diversity management thesis

Employee perceptions of diversity management in the hospitality industry

International Hospitality Review

ISSN : 2516-8142

Article publication date: 25 November 2021

Issue publication date: 7 November 2023

Diversity management is of great importance in the hospitality industry, resulting in a host of constructive consequences if managed effectively. However, there is a deficiency of investigation surrounding the outcomes of diversity management on the employees' attitudes and behavior in the hospitality industry. This research sought to investigate the influence of diversity management on workers' performance and conduct in the hospitality industry.

Design/methodology/approach

This quantitative study used survey data from 565 hospitality industry employees. Structural equation modeling was used to test the relationships from the research model.

This study identified a relationship between diversity management and positive workforce-related outcomes, including job performance, service innovation behavior and employee engagement in the hospitality industry.

Research limitations/implications

The findings of this study will push the confines of diversity management scholarship and initiate new paths of academic inquiry. Hospitality industry managers can also identify the benefits of effective diversity management as a consequence of this study.

Originality/value

This research contributes to the growing literature on diversity management as an essential aspect of human resources management in promoting positive employee attitudes and behaviors.

• Diversity management
• Employee engagement
• Job performance
• Service innovation behavior
• Diversity and inclusion

Mistry, T.G. , Okumus, F. and Orlowski, M. (2023), "Employee perceptions of diversity management in the hospitality industry", International Hospitality Review , Vol. 37 No. 2, pp. 265-285. https://doi.org/10.1108/IHR-05-2021-0041

Emerald Publishing Limited

Copyright © 2021, Trishna G. Mistry, Fevzi Okumus and Marissa Orlowski

Published in International Hospitality Review . Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode

1. Introduction

Diversity is in the core of the hospitality industry based on its global nature and worldwide employment. Workforce diversity in the hospitality industry is related to a competitive advantage ( Madera, 2018 ) and must be explored intricately to reap its full potential. Diversity management has received increased support from the corporate sector in the hospitality industry through investment in several diversity initiatives by major hospitality companies ( Gajjar and Okumus, 2018 ; Manoharan et al. , 2021 ). Diversity management has received attention in recent years in becoming a consulting industry, with organizations partnering with both academics and practitioners to evaluate their diversity management initiatives ( Pitts, 2009 ).

The foundation of diversity management literature lies in the discussion of workforce diversity. Diversity management research was initiated over two decades ago with the exploration of workforce diversity and its characteristics. It is crucial to understand how the hospitality sector manages workforce diversity due to the significant representation of minorities in the workforce ( Kalargyrou and Costen, 2017 ). Table 1 highlights the demographic makeup of the hospitality and tourism industry in the United States.

Although diversity management research has garnered momentum in the past few years, the research stream focused on diversity management in the hospitality literature is far from mature. Furthermore, there is a stark theoretical and methodological gap in the diversity management stream of research between general management literature and hospitality management literature ( Manoharan and Singal, 2017 ). Previous studies have proposed several benefits of effective diversity management in the hospitality industry ( Kalargyrou and Volis, 2014 ; Kim, 2006 ; Manoharan et al. , 2019 ). However, there is a lack of empirical evidence surrounding the consequences of diversity management in the hospitality industry. This gap could contribute to the scarcity of advanced and nuanced analysis regarding diversity management in the hospitality context. Additionally, there is limited research in assessing the impact of diversity management practices on organizational, work-related and operational outcomes ( Pitts, 2009 ). The present research aims to contribute to the body of literature by analyzing the impact of effective diversity management practices and policies on hospitality employees' attitudes and behavior.

Hence, the purpose of this research is to analyze the impact of effective diversity management on employees' attitudes and behavior in the hospitality industry. This study seeks to investigate a relationship between diversity management and positive workforce-related outcomes, including job performance, service innovation behavior and employee engagement in the hospitality industry. This investigation is crucial in the hospitality industry literature to establish the importance of diversity management as a concrete antecedent of positive employee-related and organizational outcomes ( Ashikali and Groeneveld, 2015 ).

2. Literature review

2.1 workforce diversity and diversity management.

Diversity can be broadly defined as “a characteristic of social grouping that reflects the degree to which objective or subjective differences exist between group members” ( Van Knippenberg and Schippers, 2007 , p. 516). Furthermore, in alignment with the social identity theory, “a group is diverse if it is composed of individuals who differ on a characteristic on which they base their own social identity” ( O'Reilly et al. , 1998 , p. 186). Traditionally, diversity has included merely race and gender diversity. The Diversity Task Force ( Best Practices in Achieving Workforce Diversity, 2001 ) research suggests that a common misapprehension about diversity is that only some persons or groups are included under its umbrella, when in fact, precisely the opposite is true. Furthermore, Kapoor (2011) has insisted on a broader definition of diversity, including a variety of other characteristics. Diversity can be viewed as a multi-dimensional concept ( Griggs and Louw, 1995 ) that consists of primary characteristics (nationality, age, ethnicity and gender) and secondary characteristics (educational level, work experience, tenure, personality, and social and economic backgrounds) ( Hsiao et al. , 2015 ).

Effective diversity management includes voluntary programs and practices initiated by organizations to ensure an inclusive work environment ( Mor Barak et al. , 2016 ). It includes fair policies related to human resources management and programs created and implemented to manage the diverse workforce that is a reality today ( Manoharan et al. , 2021 ). Diversity management is vital for the hospitality industry due to the demographic shifts in the workplace that have made a diverse labor force a crucial fact for the hospitality industry. While numerous advantages of a diverse labor force have been emphasized, merely including a diverse labor force with the sole purpose of maintaining a representative image is counter-productive and organizational leaders must strategically reduce inclusion barriers ( Sabharwal, 2014 ). Effective diversity management that generates positive outcomes depends on the creation and implementation of diversity management practices and employees' perceptions of such practices ( Garcia-Rodriguez et al. , 2020 ).

Aytemiz Seymen (2006) assessed the different cross-cultural diversity management approaches and concluded no optimal method to manage cultural diversity successfully. Cultural diversity management practices need to be customized to the needs of the organization ( Aytemiz Seymen, 2006 ). Pieterse et al. (2013) concluded that cultural diversity has a positive relationship with team performance consisting of learning approach-oriented members. McKay et al. (2008) found a climate of diversity could have a positive relationship with employee job performance through their study, including African American and Latino employees. Richard et al. (2007) suggested that when organizations pass beyond certain levels of organizational diversity, there is a positive impact on organizational performance.

Diversity management literature in the hospitality field has typically investigated either role evaluation or best practices ( Kalargyrou and Costen, 2017 ). Strategic training, as part of the diversity management initiatives, has yielded positive results, including an increase in the perception of the importance of diversity ( Wilborn and Weaver, 2002 ). Iverson (2000) recommended diversity management practices for hospitality leaders, including effective communication, respect and inclusion of employees' capabilities, beliefs and language preferences.

Madera (2013) recognized categories of primary diversity management practices, including diversity councils, training programs related to diversity and supplier diversity. He further emphasized the importance of support for minority groups, including women, and the LGBTQ (lesbian, gay, bisexual, transgender, queer) community, mentoring and networking for the employees, and overall cultural awareness. These were further updated by Gajjar and Okumus (2018) to include intergenerational programs, disability benefits and veteran benefits.

