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doi: 10.1111/1748-8583.12079

Retaining a diverse workforce: the impact of gender-focused human resource management Muhammad Ali, QUT Business School, Queensland University of Technology Isabel Metz, Melbourne Business School, University of Melbourne Carol T. Kulik, School of Management, University of South Australia Human Resource Management Journal, Vol 25, no 4, 2015, pages 580–599

Demography theory suggests that high gender diversity leads to high turnover. As turnover is costly, we tested the following: a main effect prediction derived from demography theory, and a moderating effect prediction derived from the relational framework. Data on 198 publicly listed organisations were collected through a human resources decision-maker survey and archival databases. The results indicate that higher gender diversity leads to lower turnover in organisations with many gender-focused policies and practices. Findings suggest that organisations can lower their turnover rates by increasing their gender diversity and by implementing gender-focused policies and practices. Contact: Dr Muhammad Ali, QUT Business School, Queensland University of Technology, 2 George Street, Brisbane, Queensland 4001, Australia. Email: [email protected] Keywords: gender diversity; turnover; gender-focused policies and practices

INTRODUCTION

I

n light of ongoing skill shortages, high employee turnover rates are a challenge for organisations around the world (Batt and Valcour, 2003; Allen et al., 2010). For instance, in Australia, 1.1 million people – 9 per cent of the workforce – changed jobs in the financial year 2012–2013 (Australian Bureau of Statistics, 2013). Turnover refers to employees departing an organisation voluntarily or involuntarily (Pelled, 1996a). High turnover rates generate huge financial (e.g. recruitment and training costs) and non-financial (e.g. loss of specialised knowledge) costs for organisations (Cascio, 1991; Hancock et al., 2013). The turnover cost (financial and non-financial) to organisations in Australia is estimated to be $20 billion a year (Australian Human Resources Institute, 2008). Scholars have been actively researching the possible determinants of turnover, turnover processes and contextual variables, with the main aim of providing insight into how turnover rates can be reduced. That makes turnover one of the most studied areas of management (e.g. Shaw et al., 1998; Tsui and Gutek, 1999). Most turnover research focuses on the role of individual perceptions and attitudes (for reviews, see Holtom et al., 2008). This focus on ‘below the line’ individual-level processes neglects the role of organisational variables leading to organisational-level outcomes (‘above the line’ research; Kulik, 2014). Thus, past empirical research, in general, fell short of testing demography theory’s organisational diversity–turnover prediction – greater organisational diversity is associated with higher turnover (Pfeffer, 1983). Organisational diversity represents the ‘composition, in terms of basic attributes such as age, sex, educational level, length of service or residence, and race’ of an organisation (Pfeffer, 1983: 303). Pfeffer and O’Reilly (1987) identified two reasons for researching the diversity–turnover relationship at the organisational level: (a) human resource managers are mainly concerned about turnover rates at the organisational level for planning purposes and (b) organisational level variables (e.g. organisational diversity) can be used as proxies for employee behaviours leading to turnover. 580

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 25 NO 4, 2015 © 2015 John Wiley & Sons Ltd.

Please cite this article in press as: Ali, M., Metz, I. and Kulik, C.T. (2015) ‘Retaining a diverse workforce: the impact of gender-focused human resource management’. Human Resource Management Journal 25: 4, 580–599.

Muhammad Ali, Isabel Metz and Carol T. Kulik

Despite demography theory’s relevance to organisational-level relationships and its emphasis on studying the impact of organisational diversity on turnover, little attention has been given to the demographic diversity–turnover relationship at the organisational level of analysis. The first objective of this study is to address this research gap by testing demography theory at the appropriate organisational level: demography theory predicts that greater organisational gender diversity is associated with higher turnover in organisations across industries (Pfeffer, 1983). Organisational gender diversity refers to the proportional representation of men and women in an organisation, from 0/100 proportions reflecting homogeneity to 50/50 proportions reflecting the highest level of gender diversity. A review of past literature on the diversity–turnover relationship revealed that most studies investigated this relationship at the top management team level (e.g. Godthelp and Glunk, 2003; Boone et al., 2004) and the business unit level (e.g. Leonard and Levine, 2006; McKay et al., 2007). Only a few studies tested the diversity–turnover relationship at the organisational level, and these studies relied on public sector organisations: federal government agencies (Choi, 2009) and community hospitals (Pfeffer and O’Reilly, 1987; Alexander et al., 1995). Choi (2009) noted that public sector organisations are, in general, more diverse and more supportive of gender diversity than are private sector organisations. Therefore, it is unclear to researchers and practitioners whether higher organisational gender diversity leads to higher turnover in private sector organisations across industries. The relational framework of diversity management links diversity factors operating at three levels: national (e.g. laws), organisational (e.g. HR policies and practices), and individual (e.g. turnover) (Syed and Özbilgin, 2009). The framework suggests that diversity should be managed at multiple levels by aligning the factors operating within and across levels. For instance, Australian equal opportunity laws centre on women (Syed and Kramar, 2010). These laws simultaneously drive increases in organisational gender diversity and improvements in gender diversity management (Nishii and Özbilgin, 2007; Kramar, 2012). The second objective of this study is to investigate whether an alignment between organisational gender diversity and gender-focused HRM may reduce turnover rates. Gender-focused HRM includes HR policies and practices that ensure gender diversity and provide an environment where women’s well-being is actively promoted (Konrad and Linnehan, 1995; McKay et al., 2007). Thus we are responding to calls for studying HR policies and practices that may moderate the diversity–organisational outcome relationship (Guillaume et al., 2013; Kulik, 2014). To achieve the two objectives set for this study, we use time lagged data collected through archival sources and a 2007 survey of HR decision-makers at organisations listed on the Australian Securities Exchange (ASX). The three data points represent time lags of 1 and 2 years between organisational gender diversity (2005) and turnover (2006 and 2007). PREDICTIONS Main gender diversity–turnover prediction Demography theory suggests that the demographic composition of an organisation determines the behaviour, attitudes and social interaction of people from both the majority and minority categories with ‘subsequent impacts on psychological well-being, attitudes, and even job performance’ (Pfeffer, 1983: 304). Demographic similarity (which implies similarity in attitudes, beliefs, and values) leads to attraction, and demographic dissimilarity (which implies dissimilarity in attitudes, beliefs, and values) leads to a lack of attraction (Byrne, 1971). The behaviours and attitudes generated by a gender diverse organisational workforce include decreased communication (Kravitz, 2003), stereotype-based role expectations (Elsass and HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 25 NO 4, 2015 © 2015 John Wiley & Sons Ltd.

