Arguably, the resulting antidiscrimination measures inherently created more diverse environments within the United States. However, the United States has aimed to end exclusionary policies of the past and appeal to the broader world as a country with strong democratic values. As a result of the eradication of exclusionary policies and the growing acceptance of a heterogeneous America, diversity in our workforce has become a means of achieving a competitive advantage in the global marketplace.
In our modern society, diversity is perceived as a business advantage leading to economic gain and access to new markets. A shift has occurred in the marketplace due to globalization of businesses and emerging markets such as India, China, and Brazil. All types of organizations and businesses are placing an emphasis on creating diverse workforces with cultural affinities, fluency in foreign languages, and ties to countries with prosperous world economies. Despite the overwhelmingly positive shift in our interpretation of diversity, however, it does present some challenges.
The Immigration and Nationality Act of 1965
In 1965, the Immigration and Nationality Act (INA of 1965) was enacted to abolish the previous restrictive policies of the 1920s, including those imposed by the National Origins Act. The National Origins Act (also known as the Immigration Act of 1924) established an immigration quota system. The quota system consisted of a National Origins Formula used to assign a quota based on nationality and representation in the United States as established by the census figures of 1890. Essentially, the National Origins Act was designed to exclude Asians, Africans, Middle Easterners, and Southern and Eastern Europeans. President John F. Kennedy stated that these policies were “intolerable.” Others also challenged these measures as discriminatory policies that tainted the image of America.
The INA of 1965 was extremely impacting. It was promulgated at the height of the Civil Rights Movement, and it abolished the quota system and created a preference system emphasizing the skills of foreign nationals and their familial relationship to a U.S. citizen or legal permanent resident. The immediate relatives of a U.S. citizen or legal permanent resident, skilled workers, and individuals from countries with political instability and violence were beneficiaries of this new preference system. Although the INA of 1965 did abolish the heinous quotas of the past, the newly established preference system did consist of quotas per country. However, the preference system created separate categories and caps on the number of visas by category. The new system was a dramatic departure from the racist exclusionary policies of the past. Its goals were to promote family reunification and immigration of skilled individuals who would benefit the United States.
The Cultural Impact of the Immigration and Nationality Act of 1965
During the years following the enactment of the INA of 1965, many emigrated from Asia, Africa, Latin America, and the Middle East. Populations who had been severely restricted from entry into the United States were afforded an opportunity to immigrate to the United States. The influx of diverse populations from all over the world changed the face of America forever. The demographics were markedly distinct from the past, since the new immigration preference system opened doors for many populations. Some immigrants came from war-torn Asian countries, such as Vietnam and Cambodia, while others fled communist regimes in Cuba and Eastern Europe and others fled poverty. By 1995, there were more than 18 million legal immigrants in the United States.
According to the U.S. Census, prior to the 1990s, the majority of immigrants were Europeans and only a small percent were Asians. By the 1990s, the European population had decreased significantly and the Asian population had dramatically increased. There was also a significant increase in the number of Latino and African immigrants. Between passage of the INA of 1965 in that year and 2010, 6.4 million Mexican immigrants arrived in the United States, according to the Department of Homeland Security (DHS). DHS revealed that 2 million Filipinos immigrated to this country, as well as 4.7 million people from Korea, Dominican Republic, India, Cuba, and Vietnam.
According to the 2011 U.S. Census, racial and ethnic minorities comprise 36.6 percent of the overall population in the United States. Notably, the first multicultural U.S. president, Barack Hussein Obama, was elected for two terms. Many political experts acknowledge that the Latino vote and immigration issues were critical in Barack Obama’s reelection to the presidency. Again, issues involving cultural diversity are at the forefront of a political shift resulting from demographic shifts. It is estimated that by 2042, the majority of the U.S. population will be comprised of Mexican Americans, African Americans, Asians, Native Americans, and Pacific Islanders. Clearly, U.S. demographics have significantly changed and will continue to become increasingly more diverse due to population growth and other factors.
Diversity Expands Business Opportunities in the Global Economy
The shift in U.S. demographics coupled with globalization has resulted in new possibilities. Businesses with diverse workforces will inevitably have more opportunities to expand their respective businesses to international markets. As employers hire diverse pools of individuals, they will benefit from diverse perspectives in terms of approaching company challenges and developing a deeper understanding of clients from around the world. Employees may provide crucial insight into cultural attitudes and differences, as well as local and regional distinctions within pertinent countries. Employees with foreign language skills prove to be critical in communicating with foreign businesses and organizations. A U.S. company is able to gain great insight into ways of negotiating deals and doing business abroad by hiring a diverse workforce. All of these factors lead to an increase in access to the global market, which, in turn, results in higher returns for a company. The practical effect has been an increase in cross-border transactions.
Diversity Creates Challenges for Cross-Border Transactions
Generally, a diverse environment within the workplace is viewed as beneficial for an organization. However, diversity presents challenges for organizations as well. It is critical, for example, to learn how to effectively communicate with individuals with distinct cultural perspectives on ways of conducting business. It is also essential, when negotiating deals, that companies be mindful of cross-cultural etiquette and behavior perceptions in foreign countries. Companies must also gain insight into other kinds of protocols and rules, whether applicable to countries, regions, or local mores.
Companies negotiating deals in foreign countries must be aware that the decision makers and influential individuals may be other than those expected in domestic transactions. According to James K. Sebenius’s article “The Hidden Challenge of Cross-Border Negotiations” in the March 2002 issue of the Harvard Business Review, it is crucial to understand negotiating and deal making and the informal influences that impact them in certain countries. Often, influential and powerful parties beyond the actual contracting parties are involved in a transaction. Other parties, such as insurance giants, government officials, or even entire industries, may also affect whether a transaction occurs.
It is also essential to anticipate different approaches to, and processes for, negotiation in order to account for differing interests, expectations, and ways of reaching a “meeting of the minds.” In some countries, the top-down decision making is pivotal. The top-down decision-making process is commonly used in hierarchical organizations. In such organizations, the leaders make decisions without necessarily consulting all of the stakeholders. In contrast, consensus decision making is a collaborative approach to negotiations and deal making that involves full discussion, participation, and agreement from all of the stakeholders.
Another important factor in global negotiations is differing approaches to drafting a contract. In some countries, a broad agreement with the general terms will suffice to make the deal. In other countries, the approach may be to set forth the terms of the agreement in detail with a plethora of contingencies anticipating possible issues that may arise.
Transcending the Business Challenges of Diversity
Companies can transcend the challenges of conducting business in a global market by hiring a diverse international team of employees possessing deep cultural awareness. A diverse team provides insight into global issues and the breadth and depth of conducting business in foreign countries. In the past, employers seeking to enter international markets placed an emphasis on foreign language skills or employees with tenuous connections to a foreign country. Today, businesses must have a deeper understanding and a multidimensional approach to business in order to conduct business in foreign countries and gain a competitive advantage. Businesses should have a clear understanding of the intricacies of the business protocol and processes such as negotiating, closing the deal, and navigating bureaucratic systems and the informal yet powerful decision-making forces in making a deal. Another significant factor is awareness of the economic and sociopolitical situations in particular regions of the world or locations within a specified country. Organizations that create truly diverse environments will be rewarded with an increased ability to solve problems—and growing power in the global marketplace.