Like research on workforce diversity, research interest regarding diversity management has gathered attention in the last few years. The evolvement of research objectives in hospitality literature has recently progressed to the inquiry of diversity management outcomes. Madera et al. (2018) concluded that there is an increase in organizational attraction for hospitality industry employees based on the status of the organizations' diversity management programs. Hence, capitalizing on diversity management leads to enhanced organizational attraction and is mediated by person-organization fit.

Mistry (2019) developed a holistic diversity management measurement scale for the hospitality industry. Two factors of diversity management (diversity management initiatives and inclusive human resources management practices) were identified through the scale development process. Diversity management initiatives focused on the efforts of hospitality industry organizations to manage workforce diversity proactively, while inclusive HRM policies described fair and inclusive policies established by the hospitality industry organization as part of their diversity management efforts ( Mistry, 2019 ). This study will utilize the two factors of diversity management to assess its impact on employees' attitudes and behavior.

2.2 Job performance

Job performance is the effectiveness of an employee in fulfilling the requirements of the job and accomplishing work-related goals efficiently ( Babin and Boles, 1998 ; Roth et al. , 2003 ). Extant research regarding job performance within general management and hospitality management scholarship has revealed several organizational factors that positively impact employee job performance. Li et al. (2012) indicated that leader–member exchange was positively linked to employee job performance. Additionally, human resources management consistently strengthened the relationship between leader–member exchange and work engagement. Increased work engagement and a sense of repaying the supervisors, as explained by the social exchange theory, may provide enhanced energy and a willingness to invest increased efforts, thus enhancing job performance ( Bakker et al. , 2007 ; Bakker and Leiter, 2010 ). Several studies from multiple industries have confirmed a positive connection between work engagement and job performance ( Gottschalg and Zollo, 2007 ; Bakker and Leiter, 2010 ), including hotels ( Salanova et al. , 2005 ).

Sun et al. (2007) concluded a positive association between high-performance human resources practices (HPHRPs) and job productivity, which is an indicator of performance. Nadda et al. (2014) found that effective human resources management practices focusing on compensation, training, development, workplace freedom, information sharing, etc., have a positive impact on employees' performance. Additionally, high-performance work practices, including training, empowerment and reward, have a positive impact on job performance among hotel employees ( Karatepe, 2013 ). Effective diversity management can be identified as an HPHRP ( Shen et al. , 2010 ) and can be positively associated with job performance in the workforce.

Diversity management initiatives will have a direct positive relationship with job performance.

Inclusive HRM practices will have a direct positive relationship with job performance.

2.3 Service innovation behavior

This research uses Chen's (2011) definition of service innovation as the development of novel and valuable concepts for improving service efficiency. Recent trends indicate that service industries, including the hospitality industry, rely on their workers to create innovative ideas regarding services being offered to guests ( Hon, 2011 ). Service innovation behavior has been marked in the hospitality industry as an avenue for gaining a competitive edge and attaining sustainable growth ( Dhar, 2016 ).

Chang et al. (2011) found a link between human resources management practices of hospitality firms and innovation. The degree to which HPHRPs demonstrate to the employees that their organization cares about them has a high impact on refining the connections between the employees and their organization and hence plays a significant role in generating desirable work-related behaviors ( Dhar, 2015 ). Recent studies have linked the effectiveness of human resources management practices of organizations with producing creative work outcomes from their employees ( Cooke and Saini, 2010 ). Furthermore, Dhar (2015) found a positive relationship between HPHRPs and the service innovation behavior of workers. Since diversity management is categorized as an HPHRP, it is also expected to have a positive linkage with service innovation behavior.

Diversity management initiatives will have a direct positive relationship with service innovation behavior.

Inclusive HRM policies will have a direct positive relationship with service innovation behavior.

2.4 Employee engagement

Schaufeli et al. (2002) identified employee engagement as “a positive, fulfilling, work-related state of mind that is characterized by vigor, dedication, and absorption” (p. 74). This definition will be used for this research as it highlights the employee being in a motivational state ( Saks and Gruman, 2014 ). Employee engagement has been investigated in the hospitality industry context, albeit as an emerging concept ( Lee and Ok, 2015 ). They found that several components of the psychological climate of the organization can be positively linked with employee engagement in the hospitality industry.

Lee and Ok (2016) further tied employee engagement with the leader–member exchange as an antecedent and organizational commitment as its consequence. Additionally, transformational leadership has also been found to have a positive influence on employee engagement in the hospitality industry ( Buil et al. , 2016 ). Employee engagement has not been directly linked with diversity management in the existing literature due to the developing nature of the research stream. Still, these findings highlight the importance of positive organizational factors in enhancing employee engagement. Diversity management has been identified as a positive organizational factor and linked with several desirable outcomes. This study aims to extend the literature to its impact on employee engagement as well.

Diversity management initiatives will have a direct positive relationship with employee engagement.

Inclusive HRM policies will have a direct positive relationship with employee engagement.

2.5 Mediating relationships

Previous studies have suggested that employee engagement is one of the attitudinal factors that boost positive employee behavior ( Jung and Yoon, 2018 ). Engaged workers are more creative and more productive ( Bhatnagar, 2012 ). Chang et al. (2013) concluded a positive relationship between engagement and innovative behavior. Furthermore, engagement has also been related to positive outcomes, including better job performance ( Halbesleben and Wheeler, 2008 ; Bakker and Bal, 2010 ).

Employee engagement has also been analyzed as a mediating variable between organizational characteristics and organizational outcomes numerous times in general management literature ( Schaufeli and Bakker, 2004 ; Saks, 2006 ; Salanova and Schaufeli, 2008 ; Aggarwal et al. , 2010 ; Chughtai and Buckley, 2011 ; Bhatnagar, 2012 ). Employee engagement mediated the connection between job resources and turnover intention ( Schaufeli and Bakker, 2004 ). Furthermore, engagement mediated the association between job resources and proactive behavior ( Salanova and Schaufeli, 2008 ).

Chugtai and Buckley (2011) concluded a mediating relationship between organizational characteristics such as trust and job performance via employee engagement. Garg and Dhar (2017) found that the relationship between leader–member exchange and service innovation behavior was mediated by work engagement. Furthermore, Jung and Yoon (2018) concluded a mediating link between an organizational climate of conflict management and service innovation behavior via employee engagement. These findings suggest that employee engagement is an appropriate mediator between organizational characteristics and positive employee behavior ( Salanova and Schaufeli, 2008 ) (see Figure 1 ).

Employee engagement will mediate the relationship between diversity management initiatives and job performance.

Employee engagement will mediate the relationship between inclusive HRM policies and job performance.

Employee engagement will mediate the relationship between diversity management initiatives and service innovation behavior.

Employee engagement will mediate the relationship between inclusive HRM policies and service innovation behavior.

3. Methodology

3.1 measures and sample.

A quantitative study was conducted to assess the research model. Data was collected through a survey of hospitality industry employees to investigate the direct and indirect impacts of diversity management on job performance, service innovation behavior and employee engagement within the hospitality industry.

Diversity management was measured using its two factors, diversity management initiatives (24 items) and inclusive human resources management policies (six items) developed by Mistry (2019) . A sample item for diversity management initiatives included, “My organization invests its resources in diversity management-based training and development for all employees.” Furthermore, “Employees from different backgrounds are treated fairly in my organization” was an example of inclusive human resources management practices. Cronbach's alpha was 0.971 for the 24 items of diversity management initiatives and 0.853 for the six items of inclusive HRM policies.

