Walking the talk in diversity management: Exploring links between strategic statements, management practices, and external recognition
Introduction
Current world events stemming from movements such as Black Lives Matter have brought diversity to the forefront of business and social discourse. Corporate America has stepped forward, re-examined its policies and practices, and committed resources to diversity and inclusion in the workplace (Hessekiel, 2020), recognizing their social and business value (Hunt et al., 2015). CNBC reports that 40 % of S&P 500 companies discussed diversity, equality, and inclusion during their 2020 s-quarter earnings calls, up significantly from last year (Stevens, 2020). In addition, companies invest $8 billion annually on diversity and inclusion training, and nearly 50 % of US organizations plan to offer diversity and inclusion training in the future (Carter et al., 2020).
Past research has shown that diverse employees are a competitive advantage (Dass and Parker, 1999). This is especially true in the context of the hospitality industry, which is labor intensive, caters to diverse customers from all over the world, and experiences high labor turnover (Madera, 2013). To achieve sustainable competitive advantage and maximize the positive outcomes related to workforce diversity, almost 98 % of companies, based in the US, have a diversity program. As far back as 2011, a Society for Human Resource Management study found that 21 % of companies reported using a variety of diversity management practices, such as diversity committees, diversity councils, and diversity advisory boards. Among organizations with these types of diversity management practices, 72 % reported that these groups were used to help augment their organization’s business efforts. It must be noted that 13 % of organizations reported having staff dedicated exclusively to diversity. Globally, 55 % of organizations in a study by Society for Human Resource Management reported their organizations “strongly promote” Diversity and Inclusion (Gehrels and Suleri, 2016). Stronger business performance can be achieved through more significant investment in diversity management practices (Singal, 2014).
To leverage and showcase their investment in diversity management, organizations often use external recognition as a measure of success. For example, a widely used practice is to benchmark against other organizations considered leaders in diversity management, such as those included on DiversityInc’s annual list of “The 50 Best Companies for Diversity,” Fortune magazine’s “Top 50 Companies for Minorities,” or the Human Rights Campaign’s “Best Places to Work for LGBTQ Equality.” Research shows that external recognition for diversity pays off for organizations. Specifically, receiving external recognition for diversity has been linked to strong financial performance via conscious efforts to build a positive reputation to signal a competitive advantage to stakeholders (Cook and Glass, 2014; Richard et al., 2013; Roberson and Park, 2007).
Despite a link between external recognition for diversity and important financial outcomes, very little research has examined the antecedents and organizational efforts that can lead to this external recognition. That is, what do organizations do to gain external recognition for diversity? Using Yang and Konrad’s (2011) model of diversity management, we propose that linking both strategic diversity statements (henceforth, diversity statements) and diversity management practices is related to external recognition for diversity—“walking the talk” is the way to receive recognition. Yang and Konrad’s model of diversity management is grounded in resource-based view (RBV) and institutional theory, which suggest that organizational motivation to invest in diversity management starts with corporate strategy. A strategy is defined as “a set of goal directed actions a firm takes to gain and sustain superior performance relative to competitors and can act as a guiding policy to address the competitive advantage” (Rothaermel, 2019, p. 4). Thus, hospitality firms seeking to implement diversity management start by including diversity as an agenda item in their corporate strategic statements, which helps them formulate policies toward diverse employees and external stakeholders. A clear diversity statement can guide diversity management practices and the positive outcomes of such practices (Thomas, 2004). Diversity management is planning and implementing organizational systems and practices to manage people, thus maximizing the potential advantages of diversity and minimizing its potential disadvantages (Cox, 1994). Research shows that diversity management leads to innovation, strong financial outcomes (Manoharan et al., 2019), and lower turnover (Richard and Johnson, 1999), and positively influences group performance and job satisfaction (Pitts, 2009). Richard and Johnson (1999, p. 89) find that “if the diversity practices ‘fit’ with the firm’s business strategy, productivity and market performance are higher than for those firms without ‘fit.’”
