Leadership in Business: Understanding and Overcoming Cultural Diversity Issues

This case study analysis examines the cultural diversity problems facing most organizations and actions to overcome this issue. It explains why it is crucial for leaders to understand cultural diversity in today’s organizations and examines the cultural composition of top leadership in Austrian’s organizations and how it affects cultural diversity.

Running Head: LEADERSHIP IN BUSINESS 1
Leadership in Business
Names
Institution

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Introduction
It is the intention of this case study analysis of the document entitled “Leading for
Change: a blueprint for cultural diversity and inclusive leadership 2016” and the speech by
doctor Tim Soutphommasane, Race Discrimination Commissioner entitled “Cultural Diversity in
the Workplace 2015”.
Firstly this case study will examine the cultural diversity problems facing most of the
organizations and actions to overcome this cultural diversity issue. It will also explain why it is
crucial for leaders to understand the cultural diversity in today’s organizations. This case study
also examines the cultural composition of top leadership in Austrian’s organizations and how it
will affect cultural diversity. It will also give guidelines on how organizations can nurture
leadership skills to improve the economy and multicultural society.it will also explain what
distinguishes people in a particular organization hence promoting cultural diversity.
Secondly, this case study will explain the steps an organization should take to do away
with this cultural diversity problem. This can include changing status quo for the top leadership
or improving policies which promote cultural diversity hence creating a conducive workplace in
the organization. The case study also explains the importance of understanding cultural
backgrounds of different employees and how can affect decision making among the top leaders.
It also shows how cultural diversity issue can lead to bias and discrimination among the
employees.
Thirdly, the case study explains policies which leaders should put in place in order to
implement change in cultural diversity and measures put in place to support it. It will also

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explain how with active top management can lead to a shift in cultural diversity within the
organization. The case study also describes the relationship between senior and middle managers
and the impact on understanding daily activities which can affect cultural diversity.
Problem identification
The AHRC (2016), leading for change publication identifies that leaders identify cultural
diversity in organizations and its impacts on leadership results in discriminations and bias within
the organization. This can be brought about by people judgment about top leadership and
assumptions that they come from different cultural society (Tae-Hyun, 2011). It is therefore
essential for leaders to understand the cultural background of employees and what is causing
differences between them. It would help in minimizing risks associated with bias and
discrimination like high employee’s turnover, absenteeism, and low productivity. It is also
critical for leaders to understand what causes biases and discrimination among the workers for it
helps in reducing costs. According to Warren (2012), increased cost can lead to low productivity
because the company will spend more on hiring than implementing measures to improve its
productivity. Studies show that an average cost for an organization arising from discrimination
case in Australia is $85000 per case. James (2012) urges that racial discrimination and bias can
damage the relationship between the company and it's internal and external stakeholders which
in turn lead to financial crisis.
Warren (2012) argues that the cultural diversity within an organization impacts on
leadership styles resulting in poor performance. According to James (2012), the beliefs, opinions,
and values which employees hold in an organization determine the style which a leader uses to
lead the organization. If the staff members have common beliefs and appreciate each other’s

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views and differences, they also accept the leadership strategies used by their leaders and this
results to a better outcome (Mohamed, 2018). On the other hand, failure to understand the
cultural backgrounds can also lead to poor performance. This is because leaders may implement
measures which would affect cultural background of some employees hence diminishing their
morale to work.
In addition, Warren (2012) also argues that understanding cultural diversity in an
organization may result in making essential decisions. This is because making decisions without
considering culture can be a challenge to the leaders and the whole organization. For example,
when making an organizational-wide decision like implementing a wok time to monitor work, it
is essential to consider how this decision will affect all individuals within the organization
(Patrick & Kumar, 2012). Some people may take that culture as a good initiative to them while
others may feel that their privacy for work has been compromised. Causing division in the
organization due to poor decision making can lead to a bad workplace culture and can lead to
low productivity. According to Johnson (2012), poor decision making also leads to high
employee’s turnover because some feel that they cannot cope with the culture implemented.
In conclusion, understanding cultural diversity builds a good workplace culture in
modern organizations and keeps them fully connected to its internal and external stakeholders.
This is because in creating new products and services, one will be able to understand the gender
culture of every individual and what they value most (Raj, 2013). Understanding different
cultural backgrounds in an organization will also help in making correct decision which will not
affect performance or even resignation of some workers. Having a good knowledge of cultural
diversity will also reduce the level of racial discrimination and bias within the organization
(Mohamed, 2018). It will help in improving the relationship between the organization and its

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external and internal shareholders. It is also concluded that with racial discrimination within the
company can lead to absenteeism or high level of employee’s turnovers which can lead to low
productivity (James, 2012. It is therefore essential for leaders to promote diversity and
implement measures to support and enable them to create a conducive workplace for its
employees (James, 2012). It will enable them to reduce costs and get substantial financial
returns.
Solutions for the problem
The AHRC (2016) leading for change publication proposes that the cultural diversity
problem of low productivity and high employee’s turnover can be overcome by having good
knowledge in cultural backgrounds of different individuals, before making any critical decision
in an organization. This will minimize chances of making decisions which can affect some
individual due to their culture and end up leaving the company (Jason, 2016). Although
implementing cultural decisions may not be an easy thing, it requires attention to employee’s
behavior and attitudes, new policies and process must be properly sustained. Some of these
policies would include, a commitment by top management and dealing with bias and cultural
development (Matthew, 2016). Leaders must take the change themselves and be a good example
to other employees. According to Zhu (2012), top leadership should also be backed up by serious
leaders in the middle for improved quality performance. These middle leaders should also
endorse cultural diversity in their day to day activities in order to reach audiences at all levels.
The issue of gender equality within an organization can help minimize cultural diversity
issue. According to Vanmala (2012), it is good to have an equal number of women to that of men
in the top leadership. This will help in minimizing chances of bias and discrimination among