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Retaining a diverse workforce

Graves, 1997), a lack of cohesion (Triandis et al., 1994) and cooperation (Chatman and Flynn, 2001), and increased conflict (Pelled, 1996b) among employees. The negative effects of dissimilarity intensify at high levels of gender diversity. The increasing minority representation (usually women) may be seen as a power threat by the majority (usually men) leading to increased conflict (Williams, 1947). These negative attitudes and behaviours may result in lower organisational citizenship behaviour (Schneid et al., 2015), organisational identification (Gonzalez and DeNisi, 2009), job satisfaction (Choi, 2009), organisational attachment (Tsui et al., 1992) and organisational commitment (Ng and Tung, 1998). These processes will in turn affect various organisational outcomes such as turnover (Pfeffer, 1983). For example, lower social integration (O’Reilly et al., 1989), lower job satisfaction (Moynihan and Landuyt, 2008), a lack of organisational identification (Riketta and Landerer, 2005) and lower organisational commitment (Dutton et al., 1994) can lead to higher levels of turnover. In sum, members of a demographically diverse organisation are more likely to turn over than members of a demographically homogenous organisation. Some empirical research supports the argument that higher diversity can lead to higher turnover. For instance, Choi (2009) found that age and race/ethnicity diversity results in higher levels of turnover intentions. Similarly, Alexander et al. (1995) found that higher levels of diversity (education diversity and tenure diversity) lead to higher levels of turnover. Thus, it is proposed: Hypothesis 1: Higher organisational gender diversity will lead to higher turnover.

Contingent gender diversity–turnover prediction The focus of Australian equal employment opportunity laws and government programmes on women (Syed and Kramar, 2010) reflects cultural expectations and societal concerns about equal opportunities for women (Sheridan, 1995; Strachan et al., 2007). According to the relational framework of diversity management, the national-level attention on women should spur an organisational level emphasis on gender diversity and gender-focused HR policies and practices (Syed and Özbilgin, 2009). Alignments among factors operating within and across levels produce desirable outcomes (Forstenlechner et al., 2012). Organisations offering gender-focused policies and practices may benefit from gender diversity leading to lower turnover rates due to the alignment between laws and ethics operating at the national level, and gender diversity and gender-focused policies and practices enacted at the organisational level (Shen et al., 2009; Syed and Özbilgin, 2009). Konrad and Linnehan (1995: 788) defined formalised HR policies and practices as the ‘formal rules, programs, positions, and procedures influencing personnel decision making in an organization’. In response to equal employment opportunity and affirmative action legislation, many organisations developed formal diversity-focused HR policies and practices designed to increase the representation of under-represented or legally protected social groups, such as racial minorities and women. Diversity-focused HR policies and practices serve three main purposes (Konrad and Linnehan, 1995). First, these policies and practices ensure that decisions about protected groups (e.g. women) are monitored. Second, they compare the representation and experiences of protected groups with those of the majority group members. Third, they emphasise the career progress of protected groups. Therefore, diversity-focused policies and practices not only ensure diversity, but also provide an environment where the well-being of protected groups is actively promoted (McKay et al., 2007). Organisations with few gender-focused policies and practices (diversity-focused policies and practices with an emphasis on gender diversity) take a compliance approach toward diversity management (Syed and Kramar, 2009; Syed and Özbilgin, 2009). These organisations comply with minimal legal requirements for equal opportunity, and diversity is generated as a 582