Job performance was measured using six items adopted by Chiang and Hsieh (2012) with a Cronbach's alpha value of 0.907, suggesting adequate internal consistency ( Field, 2013 ). Sample item included “I meet performance standards and expectations of my job.” Similar to previous efforts to measure employee service innovation behavior, a five-measure item developed by Hu et al . (2009) with appropriate internal consistency (Cronbach's alpha = 0.928) was used. “At work, I seek new service techniques and methods” was a sample item. Employee engagement was measured using the nine-item Utrecht Work Engagement Scale (UWES-9) developed by Schaufeli et al. (2006) and with a Cronbach's alpha value of 0.897. A sample item was “I am enthusiastic about my job.”

All items in the survey were measured on a scale of 1–7, where 1 was “strongly disagree” and 7 was “strongly agree.” The final part of the survey included demographic information about the respondents, including their gender, age, education, income and race. Additionally, two attention check questions were included in the survey to maintain the quality of the data. The attention check questions were “I will select neither agree nor disagree for this statement” and were placed twice throughout the survey.

The sampling frame included hospitality industry employees at least 18 years old and who had been employed with their current company for at least 12 months ( Hight et al. , 2019 ). The survey was created and hosted using Qualtrics, and MTurk was used to distribute the survey and collect responses. Surveys that did not pass the attention check questions were not included in the final data set. Duplicate respondents were deleted by comparing the computer IP addresses of the respondents. A total of 1,363 completed responses were collected, out of which 587 passed the attention check questions and were used for additional data screening. The final data set included 565 responses.

3.2 Data analysis

The data collected from the Qualtrics survey was coded and entered into SPSS v.24 and Amos v.24 software. The data were screened to assess any missing data, outliers, and deviations from normality or linearity, as recommended by Hair et al. (2010) . The internal consistency of each scale was assessed using Cronbach's alpha. Descriptive statistics were analyzed to evaluate the profile of the sample. Exploratory factor analysis (EFA) was conducted to validate the newly developed diversity management scale and its factors. The measurement and structural models were then assessed using confirmatory factor analysis (CFA) and structural equation modeling (SEM). CFA allowed the confirmation of the theorized model by assessing the overall fit before the SEM analysis was conducted ( Hair et al. , 2010 ). SEM can examine a series of dependence relationships simultaneously ( Hair et al. , 2010 ) and was hence deemed appropriate for this study. Convergent and discriminant validities of the measurement model were also assessed. Additionally, mediation analyses using bootstrapping were used to test the relative size of the mediated paths vs the direct paths ( Iacobucci et al. , 2007 ; Hayes, 2009 ).

The first step of the analysis was to screen the data for univariate and multivariate outliers. Descriptive statistics for the items used in CFA and SEM analyses were analyzed to ensure there were no violations of the necessary assumptions of normality, homoscedasticity and linearity. A total of 1,363 responses were collected, and 68 were deleted based on responses to one or both of the screening questions. An additional 567 were deleted for failure to pass both the attention check questions, and 154 were deleted for incomplete data or based on descriptive statistics. Responses that passed only one of the two attention check questions were also discarded. The final dataset contained 565 cases. All the constructs included in the study had Cronbach's alpha values greater than 0.7 as desirable for adequate internal consistency ( Hair et al. , 2010 ).

4.1 Demographic information

The personal demographic information of the respondents was analyzed and is displayed in Table 2 . The sample was split fairly evenly in terms of gender, and a little over half (52.6%) of the respondents were male. About 80% of the respondents were under 40 years of age, a reasonably accurate representation of the hospitality industry ( U.S. Bureau of Labor Statistics, 2020 ). Nearly half (46.9%) of the respondents had a 4-year college degree and 15.8% had a master's degree. The respondents were distributed relatively evenly in all the income brackets provided as options. About 60% of the respondents were White/Caucasian, while about 20% were Asian, making up the largest two races in the sample.

4.2 Exploratory factor analysis

EFA was conducted with maximum likelihood extraction and Promax rotation to refine the diversity management measurement scale and explore its dimensions (KMO = 0.965; Bartlett's test of sphericity χ 2  = 5368.708 [df = 435, p  < 0.001]). The rotated factor solution replicated the individual item loadings from the original scale, further confirming a two-factor solution (variance explained = 59.9%). The factor loadings ranged from 0.609–0.902. The first factor included 24 items focusing on diversity management initiatives, and the second factor contained six items related to inclusive HRM policies, consistent with the scale. The pattern matrix of the diversity management scale is highlighted in Table 3 .

4.3 Confirmatory factor analysis

CFA was conducted using the maximum likelihood (MLM) estimator. The results suggested a good fit to the model ( χ 2  = 2831.773, df = 1,165, p  < 0.01, CFI = 0.910, TLI = 0.905, RMSEA, 0.050, SRMR = 0.059). As highlighted in Table 4 , the square root of each AVE was higher than the correlations with other constructs confirming appropriate discriminant validity ( Fornell and Larcker, 1981 ). The diagonal numbers in bold represent the square root of the average variance extracted (AVE). The remaining numbers show correlations.

The standardized factor loadings, AVE estimates and construct reliabilities are shown in Table 5 . The standardized factor loadings were all larger than 0.50 as desired, ranging from 0.517 to 0.883 and significant at p  < 0.001. The CR values for each of the constructs were greater than 0.7 as desired (DMI = 0.982, IHRMP = 0.878, JP = 0.887, SIB, 0.878, EE = 0.925). Furthermore, the AVE estimates for each of the constructs were greater than the required threshold of 0.5 (DMI = 0.699, IHRMP = 0.574, JP = 0.573, SIB, 0.591, EE = 0.578). Standardized loadings for all items, along with CR and AVE for all constructs, adequately satisfied the desired criteria. Thus, convergent validity and reliability were confirmed.

4.4 Structural equation modeling

The direct and indirect relationships were then assessed using SEM. The results for the various fit indices used to assess the structural model indicate that the proposed model provides a good fit to the data model ( χ 2  = 2831.773, df = 1,165, p  < 0.01, CFI = 0.910, TLI = 0.905, RMSEA, 0.050, SRMR = 0.059). The standardized path coefficients, t -values and results of the direct relationships ( Hypotheses 1a – 3b ) are discussed in Table 6 .

Hypothesis 1a was partially supported as there is a significant relationship between diversity management initiatives and job performance. Still, contrary to the proposed positive relationship, the results revealed a negative relationship ( β  = −0.318, p  < 0.05). This indicates that diversity management initiatives were negatively associated with job performance among hospitality industry employees. The results confirm that inclusive HRM policies have a direct positive relationship with job performance, supporting hypothesis 1b ( β  = 0.706, p  < 0.05). Furthermore, diversity management initiatives have a direct positive relationship with service innovation behavior, thus confirming hypothesis 2a ( β  = 0.556, p  < 0.05). The relationship between inclusive HRM policies and service innovation behavior was also statistically significant, and hypothesis 2b was supported ( β  = 0.127, p  < 0.05). Both diversity management initiatives ( β  = 0.439, p  < 0.05) and inclusive HRM policies ( β  = 0.357, p  < 0.05) had direct positive relationships with employee engagement, supporting hypotheses 3a and 3b . Hence, other than the relationship between diversity management initiatives and job performance, both diversity management initiatives and inclusive HRM policies are positively associated with job performance, service innovation behavior and employee engagement.

