Retaining a diverse workforce: the impact of gender‐focused human resource management

• Author: Isabel Metz,Muhammad Ali,Carol T. Kulik
• Date: 01 November 2015
• Published date: 01 November 2015
• DOI: http://doi.org/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: m3.ali@qut.edu.au

Keywords: gender diversity; turnover; gender-focused policies and practices

INTRODUCTION

In 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.

bs_bs_banner

doi: 10.1111/1748-8583.12079

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 25 NO 4, 2015580

© 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.

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

Muhammad Ali, Isabel Metz and Carol T. Kulik

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 25 NO 4, 2015 581

© 2015 John Wiley & Sons Ltd.