Employee Relations

Workforce diversity and organizational performance: a study of IT industry in

India
Subhash C. Kundu Archana Mor
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ER
39,2 Workforce diversity and
organizational performance:
a study of IT industry in India
160 Subhash C. Kundu and Archana Mor
Haryana School of Business,
Received 16 June 2015
Revised 16 March 2016 Guru Jambheshwar University of Science and Technology, Hisar, India
17 October 2016
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Accepted 19 October 2016

Abstract
Purpose – The purpose of this paper is to examine the relationship between employee perceptions of diversity
(i.e. significance of diversity and diversity management, and value of diversity practices employed) and
perceived organizational performance. It also attempts to examine whether the perceptions of diversity vary
among employees from different diversity backgrounds (i.e. across gender and categories) in Indian IT industry.
Design/methodology/approach – Primary data based on 402 respondents were analysed using statistical
tools like factor analysis, correlations, analysis of variance, means, grand means, and regression.
Findings – Results indicated that employees irrespective of their diversity backgrounds positively
acknowledged diversity and diversity management. However, limited but significant differences were
observed among employee perceptions regarding valuing the diversity practices employed based on their
diversity backgrounds. Further, employees’ perception of promotion of gender diversity was found to be
positively related to perceived organizational performance.
Research limitations/implications – This paper relied on self-report surveys for data collection. Future
studies should collect data using multiple methods to avoid common-method bias. As the sample was drawn
from India, specifically from IT industry, the conclusions may not be generalized to other industries. Future
studies may be conducted across industries covering different cultural settings.
Practical implications – Implications are first, that, in addition to investing in initiatives for promoting
diversity, especially gender diversity, organizations need to ensure positive perceptibility of these initiatives
by employees. Second, to foster acceptance and effectiveness of gender/diversity initiatives in organizations,
managers need to ensure men and majority group employees are part of these initiatives. Third, IT industry
needs to reassess their hiring strategies and should design diversity programmes with goals in mind, if not
quotas, to hire and retain diverse employees to explore their potential contribution.
Originality/value – Inclusion of employees of Indian IT industry of different categories will definitely add
value to the existing knowledge on diversity, management theory, and practice.
Keywords Organizational performance, Perception, Workforce diversity, Gender diversity, IT industry
Paper type Research paper