by-product of non-discrimination (Konrad and Linnehan, 1995; Gilbert et al., 1999). However, simply having a diverse workforce does not imply its effective management (Hartenian and Gudmundson, 2000). Failure to monitor the career progress of minority members may lead to subtle discrimination and ‘glass-ceiling’ perceptions in a gender diverse workforce (Hau Siu Chow and Crawford, 2004). A lack of career progress and support may reduce motivation and participation among minority members (Stevens et al., 2008). Minority members may view the organisation’s few gender-focused policies and practices as an indication that the organisation is unwilling to fully engage minority members (Mor-Barak and Cherin, 1998). Therefore, the negative effects of gender diversity predicted by demography theory such as decreased communication, and lack of job satisfaction and job commitment, may be exacerbated in organisations with few gender-focused policies and practices (Stevens et al., 2008). These intense negative effects of gender diversity would lead to high levels of turnover. In sum, as gender diversity increases in organisations with few gender-focused policies and practices, the negative diversity dynamics predicted by demography theory strengthen because of the lack of a supportive environment, leading to higher turnover. In contrast, organisations with many gender-focused policies and practices adopt an inclusive approach toward diversity management (Syed and Kramar, 2009; Syed and Özbilgin, 2009). These organisations recognise that women are in a disadvantaged position compared with men because of past discrimination that resulted in women’s under-representation (Konrad and Linnehan, 1995). Therefore, gender identity is explicitly considered in the HR decisions at these organisations. For instance, these organisations deliberately identify potential women candidates for promotion to management positions. Moreover, women’s representation, contributions, professional development, and career progress are emphasised (Comer and Soliman, 1996). These organisations provide an environment where women feel valued (Choi, 2009). The increased value placed on women results in their increased job satisfaction and organisational attachment (Eisenberger et al., 1990), and enhanced social integration (Choi, 2009). This is especially important because, in the absence of such support, women are more likely to leave an organisation than men (Hom et al., 2008). Therefore, gender diverse organisations with many gender-focused policies and practices will experience low turnover among women. The benefits of gender-focused policies and practices are also experienced by men (Kaplan and Ferris, 2001). Of the 43 gender-focused policies and practices studied in this research (see Appendix), 24 policies and practices are not women specific; they are meant to benefit both men and women in an organisation (e.g. ‘managers are trained in their equal opportunity responsibilities’ and ‘workshops or seminars on managing a gender diverse workforce are made available to managers’). The other 19 policies and practices also benefit men indirectly by creating a positive diversity climate – a collegial work environment with a lack of bias toward minority members (Plaut et al., 2009). For instance, the practice of comparing turnover rates for female and male employees makes it less likely that managers will engage in discriminatory practices. Moreover, practices such as examining performance-based salary increases by gender contribute to a transparent performance management system. These policies and practices weaken perceived gender inequality (Tinkler et al., 2007) and increase perceptions of organisational fairness (Bies and Shapiro, 1988). Both men and women benefit from the greater organisational performance achieved through these gender-focused policies and practices in a gender diverse organisation (McMillan-Capehart, 2003). Achieving greater organisational performance is an overarching organisational objective for both majority and minority employees (Falbe and Yukl, 1992). Organisations usually share the increased profits with both majority and minority employees HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 25 NO 4, 2015 © 2015 John Wiley & Sons Ltd.

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in the form of benefits and training and development opportunities (Wright et al., 2005). Therefore, both men and women will place high value in their organisations’ efforts to embrace diversity (McKay et al., 2007). Past research indicates that perceived diversity climate is positively associated with perceived organisational support and that support, in turn, is positively related to organisational loyalty (Jauhari and Singh, 2013). The negative effects of gender diversity predicted by demography theory such as decreased communication, lack of job satisfaction and job commitment, and low organisational commitment and organisational identification will thus be weakened in these organisations leading to low turnover (Gonzalez and DeNisi, 2009). In sum, as gender diversity increases in organisations with many gender-focused policies and practices, the negative diversity dynamics predicted by demography theory weaken because of a supportive environment, leading to lower turnover. All in all, gender diversity will lead to higher turnover in organisations with few genderfocused policies and practices, and gender diversity will lead to lower turnover in organisations with many gender-focused policies and practices. Although no prior research has investigated the impact of gender-focused policies and practices on the gender diversity–turnover relationship, there is some evidence that diversity climate perceptions affect turnover intentions (Kaplan et al., 2011; Buttner et al., 2012). Thus, it is proposed: Hypothesis 2: Gender-focused policies and practices moderate the relationship between organisational gender diversity and turnover such that the relationship will be positive in organisations with few gender-focused policies and practices, and negative in organisations with many gender-focused policies and practices.

METHODS We used a time lagged design to examine the impact of gender diversity on turnover with one and two year time lags (Huselid, 1995; Wright et al., 2005). Sample and data collection The population of this research consists of all for-profit organisations of all sizes across industries in Australia. The sampling frame of this study comprises 1,855 organisations that were listed on the ASX in the year 2007 and were operating in Australia. In September 2007, a survey and a cover letter were sent to HR decision-makers (HR directors, HR managers, managing directors or chief executive officers) at those organisations. Two weeks after the original mail-out, a reminder letter with another copy of the survey was sent to decision-makers who had not yet responded to the survey. A total of 213 organisations completed the survey, resulting in a response rate of 12 per cent after adjusting for undelivered surveys (61), organisations that did not meet the study’s selection criteria (15 organisations declined to participate, explaining that they were no longer listed on the ASX) and organisations that recently had ceased operating (5). Of 213 responses, 198 surveys were usable in terms of having most questions answered, resulting in a corrected response rate of 11.2 per cent. The survey respondents reported on gender-focused policies and practices (see Appendix). They also reported on employee turnover for the years 2006 and 2007, and their business strategy. Data on these variables were matched to data on gender diversity for 2005 and organisation size from the Workplace Gender Equality Agency database, and industry type, organisation age and organisation type (holding or subsidiary/stand-alone) from the Business Who’s Who of Australia database. Low response rates are acceptable provided the sample represents the population of the study (Cook et al., 2000), thus allowing generalisability to the population (Werner et al., 2007). 584



