Organization culture is the set of values, beliefs, behaviors, customs, and attitudes that helps the members of the organization understand what it stands for, how it does things, and what it considers important. When the people comprising an organization represent different cultures, their differences in values, beliefs, behaviors, customs, and attitudes reflect multiculturalism. Diversity exists in a community of people when its members differ from one another along one or more important dimensions.

Organization culture is an important environmental concern for managers. Managers must understand that culture is an important determinant of how well their organization will perform. Culture can be determined and managed in a number of different ways.

Diversity and multiculturalism are increasing in organizations today because of changing demographics, the desire by organizations to improve their workforce, legal pressures, and increased globalization. There are several important dimensions of diversity, including age, gender, and ethnicity. The overall age of the workforce is increasing. More women are also entering the workplace, although there is still a glass ceiling in many settings. In the United States, more Hispanics are also entering the workplace as the percentage of whites gradually declines.

Diversity and multiculturalism can impact an organization in a number of different ways. For example, they can be a source of competitive advantage (i.e., cost, resource acquisition, marketing, creativity, problem solving, and systems flexibility arguments). On the other hand, diversity and multiculturalism can also be a source of conflict in an organization.

Managing diversity and multiculturalism in organizations can be done by both individuals and the organization itself. Individual approaches include understanding, empathy, tolerance, and willingness to communicate. Major organizational approaches are through policies, practices, diversity training, and culture.

Few, if any, organizations have become truly multicultural. The major dimensions that characterize organizations as they eventually achieve this state are pluralism, full structural integration, full integration of the informal network, an absence of prejudice and discrimination, no gap in organizational identification based on cultural identity group, and low levels of intergroup conflict attributable to diversity.