Do employees’ perceptions of diversity management enhance firm’s financial performance: the moderating role of board members’ diversity level

Abstract

PurposeThe hospitality industry has one of the most diversified workforces. This study aims to examine the effect of employees’ perceptions toward diversity management on the company’s financial performance. The current study also examines the moderating effect of board members’ diversity level on the association between employees’ perceptions and financial outcomes.Design/methodology/approachFrom online reviews, the authors identified multi-faucets of diversity management and measured employees’ perceptions of diversity management. Using panel data analysis, the relationships among employees’ perceptions, board members’ diversity level and companies’ financial performance were studied.FindingsThis study found that employees’ perceptions of diversity management positively influence the company’s financial performance and the relationship was positively moderated by board members’ diversity level.Practical implicationsFindings show that hospitality employees perceive nine diversity and inclusion categories (age, organizational climate, culture, disability, education, gender, physical differences, policy and practice and race) that companies need to consider when developing and implementing diversity management. Moreover, practitioners need to eliminate the gap between board members and employees when applying diversity management.Originality/valueDrawing upon service–profit chain theory, this study extends hospitality literature regarding diversity management by demonstrating how employees perceive working environments created by diversity management affects the organizational financial outcome. Moreover, this study emphasizes the exemplary role of board members as policy and practice makers, to provide employees with the legitimacy and responsibilities of diversity management.