The sample of 198 organisations reflects a range of companies in size, women’s representation and industry. Organisation size ranged from no employees except executive board members to 21,268 employees (mean 717). The organisations with no employees except executive board members were not included in statistical analyses because no meaningful value of gender diversity was available for these organisations. Women’s representation in the remaining organisations ranged from 0 per cent to 100 per cent (mean 34 per cent). The participating organisations were drawn from 9 out of 10 industry groups based on Standard Industrial Classification (SIC) codes; no organisation belonged to the Non-classifiable Establishments category. The major representations were: Mining (36 per cent of the organisations); Services (17 per cent); Manufacturing (16 per cent); and Finance, Insurance and Real Estate (13 per cent). The archival analysis technique was used to gauge non-response bias and the generalisability of the results. The archival analysis technique involves comparing the characteristics of respondents and non-respondents (Rogelberg and Stanton, 2007). Data on return on equity for survey respondents (n = 193 excluding missing data) and non-respondents (n = 1507 excluding missing data) were compared, demonstrating that the two sets of organisations are not statistically different in financial performance, t(1698) = 0.35, n.s. In sum, non-response bias is not a major concern in this research, and the findings are generalisable to its population. Measures Outcome Diversity dynamics as predicted by demography theory (e.g. lack of cohesion and cooperation, and moderate to high relationship conflict) can generate voluntary as well as involuntary turnover among both men and women. Some employees may leave voluntarily because of the negative diversity dynamics, whereas others may be forced to leave or be terminated. Therefore, following Jackson et al. (1991) and Wagner et al. (1984), both voluntary and involuntary turnover was considered. The survey asked HR decision-makers to report the total number of employees who left the organisation (voluntarily or involuntarily) during the 2006 and 2007 financial years. These numbers were divided by the total number of employees in 2006 and 2007 to calculate the percentage of employees who left an organisation in those years. Predictor Blau’s index of heterogeneity for categorical variables was used to calculate gender diversity in an organisation’s workforce (Blau, 1977). As per Blau’s index, heterogeneity equals 1 − Σpi2, where pi represents the fractions of the population in each category. The index value (level of gender diversity) increases as the representation of men and women in the organisation’s workforce becomes more equal. The index ranges from zero representing homogeneity (0/100 gender proportions) to 0.5 representing maximum gender diversity (50/50 gender proportions). Moderator Gender-focused policies and practices were measured using a scale developed by Konrad and Linnehan (1995) with a reported reliability of 0.93. The original scale (54 items) focuses on various dimensions of diversity, including racial and physical disability. For this research, the items were slightly modified to focus exclusively on gender diversity, and 11 items from the original scale were dropped because of their irrelevance to gender diversity. All 43 items required yes–no responses (see Appendix). Two items were dropped from the analyses because there was no variance in the responses (all organisations responded ‘no’ to Items 42 and 43 in the Appendix). The total number of ‘yes’ responses divided by 41 (remaining total items) indicated the level of gender-focused policies and practices within an organisation. HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 25 NO 4, 2015 © 2015 John Wiley & Sons Ltd.

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Creating a single index of organisational policies and practices is consistent with past research (Liao et al., 2009; Armstrong et al., 2010). Cronbach’s alpha for the current study is 0.92. Controls The analyses controlled for the effects of organisation size, organisation age, organisation type, business strategy and industry type on turnover. Compared with small organisations, large organisations may have lower turnover rates because they offer more opportunities for internal mobility and training and development (Terborg and Lee, 1984). Organisation size is also linked with HR policies and practices (Kotey and Sheridan, 2004). Consistent with previous research, organisation size was operationalised as total number of employees (Jackson et al., 1991; Alexander et al., 1995). Organisation age may have an impact on turnover. Compared with new organisations, old organisations are more likely to have employees with longer tenure (Wagner et al., 1984), which is linked with turnover rates (Alexander et al., 1995). Organisation age was operationalised as the number of years since the organisation was founded (Jackson et al., 1991). Holding companies or subsidiaries, compared with stand-alone organisations, may benefit from the combined financial resources that can be spent on employee retention strategies (Richard et al., 2003). A dummy variable called ‘organisation type’ was created with ‘1’ representing ‘holding or subsidiary’ and ‘0’ representing ‘stand-alone.’ An organisation’s business strategy may have an impact on both HR practices (e.g. appraisal system) and turnover (Jackson et al., 1989). The survey asked respondents to select their organisation’s overall business strategy from three options: cost leadership, product differentiation and market focus. The three options mirror Porter’s (1985) typology of business strategy. Two dummy variables called ‘Cost Leadership’ (with ‘1’ representing cost leadership and ‘0’ representing product differentiation and market focus) and ‘Market Focus’ (with ‘1’ representing market focus and ‘0’ representing cost leadership and product differentiation) were created. Diversity can produce different effects in manufacturing and services industries because of the different levels of interaction among employees in the two industries (e.g. Godthelp and Glunk, 2003; Ali et al., 2011). The nine SIC industry groups of the sample organisations were categorised into manufacturing and services (Richard et al., 2007). A dummy variable called ‘industry type’ was created with ‘1’ representing manufacturing and ‘0’ representing services. RESULTS Table 1 presents the means, standard deviations and correlation coefficients for all variables. We used hierarchical multiple regression to test the hypotheses. Hypothesis 1 proposed that organisational gender diversity would be positively related to turnover. To test Hypothesis 1, turnover 2006 and turnover 2007 each were regressed on gender diversity 2005, after the control variables were entered in Step 1 (see Table 2 for turnover 2006 and Table 3 for turnover 2007). The results shown in Tables 2 and 3 did not support Hypothesis 1, because gender diversity 2005 did not have a significant effect on turnover 2006 (β = 0.06, n.s.) or turnover 2007 (β = −0.20, n.s.). Hypothesis 2 proposed that gender diversity will lead to higher turnover in organisations with few gender-focused policies and practices and lower turnover in organisations with many gender-focused policies and practices. A gender diversity 2005 × gender-focused policies and practices interaction term was created. The predictor variable of gender diversity 2005 and the moderating variable of gender-focused policies and practices were centred to reduce multicollinearity with the interaction term (Aiken and West, 1991). To test Hypothesis 2 for 586


