Organisational diversity programs across cultures: effects on absenteeism, turnover, performance and innovation

Case studies

Organisational diversity programs across cultures: effects on absenteeism, turnover, performance and innovation

American Research, May 2015

What impact do national cultural values and cultural practices have on the adoption and efficacy of workforce diversity programs, and, ultimately, organisational outcomes? New research explores these relationships, with the findings providing practical ideas for multi-national organisations and those responsible for managing their diversity programs.

Globalisation and the spread of organisations across borders, while creating significant opportunities for maximising the talent pool, have created challenges as well. As organisations seek to improve the diversity of their workforce and foster an inclusive culture, what is the impact of national cultural values and practices on diversity programs and organisational outcomes? Does one size fit all?

Recent research conducted by Dr. Hilla Peretz (Ort Braude College, Israel), Prof. Ariel Levi (Wayne State University, USA) and Dr. Yitzhak Fried (Syracuse University, USA) explored the relationship between national cultural values (‘aspirational’ values), national cultural practices (‘as is’ practices), the effectiveness of diversity practices, and how these influence absenteeism, turnover, performance and innovation across borders.

Peretz, Levi and Fried (2015) found that there is a direct relationship between certain national cultural values and the likelihood an organisation will adopt diversity programs aimed at increasing the ‘employment prospects’ of members from traditionally underrepresented demographic groups. The researchers found that if there is any misalignment between the aspirational values of organisational leaders and the prevailing values as practised by employees and managers, it may affect the successful implementation of diversity programs. The result of this could be disruptive behaviour from existing employees, including “withdrawal” behaviour such as absenteeism and turnover. The research findings indicate disharmony between intentions and outcomes because of the moderating effect of cultural practices. Finally, the researchers linked these findings with the mediating effect of turnover and absenteeism on overall organisational outcomes trends (in terms of performance and innovation).

Aim

This research aimed to address three important areas:

  • how national cultural values influence the adoption of diversity programs by organisations with regards to recruitment, training and promotion
  • how national cultural practices have a moderating effect on the relationship between diversity programs and actual organisational outcomes
  • how absenteeism and turnover serve as mediators of the relationship between diversity programs and performance and innovation.

Method

The study used existing data collected and maintained in global databases through extensive previous studies. The sample was drawn from the 2009-2010 Cranfield Network on Comparative Human Resource Management (Cranet) project data set. This data set was used to procure data on absenteeism, turnover, organisational outcomes and diversity programs. The sample size comprised  5,000 organisations across 22 countries. Data were collected via a standardised questionnaire, which asked questions seeking factual answers rather than opinion (e.g. numbers and percentages, or yes/no responses to factual questions). Respondents were senior HR/personnel specialists.

The data on cultural values and cultural practices were gathered from the GLOBE study – a multi-phase and multi-method project aimed at studying the relationship between societal culture, organisational culture and organisational leadership. The survey data provided the base for the distinction between national cultural values and national cultural practices and measured seven values - individualism/collectivism, power distance, uncertainty avoidance, future orientation, gender egalitarianism, humane orientation and performance orientation. Respondents to the GLOBE surveys were middle managers from organisations in food processing, financial services and telecommunications services industries. These three industries were selected because they are present in all countries. Multinational corporations were excluded from the study. The GLOBE data set contained data from over 17,000 individuals from 951 organisations across 62 countries.

While two separate data-sets were used for the study, the researchers used several control measures to mediate the influence of other variables (such as organisational size, industry, benefits, career development opportunities, compensation, etc.) on the outcomes being studied.

One of the key variables measured was a diversity programs index, which examined whether an organisation had recruitment, training or career progression programs with a focus on any of the following groups: ethnic minorities, older workers, people with disabilities, women, mothers returning to work, low skilled labour and younger workers.

Findings

The key findings showed that the seven national cultural values (identified above) had a moderating relationship with the diversity programs index. The diversity programs index was also more strongly related to turnover in societies characterised by lower levels of cultural practices of power distance, collectivism and uncertainty avoidance, and higher levels of performance and humane orientation. Similar observations were also made regarding absenteeism. The diversity programs index was also indirectly related to organisation outcomes (performance and innovation) through turnover and absenteeism.

The key findings from the research were:

  1. National culture (aspirational values) is related to the adoption of programs aimed at increasing the recruitment, training and career progression of a diverse group of employees. In particular, countries with a cultural value set of high individualism, future orientation, gender egalitarianism and performance orientation coupled with low power distance and uncertainty avoidance were more likely to support the adoption of diversity programs.
  2. National cultural practices (‘as is’ practices) are related to how absenteeism and turnover trends emerge because of diversity practices being implemented in organisations. Diversity programs were strongly supported in countries where levels of future orientation, humane orientation and performance orientation were high and levels of power distance, uncertainty avoidance, and institutional collectivism were low.
  3. Following the afore-established relationships, an indirect positive relationship is demonstrated between diversity programs, and innovation and performance, which varied depending on the levels of employee absenteeism and turnover.
Implications

The findings carry considerable practical implications for organisations, especially those operating in a cross-border / cross-cultural context. Managerial decisions on adoption of diversity programs in business units that operate in different cultural jurisdictions can benefit greatly from an understanding of the cultural values and practices of the dominant workforce population.

Managers operating in countries that align to the ‘ideal’ set of cultural values and practices may not face challenges in getting diversity programs off the ground. However, exploring cultural values and practices can be crucial to developing sustainability measures for existing diversity programs e.g. weaving the importance of diversity to the organisation into on-boarding and orientation programs. By signalling value of openness and inclusion from Day 1, organisations may be able to increase the sustainability of their programs and the adoption of the organisation’s values early on.

On the other hand, managers operating in countries where the cultural values and practices are not ideal for the adoption of diversity programs will need to pay close attention to these findings. By understanding which practices may be perceived negatively by the workforce, managers would be able to devise change management strategies to manage employee perceptions and garner greater buy-in. Managers should also be able to design diversity programs in a way that maintains a sustained effort towards generating acceptance and appreciation for the program objectives. By increasing their own awareness of the inherent inclinations of the workforce towards or against diversity programs, managers can estimate the effort, the approach, and the tactics that may be required. This will further help set realistic goals for the diversity programs they intend to implement.

As the researchers suggest, it would be beneficial to consider additional variables that could influence the design and effectiveness of diversity programs. This could include:

  • The level at which diversity crosses its optimality and becomes less effective across various  cultures, which could influence the type and number of diversity programs organisations could go for
  • The effect of factors such as organisational culture or managerial practices on impact and outcome of organisational diversity programs.

To read the full article, see Hilla Peretz, Ariel Levi & Yitzhak Fried (2015) “Organizational diversity programs across cultures: effects on absenteeism, turnover, performance and innovation” The International Journal of Human Resource Management 26:6, pp. 875-903

For further information contact Gaurav Warudi.

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