Diversity in the workforce has become a demographic reality across the globe. Many agree that organizations should aim to manage diversity rather than simply value it or rely on affirmative action policies. This paper is an attempt to elucidate the concept of diversity and propose a diversity management model.

As firms stand poised for conducting business in the 21st century, they face a host of challenges brought on by a changing business environment. The growing popularity of international alliances combined with a growth tendency to flatter organizational structures and globalization has accelerated the need for firms to coordinate activities that span geographical as well as organizational boundaries.1 Globalization, which can be conceptualized as a situation where political borders become increasingly more irrelevant, economic interdependence are heightened and national differences due to dissimilarities in societal cultures are central issues of business. The world, on account of these complex and dynamic forces, becomes a "Global marketplace".

In addition, the explosion of Foreign Direct Investment (FDI) is one of the most important economic trends of the past decade. As recently as 1985, FDI totaled $ 60 bn per year. Today, FDI is more than ten times as large and increasing every year, flowing into every nook and corner of the world, as the multinational company spread in every possible market. This is visible in the shift of the FDI destination. A decade and half ago, more than 80 % of the FDI reached major industrialized countries, and now the mix has changed and a good portion of the FDI reaches developing nations like China, Brazil, South Africa and the likes of India.

As a result, the companies have an increasing share of their sales and assets spread around the world. The fallout of this has been that many companies now have a much greater proportion of their workforce outside the home country. No longer are the great majority of employees located in the country of origin, or even in major industrialized countries. Increasingly they are spread broadly across the globe, and include a broad mix of nationalities, languages and cultures.

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