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employees (Jason, 2016). For example, having only one female in top leadership may make
others feel that she is not true leader. This will, therefore, lead to her ideas being looked down
upon because the majority of people may feel they favor a particular gender (Jason, 2016).
Malgorzata (2013) argues that to overcome the cultural diversity issue of poor
performance within the workplace, leaders can influence and support diversity by implementing
good measures for collecting data on cultural diversity progress. Collection of data forms a good
baseline for measuring future progress and setting individual minds in the organization.
According to Apoorva (2014), the development of cultural diversity without proper data
collection is usually slow and can lead to reduced productivity. This process would include
collecting data based on individual’s ethics and racial backgrounds. This is made easier if they
involve self-identification process Vanmala (2012). In this process, individuals will be given
questionnaires requiring them to give responses about their cultural background. This will help in
reducing bias and discrimination within the organization.
In addition, Livermore (2016) also argues that to overcome the cultural diversity problem
of bias and discrimination, leaders can implement policies that value every employee in the
organization irrespective of the differences which he/she may portray. Implementing these
policies can result in collaboration between employees and teamwork (James, 2012).
Vanmala (2012) argues that one of the factors that hinder the realization of benefits
within an organization is discriminating staff members based on the values, opinions or other
cultural differences which they may portray. Biases also hinders employee collaborations
because if they realize that one team is being favored because of a particular cultural aspect
which it portrays, they develop a negative attitude towards the management or the team favored,

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and this leads to various issues which may significantly impact firm performance (Apoorva,
2014).
To address the issue of discrimination and bias in workplace, it is also fundamental for
the management to encourage open communication. Warren (2012) affirms that when employees
with diverse cultural aspects are allowed to communicate with each other and with the
management freely, they establish strong bonds which result in the view of equality. This makes
the management to allocate opportunities and other aspects of the company without
discriminating any group and also benefits from having staff members made up of people with
varying views, values, and opinions (Reeta, 2013).
In conclusion, the problem of discrimination and bias based on culture in workplaces can
be addressed through implementing policies which value every person in the workplace
regardless of his/her culture (Mohamed, 2011). These policies should be focused on ensuring the
essence of equality is respected, and the management understands the benefits of providing
opportunity without discriminating employees based on the cultural characteristics which they
portray (James, 2012).
It can also be addressed by encouraging open communication (Mohamed, 2011). When
employees perform their tasks in an environment where they are free to share their ideas and
problems, the chances of being discriminated are always limited because they can communicate
what they feel is not fine for them.
Recommendations (12 recommendations: 4 recommendations for each problem)
To reduce the level of racial bias and discrimination, leaders should have a proper data of
cultural backgrounds of the employees which would help in implementing policies without

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affecting people’s culture (Reeta, 2013). This can be done through giving out questionnaires
which they should respond. It is also recommended that there should be gender equality in the
top management. Gender imbalance can lead to bias because people of a particular gender may
not have enough seniors to support their culture (James, 2012). Also, leaders should come with
policies which do not affect a cultural background of some workers. Implementation of policies
like work timer may compromise the privacy of some individuals (Mohamed, 2011). It is
recommended that diversity in the workplace can be developed by implementing recruiting,
promoting opportunities that reflect the workplace ethics demographics on a yearly basis.
Failure to understand cultural diversity can lead to poor decision making within the
organization. To avoid this poor decision which can lead to low production and high employees
turnover, leaders should engage employees in decision making before implementing any change
(Mohamed, 2011). This will enable them to know if the change will have an impact on the
cultural background of employees. Secondly, there should be an active team of middle managers
to help top managers in understanding day to day activities which can affect cultural diversity in
the organization (Mohamed, 2011). This is because senior management without an active team in
the middle can lead to poor performance.
It is also recommended that leaders should be engaged in proper training and education in
understanding the cultural diversity within the organization (James, 2012). They should also be
educated about its importance and how making decisions without understanding cultural
backgrounds of employees can affect their performance (Mohamed, 2011). Lastly, it is
recommended that diversity in the workplace can be developed by implementing a 12 months
mentoring program for 10 leaders from different cultural background to enable them to develop
their leadership, communication and networking skills

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Poor performance within an organization is also another problem associated with cultural
diversity (Apoorva, 2014). People in top leadership should have common cultural backgrounds
like an age to avoid disrespecting others and seeing them as minor and cannot come up with
solid ideas. Lack of proper guidelines and poor communication skills among the top leaders can
also bring about cultural diversity issue (Reeta, 2013). Leaders should have proper knowledge on
the cultural background of its employees. Leaders should also collect data on the process and
progress of cultural diversity which helps to form the baseline for future growth and focus
employee’s minds within the organization. Focusing on organizational goals will assist in
achieving good results. This will also lead to substantial financial returns (Mohamed, 2018). It is
also recommended that leaders should put into place rules and regulations for middle managers
to prevent them from making decisions which would favor them and in turn have a negative
impact on the cultural background of employees.
Conclusion
It is concluded that lack of proper ways of managing cultural diversity is a major problem
facing not only Australia but also other countries across the world. One of the major factors that
lead to lack of managing cultural diversity in organizations is failing to understand the cultural
background of employees. Managing cultural differences in workplaces is fundamental because
it promotes teamwork, and also makes firms to have employees with varying ideas and opinions.
Those who feel that their culture has been compromised can resign, hence leading to insufficient
staff, and also making the company to incur expenses in recruiting and training new employees.

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