Workforce diversity and organizational performance: a study of IT industry in India
| Date | 13 February 2017 |
| Published date | 13 February 2017 |
| Pages | 160-183 |
| DOI | https://doi.org/10.1108/ER-06-2015-0114 |
| Author | Subhash C. Kundu,Archana Mor |
| Subject Matter | HR & organizational behaviour,Industrial/labour relations,Employment law |
Workforce diversity and
organizational performance:
a study of IT industry in India
Subhash C. Kundu and Archana Mor
Haryana School of Business,
Guru Jambheshwar University of Science and Technology, Hisar, India
Abstract
Purpose –The purposeof this paper is to examine the relationshipbetween employee perceptionsof diversity
(i.e. significance of diversity and diversity management, and value of diversity practices employed) and
perceived organizational performance. It also attempts to examine whether the perceptions of diversity vary
amongemployees from differentdiversity backgrounds (i.e.across gender and categories)in Indian IT industry.
Design/methodology/approach –Primary data based on 402 respondents were analysed using statistical
tools like factor analysis, correlations, analysis of variance, means, grand means, and regression.
Findings –Results indicated that employees irrespective of their diversity backgrounds positively
acknowledged diversity and diversity management. However, limited but significant differences were
observed among employee perceptions regarding valuing the diversity practices employed based on their
diversity backgrounds. Further, employees’perception of promotion of gender diversity was found to be
positively related to perceived organizational performance.
Research limitations/implications –This paper relied on self-report surveys for data collection. Future
studies should collect data using multiple methods to avoid common-method bias. As the sample was drawn
from India, specifically from IT industry, the conclusions may not be generalized to other industries. Future
studies may be conducted across industries covering different cultural settings.
Practical implications –Implications are first, that, in addition to investing in initiatives for promoting
diversity, especially gender diversity, organizations need to ensure positive perceptibility of these initiatives
by employees. Second, to foster acceptance and effectiveness of gender/diversity initiatives in organizations,
managers need to ensure men and majority group employees are part of these initiatives. Third, IT industry
needs to reassess their hiring strategies and should design diversity programmes with goals in mind, if not
quotas, to hire and retain diverse employees to explore their potential contribution.
Originality/value –Inclusion of employees of Indian IT industry of different categories will definitely add
value to the existing knowledge on diversity, management theory, and practice.
Keywords Organizational performance, Perception, Workforce diversity, Gender diversity, IT industry
Paper type Research paper
Introduction
It is now no longer possible to ignore the pervading influence of diversity in organizations.
The concept of diversity has transformed from being a governmental or legal obligation to a
strategic priority. The aim of attaining sustainable competitive advantage (Süβand Kleiner,
2007) and the need to become an employer of choice (Foster and Harris, 2005; Ng and Burke,
2005) has instigated organizations worldwide to embrace the concept of diversity. However,
in the opinion of Farrer (2004), mere manifestation of diversity or embracing diversity as a
concept alone does not guarantee success; organizations need to effectively manage
diversity by celebrating, valuing, and actively encouraging the diversity of the workforce.
Management of diversity has thus become a top priority for top executives of organizations
around the world (Wikina, 2011).
However, whether the goal of effectively managing workforce diversity is achieved
depends largely on the employees’perceptions towards the diversity management
initiatives, i.e. the extent to which they consider the organization values and integrates
diversity and supports it through fair employment practices (Cox 1993; Kaplan et al., 2011;
Mor Barak et al., 1998). Employees look at their work policies, practices, and work
Employee Relations
Vol. 39 No. 2, 2017
pp. 160-183
© Emerald PublishingLimited
0142-5455
DOI 10.1108/ER-06-2015-0114
Received 16 June 2015
Revised 16 March 2016
17 October 2016
Accepted 19 October 2016
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0142-5455.htm
160
ER
39,2
environment to make perceptions of how their organization values diversity (Madera et al.,
2013). Thus, in order for organizations to successfully derive performance benefits from
workforce diversity, employees need to positively perceive the diversity supporting efforts
of the organization (Kossek and Zonia, 1993; Mor Barak et al., 1998). Aside from this,
receptivity of employees, i.e. the personal value they attach to diversity (receptivity to
diversity) and (receptivity to diversity management) diversity management plays a
significant role in determining the effectiveness of the initiatives undertaken and their
subsequent role in achieving success (Soni, 2000). More importantly the perceptions and
attitudes of employees toward various diversity issues have become a fundamental
component in achieving success (Erasmus, cited in Veldsman, 2013). However, only a limited
number of studies have actually focused on what employees think about diversity, and on
the possible effects of these perceptions (Van Knippenberg and Schippers, 2007).
Accordingly, we set out to study the employees’perceptions toward diversity in terms of
their receptivity to diversity and diversity management, and towards the diversity practices
employed by the organizations in support of diversity, beginning from their relation with
demographic dimensions to examining their effects on organizational performance.
Studying the perceptions of employees toward diversity is of specific interest to us
because, as contended by Lawrence (1997), diversity effects rely on perceptions. It has
become apparent that diversity attitudes and/or perceptions of employees may be a strong
predictor of diversity outcomes, such as organizational commitment, job satisfaction
(Hicks-Clarke and Iles, 2000), and organizational performance (Allen et al., 2007).
Understanding the employee perceptions could also help to direct focus on where there are
needs for improvement in order to maximize the benefits from organizational endeavours
which support diversity (Ozgener, 2008; Wikina, 2011). Furthermore, as asserted by Allen
et al. (2007), perceptual component of diversity compared to actual diversity aids in
capitalizing the complex and multidimensional nature of diversity, and has important
organizational effects. In addition to that, we assessed the outcome, i.e. organizational
performance subjectively. Although most of the researches have assessed the outcomes of
diversity by using objective measures ( Jayne and Dipboye, 2004), Allen et al. (2007) asserted
that subjective (perceived) measure permits a broader range of evaluations and a richer
description of the effectiveness of an organization that enable more organizations to be
compared within a single study. Therefore, this study conceives employee-perceived
organizational performance as a subjective outcome indicator to test its relationship with
perceptions of diversity.
We selected India as the setting for this study for a variety of reasons. First, India has a
markedly different societal context for diversity from western countries (Sowell, 2002;
Budhwar, 2009) and thus, offers a rich ground for studying diversity. Second, rapid
developments in the Indian economy after its liberalization in 1991 have prompted
institutions such as the World Bank to forecast that India will become the world’s fourth
largest economy by 2020 and consequently, a large number of foreign operators have now
entered the Indian market (Budhwar and Varma, 2010) and they call for the peculiarities and
idiosyncrasies of the Indian workforce and business exigencies, including diversity issues
(Woodard and Saini, 2006). Third, India’s economy has been classified as emergent or
developing, thus, placing it in a category of countries that are in contrast with contexts such
as the USA where most of the prior research on diversity has been focused, which may not
represent the situations of Asian countries, in which the cultural values significantly differ
(Magoshi and Chang, 2009).
We chose to focus majorly on gender, race/ethnicity, caste, and disability as these
dimensions have been identified in previous literature in India (Kundu, 2003, 2004). Further,
gender, caste, and race/ethnicity provide a strong basis for social categorization of Indian
society (Shenoy, 2013), whereas gender and disability have been the major focus of the
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