The Business Case: Benefits of Diversity Management Beyond High-Performance Work Systems

Topic(s): diversity, performance

Topic: Diversity
Publication: Human Resource Management (NOV/DEC 2010)
Article:  The Impact Of Diversity And Equality Management On Firm Performance: Beyond High Performance Work Systems
Authors: C. Armstrong, P. C. Flood, J. P. Guthrie, W. Liu, S. Maccurtain, and T.  Mkamwa
Reviewed By: Kerrin George

“What I need is the data, the evidence that diverse groups do better.”  Organizations may recognize the consequences of workplace discrimination, but when it comes to diversity management (e.g., practices that emphasize differences among employees as an asset if managed effectively), organizations need more convincing that the benefits will outweigh the costs. 

The advantages of high performance work systems (HPWS; i.e., integrated recruitment, selection, performance management, training and development practices) have robust effects on organizational performance beyond individual human resource practices.  However, effective diversity management is often considered a primary characteristic of high performing organizations.  Armstrong and colleagues (2010) investigated whether diversity and equality management systems (DEMS, e.g., diversity training, ensuring equal pay and promotion across all groups) would have additional benefits for organizational performance.  They found support that organizations that used HPWS had increased firm performance; however, those organizations that used DEMS or a combination of both systems demonstrated additional gains, such as increased productivity and innovation, and less voluntary turnover.

The business case for diversity is evident here:  diversity management can be a performance enhancing strategy that leads to financial and climate benefits for organizations.  Practitioners should use this evidence to argue that investment in these practices is not a waste of resources.  Organizations with the ability to effectively manage workforce diversity by providing training or tying diversity to the broader organization’s strategy, for example, can lessen negative diversity outcomes and profit from multiple perspectives. 

Armstrong, C., Flood, P.C., Guthrie, J.P., Liu, W., Maccurtain, S., & Mkamwa, T. (2010). The impact of diversity and equality management on firm performance: beyond high performance work systems. Human Resource Management, 49(6), 977-998.