between employees’ and managers’ perceptions of the DM situation within their organization. These reflect the three social dilemmas, as Schneider and North-craft (1999) identified, that organizations must address if they wish to leverage workforce di-versity for their organizational success: “orga-nization participation,” “managerial participa-tion,” and “individual participation” (p. 1445). More importantly, employees’ perception plays an important role in effective DM. Organiza-tions seeking to deploy DM to enhance em-ployee commitment need to involve employ-ees fully in implementing DM initiatives.

Limitations and Future Research

This paper contains a number of limitations. First, the sample MNCs were drawn from a small range of nationalities with a relatively small sample size within each nationality apart from the Indian MNCs. We were not able to interview HR professionals at the headquarters to gauge their views on DM as a global HR strategy and to establish a more solid picture of the level of influence that parent countries have in shaping regional/local DM policy and programs. Second, we were not able to estab-lish the true effect of the DM initiatives imple-mented and the types of DM programs em-ployees preferred that would mutually benefit the organization and individuals. Third, while

a number of factors related to the managers’ backgrounds, firm characteristics, and industry appear to be influential in shaping the DM policy and practices, we cannot generalize this finding without further study.

In view of our findings and the above limitations, we call for more studies in this direction. DM is a highly contextual issue; therefore, studies must be contextualized to uncover how diversity issues are culturally and socially constituted within specific socio-political contexts and geographic locations. Future studies should systematically investi-gate the country-of-origin effects of MNCs in their efforts to adopt strategic HRM and DM initiatives in less developed countries. Focus should also be placed on exploring the key factors that influence MNCs to adopt DM programs, the extent to which organizations evaluate the outcomes or benefits of invest-ing in DM initiatives, and the most effective DM programs in aligning the interests of dif-ferent employee groups with the organiza-tion. In addition, management attitude and competence in DM should be studied in greater depth and on a wider scale with a view of informing leadership development programs. Finally, researchers should under-take cross-country comparative studies to compare and contrast the societal context of and approaches to DM and to establish the extent to which DM is recognized as an im-portant people management issue in less developed countries. This may help inform regional and international social policy deci-sions and corporate global HR strategy.

Acknowledgments

We would like to thank the guest editors and three anonymous reviewers for their helpful comments on the earlier versions of the paper. This research was supported by a grant from the “Project 211(Phase III)” of the Southwestern University of Finance and Economics, Chengdu, China.

498 HUMAN RESOURCE MANAGEMENT, MAY–JUNE 2010

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