Introduction
It is now no longer possible to ignore the pervading influence of diversity in organizations.
The concept of diversity has transformed from being a governmental or legal obligation to a
strategic priority. The aim of attaining sustainable competitive advantage (Süβ and Kleiner,
2007) and the need to become an employer of choice (Foster and Harris, 2005; Ng and Burke,
2005) has instigated organizations worldwide to embrace the concept of diversity. However,
in the opinion of Farrer (2004), mere manifestation of diversity or embracing diversity as a
concept alone does not guarantee success; organizations need to effectively manage
diversity by celebrating, valuing, and actively encouraging the diversity of the workforce.
Management of diversity has thus become a top priority for top executives of organizations
around the world (Wikina, 2011).
However, whether the goal of effectively managing workforce diversity is achieved
Employee Relations depends largely on the employees’ perceptions towards the diversity management
Vol. 39 No. 2, 2017
pp. 160-183
initiatives, i.e. the extent to which they consider the organization values and integrates
© Emerald Publishing Limited
0142-5455
diversity and supports it through fair employment practices (Cox 1993; Kaplan et al., 2011;
DOI 10.1108/ER-06-2015-0114 Mor Barak et al., 1998). Employees look at their work policies, practices, and work
 environment to make perceptions of how their organization values diversity (Madera et al., Workforce
2013). Thus, in order for organizations to successfully derive performance benefits from diversity
workforce diversity, employees need to positively perceive the diversity supporting efforts
of the organization (Kossek and Zonia, 1993; Mor Barak et al., 1998). Aside from this,
receptivity of employees, i.e. the personal value they attach to diversity (receptivity to
diversity) and (receptivity to diversity management) diversity management plays a
significant role in determining the effectiveness of the initiatives undertaken and their 161
subsequent role in achieving success (Soni, 2000). More importantly the perceptions and
attitudes of employees toward various diversity issues have become a fundamental
component in achieving success (Erasmus, cited in Veldsman, 2013). However, only a limited
number of studies have actually focused on what employees think about diversity, and on
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the possible effects of these perceptions (Van Knippenberg and Schippers, 2007).
Accordingly, we set out to study the employees’ perceptions toward diversity in terms of
their receptivity to diversity and diversity management, and towards the diversity practices
employed by the organizations in support of diversity, beginning from their relation with
demographic dimensions to examining their effects on organizational performance.
Studying the perceptions of employees toward diversity is of specific interest to us
because, as contended by Lawrence (1997), diversity effects rely on perceptions. It has
become apparent that diversity attitudes and/or perceptions of employees may be a strong
predictor of diversity outcomes, such as organizational commitment, job satisfaction
(Hicks-Clarke and Iles, 2000), and organizational performance (Allen et al., 2007).
Understanding the employee perceptions could also help to direct focus on where there are
needs for improvement in order to maximize the benefits from organizational endeavours
which support diversity (Ozgener, 2008; Wikina, 2011). Furthermore, as asserted by Allen
et al. (2007), perceptual component of diversity compared to actual diversity aids in
capitalizing the complex and multidimensional nature of diversity, and has important
organizational effects. In addition to that, we assessed the outcome, i.e. organizational
performance subjectively. Although most of the researches have assessed the outcomes of
diversity by using objective measures ( Jayne and Dipboye, 2004), Allen et al. (2007) asserted
that subjective (perceived) measure permits a broader range of evaluations and a richer
description of the effectiveness of an organization that enable more organizations to be
compared within a single study. Therefore, this study conceives employee-perceived
organizational performance as a subjective outcome indicator to test its relationship with
perceptions of diversity.
We selected India as the setting for this study for a variety of reasons. First, India has a
markedly different societal context for diversity from western countries (Sowell, 2002;
Budhwar, 2009) and thus, offers a rich ground for studying diversity. Second, rapid
developments in the Indian economy after its liberalization in 1991 have prompted
institutions such as the World Bank to forecast that India will become the world’s fourth
largest economy by 2020 and consequently, a large number of foreign operators have now
entered the Indian market (Budhwar and Varma, 2010) and they call for the peculiarities and
idiosyncrasies of the Indian workforce and business exigencies, including diversity issues
(Woodard and Saini, 2006). Third, India’s economy has been classified as emergent or
developing, thus, placing it in a category of countries that are in contrast with contexts such
as the USA where most of the prior research on diversity has been focused, which may not
represent the situations of Asian countries, in which the cultural values significantly differ
(Magoshi and Chang, 2009).
We chose to focus majorly on gender, race/ethnicity, caste, and disability as these
dimensions have been identified in previous literature in India (Kundu, 2003, 2004). Further,
gender, caste, and race/ethnicity provide a strong basis for social categorization of Indian
society (Shenoy, 2013), whereas gender and disability have been the major focus of the
 ER diversity efforts in Indian companies (Mercer, 2012). Thus, overall the study comprises
39,2 males and females from various categories including: caste: general category (upper and
forward class), and socially disadvantaged (schedule castes (SCs); the scheduled tribes (STs);
the other backward classes (OBCs); minority (Sikhs, Muslims, Christians, etc.); and disabled
(handicapped, except mentally challenged). In addition, a requisite for this study was to
conduct it in a sector that has diverse workforce. For this purpose, Indian IT services sector
162 was selected. In the context of India and its IT services sector, these categories of diversity
continue to be under examined. This study attempts to fill out this research gap and also
responds to Patrick and Kumar’s (2012) call for research on perceptions of workplace
diversity in different ethnic and other marginalized groups in IT industry of India. This
study therefore attempts to address the following objectives:
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(1) To assess whether employees of different gender and category differ in their
perceptions of diversity, in terms of:
• their receptivity to diversity and diversity management; and
• valuing the diversity efforts/initiatives employed by the organizations
regarding:
– equal representation and developmental opportunities;
– hiring and retaining diverse employees; and
– promoting gender diversity.
(2) To assess the relationship between employees’ perceptions of diversity (related to
their receptivity of diversity and diversity management, and valuing organizational
support for diversity) and perceived organizational performance.