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* p < 0.05, ** p < 0.01. a Two tailed. SD, standard deviation.

Controls 1. Organisation size 2. Organisation age 3. Organisation type (1 = Holding/subsidiary; 0 = Stand-alone) 4. Cost leadership 5. Market focus 6. Industry type (1 = Manufacturing; 0 = Services) Moderator 7. Gender-focused policies and practices Predictor 8. Gender diversity 2005 Outcomes 9. Turnover 2006 10. Turnover 2007

Variable

2337.51 31.62 0.47 0.42 0.43 0.50 0.18 0.17 38.64 46.87

0.22 0.24 0.55 0.20 0.35 17.06 24.55

SD

717.35 22.80 0.68

Mean

TABLE 1 Means, standard deviations, and correlationsa

0.40** 0.05

0.01 −0.02

0.09

0.28**

0.09 −0.04 −0.18*

1

0.06

0.03 0.03

0.19*

0.29**

0.19** −0.01 −0.14*

2

0.10 0.15*

−0.06 0.00 0.12 0.13

0.15

−0.26**

−0.04

−0.10

−0.01

5

0.04

−0.30** 0.12

4

0.15*

0.03 0.11 −0.23**

3

−0.20** −0.16*

−0.26**

−0.19**

6

0.02 0.04

0.18*

7

0.11 0.02

8

0.60**

9


587


TABLE 2 Hierarchical regression analyses – turnover 2006a Variable

Gender diversity 2005 predicting turnover 2006

Controls Organisation size Organisation age Organisation type Cost leadership Market focus Industry type Predictor Gender diversity 2005 Moderator Gender-focused policies and practices Interaction term Gender diversity 2005 × Gender-focused policies and practices R2 F ΔR2 F for ΔR2

β (Model 1)b

Hypothesis 1 β (Model 2)


−0.04 0.01 0.06 0.00 0.10 −0.19*

−0.04 0.00 0.06 0.02 0.09 −0.18*

−0.02 0.01 0.05 0.01 0.09 −0.20*

0.06

0.02 −0.03 −0.13

0.06 1.46 0.06 1.46

0.06 1.32 0.00 0.54

0.08 1.33 0.02 1.31

* p < 0.05, ** p < 0.01, *** p < 0.001. a b

n = 154. Standardised coefficients are reported.

turnover 2006 and turnover 2007, gender-focused policies and practices and the interaction term were entered in Step 3, after the control variables were entered in Step 1, and gender diversity 2005 was entered in Step 2. The results for gender diversity 2005 predicting turnover 2006 shown under Model 3 in Table 2 indicate that the interaction term was not significant (β = −0.13, n.s.). However, gender-focused policies and practices and the interaction term accounted for an additional 5 per cent of variance in turnover 2007 (see Model 3 in Table 3), with the interaction term significant (β = −0.23, p < 0.01).1 We plotted the effects of gender diversity on turnover in the two types of organisations. Figure 1 presents separate regression lines for organisations with few gender-focused policies and practices (one standard deviation below mean) and for organisations with many gender-focused policies and practices (one standard deviation above mean). The relationship between gender diversity in 2005 and turnover in 2007 was positive (higher diversity led to higher turnover) but non-significant for organisations with few gender-focused policies and practices (β = 0.15, n.s.), and negative (higher diversity led to lower turnover) and significant for organisations with many gender-focused policies and practices (β = −0.36, p < 0.05). The significant negative relationship in organisations with many gender-focused policies and practices was consistent with Hypothesis 2, which proposed that gender diversity will lead to lower turnover in organisations with many gender-focused policies and practices. As a result, Hypothesis 2 is partially supported for gender diversity 2005 and turnover 2007. 588