4.5 Mediation analysis

Mediation analysis using 5000 bootstrapped samples and with a 95% confidence interval (CI) was conducted. The results of the mediation analysis and indirect effects ( Hypotheses 4a – 5b ) are displayed in Table 7 . Diversity management initiatives had a significant indirect relationship with job performance via employee engagement (95% CI = 0.056, 0.204). Since the 95% CI did not include zero, statistical significance is established ( Hayes, 2013 ), and hypothesis 4a was supported.

Furthermore, inclusive HRM policies also had a significant indirect relationship with job performance via employee engagement (95% CI = 0.053, 0.162), and hypothesis 4b was supported. Additionally, employee engagement mediated the relationship between diversity management initiatives and service innovation behavior (95% CI = 0.191, 0.365) and between inclusive HRM policies and service innovation behavior (95% CI = 0.134, 0.323). Thus, hypotheses 5a and 5b were also supported. This indicates that employee engagement mediated the relationships between diversity management initiatives and inclusive HRM policies and job performance and service innovation behavior as outcomes.

5. Conclusions and discussion

5.1 conclusions.

The purpose of this study was to analyze the relationship between diversity management and job performance, service innovation behavior and employee engagement of hospitality industry employees. Diversity management initiatives were found to have a significant negative relationship with job performance, partially supporting the hypothesis. Previous research has established that improving employees' job performance requires leadership and dedication from the organization ( Sabharwal, 2014 ). Hence, merely introducing programs and insisting on employees to participate in the initiatives, without an appropriate contingency plan to make up for the productivity, can only negatively impact job performance. This idea can clarify the discrepancy between the initially hypothesized relationship and the actual conclusion that emerged during this study. Although programs that stimulate an inclusive environment and are instrumental in reducing interpersonal conflicts are beneficial ( Choi and Rainey, 2014 ), appropriate measures must be taken to compensate for the time and resources spent participating in such initiatives.

Inclusive HRM policies were positively and significantly linked with job performance, supporting the hypothesis. Since HPHRPs have been positively linked with job performance ( Sun et al. , 2007 ), it is understandable for inclusive HRM policies related to diversity management to be positively associated with job performance. Nadda et al. (2014) also found fair policies related to compensation, hiring and promotions as contributing factors in enhancing employees' job performance. Hence, the inclusive HRM dimension of diversity management is duly linked with job performance in the hospitality and tourism industry, as supported by previous literature ( Choi and Rainey, 2010 ).

Diversity management initiatives were concluded to have a direct positive relationship with service innovation behavior, as previously hypothesized. A supportive work environment and leadership commitment included in the diversity management initiatives dimension of diversity management have been found to positively impact service innovation behavior ( Martins and Terblanche, 2003 ). A conflict management climate has been identified as a critical contributor to enhancing employees' service innovation behavior in the hospitality industry ( Jung and Yoon, 2018 ). Since diversity management initiatives are ingrained within conflict management, diversity management initiatives have a positive impact on service innovation behavior.

Service innovation behavior was also significantly linked with the inclusive HRM policies dimension of diversity management. This relationship was the weakest among the hypothesized relationships, although it was statistically significant. The research on enhancing service innovation behavior is rooted in the concept of a supportive work environment and the ability and freedom for the employees to innovate ( Reade and Lee, 2016 ). However, fair and inclusive human resources management policies regarding the fundamental human resources functions of compensation and hiring have not been linked with service innovation behavior in the literature. Organizations that practice inclusive HRM policies may have an impact on the performance of the employees' core job duties but do not necessarily have a superior impact on service innovation behavior, which is not included in their essential job functions.

Diversity management initiatives were established to have a significant positive relationship with employee engagement. Hence, the proposed hypothesis was supported in this instance. Karatepe and Olugbade (2009) found that employee engagement is positively affected by job resources, organizational environment and psychological climate in the hotel sector ( Lee and Ok, 2015 ). The items included in the diversity management initiatives dimension are rooted in organizational characteristics and commitment to diversity management from the organization. Hence, the positive relationship between diversity management initiatives and employee engagement can be explained based on previous research.

Employee engagement was also found to have a significant positive relationship with inclusive HRM policies dimension of diversity management, in alignment with the hypothesis. In addition to organizational factors, human resources practices have been known to increase employee engagement in the hotel industry ( Presbitero, 2017 ). Since the items in inclusive HRM policies are focused on human resources management within the organization, there is ample justification to support the relationship between inclusive HRM policies and employee engagement.

Regarding the indirect mediating relationships, all four proposed hypotheses were supported since employee engagement has been identified as an attitudinal factor in generating positive employee behavior ( Jung and Yoon, 2018 ). The relationship between diversity management initiatives and job performance was mediated by employee engagement. It is vital to note that the direction of the direct relationship between diversity management initiatives and job performance was negative, and introducing employee engagement as a mediator altered the direction of the indirect relationship. Hence, it can be concluded that employee engagement was a missing attitudinal factor in the relationship between diversity management initiatives and job performance.

The relationship between inclusive HRM policies and job performance was also mediated by employee engagement. Research has also suggested that employee engagement is an effective mediator between organizational characteristics and positive employee behaviors ( Salanova and Schaufeli, 2008 ). This can explain that employee engagement further mediated the relationship between diversity management initiatives and service innovation behavior. Lastly, there was a significant indirect relationship between inclusive HRM policies and service innovation behavior through employee engagement.

5.2 Theoretical implications

This research provides numerous theoretical implications. This study advances the scholarship of diversity management beyond an assumptive approach ( Pitts, 2009 ). The findings provide empirical evidence for the concepts described by researchers who have suggested that diversity management is beneficial to organizations and can be a source of competitive advantage ( Yang and Konrad, 2011 ). This research advances the literature on diversity management further by moving beyond the assumptive idea that diversity management could be beneficial for the hospitality industry. This study provides empirical proof that diversity management is indeed vital for positive outcomes in the hospitality industry.

Additionally, this research concludes that diversity management mainly has a positive effect on desirable employee-related outcomes. The findings from the hypotheses testing further extend the body of knowledge on diversity management in the hospitality context by establishing a positive link between diversity management dimensions, job performance, service innovation behavior and employee engagement. The mediating effects of employee engagement further contribute to the literature by confirming that organizational factors can lead to attitudinal impacts, which eventually have an impact on the employees' behaviors ( Salanova and Schaufeli, 2008 ) based on the social exchange theory.

5.3 Practical implications

This research provides many practical implications for the hospitality industry. It has been concluded that effective diversity management generates enhanced organization attraction ( Madera et al. , 2018 ), innovative ideas and a positive image for the organization ( Ineson et al. , 2013 ). Additionally, effective diversity management can also have a positive influence on an organization's financial performance ( Singal, 2014 ). This research confirms the findings of previous research and establishes diversity management as an antecedent to positive attitudes and behaviors of hospitality and tourism industry employees. Diversity management is directly related to positive employee attitudes and behavior in the hospitality industry, and managers can utilize these findings to create favorable outcomes for their organizations.