Indian context
India, largest democracy and the second most populous country in the world with an
estimated population of 1.25 billion (World Bank, 2013), is one of the oldest and richest
civilization being extremely diverse and multi-faceted in its history, culture, and
institutional frameworks (Thite, 2011). The country addresses a range of diversity issues,
including age, education, religion, caste, socially disadvantaged (e.g. SCs, STs and OBCs),
gender, language, regional background, ethnicity, and disability (Kundu, 2003; Venkata
Ratnam and Chandra, 1996). It is a multi-religious country, with Hinduism being practiced
by 79.8 per cent of the population, followed by the other six religions which have been
awarded “National minority” status – Muslims, Christians, Sikhs, Jains, Buddhists, and
Parsis (RGI and Census Commissioner, 2011). Indian society is also marked by the presence
of a strict system of social stratification legitimated by perceived cultural and religious
principles (Nair, cited in Shenoy, 2013). The most visible of the social hierarchies is the caste
system, which is a complex social code, with the upper/forward castes exercising
considerable subjugative influence over the economically and socially disadvantaged castes:
SCs, STs, and OBCs (Sridharan, 1999). No less significant in Indian society is the hierarchy
that separates men from women (Wang and McLean, 2016). Women are expected to leave
their jobs after marriage, pregnancy, or childbirth to carry out their domestic duties; they
may never be encouraged to return to their jobs (Budhwar et al., 2005).
Ingrained structures of inequality and hierarchy, thus, constitute the framework of
Indian society, where a certain group of people is privileged by the virtue of their caste,
gender, or creed (Cooke and Saini, 2010; Ghosh, 2016) and a subordinate social status is
assigned to women and other disadvantaged groups. This is regarded as the primary reason
for employment discrimination in India (Pager, 2007). To ensure equal opportunities, the
 constitution prohibits discrimination on grounds of religion, sex, caste, or place of birth Workforce
(Kundu, 2003). Further, to compensate for and remedy existing social hierarchies, Indian diversity
constitution embraces affirmative action similarly throughout all the states in favour of
disadvantaged groups and preserves “reservation” (quotas) in the public sector to protect its
historically discriminated groups: SCs, STs, and OBCs (Haynes and Alagaraja, 2016; Haq,
2012). Nevertheless, the legal and organizational infrastructure for diversity in India is not
fully comprehensive and is weakly enforced, as these principles do not extend to the private 163
or agricultural sectors which encompass nearly 80 per cent of the workforce (Woodard and
Saini, 2006). Further, shrinking of public sector and reserved jobs in quest of capital growth
(Pick and Dayaram, 2006) add to the severity of the situation and fuel the current diversity
management debate in India: whether to extend the reservation policy into the realm of the
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private sector? (Haq, 2012). Consequently, calls for private sector organizations to
implement reform policies such as affirmative action are becoming more strident (Pick and
Dayaram, 2006). Amidst all these efforts, inequality and potential discrimination are still
evidenced in organizations (Dhesi, 1998; Kundu, 2003; Venkata Ratnam and Chandra, 1996;
Vijayalakshmi et al., 2006) and educational institutions in India (Nair and Vohra, 2015).
According to a Global Gender Gap report of 2013, among 136 countries, India ranks 120th in
educational attainment, 135th in health and survival, and 124th in economic participation
(Bari, 2014). This indicates that inequality is pervasive across the different socioeconomic
strata in India and has been recognized as a critical barrier to India’s development (Ghosh,
2016; Pick and Dayaram, 2006) as it induces income inequality and hampers economic
growth (Birdsall and Sabot, 1991).