TABLE 3 Hierarchical regression analyses – turnover 2007a Variable

Gender diversity 2005 predicting turnover 2007

Controls Organisation size Organisation age Organisation type Cost leadership Market focus Industry type Predictor Gender diversity 2005 Moderator Gender-focused policies and practices Interaction term Gender diversity 2005 × Gender-focused policies and practices R2 F ΔR2 F for ΔR2

β (Model 1)b



−0.05 0.00 0.04 0.11 0.20* −0.17*

−0.06 0.01 0.04 0.10 0.20* −0.18*

−0.04 0.01 0.00 0.08 0.21 −0.20*

−0.20

−0.10 0.04 −0.23**

0.07 1.81 0.07 1.81

0.07 1.54 0.00 0.05

0.12 2.09* 0.05 3.80*

* p < 0.05, ** p < 0.01, *** p < 0.001. a n = 154. b Standardised coefficients are reported.

Figure 1 Moderating effect of gender-focused policies and practices on the gender diversity–turnover relationship Few HR Policies and Practices

Many HR Policies and Practices

70

60

Turnover 2007

50

40

30

20

10

0 0

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

0.50

Gender Diversity 2005 (Blau's Index)


589


DISCUSSION The main objectives of testing the two gender diversity–turnover predictions at the organisational level were to investigate: (a) whether gender diversity results in higher turnover in organisations across industries as predicted by demography theory and (b) whether gender-focused policies and practices help organisations reduce high turnover rates. The findings of this study support the moderating effect prediction that the impact of gender diversity on turnover is contingent on gender-focused policies and practices. Main gender diversity–turnover relationship The results did not support the main prediction that gender diversity leads to high turnover. Therefore, the findings of this research did not support demography theory (Pfeffer, 1983). Because we investigated the gender diversity–turnover relationship at the organisational level based on demography theory, there are two explanations for the non-significant relationship. It may be that organisational gender diversity did not generate the negative employee behaviours predicted by demography theory (e.g. a lack of communication and increased conflict between male and female employees). Alternatively, organisational gender diversity may have generated these negative behaviours but the behaviours did not affect turnover (Holtom et al., 2008). The non-significant main gender diversity–turnover relationship might also be attributed to the time lag between gender diversity and turnover studied in this research. We predicted that gender diversity would result in high turnover 1 or 2 years later. However, our findings and those of other researchers (Leonard and Levine, 2006; Choi, 2009) weaken this argument and suggest that the turnover process (diversity → negative behaviours → turnover) at the workplace/organisational level might take more than 2 years. Choi (2009) did not find a main gender diversity–turnover relationship at the organisational level with cross-sectional data, and Leonard and Levine’s (2006) results did not support a main gender diversity–turnover relationship at the workplace level with a 2-year time lag. However, Wiersema and Bird (1993) found a main diversity–turnover relationship at the top management team level with a 3-year time lag, and Godthelp and Glunk’s (2003) results supported a main diversity–turnover relationship at the top management team level with a 5-year time lag. Moreover, demography theory may only predict negative organisational effects when the demographic compositions are similar across various departments in an organisation (Tsui and Gutek, 1999). Demography theory suggests that the gender composition of an organisation generates negative employee behaviours and attitudes, which lead to high turnover rates (Pfeffer, 1983). However, in many organisations, men and women are segregated into separate occupations and job roles (McMahan et al., 1998; International Labour Office, 2010). In organisations with high levels of gender segregation, the negative diversity processes predicted by demography theory are less likely to occur, and so we will observe weak or no effects on turnover even if the organisation has a very gender diverse workforce. Furthermore, the non-significant main effect findings strengthen the argument that moderating effect predictions may provide better insights (Van Knippenberg and Schippers, 2007). Moderating effects of gender-focused policies and practices The results indicate that gender-focused policies and practices moderated the relationship between gender diversity and turnover with a 2-year time lag such that the relationship was negative (higher gender diversity resulted in lower turnover) and significant for organisations with many gender-focused policies and practices (see Figure 1). In these organisations, lower levels of gender diversity might be associated with higher turnover because the employees 590