Hospitality industry organizations must note that diversity management positively influences its employees' job performance, service innovation behavior and engagement. The findings not only encourage hospitality industry organizations to evaluate and enhance their diversity management efforts because of their impact on job performance and employee engagement, but they also provide practical evidence regarding the positive influence of diversity management on service innovation behavior. Managers do not need to “rely on gut feeling, speculation, and their own limited experience about the keys to innovation success” ( Ottenbacher and Gnoth, 2005 , p. 206) anymore.

Hospitality industry organizations can learn that basic compliance with the laws is not enough anymore. A more novel approach regarding their diversity management efforts is required to generate positive outcomes. A passive approach to diversity and diversity management may not be beneficial to hospitality companies anymore. An overall culture change is required within organizations where individual differences are respected and valued to move forward with the diversity management movement ( Martín-Alcázar et al. , 2012 ). Organizations should include diversity management into their strategic plans to reap the full benefits of a diverse workforce.

Companies can initiate programs and policies such as mentoring, diversity training, formal and informal networking groups for their employees to promote a culture of diversity management. Hospitality industry organizations should communicate the importance of diversity management to all employees, encouraging and furthermore rewarding employees for participating in such initiatives. Hospitality organizations should also be committed to providing fair compensation and benefits to all employees, further communicating a “zero tolerance” policy of discrimination. Companies should create a culture where employees' differences are respected and utilized as a strength. As stated previously, Madera (2013) and Gajjar and Okumus (2018) have highlighted a total of ten categories that companies can use as a benchmark for their diversity management practices. By utilizing workforce diversity effectively and as an asset, organizations can generate positive attitudinal and behavioral outcomes among their employees.

5.4 Limitations and future research

Despite theoretical and managerial implications, findings from this study must be assessed against a backdrop of potential limitations requiring further research. Additionally, since the research measured employees' perceptions instead of actual performance data, the reality within the workplace may not be entirely reflected through the data. Furthermore, even though the findings were based on a representative sample of hospitality industry employees employed in a range of jobs within several sectors of the industry, generalizing the results must be done with caution because of the country-specific sample. The research should also be replicated to consider the attitudinal and behavioral differences between different groups based on gender, race, ethnicity, etc., by introducing these demographic factors as moderators in future studies.

There is still room for scholars to improve the existing body of knowledge on diversity management. The relationship of diversity management with several desirable organizational outcomes such as organizational citizenship behavior, job satisfaction, organizational commitment and turnover intention should be analyzed. Hsiao et al. (2015) established a positive link between organizational diversity and organizational citizenship behavior. Organizational citizenship behavior is linked with high-involvement human resources management practices at its core ( Yang, 2012 ).

Best practices related to the perceived corporate image, organizational support, organizational justice, internal marketing, organizational culture, training and communication have all been included in diversity management scholarship ( Gajjar and Okumus, 2018 ; Madera, 2013 ; Madera et al. , 2016 , 2017 ) and are crucial in increasing the job satisfaction of hospitality industry employees as highlighted by Kong et al. (2018) . Hence, effective diversity management of hospitality industry employees should have a positive impact on employees' job satisfaction.

Although the consequences of employee organizational commitment have been extensively explored in the hospitality industry context, the antecedents have been only broadly researched as organizational characteristics ( Luo et al. , 2017 ). A nuanced understanding of precursors of employee organizational commitment, such as diversity management, is lacking in the hospitality scholarship and can be assessed in future studies. Turnover intention or the likelihood of an employee leaving the organization soon ( Kang et al. , 2015 ) has also been investigated in the hospitality industry with regards to its several antecedents, a majority of which are organizational characteristics ( Ozturk et al. , 2014 ).

Research model

Demographic details of the hospitality and tourism industry workforce

Pattern matrix of diversity management

Item loadings, reliability and validity

Results of direct relationships

Mediation analysis

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Thesis Abstract - Diversity Management

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Diversity impact on organizational performance: Moderating and mediating role of diversity beliefs and leadership expertise

Jamshid ali turi.

1 Department of Management Studies, Bahria Business School, Bahria University, Islamabad, Pakistan

Sudhaishna Khastoori

2 Department of Management Sciences, SZABIST, Larkana, Pakistan

Shahryar Sorooshian

3 Department of Business Administration, University of Gothenburg, Gothenburg, Sweden

Nadine Campbell

4 Business school, Western Sydney University, Sydney, Australia

Associated Data

The data has been sent to the SZABIST center of research in Shaheed Zulfikar Ali Bhutto Institute of Science and Technology, 79 Clifton Road, Karachi 75600, Pakistan. To obtain the archive, should use the main author's name followed by the year 2021, "Ali Turi / Khastoori - 2021. Data set, the contact information for the SZABIST center of research is: Tel: (021) 358-21538-42 (EXT # 407) Fax: (021) 35830446 Email: kp.ude.tsibazs@ofni .

The current research examines the impact of four independent diversity variables, gender, age, educational background, and ethnicity, on the moderating role of diversity beliefs and the mediating role of leadership expertise to measure organisational performance in Pakistan. A self-administered questionnaire using a 6-point Likert scale approach was adopted to collect the responses from 176 employees. Quantitative analysis was done using SPSS, and SMART-PLS3 were used for was used to comprehend the objectives of the research. The findings indicate that age diversity, diversity beliefs, and leadership expertise have a statistically significant impact on organisational performance. Moreover, moderating variable diversity belief did not affect organisational performance, but leadership expertise plays a significant mediating role in organisational performance. Our study provides critical theoretical contributions to research diversity and organisational performance in Pakistan and examines the impact of workforce diversity on organisational performance with leadership expertise as mediator and diversity beliefs as a moderator.

1. Introduction

Diversity has many meanings, applications, and implications. Some organisations see it as an asset from which innovation and competitive advantages can springboard, while others see it as a hindrance, constrain, and biases. Traditionally, diversity included religion, language, age, gender, ethnicity, education, cultural and personality orientation [ 1 ]. Today, the concept of diversity has evolved to encompass strategic targets to improve organisational performance and effectiveness [ 2 ]. Therefore, organisations promote workforce diversity to bolster organisational performance [ 3 ]. However, many studies suggest that diversity exists in different forms with different intensities. If not managed properly, it has the potential to harm morale, intensify turnover and result in substantial communication problems.

The lack of diversity training and understanding of diversity beliefs, especially in developing countries with rigid social and cultural bonds, leads to organisational bias. To overcome these organisational biases, E-Vahdati et al. [ 4 ] recommended that firms should emphasise corporate governance, accountability, ethics, trust, and diversity. Moreover, organisations also need diversity for rational decision-making and promoting a conducive environment, where everyone’s beliefs are respected, leading to employees self-reflecting on the positive benefits [ 5 , 6 ]. However, if workforce diversity is mismanaged, this could lead to emotional conflicts, perceived organisational politics, miscommunication, power struggle, and higher employee turnover. As a result, having a diverse workforce would become an inhibitor for organisational development [ 7 , 8 ].

Muhammad Ali Jinnah, the founder of Pakistan, believed that diversity management involves four key concepts. One is democratisation which would guarantee cooperation amongst its citizens. Two, consistent social equity and equivalence through egalitarian Islamic values. Three, stringent laws with no room for bias or discrimination. Four, protectionism for minorities, women, and other disadvantaged groups [ 9 ]. Despite this, Pakistan is among the lowest-ranked diverse countries in the world. It ranked in the 22nd percentile for gender diversity and female economic activity in emerging economies due to its religious and cultural norms. Additionally, Pakistan’s sectoral diversity falls in the bottom five [ 10 ].