Indian IT industry
As predicted by Basu (2001), the IT industry has turned out to be “India’s philosopher’s
stone” and has been able to make its presence felt in the global market, making India a name
to reckon within the global scenario (Gupta et al., 2015). The sector has increased its
contribution to India’s GDP from 1.2 per cent in FY1998 to 9.5 per cent in FY2014
(NASSCOM, 2015). In addition to fuelling India’s economy, Indian IT industry positively
influences the lives of its people by contributing to the various socioeconomic parameters
such as employment, standard of living, and diversity among others (NASSCOM, 2013).
Indian IT sector empowers diverse human assets in terms of age, gender, educational
background, disability, etc. It is the largest private sector employer and employs about
3.5 million people, out of which 34 per cent represents women (NASSCOM, 2015). The Indian
government has declared IT industry as a thrust area for national development and
provides substantial support to accelerate its growth (Balakrishnan, 2006; Ilavarasan, 2007).
The growth of this industry serves as a benchmark for other industries.

Social composition of the IT workforce

Support for liberalization and merit system, and the staunch opposition to reservation and
affirmative action by IT industry is regarded as the reason for its growth by IT leaders.
Hiring practices in the IT industry are completely based on merit and does not discriminate
on the basis of caste, class, region, religion or gender. The industry provides equal
employment opportunities to the socially and economically disadvantaged. The industry,
however, refuses to recognize the need for market interference in the form of affirmative
action or reservations. Industry spokespersons claim that the IT industry has flourished in
India because of the absence of state interference or control, and that the growth would not
have been as fast if it had been exposed to bureaucratic controls (Upadhya, 2007).
The staunch opposition is closely linked to their support for liberalization, the need to
overcome market imperfections caused by caste-based discrimination, and to induce market
competitiveness (Upadhya, 2007).
 ER The scholars, however, caution that this has also led to social homogeneity in the IT
39,2 workforce as the notion of merit ignores the social mechanisms (social and economic factors)
that bring it into existence (D’Costa, 2003; Fuller and Narasimhan, 2006; Ilavarasan, 2007;
Upadhya, 2007). A number of studies have reported that uneven and combined development
is reflected at the workforce of the Indian IT industry, where employment related benefits
are not reaching all social groups. Ilavarasan (2007), through a study of 114 employees from
164 two IT firms located in Bangalore, identified that 90 per cent of the sample respondents were
from general category, rest of the 10 per cent from OBCs, and participation of SC/ST
category respondents were nil in the randomly drawn sample. Similarly, based on a survey
of 132 workers from eight different IT companies, Upadhya and Vasavi (2006) noted that
Hindus represented 93 per cent of the sample, whereas the other religions constituted the
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remaining 7 per cent.

Organizational efforts to support diversity

According to Patrick and Kumar’s (2012) study, employees of the Indian IT industry report
discrimination as the most frequently encountered barrier for accepting workplace
diversity. The industry on the other hand, places major emphasis on reducing prejudice,
stereotypes, and discrimination by increasing awareness about workplace diversity through
different strategies such as to admit to biases and to recognize the existence of diversity and
value the fundamental rights (Patrick and Kumar, 2012). Donnelly (2015), in this regard,
highlighted that the industry places a major emphasis on diversity and inclusion
management in the form of equal opportunity policies and practices in order to overcome
such barriers and to capitalize on diversity. Further, it supports affirmative action for
SCs/STs by focusing on educating and upgrading the skills of society’s weaker sections, not
by introducing caste-based job reservations; to this end, various IT companies have funded
and lead initiatives in the area of primary education (Upadhya, 2007). Deducing from the
studies of Wikina (2011), Donnelly (2015), and global HR firm Mercer (2012), we focus on
three major organizational practices employed in diverse IT environment to develop more
creative and innovative workplaces: first, representation of all the groups in the
organization without exclusion in terms of uninhibited access to opportunities for
development; second, providing equal opportunities of employment by hiring and retaining
employees from diverse groups and not discriminating based on their demographic
differences in order to remain excellent; and third, promoting gender diversity.