think that the organisation does not ‘walk the talk’. A wide range of gender-focused policies and practices could be there for employment branding, but the organisations do not really embrace gender diversity. However, when many gender-focused policies and practices are accompanied by high levels of gender diversity, turnover is reduced because employees see that the organisation facilitates gender diversity by providing an inclusive environment. Keeping all other variables studied at their mean values, every five additional gender-focused policies and practices adopted in a gender diverse organisation (50/50 gender composition) reduced turnover by 5.9 per cent. The findings support the relational framework of diversity management, which advocates for the alignment between factors operating at the national level (focus of laws on women) and those operating at the organisational level (organisational gender diversity and gender-focused HRM) (Syed and Kramar, 2009; Syed and Özbilgin, 2009; Forstenlechner et al., 2012). The results also strengthen the arguments that diversity management can affect the diversity–outcome relationship (Guillaume et al., 2013), and a comprehensive set of HR policies and practices is more effective than individual policies and practices (Batt and Valcour, 2003). The moderating effect suggests that the ‘inclusive’ approach of organisations with many gender-focused policies and practices enables them to capitalise on the potential of both male and female employees (Roberson, 2006). Women might feel more valued because of the supportive environment (Choi, 2009), and both men and women might feel more attached because their organisation is being socially responsible (Williamson et al., 2008). Gender diverse organisations with many supportive HR policies can gain a competitive advantage by creating a culture that embraces diversity and celebrates differences (Härtel, 2004). These organisations enjoy a competitive advantage by saving on recruitment, selection, training and development costs (McKay et al., 2007), and by retaining social capital in the form of employees’ valuable connections within and across organisations (Shaw et al., 2005; Buttner et al., 2012). Unfortunately, organisations in Australia, in general, do not offer many gender-focused policies and practices (D’Netto and Sohal, 1999; Lingard and Francis, 2004). For instance, our data indicate that with the exception of work/family programmes (used by 61 per cent of organisations) and equal opportunity policies and systems (e.g. an equal opportunity policy statement exists, endorsed by 36 per cent of organisations), all other gender-focused policies and practices are used by one third or fewer sample organisations in Australia. Similarly, with the exception of affirmative action plans that are used by 69 per cent of organisations, most diversity practices (training, diversity committees, networking programmes, diversity evaluations for managers, diversity staff and mentoring programmes) are used by one third or fewer sample organisations in the United States (Kalev et al., 2006). The results pertaining to the moderating effects of gender-focused policies and practices (supportive HR policies and practices) on the gender diversity–turnover relationship are consistent with those of past empirical research. For instance, McKay et al.’s (2007) results indicated that racial diversity climate perceptions (perceptions of the work environment as diversity-friendly) affected turnover intentions among managerial employees. Similarly, Gonzalez and DeNisi (2009) found that higher levels of racial/ethnic diversity were associated with higher performance (employee productivity and return on income) in units with supportive diversity climates, but higher levels of racial/ethnic diversity were associated with lower performance in units with adverse diversity climates. Diversity climates are usually measured by employee perceptions (Mor-Barak et al., 1998), leaving open the question of how organisations can create climates that benefit organisational outcomes (Kulik, 2014). The HR policies and practices studied in this research provide an avenue by which organisations can create and nurture positive gender diversity climates. HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 25 NO 4, 2015 © 2015 John Wiley & Sons Ltd.

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Organisations with only a few gender-focused policies and practices may not create a shared perception of the gender diversity climate among employees (Bowen and Ostroff, 2004). As many Australian organisations offer few gender-focused policies and practices, employees might not even expect these policies and practices. As a result, the combination of few policies and practices and greater gender diversity did not produce higher levels of turnover. But when these policies and practices were in place (in organisations with many gender-focused policies and practices), employees responded positively and thus higher gender diversity resulted in lower turnover. Research implications This research might be the first study focusing on the impact of organisational gender diversity on turnover in organisations across industries. The data collection ensured temporal precedence of diversity with 1- and 2-year time lags between gender diversity and turnover (Menard, 1991). Although our results did not support a main effect relationship between gender diversity and turnover, this study may stimulate longitudinal diversity research with extended time lags to focus on turnover at the organisational level (Leonard and Levine, 2006). A focus on both time lag and intervening variables will help understand when the various intervening variables (e.g. job satisfaction and job commitment) emerge and establish the time they can take to affect turnover (Holtom et al., 2008). This study focused on context by testing the moderating effects of gender-focused policies and practices on the gender diversity–turnover relationship. Diversity theories do not yet explain the differential impact of gender diversity on turnover in organisations depending on their HR policies and practices. Similar to this study’s findings, McMillan-Capehart (2003) found that the positive gender diversity–performance relationship was stronger for organisations with diversity-focused policies and practices than for organisations with diversity-blind policies and practices. The moderating effects found in the two studies demonstrate that organisationallevel interventions impact diversity dynamics (Syed and Özbilgin, 2009; Kramar, 2012), but their effects are contingent rather than universal (Galbraith, 1973). The focus on contextual factors can help build theories that can explain diversity dynamics in different business environments (Richard et al., 2013). Future research can benefit from testing, for example, whether top management team or chief executive officer commitment to diversity moderates the impact of diversity on turnover. Moreover, past diversity climate–turnover research mainly used turnover intentions as the outcome variable (e.g. Kaplan et al., 2011; Buttner et al., 2012). However, turnover intentions are not strongly correlated with actual turnover rates (Jung, 2010). Future research on the diversity climate–turnover relationship should focus on actual turnover rates. Practical implications High turnover is a major concern for managers, with some industries experiencing as high as 50 per cent turnover among women (Hewlett et al., 2008). Turnover research carries significant practical implications as it can identify ways to reduce turnover rates (Holtom et al., 2008). Understanding the moderating effect of gender-focused policies and practices will help practitioners align their HR policies and practices with gender diversity to reduce turnover – one of the main objectives of this study. Gender diverse organisations experienced a sizeable decrease in turnover (5.9 per cent) with the adoption of every five gender-focused policies and practices. Therefore, a comprehensive set of gender-focused policies and practices is desirable in a gender diverse organisation (Wyatt-Nichol and Antwi-Boasiako, 2012). Introducing only a few of those HR policies and practices might not be sufficient to create a positive diversity 592