Previous studies on diversity focused on culture and ethnicity, but elements such as age, gender, and education have not been fully explored. Therefore, there is a need to examine different elements of diversity in different settings to understand its applications and managerial implications for sustainable organisational performance [ 11 – 13 ]. However, the subjective nature of diversity has left many practitioners ill-equipped to manage diversity effectively or determine which components play a role in diversity management and diversity-related issues [ 14 ].

The contradictory research results on diversity need to be further examined to increase our comprehension and better explain this phenomenon. Previous research has considered various diversity dimensions to identify their impact on organisational performance. For example, García-Granero et al. [ 15 ] and Georgakakis [ 16 ] explored the relationship between top management team functional diversity and the firm’s performance with the moderating role of top management (CEO) attributes. Other studies have used negative descriptors such as discrimination and racial prejudice to explore diversity.

However, no studies have examined the projectized environments or considered the role of leadership expertise and diversity beliefs. This research’s main queries are to determine how leadership expertise adds to organisational performance, value diversity beliefs, and organisational performance? Therefore, our contribution to the diversity literature will help us better understand and assess the impact of diversity on organizational performance by examining leadership expertise as a mediating variable and determining the extent to which diversity and organizational performance are related, using diversity beliefs as a moderating variable within Pakistan.

2. Literature review and hypotheses

Diversity is considering, recognising, and respecting others’ opinions and differences irrespective of their culture, gender, age, social status, race, physical capability, and so on [ 7 , 17 ]. It is used to find opportunities, face challenges, and explore new avenues [ 18 ]. Furthermore, diversity can be used to enhance knowledge and skill levels, help to understand behaviour, conflicts and fill the gaps within the organisation [ 7 , 19 ]. While there are many facets to diversity, this research aims to look more especially at gender, age, ethnicity, and educational diversity.

2.1 Gender diversity

Gender diversity represents the gender identities of men and women. It describes the emotional difference and experience publicly and culturally attached to men and women within any firm [ 20 ]. Research has found that a moderate level of gender diversity boosts the competitive edge, whereas greater levels of gender diversity reduce organizational performance. Other studies have shown that organisational success depends upon gender equality and equity [ 21 , 22 ];. Although western organisations have been moving closer to gender equality, Pakistan is way behind [ 21 ]. The gender-oriented inequities within the Pakistani workplace are reinforced by personal biases and stereotypes, referring that the status of men is perceived as superior to women. Many organisations prefer hiring male employees because they perceive men as better performers [ 23 ].

2.2 Age diversity

Age diversity is the ability of an organisation to accept different age groups. The business environment can only grow and succeed when various age groups within an organisation come with diverse experiences [ 24 – 26 ]. Recently, age diversity issues have gained significance because professionals are choosing to work past retirement age, and young adults are working part-timers while completing their studies [ 27 – 29 ]. Many organisations are welcoming this trend because they need skilled employees with experience and young talent with an innovative mindset for new ventures better organisational performance [ 30 , 31 ]. However, In Pakistan, young people face more discrimination in the labour market than old workers [ 32 ], as cultural norms are founded on respect for their elders.

2.3 Ethnic diversity

Ethnic diversity refers to differences in religion, language, and cultural background. Employees from different backgrounds working in the same organisation represent different lifestyles, cultures, beliefs, and skills that can improve strategic decisions [ 14 ]. Due to these perceived attributes and globalisation, organisations are focusing on multiplicity diversity building, but many companies struggle to produce and implement policies that reduce ethnic discrimination, which negatively impacts organisational performance [ 32 – 35 ]. Pakistani laws espouse that all citizens are equal irrespective of their religion, language, gender, or caste, but for minorities in Pakistan, this is a farfetched dream. According to EEOC data, ethnic diversity violations cost companies $112.7 million per annum due to ethnic diversity violations [ 3 ].

2.4 Educational diversity

Educational diversity denotes differences in knowledge, training, skills, experience, and qualification [ 18 , 36 ]. Some organisations refuse to employ highly qualified workers because they do not believe highly educated individuals are better performers, while others see employees with less education, skills, and training underperform [ 22 ]. The lowest level of education affects the earnings of rural workers in Pakistan, but old earners who receive more education earn more in urban areas. Organisations use educational diversity to have a mix of soft and hard-tech skills [ 37 ], and employees consider having educational diversity to significantly increase their ability in obtaining desirable jobs [ 38 , 39 ]. Age, gender, ethnicity, and educational diversity add to the synergetic pragmatism of the projects and organisation [ 30 , 40 ]. These findings lead us to the stance that H1 : Diversity has a significant positive impact on project performance .

2.5 Leadership expertise

Leadership expertise plays a crucial role in organisational performance, as it creates new directions, new philosophies, optimism, boost enthusiasm and cooperation among employees, and devises appropriate visions and strategies. Furthermore, leadership expertise considers diversity an organisational strength and promotes inclusion and diversity using various leadership styles as one leadership style may not work in diverse teams. The leader-member exchange (LMX) theory explains this approach best. It is a relationship-based approach with a dyadic relationship between the leader and their employees [ 41 ].

According to LMX [ 41 ], a leader uses a specific leadership style for each team member based on their mindset. The leaders share more knowledge and information, delegate responsibilities, and encourage participation in decision-making with some members and not others. LXM theory allows leaders to develop in-groups and spend more resources on the members they expect to perform better. This relationship between a leader and members gradually develops and reaches a high degree of dependence, mutual trust, and support. As a result, productivity increases. That eventually enhances employee retention, loyalty, and sustainable organisational growth.

Previous results maintain that effective diversity management at the workplace adds to both organisational and organisational performance [ 7 , 40 ]. Diversity, which has become an integral part of every organisation and project in this unified world, needs better leadership expertise to manage it at the micro and macro levels [ 34 , 42 ]. Research supports that a leader’s expertise, i.e., leading employees with respect regardless of their caste and creed, leading them with self-assurance, positively shaping their behaviour, results in enhanced employee performance, which eventually reflects increased organisational performance [ 43 ]. The findings lead us to H2 : Diversity with leadership expertise has a positive impact on organisational performance .

2.6 Role of diversity beliefs as a moderating variable

Diversity beliefs mean understanding that everyone is unique, and there is a need to recognise individual differences. These differences include race, ethnicity, gender, sexual orientation, socio-economic status, age, physical abilities, religious beliefs, political beliefs, or other ideologies [ 11 ]. Today, globalisation is one of the driving forces of diversity within organisations. However, accommodating diversity beliefs in terms of spiritual, cultural, and political views sometimes challenges a diverse organisation [ 12 , 25 ]. Staff needs to be reminded that they should not impose their opinions on others as their personal and ethnic beliefs are independent of their work obligations [ 27 , 44 ]. The employment practices linked with unbiased diversity beliefs can lead to constructive organisational results [ 11 , 26 ].

These diversity beliefs can be polarised perceptions or preferences towards homogeneity or heterogeneity [ 7 , 17 ]. A leader’s diversity beliefs may be one of the factors influencing organisational performance. Manoharan and Singal [ 42 ] found diversity positively affects organisational performance when supported by positive beliefs and values. Kundu and Mor [ 45 ] concluded that a generally positive view of workforce diversity could positively impact organisational and new venture (project) performance. Additionally, the perception of employees about workforce diversity is positively linked with organisational performance [ 46 ], and employees perceive their organisation more favourably when diversity management is perceived as positive [ 18 ]. However, due to organisational variations and cultural settings, diversity needs to be managed differently [ 14 , 47 ]. As such, we hypothesise that H3 : Diversity beliefs moderates the relationship between leadership expertise and organisational performance .