Employee perceptions of diversity

Diverse workforce (diversity) refers to the co-existence of people from various social,
cultural, and ethnic backgrounds within the company (Kundu, 2001). Diversity also denotes
the differences between individuals on any personal attributes that determine how people
perceive one another (Ragins and Gonzalez, 2003) and diversity management seeks to
harness those differences in the pursuit of more productive environments (Kandola and
Fullerton, 1998). The commonly espoused objectives of diversity management include
valuing, harnessing, and utilizing workforce diversity and overcoming barriers like
discrimination and segregation (Healy et al., 2010). Diversity management constructs on the
social categories encapsulated by conventional equal employment policies to include
personal characteristics, with the emphasis placed on voluntary actions instead of
compliance with external legislation (Kossek et al., 2006). But, if employees do not accept and
value differences and recognize the importance of the employer’s diversity-management
initiatives, these initiatives are likely to have a very low probability of succeeding
(Soni, 2000). Thus, to implement diversity-management programmes effectively, it is
important to systematically identify key factors that must be taken into account by
organizations attempting to enhance their diversity-management efforts (Soni, 2000).
 Diversity perceptions call for an understanding that men, women, and minorities have Workforce
different experiences in organizations and are often unable to see or to understand the diversity
experiences of others (Fine et al., 1990; Soni, 2000). Perceptions and attitudes towards
women and ethnic minorities differ in organizational settings (Miller, 2014); they still
continue to encounter “glass ceiling” that keeps them from reaching the upper echelons of
employment (Morrison and von Glinow, 1990) and subsequently, opportunities for
advancement at all levels of organizational hierarchy are comparatively inferior. The 165
prospects of employment and career advancement profiles are matters of concern for Indian
women (Budhwar et al., 2005; Parikh and Sukhatme, 2004). For instance, Rothboeck et al.
(2001) observed gender differences in representation of women in the workforce of Indian IT
industry, especially at higher hierarchy levels. On the same line, Donnelly (2015), through a
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recent survey of 15 Indian IT companies, reported that the representation of women was
segmented into low ranking positions, thus, pointing to the fact that gender continues to be
a key restriction in the development and progression at work. Similarly, minority employees
also face disadvantages in managerial and professional settings in the form of slower
promotion rates ( Jackson and Daniels, 2007) and biased hiring practices ( Jackson and
O’Callaghan, 2011). In a study of Indian software industry, Ilavarasan (2007) discovered that
major proportion of the high ranking jobs were segmented by the upper class and caste
stratum of the society. Analogous to this, Taeube (2004) argued that Indian IT
entrepreneurship is dominated by the high-status upper castes. The glass ceiling effect is
encountered by people with disabilities as well, generating barriers to promotion and career
advancement (Braddock and Bachelder, 1994).
Previous research points to the existence of gender and racial/ethnic differences in
diversity perceptions of employees in organizations which can affect how they view
diversity and diversity management. For instance, the study of Soni (2000) showed that
employees’ receptivity to diversity and diversity management varied between gender and
race groups. A similar study conducted by Gaze and Oetjen (2014), in a sample of
government and military employees of an overseas US Navy Medical Treatment Facility,
revealed that ethnic heterogeneity was significantly related to the receptivity to diversity
and diversity management. They found, for instance, that Hispanics were more receptive to
diversity management than Caucasians, and that male Asian-Americans were more
receptive to diversity and diversity management than Caucasians. Soldan and Dickie (2008),
in a sample of 391 employees in Australia, found that receptivity to diversity management
varies among gender groups with females being more receptive to diversity management
than males. Particularly, in India, a recent study conducted by Patrick and Kumar (2012), in
a sample of 300 IT employees in India, revealed that women recognized diversity and
learned to value and respect fundamental differences more compared with men.
Furthermore, in a study of 30 IT-ITES companies in India, Rao and Bagali (2014)
discovered that receptivity of employees to gender diversity and cultural diversity differed.
Thus, we focused on gender and cultural differences separately. Based on the above
literature, we propose the following hypotheses:
H1. Male and female employees differ in their perceptions regarding “receptivity to
diversity and diversity management.”
H1a. Employees across various categories differ in their perceptions regarding
“receptivity to diversity and diversity management.”