climate that will reduce turnover (Mor-Barak et al., 1998; Plaut et al., 2009). By quantifying the effect of gender-focused policies and practices, this research can help HR managers to justify gender diversity policies and practices to executive management (Batt and Valcour, 2003). Therefore, the strategic focus of this research helps managers to advocate the business case for gender diversity and champion gender-focused policies and practices (McCloskey, 2006). Limitations This study has certain limitations. First, the present research did not measure mediating processes. Instead, this study concentrated on the two ends of the causal chain: gender diversity and turnover. The intervening processes can be studied and measured in case studies or laboratory studies (Groggins and Ryan, 2013). Studying the full causal chain will help to diagnose the lack of support we observed for an overall gender diversity–turnover relationship – to distinguish whether gender diversity did not initiate the mediating processes or the mediating processes did not affect turnover (Van Knippenberg and Schippers, 2007). Second, we could not take into account other forms of workforce diversity such as race and ethnicity due to the unavailability of data. Organisational racial diversity is unlikely to affect the gender diversity–turnover relationship in Australian organisations. Australia’s low racial diversity makes workforce racial diversity less salient than workforce gender diversity (Australian Bureau of Statistics, 2011). Third, a low response rate (11.2 per cent) may limit the generalisability of the findings. Several factors might have contributed to the low response rate. The sensitivity of the research topic may have prevented some organisations from participating (Rogelberg and Stanton, 2007). The senior executives may have been over-surveyed (Cycyota and Harrison, 2006) and less likely to participate because of their busy schedules. Some organisational policies prohibit managers from participating in surveys (Baruch and Holtom, 2008). Note 1. Becker (2005) advised researchers to report results both with and without control variables to avoid incorrect inferences that may be drawn because of multicollinearity among predictor and control variables. We repeated the regression analyses reported in Tables 2 and 3 without control variables. In the absence of control variables, gender diversity 2005 and gender diversity 2005 × gender-focused policies and practices terms remained non-significant in Table 2. Similarly, the gender diversity 2005 term remained non-significant and the interaction term of gender diversity 2005 × gender-focused policies and practices remained significant in Table 3.

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APPENDIX Gender-Focused Policies and Practices (Konrad and Linnehan, 1995) 1. 2. 3. 4.

16.

An Equal Opportunity (EO) policy statement exists. There is a written statement of the consequences of not adhering to EO policy. Turnover rates are calculated for female employees. Female employees who are potential candidates for management jobs are identified and targeted for promotion. A system exists which monitors female representation in management jobs that impact on the ability to meet EO goals at management levels. There is a FTE (full time equivalent) position designated to handle EO issues. There is a person with EO expertise on staff. An EO expert has been consulted from outside the organization to develop or modify the organization’s employment practices. Employees are informed about the specifics of the EO plan. A system exists which identifies positions for which EO goals have been set but have not been achieved. Line managers are informed of the EO goals for their departments. Line managers’ job descriptions include responsibility for EO. Line managers receive regular reports of any positions in their departments for which EO goals have been set but not achieved. Line managers’ performance appraisals include their attitude toward EO. Line managers’ performance appraisals include their departments’ EO performance in relation to statistics and goals. EO statistics affect line managers’ pay rises or bonuses.

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5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

© 2015 John Wiley & Sons Ltd.


17. A committee comprised of members of the Board of Directors exists, which oversees EO related issues. 18. A committee comprised of senior managers/executives exists, which examines EO related issues. 19. Female employees are specifically targeted to receive management development training. 20. A mentoring program designated for female managers exists. 21. Managers are trained in their EO responsibilities. 22. Workshops or seminars on managing a gender diverse workforce are made available to managers. 23. A maternity leave policy exists separately from the disability plan. 24. Promotional salary increases for managers are examined for impact on equal pay across gender. 25. Performance-based salary increases for managers are examined for impact on equal pay across gender. 26. Performance rating distributions of female managers are examined to determine whether their ratings are different from the average. 27. Management bonuses are examined for impact on equal pay across gender. 28. There is a female employees’ interest group. 29. The organization sponsors membership in women’s professional associations for female managers. 30. Women’s programs or associations are regularly supported either financially or through other means (e.g. by providing meeting space, hosting receptions, or printing a newsletter). 31. A formal policy of proactively recruiting women for all management positions exists. 32. Positions for which EO goals have not been achieved are noted as such on the job requisition for management positions. 33. Universities or alumni associations are contacted to identify potential female candidates. 34. Executive search firms and/or employment agencies which specialize in finding female candidates are used. 35. Job advertisements are placed in women’s publications. 36. The hiring manager is informed if EO goals for the position have not been met. 37. EO concerns influence the hiring decision. 38. In situations where there are EO concerns, the hiring decision process is different than would otherwise be the case (e.g. higher level approvals are needed). 39. Being a woman is a criterion considered in hiring decisions. 40. Regarding workforce reductions, in situations where the manager decides to terminate a female employee, the choice may be overturned for the sake of women’s representation. 41. Regarding workforce reductions, decisions to terminate female employees are made at higher levels than the levels required for terminating male employees. 42. Regarding terminations for poor performance, a policy that requires additional approvals for terminating female employees exists. 43. Regarding terminations for poor performance, decisions to terminate female employees are made at higher levels than the levels required for terminating male employees.


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