Bottom-line benefits of diversity

NEW BRUNSWICK, N.J. – A diverse work atmosphere in which employees believe everyone is treated equally has a positive impact not only on work attitudes and job performance, but also on a company’s bottom line.

Those are among the findings of a recent study co-authored by Rutgers researcher Patrick McKay, who examined the productivity patterns of 6,130 workers in 743

stores at a large U.S. retail organization.

 

“Overall, stores with pleasant diversity climates enjoyed greater sales performance among their employees than those lacking such climates,” said McKay, an associate professor of human resource management at the Rutgers’School of Management and Labor Relations. “This clearly shows the bottom-line implications of effective diversity management.”

Some of these principles include treating all employees equally; being open to the perspectives of all workers regardless of race, gender and ethnicity; and making sure no worker feels marginalized, the researcher said.

McKay’s findings appeared in the summer 2008 issue of Personnel Psychology. His co-authors are Derek R. Avery, associate professor of psychology and management at the University of Houston, and Mark A. Morris, leadership director with J.C. Penney Inc.

 The study, “Mean Racial-Ethnic Differences in Employee Sales Performance: The Moderating Role of Diversity Climate,” explored performance among sales personnel from various ethnic and racial groups. The researchers found that on average, African-American sales 

workers in pro-diversity climates realized gains of $20 in sales per hour – or annual sales increments of $20,800 per employee.

Among Hispanics, employees in stores which actively supported diversity enjoyed sales-per-hour gains of $26.

Moreover, McKay said, highly pro-diversity working conditions resulted in sales gains for white employees as well, although those gains were not as large as those in the other populations the researchers studied.

Earlier research on integrating the American workforce focused on such benefits as an enhanced labor pool, increased access to untapped consumer markets, improved corporate image and reduced liability for companies.

McKay said his study, presented at a conference of the Academy of Management in Philadelphia, is the first to measure sales productivity against diversity in the marketplace.

The data were collected from September to November 2005 among workers and managers at a large national retail organization recognized as a “Top-50 Company for Diversity” by DiversityInc Magazine.

“First and foremost,” the researchers noted, “this study illustrates the ‘dollar value’ of effective diversity management in terms of improved sales performance through the reduction of racial-ethnic mean differences in sales performance.”

On a practical level, McKay said, “I’d like to see more emphasis upon ensuring a fair and inclusive climate in terms of doing business, because such a climate has a lot of positive outcomes flowing from it. It’s a win-win situation: When you’re inclusive of everyone, you see benefits for all groups involved.”

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