Researchers have also highlighted differences in the insights of employee groups towards
valuing the organization’s efforts to integrate and support diversity through diversity
initiatives including: access to equal representation and development opportunities for
diverse groups, hiring and retaining diverse groups, and promoting gender diversity in
 ER organizational settings. For instance, in a study of 1,083 employees from 80 firms in India,
39,2 Kundu (2003) established that perceptions of employees differed based on their gender,
ethnicity, and ability towards diversity issues addressed in organizations, including
receiving development opportunities, hiring, and retaining diverse employees. Analogous to
these findings, perceptual differences between males and females were highlighted in
another study of Kundu (2004) regarding valuing efforts of employers to promote gender
166 diversity. In yet another survey of 207 employees from two firms in India, Sia and Bhardwaj
(2008) reported that women and ethnic minorities valued organizational efforts of promoting
diversity more compared with men from dominant group. They further pointed out that
women and ethnic minorities perceived the organizational practices to be less fair.
Furthermore, in a study of IT industry in India, Patrick and Kumar (2012) found that there
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were significant differences between men and women employees toward strategies for
increasing awareness about workplace diversity. Women were more likely to support
diversity initiatives by working with diverse others to achieve goals. Similar studies have
been evidenced in other contexts. In the USA, Cundiff et al. (2009) found that female
employees were found to have more positive perceptions toward diversity initiatives
compared with men. Similarly, studies of Mor Barak et al. (1998) and Kossek and Zonia
(1993) shared similar report that women and ethnic minorities exhibited greater support for
diversity efforts of employers as compared to white males. Based on the above literature, we
propose the following hypotheses:
H2. Male and female employees differ in their perceptions regarding “equal
representation and developmental opportunities.”
H2a. Employees across various categories differ in their perceptions regarding “equal
representation and developmental opportunities.”
H3. Male and female employees differ in their perceptions regarding “hiring and
retaining diverse employees.”
H3a. Employees across various categories differ in their perceptions regarding “hiring
and retaining diverse employees.”
H4. Male and female employees differ in their perceptions regarding “promotion of
gender diversity.”
H4a. Employees across various categories differ in their perceptions regarding
“promotion of gender diversity.”

Perceptions of diversity and perceived organizational performance

Perceived organizational performance
There is a perpetual debate on the relative merits of objective and subjective performance
measures in the performance management literature. Each type of measure has its
advantages and disadvantages. Factors like difficulty in gaining access to accurate financial
data and misrepresentation of it by managers owing to its sensitivity and confidentiality
(Dess and Robinson, 1984); shortage of market-based financial reporting; inefficient
governing mechanisms; and ambiguity in financial reporting restrict the use of objective
measures (Hoskisson et al., 2000), especially in private firms where assets values can be
quite fictitious (Bae and Lawler, 2000). Subjective measures, on the other hand, are
associated with limitations like common source bias (Meier and O’Toole, 2013). However,
limited biases have been reported with the self- reported firm performance data (Wall et al.,
2004). Research has also demonstrated that self-reported firm performance measures
are positively related with a high correlation to objective firm performance
 measures (Andrews et al., 2011; Venkatraman and Ramanujam, 1986). Subjective measures Workforce
enable cross-industry comparisons and generalizability of results, and also include the diversity
perceptual component of analysis (Allen et al., 2007) which is germane to the present
study as it hovers around employees’ perceptions towards diversity and related factors.
Subjective measures have also been supported and used by Allen et al. (2007) and
Pitts (2009) in measuring the outcomes of diversity. Our research, thus, uses perceptual
measures of performance. Diverse potential organizational performance measures were 167
considered relative to the competition from multiple organizational perspectives, including
quality, productivity, profitability, customer service, market share, and return on equity
(Khandwalla, 1977; Som, 2008).
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Relationship between perceptions of diversity and perceived organizational performance