Furthermore, organisations bring people from different cultures to boost creativity, knowledge, and rational problem-solving approaches. Consequently, the leaders in this 21 st century have become highly alarmed with diversity management in organisations [ 48 ]. It is believed that diversity at the workplace positively impacts organisational performance, and the leadership expertise mediates this relationship. According to prior research [ 8 , 49 ], organisational leaders play a vital role in forming and promoting the workplace culture, free of prejudice and personal biases. The workforce mainly follows leaders to set the perspective wherein they would work in an organisational setting. Thus, forming such an environment that imitates respect, ethical behaviour, understanding, and encouraging cross-cultural values improves organisational performance. However, this relationship is moderated by the diversity beliefs. Everyone in the organisation does not hold the same values and beliefs. Still, a true leader who can determine the varied beliefs of employees and manage diversity in a way that is convincing for each team member can help organisations reach new heights [ 50 ]. The research findings lead to the hypothesis that H4 : Diversity significantly impacts organisational performance with the mediation of leadership expertise and moderation of diversity beliefs .

The Conceptual Model ( Fig 1 ) was developed based on the relationship between four dimensions of diversity most relevant to the Pakistani context, the leadership expertise, diversity beliefs, and organisational performance. This conceptual framework indicates the impact of workforce diversity on organisational performance in the presence of leadership expertise as mediating variable and diversity beliefs as moderating variable in the services sector and projectized organisations in Pakistan’s major cities.

3. Methodology

A quantitative approach using a correlational study was undertaken to determine the extent of a relationship constructs under investigation. A structured questionnaire was adopted from previous studies [ 51 , 52 ] to collect primary data using a survey, keeping in mind the objectives of the studies. The study used a 6-point Likert scale for grading the responses with the scale (1 = strongly disagree, 2 = disagree, 3 = partially disagree, 4 = partially agree, 5 = agree, 6 = strongly agree). The target population of the study was the project management professionals, working in the major cities of Pakistan. These cities were selected because many of the national and international developmental projects take place here. Organizations were selected from the services sector. The questionnaires were self-administered.

Additionally, a muti-level sampling procedure was adopted to make the respondent selection process more accurate and precise. In the first phase, stratified random sampling was applied to select the strata of the potential respondents. In the second phase, the quota sampling technique was applied to select the qualifying organizations, and in the third phase, convenient sampling was used to collect data. A total of 550 questionnaires were distributed, and 482 were returned. Questionnaires were assessed and screened for completeness. A total of 17 questionnaires were discarded as more than 10% of the values were missing. A further 12 were removed because of outliers. The remaining 451 were analysed using SPSS and Smart PLS.

4. Results and findings

4.1 participant demographics.

Table 1 contains the demographic details of the respondents. Among 176 respondents, 97 were male, and 79 were female. Most of the respondents were aged 30–35, had more than 5years’ experience working for their organisation, and held a bachelor’s degree or higher. This indicates that the participants were well educated and possessed sufficient skills and knowledge to answer all the survey questions proficiently.

4.2 Instrument validity

Table 2 indicates the loading factors for all the items are in the acceptable range of greater than 0.70. The average variance extracted (AVE) falls between 0.612–0.678 for the constructs, indicating a high-reliability level. Moreover, the composite reliability (CR) values range from 0.862 to 0.947 and are highly consistent and satisfy the convergent validity criteria. Furthermore, predictive accuracy, effect size, and predictive relevance were conducted for the goodness of fit, and their values fell in an acceptable range.

*OL = Organisational Leadership; AD = Age Diversity; ED = Ethnic Diversity; GD = Gender Diversity; EDD = Educational Diversity LE = Leadership Expertise; DB = Diversity Beliefs.

4.3 Discriminant validity: Fornell-Larcker Criterion

Discriminant validity of the constructs was checked using Fornell-Larcker Criterion. Discriminant validity confirms correlation among constructs if the values do not exceed 0.85 and the square root of AVEs is greater than the correlation of other constructs. Table 3 maintains that all values are less than 0.85, and their square root of AVEs was greater than their constructs’ off-diagonal values. These details satisfy the discriminant validity requirements.

*AD = Age Diversity; DB = Diversity Beliefs; ED = Ethnic Diversity; EDD = Educational Diversity GD = Gender Diversity; LE = Leadership Expertise; OP = Organisational Performance.

4.4 Discriminant validity: HTMT Criterion

HTMT refers to the average of the correlations of indicators between different constructs relative to the average of the correlations of indicators within the same construct. It measures the discriminant validity between the construct of the instrument. While conservative cut-off values are 0.9 is advocated a more stringent ratio of 0.85 as it offers the best criterion compared to all other methods of assessing discriminant validity [ 53 ]. Thus, any inter-construct ratio greater than 0.85 would be considered as having poor discriminant validity. The HTMT ratios obtained in this study, as shown in Table 3 , indicate no discriminant validity problems between the constructs.

4.5 Hypothesis testing

The path estimation or hypothetical relations was performed to observe the significant relationship in the inner path model. The entire hypothetical path in the framework was examined through the regression coefficient (β). Using the PLS Bootstrap technique, the value of β was checked to observe the proposed hypotheses in the structural model. Table 4 demonstrates the path coefficient assessment result where out of 10 direct hypotheses, six were supported, and four were not supported. The supported hypotheses were significant at least at the level of 0.05, have expected positive sign directions, and consist of a path coefficient value (β) ranging from 0.181 to 0.515.

Additionally, Table 5 shows that all six direct relationships were significant as the p-value is less than 0.05 and the t-value is higher than 1.96, depicted in Fig 2 . However, the other four hypotheses were unsupported because the p-value was higher than 0.05, and the t-values were less than 1.96.

In the case of moderating hypothesis, DB does not moderate the relationship between LE and OP. Therefore, it confirms that DB does not play any significant moderating role in the relationship between LE and OP.

4.6 Mediation hypothesis

For the mediating analysis, the bootstrapping technique was applied [ 54 ]. The mediation analysis results are presented in Table 6 and in Fig 3 , where among the four mediating hypotheses, three were supported, and one was not supported. The mediating path AD -> LE -> OP, ED -> LE -> OP, and EDD -> LE -> OP was significant as p < .005 and the values of LL and UL do not have zero (0) in between, which confirmed a mediating effect. However, the other mediating path GD -> LE -> OP was not significant as p < .005, and the zero (0) exists between LL and UL. In addition, among the three hypotheses, the AD -> LE -> OP path was partially mediated as the direct hypothesis was significant. However, the other two significant paths were fully mediated as their direct relationships were not significant.

5. Discussion

After many years of research on workplace diversity, there is considerable misperception over what diversity is. The broad definitions state that diversity seeks inclusion but does not identify the difference between social diversity where individuals of different races, ethnicity, religious beliefs, socio-economic status, language, geographical origin, gender, and/or sexual orientation bring their different knowledge, background, experience, and interest to increase organisational performance. Similarly, functional diversity where individuals with a variety of educational and training backgrounds are not examined. As a result, organisations are left confused about how to manage diversity to maximise organisational performance [ 55 – 58 ].

