Diversity refers to human characteristics that make people different from one another. Today’s labor force is highly diverse. If effectively managed, this diversity can provide the organization with a powerful competitive edge because it stimulates creativity, enhances problem solving by offering broader perspectives, and infuses flexibility into the firm.

An organization confronts significant challenges in making employee diversity work to its advantage. These include (1) genuinely valuing employee diversity, (2) balancing individual needs with group fairness, (3) coping with resistance to change, (4) promoting group cohesiveness, (5) ensuring open communication, (6) retaining valued performers, and (7) managing competition for opportunities.

Some groups are likely to be left out of the corporate mainstream. African Americans still face a certain amount of explicit racism and tend to be less educationally prepared for the workplace. Asian Americans confront two stereotypes—one saying they are too cautious and reserved to lead, and another saying they are unscrupulous in business—as well as the belief that they are too educated to merit special consideration as a minority. Full social acceptance is still denied to people with disabilities, who are often incorrectly perceived as being less capable than others, more prone to quit their jobs under pressure, and costly to accommodate in the workplace.

Foreign-born workers face language and cultural barriers and sometimes ethnic/racial prejudice. They are often resented by Americans of all races, who believe they are taking their jobs.

Homosexuals sometimes face outright discrimination (the refusal to hire or retain them as employees) and ostracism from coworkers or managers. Latinos face language and cultural difficulties and, in some cases, racial discrimination.

Older workers encounter negative stereotypes about their abilities, energy, and adaptability, as well as some physical problems and resentment from younger workers. Women often fare badly in male-dominated corporate cultures that display masculine leadership biases and have old boys’ networks that exclude women. They are also subject to sexual harassment to a much greater degree than men.

Organizations that have capitalized the most on their diverse human resources to gain a competitive advantage tend to have top management committed to valuing diversity; solid, ongoing diversity training programs; support groups that nurture nontraditional employees; and policies that accommodate employees’ family needs. They also have senior mentoring and apprenticeship programs to encourage employees’ career progress, set communication standards that discourage discrimination, use diversity audits to uncover bias, and hold their managers responsible for effectively implementing diversity policies.

There are two pitfalls in diversity management programs that managers must be careful to avoid: (1) giving the appearance of “white male bashing” and (2) unintentionally promoting stereotypes.