Conferring to the resource-based view (Barney, 1991), organizational diversity may be a
source of sustained competitive advantage (Richard, 2000) as it is valuable, rare, un-imitable
by competitors, and non-substitutable. As a “business case,” diversity is believed to
engender competitive advantage by establishing a better corporate image, improving group
and organizational performance, and attracting and retaining human capital (Bleijenbergh
et al., 2010). Investing in organizational diversity is, thus, acknowledged by organizations
worldwide. However, as asserted by Jayne and Dipboye (2004), increasing diversity and
diversity management efforts alone does not necessarily lead to positive or higher
organizational performance; both, diversity and its management need to be positively
valued by the employees in order to harvest the true benefits of diversity. If organizations
properly manage employees’ diverse perceptions, diversity can be a source of growth,
learning, and intuition, thus, enhancing organizational performance (Choi and Rainey, 2010;
Ely and Thomas, 2001; Foldy, 2004; Thomas and Ely, 1996). Van Knippenberg and
Schippers (2007), in support of this, argued that the effects of diversity are more positive
when both employees and organizations share more favourable views about and attitudes
toward diversity.
Past research concerning perceived value of diversity and diversity management
supports these assertions by demonstrating its association with important organizational
outcomes. In a recent study of 278 managers from leisure industry, Garib (2013) established
that general positive view of employee diversity on itself can leads to positive impact on
perceived organizational performance. In yet another survey of 391 managers from 130
firms, Allen et al. (2007) elucidated that employee perceptions of diversity positively
influenced perceived performance benefits of organizations. Further, employee openness to
diversity in a group, a construct conceptually similar to receptivity to diversity, was found
to be positively associated with perceived group performance in a study conducted by
Lauring and Selmer (2011). Similarly, De Meuse and Hostager (2001) also purported that
employees’ view about diversity (i.e. whether diversity is good or bad) affects the perceived
outcomes of the organization. Similarly, diversity is more likely to have positive effects
when employees believe in the value of diversity management (Soni, 2000). As the way how
diversity is perceived influences the way how diversity management policies might be
viewed and implemented (Garib, 2013). For instance, if employees view diversity as a
phenomenon that only brings diverse views, which are not compatible, then diversity is not
viewed most probably positively and implementing diversity policies to manage it will not
be supported by employees. In contrast, if they view and value diversity as a phenomenon
imperative for success, then they are more likely to view diversity initiatives positively and
participate in such endeavours so as to harvest the benefits of diversity. For instance, Pitts
(2009), in a study of federal employees in the USA, found that employees perceived their
organizations to be more effective when they were positively receptive to diversity
management. Similarly, Choi and Rainey (2010) studied the effects of diversity and diversity
 ER management on employee perceptions of organizational performance and reported that
39,2 perceived effective diversity management was positively related to perceived organizational
performance. Thus, based on the above literature following hypothesis can be raised:
H5. “Employees” receptivity to diversity and diversity management’ is positively related
to perceived organizational performance.

