Workforce diversity is a function of the similarities and differences among employees in such characteristics as age, gender, ethnic heritage, physical or mental ability or disability, race, and sexual orientation. Managers of diverse work groups need to understand how their members' social conditioning affects their beliefs about work and must have the communication skills to develop confidence and self-esteem in their employees.

Stereotypes can lead to prejudice toward others; prejudice consists of judgments concerning the superiority or inferiority of others that can lead to exaggerating the worth of one group while disparaging the worth of others. Management systems built on stereotypes and prejudices are inappropriate for a diverse workforce.

Employment statistics show that the future workforce will be radically different from the workforce of today. The goal of valuing diversity is to utilize all of the differences among workers for the benefit of the workers and the organization.

International business has rapidly become an important part of almost every manager's life and is likely to become even more important in the future. Managers need to recognize that employees from different backgrounds are similar in some respects and different in others.

Diversity can be categorized as having primary and secondary dimensions. The primary dimensions of diversity are those that are either inborn or exert extraordinary influence on early socialization; dimensions of this type are age, ethnicity, gender, physical or mental abilities, race, and sexual orientation. Secondary dimensions of diversity include factors that are important to us as individuals and to some extent define us to others but which are less permanent and can be adapted or changed: educational background, geographic location, income, marital status, military experience, parental status, religious beliefs, and work experience.

A multicultural organization is one in which employees of different backgrounds, experiences, and cultures can contribute and achieve their fullest potential for the benefit of both themselves and the organization. Developing a multicultural organization is a significant step in managing a diverse workforce and may be crucial to sustaining a competitive advantage in the marketplace. A multicultural organization has six characteristics: pluralism, full structural integration, full integration of informal networks, an absence of prejudice and discrimination, equal identification with organizational goals among employees from both majority and minority groups, and low levels of intergroup conflict.