While existing research confirms that strategic diversity statements and diversity management practices can lead to positive organizational outcomes, the literature has several limitations. First, little is known about the actual strategic diversity statements that organizations adopt (Kossek et al., 2005). Instead, the majority of the research has focused on the antecedents and outcomes of strategic diversity statements (Cook and Glass, 2015; Friday and Friday, 2003; Richard, 2000; Roberson and Park, 2007), but not on what they are (i.e., their content). Second, research on diversity management practices is often micro-level—for example, it examines the effect of team and work unit demographics, or the effect of the manager- and employee-perceived diversity climate on team- and individual-level outcomes (Kalargyrou and Costen, 2017; Manoharan and Singal, 2017). Third, although some research has been conducted at the macro or organizational level, much of this has only focused on the effect of diversity management practices on individual aspects of firm performance and not on external recognition for diversity (e.g., Richard, 2000; Richard et al., 2004). In addition, these studies have often been conducted as silos, creating a gap in understanding relationships between strategy statements, diversity management practices, and external recognition for diversity. Lastly, although industry context matters (Johns, 2018), only two studies have used hospitality organizations to examine external recognition for diversity. Both were limited to investigating the relationship between diversity management practices and a single type of external recognition for diversity, and neither looked at diversity statements (Madera, 2013; Gajjar and Okumus, 2018).
To address these gaps, we build on Yang and Konrad’s (2011) model of diversity management to examine (1) the content of diversity statements, (2) diversity management practices, and (3) the links between diversity statements, diversity management practices, and external recognition for diversity management. Using Fortune 1000 companies to select our sample, we identified hospitality-related firms, manually collected data related to their diversity statements and diversity practices from their websites, and examined the links between these data and external recognition, such as any diversity-related awards and accolades these firms received.
Addressing these gaps is important because gaining a deeper understanding of the relationship between strategy statements, diversity management practices, and external recognition for diversity will benefit both academics and practitioners. For academics, examining the relationships between strategy, practices, and performance through the lens of diversity management builds on the tradition of strategic human resource management (HRM), investigating how practices such as those for diversity management can be measured and compared between organizations and linked to strategy and important outcomes (Madera et al., 2017). For practitioners, there is a need to understand the effects of diversity management practices on external recognition for diversity, because hospitality organizations substantially invest in diversity management to generate reputations for being diversity leaders (Gajjar and Okumus, 2018; Madera, 2013).
Section snippets
Strategic diversity statements
Strategic communication to stakeholders in the form of corporate website statements benefits organizations in many ways. They help an organization state priorities that point to its future direction as a firm, improve performance, and stimulate creative thinking while also building team expertise by using limited resources effectively (Patterson and Radtke, 2009). These statements include mission statements, vision statements, and detailed strategic statements, such as diversity and inclusion
Methodology
To evaluate (1) the content of diversity statements, (2) diversity management practices, and (3) the nature of the link between diversity statements, diversity management practices, and external recognition for diversity, we employed a textual qualitative approach. Qualitative research offers a holistic view of the occurrences under investigation (Bogdan et al., 1975; Patton, 1980), and compared with quantitative research, it offers flexibility in terms of data collection, analysis, and
Findings
The purpose of the present study is to explore (1) the content of diversity statements and (2) diversity management practices, and (3) the links between diversity statements, diversity management practices, and external recognition for diversity management. Consistent with the objectives of this study, we identified three overarching themes. The first theme is diversity statements, which has six subthemes. The second theme is diversity management practices, which has nine subthemes.
External recognition
Several organizations give diversity awards for various diversity initiatives undertaken by hospitality companies. These organizations include: (1) Black Enterprise, (1) Business Equality Network, (3) Comparably (an online portal that reveals company cultures and market compensation, as contributed by real employees, and showcases the most fair and accurate display of employer brands), (4) DiversityInc, (5) Forbes Best Employer for Diversity, (6) Great Place to Work®, (7) Human Rights Campaign
Discussion linking diversity strategies, practices, and recognition
To answer the third research question, we examined the links between diversity strategies, practices, and recognition for diversity. Fourteen companies showed clear links between diversity statements, diversity practices, and external recognition. Most of the companies with clear links between their diversity strategic statements and management practices have received some form of external recognition and rank higher on the Fortune 1000 list than those without these links. This indicates that
Implications and contribution
The study makes several significant theoretical and practical contributions. First, it contributes to the literature by exploring the prevalence and content of diversity statements in hospitality firms. We identified six different diversity statements: (1) diversity management practices, (2) organizational culture, (3) diversity and inclusion as a core value, (4) diversity and inclusion as a strategy, (5) diversity dimensions, and (6) valuing/support/inclusion for external stakeholders. This
Limitations and conclusion
In the context of the hospitality industry, where diversity is salient, we examined 27 large firms to explore whether the link between strategy (statements), conduct (practices), and performance (recognition) extends to diversity management and recognition. We found that overall, the higher the connected links between a firm’s diversity statements and management practices, the higher that firm’s external recognition, which may eventually lead to stronger firm performance. However, we were not
Acknowledgments
The authors would like to thank the journal’s Editor-in-Chief, and the anonymous reviewers for their valuable feedback to improve the manuscript.
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