As discussed in my previous post, Diversity Drives Business Growth, companies with more diversity perform better financially.  Why? Well, according to one study, companies with positive diversity climates retain their talent.*

Diversity Climate Defined

Diversity Climate: Employee perceptions regarding how much a company values individual diversity, integrates diversity into organizational life, and supports diversity through fair employment practices. **

Critically, a diversity climate does not measure the demographic heterogeneity of a company. It cannot be achieved by merely filling a certain number of job slots with minority applicants.

Nor does merely having policies convince employees that management values diversity. Employees must know that the Company actually adheres to its policies.

The Study

To study the effects of diversity climate on employee retention, researchers created a representative sample of the U.S. working population (employed by companies with more than 100 employees). In the end, 4,184 completed a survey with questions of interest to the study. Demographically, the respondents were 51.9% male and 48.1% female. They were 86.3% White, 8% Black, 3.5% Latino/a, 1.5% Asian, and .8% other.*** The researchers also tried to make the sample as representative as possible along 30 other dimensions measured by the U.S. Census Bureau.

The study measured the employees’ turnover intentions by asking them how seriously they had considered leaving their companies within the next twelve months. Researchers measured Diversity Climate by asking respondents to rate statements such as, “The leadership at my company is committed to diversity.” The study also measured the employees’ pay satisfaction and supervisor effectiveness. The study only measured demographic race and sex, not other factors such as disability, age, national origin, or LGBTQ status.

Overall, the study’s nationally representative and multiorganizational data yielded some strong and generalizable data. The results of the study showed that when an employee perceives that management champions diversity, they are less likely to leave their company.

Why Diversity Climates Matter (to White Men too)

Interestingly, employees across demographic groups valued positive diversity climates. Even white male respondents reported higher intent to stay at organizations with positive diversity climates. This finding “refutes both the theoretical and practical concerns that diversity initiatives represent a zero-sum game in which support for a diversity climate comes at the expense of majority members.” Id. at 282.

Why do all employees value positive diversity climates?

1. A Positive Diversity Climate Indicates A Fair Workplace

Fundamentally, employees who believe management values nondiscrimination, believe that their organization values and rewards fair decision-making. Employees have imperfect information about how their organization’s policies and decisions will unfold in the future. So, they use their own assessments of the diversity climate to predict how fairly the organization will treat them. Id. at 273-4.

Employees from all backgrounds, including white men, reported lower intent to leave companies with positive diversity climates. This suggests that employees, from both dominant and non-dominant groups, use diversity climates to signal an organization’s commitment to general fairness.  Employees want to work for organizations where they feel that decisions about their future careers will be made fairly. Id. at 275.

1. Many Employees Identify with at least one Non-Dominant Group

People defined by the study as white men might actually be much more diverse along other dimensions. The study did not ask respondents about religion, LGBTQ status, age, disability, national origin, or socioeconomic status. Few employees fit into the dominant group along every dimension. So, additional employees may feel that the diversity climate directly affects them as members of non-dominant groups.

How to Create a Positive Diversity Climate

So how does a company convince its employees it cares about diversity?

Employees follow the money.

Diversity initiatives that involve education, updated policies, public relations, and demographically diverse hiring are all great. But employees do not believe a company really values diversity if it sends them inconsistent signals through compensation decisions. Id. at 283.

Companies must adhere to transparent, fair, and clear criteria for pay and promotion decisions. Otherwise they jeopardize their perceived commitments to diversity.

* See David M. Kaplan, Jack W. Wiley, and Carl P. Maertz, Jr., The Role of Calculative Attachment in the relationship Between Diversity Climate and Retention,  50.2 Human Resource Management 271 (2011), http://onlinelibrary.wiley.com/doi/10.1002/hrm.20413/abstract.

** Id at 272.

*** Researchers hypothesize that fewer Latinos and Asians work at organizations with more than 100 employees.