The rise of diversity management is leading to an increase in customers and workers from different cultures and ethnicities. According to a 2004 survey, the percentage of different employees working in the United States is:

• Latin American 14%
• African American 12%
• Asian Americans 4%
• European-Americans 36%

There is also an increase in the purchasing power of minorities. The 2007 Commodity Consumption Chart showed that the combined purchasing power of African Americans, Asian Americans, and Native Americans is $1.4 trillion. This amount has tripled in twenty years.

The competitive advantages of adequate management motivate organizations to adapt diversity initiatives. It is generally observed that workers and other people (related to an organization) feel comfortable working in an environment where diversity is applied. This leads to the attraction of a larger number of diverse customers.

Another factor observed in the implementation of the diversity initiative is the increase in decision-making power and goodwill of the stakeholders. Worker irritation, fights, absences, turnover and short cases are also greatly reduced.

A fear-based incentive to apply the diversity initiative in practice is to avoid a court summons and further government regulation. The top five optimistic bases for why respecting diversity generates a competitive advantage for organizations are as follows:

1. Attract customers and retain them

• Respecting a customer makes them feel more comfortable doing business with that particular organization.
• If vendors are insensitive to respecting customers from various social groups, the latter are likely to change their business relationships. Ultimately, this would not be detrimental to the customer. Rather, it would be detrimental to the seller.
• Attract employees and retain them
• If there is a continual rise in an organization’s reputation with respect to proper diversity management, you also see an increase in the organization’s pool of job applicants. These diverse applicants tend to be of great help in the practical application of the diversity initiative.

3. Achieve significant cost reductions

• A decrease in the expenses of an organization can be due to certain reasons; fewer employee complaints, absences, rebellions and litigation. It takes a lot of time and resources to resolve employee complaints of discrimination.

4. Increased decision making, problem solving and creativity

• Every culture has different perceptions of business matters. This is due to having a different life experience. Therefore, diversity causes an increase in decision making, problem solving and innovations of organizations. A workforce from different cultures is more likely to make better decisions regarding their own cultural groups.

5. Increase stakeholder benevolence:

• An organization that respects diversity gets respect in return. This positive feedback usually comes from the media, the government, informed customers, and job candidates who want to contribute to a positive social goal.

The application of diversity provides benefits from the individual to the collective level. Consumers, employees, and organization owners are not only comfortable with this system, but also enjoy working in such an atmosphere. Therefore, the diversity initiative must be implemented by educating people about its importance.