If you were to ask a room full of people to each define the term "diversity," how many different answers do you think you'd get? You'd probably get as many definitions of the term as there are people in the room. That's because diversity isn't just about how people look or where they come from. It's about differences, but not just differences in gender, race, or class. Diversity encompasses other differences as well – for example, in abilities or values and beliefs.

Some narrowly-focused definitions only refer to diversity in terms of basic personal characteristics. But a true understanding of diversity includes more subtle differences. After all, two people from completely different geographical locations may differ in terms of gender, race, or language, but may share the same beliefs. Alternatively, two similar people of the same gender and community – and even working in the same organization – can have very different beliefs and values.

Today's focus on diversity in the workplace is a reaction to an evolving population and the subsequent gender and ethnic mix changes that have taken place at work. But the term "diversity" now commonly includes other groups of people, such as those with disabilities, different sexual orientations, different religious backgrounds, and alternate lifestyles. Diversity encompasses all the ways in which people differ. Diversity can bring with it new and relevant approaches to work. But only when companies move beyond simply thinking of it in terms of someone's cultural background can they reap the rewards diversity can bring.

There are three major components of diversity:

1. primary personal characteristics – Primary personal characteristics are unalterable and very powerful. Primary characteristics include race, gender identity, nationality, mental and physical ability, age and generation, religion, sexual orientation, and cultural background.
2. secondary personal characteristics – Secondary personal characteristics are important in shaping you, but you do have a measure of control over them. Secondary personal characteristics include marital status, educational level, values, beliefs, parental status, and communication styles.
3. organization-related characteristics – Organization-related characteristics are strictly work related. These characteristics include your position in the work hierarchy, tenure, part-time or full-time status, roles and responsibilities, projects, organizational cultures, and geographical location.

Effects of not managing diversity well

In the workplace, there are job demands that require a certain degree of conformity. Does that mean everyone should strive to become more similar, especially when they have to work together? Not at all. People can be very diverse and still find common ground.

But more and more, people understand that all the various groups have a great deal to contribute, and can still retain and even celebrate their differences. This doesn't mean it's always easy to manage diversity effectively. And if it's not managed well, diversity can actually decrease group cohesiveness, making it difficult for teams to benefit from their differences in perspective. The challenge for managers is to encourage greater cohesion.

If diversity isn't managed well, differences can result in wide-ranging effects on a team:

• social categorization – in a process known as social categorization, people may judge team members as "like me" – as part of an ingroup – or as "different from me" – as in an outgroup
• poor communication – language differences that arise with diverse teams can result in poor communication that impedes understanding
• conflict – team members may feel discomfort with differences, have attitudes based on stereotypes, or be biased against the unfamiliar, which can all lead to conflict

Social categorization and poor communication often lead to stereotyping. It's common, especially when a new team meets, for members to form opinions about each other based on what they see. They also form opinions on how they expect people to behave. But stereotypes are closed categories that leave no room for individual differences or exceptions. Conflict can occur. When people hold preconceived ideas, they're resistant to ideas or individuals that challenge the stereotype. And the person being stereotyped often resents being pigeonholed.

Managing a diverse team effectively

Diversity helps to spark creativity, expand horizons, reveal new ways to approach the world, or grow a business. Without diversity in the workplace, companies run the risk of becoming monocultural, with only one limited perspective. Effectively managing diversity goes beyond respecting the differences between people. It's about putting those differences to work in the best possible way for both the company and your employees. Managing diversity in the workplace is more than simple compliance with laws and regulations. Effective diversity management can address issues such as social categorization, poor communication, and conflict, and create stronger, more cohesive teams.

You can reap several benefits from being able to manage diverse teams effectively:

• encourage greater creativity – you'll be able to encourage the greater creativity that comes with a diverse team
• develop high-quality solutions – you'll be able to harness the potential of diverse teams to make better-quality decisions and develop high-quality solutions
• be a more effective leader – you'll be seen as a more effective leader who can direct and guide a cohesive team of diverse individuals
• create job satisfaction for employees – you'll create better job satisfaction for employees, who will then be more motivated to work for you

A diverse team that's well managed – one that's comfortable communicating all the varying points of view – can be more creative. And that same creativity can lead to better team decisions and solutions. It means you have a larger pool of ideas and experiences that in turn give you access to a greater variety of solutions to problems. Whether the problem being addressed is in sourcing, processes, allocation of resources, or just about any organizational area, a diverse set of skills and experiences leads to solutions that can have a global impact.

And when you manage a diverse team well, you can inspire your employees to perform to their highest ability. You'll be seen as a more effective leader because you are able to communicate well with a diverse group of individuals, creating a cohesive team that works well together and avoids conflict. And by showing your employees that their needs and interests are important, you'll also create better job satisfaction for them. In turn, your employees will be more motivated.

In a global business environment, it can be a challenge to manage a diverse group of employees effectively. But you need to be able to harness all your team members' potential to help them improve their performances, as well as that of the team. Not managing diverse teams effectively can lead to the problems of social categorization, poor communication, and conflict. But there are many benefits to being able to manage a diverse team effectively. You'll be able to encourage greater creativity, come to better team decisions and solutions, be a more effective leader, and have happier and more motivated employees.