Diversity just makes cent$

Topic(s): diversity

Topic: Diversity
Publication: Personnel Psychology
Article: Mean racial-ethnic differences in employee sales performance:  The moderating role of diversity climate.
Blogger: Larry Martinez

Having lots of diversity in your organization seems like a generally good business principal; after all, almost every one of the top companies have mission statements that include diversity as one of their overarching goals. Benefits of having a diverse workforce include having access to untapped client-bases, a better corporate image, reduced legal liability, and improved performance, creativity, and problem solving.  But is having a diverse workforce really enough?

The authors of this article thought that an organization’s diversity climate – defined as employees’ shared perceptions that an employer utilizes fair personnel practices and socially integrates underrepresented employees into the work environment – might have an effect on sales performance. In short, they compared different racial groups’ performance and found that, on average, White employees sold more than Hispanic, but not Black employees. They also found that for stores in which diversity climate was rated low, these differences were exacerbated. For instance, in this sample, Black employees who worked in low diversity climate stores earned approximately $20 less than those who worked in high diversity climate stores.

Hispanics earned approximately $26 less per hour in low than in high diversity climate stores.  The
projected difference of pay in a typical work year for Blacks and Hispanics is $20,800 and $27,040, respectively. Clearly this is a nontrivial finding not only for employees but for organizations as well.  Seems that the way organizations manage their diverse workforce is as important as having one in the first place.

McKay, P. F., Avery, D. R.,  & Morris, M. A. (2008).  Mean racial-ethnic differences in employee sales performance:  The moderating role of diversity climate.  Personnel Psychology, 61, 349-365.