Why has the modern workplace become so diverse? The changing demographics of the United States is a major reason why the workplace is becoming more diverse. Workers of Hispanic origin, for example, make up about 15 percent of the workforce today. But because of the rapid growth of this segment of the population, by 2050 it is estimated they will make up 30 percent. The percentage of people of Asian descent in the workforce is also expected to double by 2050.16 Advancements in technology have made it possible for businesses to operate with relative ease on a global basis. It’s not unusual for companies to outsource or offshore work to other countries to decrease labor costs or establish operations in other countries to broaden their market reach. Hiring patterns are adding to the diversity of the workforce as U.S.-based companies hire workers who have emigrated from other countries. European and Middle Eastern companies are experiencing similar increases in immigration.

More women are now in the workforce than in decades past. And, as we indicated, many more employees than ever are indicating that they plan to work beyond the traditional retirement age, meaning increased age diversity in the workforce. For all these reasons, the modern workplace is now diverse in age, gender, and ethnicity.

How is a diverse workforce beneficial? Diversity is an important component of the modern workplace. For many companies, hiring to diversify the workforce initially meant fulfilling an affirmative action requirement by filling positions with a certain number of women, Hispanics, or African Americans. Some criticized this strategy as unfair and bad for a company if the best candidate was not hired in favor of meeting such a requirement. Over time, however, many companies have come to embrace the idea of diversity beyond just satisfying a requirement. It’s now becoming clear that companies should embrace diversity to improve their competitiveness. A diverse workforce helps companies offer a broad range of viewpoints that are necessary to compete in a world that is more globalized.

In addition, products and services need to be tailored to customers and clients with diverse backgrounds, so it’s vital to have a workforce that understands the cultural needs of different customers. When PepsiCo’s Frito-Lay division launched a Doritos guacamole-flavored tortilla chip to appeal especially to Latino consumers, its Latino employees provided valuable feedback on the product’s taste and packaging. The new chip variety generated more than $100 million in sales in its first year, making it the most successful product launch in the company’s history.

What issues do companies face while managing diversity? Despite its many benefits, a diverse workforce can pose challenges. For example, a more culturally diverse population naturally brings about a wider variety of religious beliefs and practices, with more employees trying to integrate their religious practices into the workday. As employers struggle to accommodate workers’ religious needs, they must also try to avoid the potential friction that open demonstrations of religious practices might provoke. Many employers strike a balance by allowing employees to take prayer breaks and time off to observe religious holidays, catering to dietary requirements, and permitting differences in dress. Floating religious holidays and on-site religious accommodations, such as prayer rooms, are used by companies to meet the needs of a diverse religious workforce.

Although the number of women in the workforce is growing, women are still battling some of the same issues that their mothers and grandmothers faced: sexism, salary inequities, and sexual harassment. Historically, women in similar positions as their male counterparts were paid less and experienced fewer promotions despite documented higher performance ratings. Gender-discrimination and sexual harassment lawsuits continue to receive national press and indicate that gender-related challenges have not gone away. Moreover, men still dominate top managerial positions. Fewer than a dozen Fortune 500 companies are headed by women.

The aging workforce also creates several challenges. Compared with younger workers in the same position, older workers often expect higher salaries and better benefits. Healthcare costs, for example, are higher with an older workforce. However, many employers find that there is less turnover and absenteeism among older workers and that they are willing to learn new skills as well as help and train their younger coworkers. These benefits can offer enough savings to a company to negate the higher costs of retaining more senior workers.

How can employees improve their understanding of each other’s differences? Differences can create misunderstandings and conflict despite the most well-intentioned actions. Therefore, it is important that employers provide effective diversity training for their employees. It is also important for coworkers to learn to look at situations from perspectives that are different than their own. Ultimately, managing diversity means developing a workforce that has the capacity to accept, incorporate, and empower the different talents, backgrounds, and perspectives people have.