The present research provides a better understanding of the prevailing diversity scenario in Pakistan’s service sector and projectized organisations. The research indicates that three diversity variables, ethnic, gender, and education, do not significantly impact organisational performance. In contrast, age diversity has a significant impact on organisational performance.

The moderating hypothesis indicates that diversity beliefs play no significant role in improving organisational performance. This study challenges previous findings in the literature review sections, which proclaims that diversity and diversity beliefs significantly affect organisational performance. Therefore, organisations prefer to engage the workforce with diverse social, cultural, and ethnic backgrounds, bringing multi-facet experiences, learning, tacit and explicit knowledge to the organisation, boom effectiveness, and efficiencies, face challenges, and accept future challenges. This may be due to regional and cultural factors, that diversity beliefs are not promoting organisational performance, which may be explored in the future. Moreover, this study indicates that leadership expertise plays a significant mediating role, and diversity beliefs play a significant moderating role in organisational performance.

5.1 Theoretical implications

Our study provides critical theoretical contributions to research diversity and organisational performance. There is a gap in the current literature on the impact of workforce diversity on organisational performance, with leadership expertise as mediating variable and diversity beliefs as moderating variable in the services sector and projectized organisations in Pakistan. Specifically, we determined that leadership expertise mediates age, ethnicity, and educational diversity, and organisational.

Second, we contribute to research on the effective path by which diversity influences organisational performance by exploring the mediating role of leadership expertise. That is, our study not only examined that leadership expertise positively influences organisational performance. Building on these studies, our research uses leader-member exchange theory as an effective path and organisational performance as a goal. Drawing on the leader-member exchange theory, we determine that leadership expertise can impact diversity and enhance organisational performance. Our results suggest that leadership expertise is a crucial mechanism for diversity management and improving organisational performance in Pakistan.

Finally, our research explored the value of incorporating the moderator, diversity beliefs, and the mediator leadership expertise into a single theoretical model helps us better to understand the relationship between diversity and organisational performance. Our study showed that diversity beliefs do not moderate the relationship between leadership expertise and organisational performance. However, there were direct relationships between age diversity and leadership expertise, age diversity and organisational performance, diversity beliefs and organisational performance, and ethnic diversity and leadership expertise. Additionally, this study also found that there is partial and no mediation between age diversity, gender diversity, and organizational performance.

5.2 Practical implications

In addition to the theoretical contributions, our research informs practitioners in several ways. First, our results show that age, ethnicity, and educational diversity directly contributes to organisational performance via leadership expertise. There was also a direct relationship between age and ethnic diversity and leadership expertise. These findings emphasise the relevance of diversity management in light of globalisation.

Leaders should employ leader-member exchange procedures to help sustain organisational performance in an increasingly diverse workforce. That is, leadership styles need to change based on the mindset of the various groups within the organisation. The leaders share more knowledge and information, delegate responsibilities, and encourage participation in decision-making with some members and not others. LXM theory allows leaders to develop in-groups and spend more resources on the members they expect to perform better. However, this study added to the body of knowledge, that leadership expertise may not contribute to well managed and effective group development, due to social, religious, and cultural limitations of the locality/respondents.

5.3 Limitations and future research directions

This study has several limitations. First, it focused on age, gender, ethnic, and education diversity management and did not take into account other demographic diversity practices implemented within the organisations. Previous research recognises that a broad spectrum of demographic diversity influences organisational performance [ 55 ]. Future research should investigate a broader range of demographic diversity to understand better what constitutes a comprehensive approach to diversity management. Second, the research is quantitative, and its moderate response rate may limit the generalisability of the results [ 59 ]. Future research could combine qualitative and quantitative methods to leverage both structured and unstructured data to enhance the depth of insights and provide more specific practical outcomes [ 60 ]. Third, the generalisability of findings should be interpreted with caution. Every society has its own culture, norms, and social values, and previous research has identified that organisational culture may influence the findings related to diversity management [ 61 ].

6. Conclusions

Workplace diversity is becoming one of the most popular ways to evaluate organisational performance. Thus, conducting training and creating awareness regarding diversity will lead to value generation, better productivity, and vitality. Managing diversity at the workplace considers leveraging and respecting cultural differences in employees’ competencies, ideas, and innovativeness to persuade them to contribute towards a common goal and do it in a way that gives a competitive edge to organisations. Hence, it is recommended to encourage a more diversified workforce and create awareness to increase organisational performance. In addition, this research has focused on diversity beliefs as a moderating variable. However, future research can be conducted that how leadership expertise can mediate between age and gender diversity and organizational performance. Additionally, organisational justice as a moderator between diversity dimensions and organisational performance needs to be explored. Moreover, in the current paper, the social traits of diversity have been studied, providing opportunities or gaps to study functional diversity traits in the future.

Ethical consent

The study was approved by the ethical committee of the SZABIST Larkana Campus. The consent was informed, and the information was collected through an approved structured questionnaire. Moreover, the authors declare that they have no conflict of interest.

Funding Statement

The author(s) received no specific funding for this work.

Data Availability

• PLoS One. 2022; 17(7): e0270813.

Decision Letter 0

16 Dec 2021

PONE-D-21-09151Diversity Impact on Organizational performance: Moderating and Mediating role of Diversity Beliefs and Leadership ExpertisePLOS ONE

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Reviewer #1: The study is interesting, and the results are useful for diversity related research. However, the manuscript needs to be thoroughly checked for language including grammar. Detailed review comments are attached.

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You get a minor revision, make a revision immediately, pay attention to the marked reviews, the introduction is quite clear but there are some things that need to be improved, the methods, data processing and others are quite good

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Submitted filename: PLOS Review_2021.docx

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Author response to Decision Letter 0

24 Jan 2022

General: The whole paper was revisited and the help of the expert/native speaker was also incorporated. Additionally, some technical quality improvements are also considered.

Reviewer #1: The study is interesting, and the results are useful for diversity related research. However, the manuscript needs to be thoroughly checked for language including grammar. Detailed review comments are attached.

Suggestion accepted and incorporated . Thanks for your appreciation, the whole paper was revisited and the suggestions were incorporated

Reviewer #2: You get a minor revision, make a revision immediately, pay attention to the marked reviews, the introduction is quite clear but there are some things that need to be improved, the methods, data processing and others are quite good

Suggestion accepted and incorporated. Thanks for your appreciation, the whole paper was revisited and the suggestions were incorporated

Submitted filename: reviewers comments and responses.docx

Decision Letter 1

21 Jun 2022

Diversity Impact on Organisational Performance:

Moderating and Mediating Role of Diversity Beliefs and Leadership Expertise in Pakistan

PONE-D-21-09151R1

Dear Dr. Shahryar Sorooshian,

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5. Is the manuscript presented in an intelligible fashion and written in standard English?

6. Review Comments to the Author

Reviewer #2: Based on the results of the previous reviewer's comments, which generally have to be revised by the author. Well done.

Reviewer #3: The study is very interesting, and the overall results are useful for related research areas. Therefore, I recommend to publish this article in its current form.

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Reviewer #2: No

Reviewer #3:  Yes:  Dr. Asad Ali

Acceptance letter

15 Jul 2022

Diversity Impact on Organizational performance: Moderating and Mediating role of Diversity Beliefs and Leadership Expertise

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