168 Researchers have long believed that in order for organizations to achieve success and to
harvest the true benefits of the diverse workforces, employees need to perceive that their
organization supports and values the contributions of all employees (Kossek and Zonia,
1993; Kundu, 2003; Mor Barak et al., 1998; Nishii, 2013; Triana and Garcia, 2009).
Organizational efforts to support diversity fosters an environment that signals acceptance
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and appreciation for all the employees, irrespective of their diverse backgrounds
(Hicks-Clarke and Iles, 2000; Mor Barak and Levin, 2002; Triana and Garcia, 2009). Having
policies and practices that support organizational diversity conveys a positive message to
all employees that their organization values diversity and cares for them (McKay et al., 2009)
and that the organization is committed to achieving and leveraging diversity (Avery et al.,
2007). This further elicits positive employee reactions towards their workplace (Cox, 1993;
Kundu and Mor, 2016), e.g. may help improve perceptions of neutrality and trust
(Triana and Garcia, 2009) and foster satisfaction and feelings of oneness with the
organization (Lauring and Selmer, 2011), and thus, employees respond by valuing diversity
among their organizations and their customers (Madera et al., 2013).
These positive perceptions of organizational support for diversity are argued to be an
imperative condition for the achievement of diversity objectives as they provide important
information regarding the efficacy of organizational diversity programmes by providing
direct insight into the actual employee experience with the organization (Herdman and
McMillan-Capehart, 2010) and are claimed to be important indicator of the organization’s
actual support for diversity (Rynes and Rosen, 1995). The positive perceptions of
organizational management of diversity (through fair diversity policies, practices, and
procedures) further serve as a directive function by channelling employee behaviours
toward achieving organizational objectives (Herdman and McMillan-Capehart, 2010). For
instance, a recent study found that when employees perceive that their organization is
supportive of diversity, employees feel psychologically safe expressing their identities,
which influence their in-role and extra-role performance (Singh et al., 2013). Similarly, in a
survey of 229 Indian IT professionals, Jauhari and Singh (2013) established that perceptions
of supportive diversity environment positively influence employee perceptions of
organizational support which in turn enhances their organizational loyalty.
Further, researchers have also maintained that employee perceptions of organizational
appreciation for diversity is positively related to key performance indicators when
measured objectively, and to positive perceptions of organizational performance when
measured subjectively. For instance, studies of Avery et al. (2007) and McKay et al. (2011)
demonstrated that employee perceptions of positive organizational support for diversity
resulted in greater customer satisfaction. Similarly, a positive impact on sales in a real estate
company among employees was also observed in the study of Chen et al. (2012). At the same
time, measuring the performance subjectively, Benschop (2001), in an empirical case study,
showed that an organization’s policies and practices for managing diversity influenced both
the process of meaning formation regarding diversity and the perception of performance
effects. In yet another study of federal agencies in the USA, Brewer (2005) revealed that
efforts to improve employee perceptions of fairness and equity through various diversity
initiatives significantly improved employee perceptions of the firm performance.
Furthermore, a recent report by Deloitte (2013) discovered that when employees
perceived that their organization was committed to and supportive of diversity, they
 reported better business performance and were more likely to agree that they work in a high Workforce
performing organization. Thus, employee perceptions of diversity practices like equal diversity
representation and developmental opportunities, hiring and retaining diverse employees,
and promotion of gender diversity employed to support organizational diversity are likely to
influence perceptions of organizational performance. Hence, on the basis of above literature,
following hypotheses can be raised:
H6. Employees’ perception of “equal representation and developmental opportunities” is 169
positively related to perceived organizational performance.
H7. Employees’ perception of “hiring and retaining diverse employees” is positively
related to perceived organizational performance.
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H8. Employees’ perception of “promotion of gender diversity” is positively related to

perceived organizational performance.

Research methodology
Sample
The present study employed a questionnaire survey approach to collect the data for testing
the research hypotheses. For gathering data through questionnaires, 90 organizations
(IT-ITES and BPO) were initially identified from Chennai and Delhi-NCR region (firms
operating in the high-tech clusters of Chennai and Delhi were selected as these two metro
cities are the major hub of IT companies in India), out of which 40 organizations responded,
those employed all the categories of employees, i.e. male, female, general, minority, disabled,
and socially disadvantaged categories of employees. We then administered questionnaires
to employees of these selected organizations, ensuring that we receive responses from all the
categories of employees including male and female. We received 478 filled up questionnaires
from the employees, out of them 402 were completely filled and thus used for the study.
The distribution of the sample can be seen through Table I.
Table I showed that the sample included a total of 218 male and 184 female respondents.
Out of the total count, 174 were general category respondents; 44 disabled, 86 minorities,
and 98 were from socially disadvantaged category. The other characteristics of the sample
included average work experience (7.1 years) of the employees and average total employees
per organization (1,220).

Measures
Apart from the five variables concerning the general information about the respondents and
the organizations, questionnaire of this study consisted of two constructs: “diversity”
(total 19 items) and “organizational performance” (total six items). The “diversity” construct
included three sub-constructs: “value efforts to promote diversity” (total 11 items) adapted
from the study of Kundu (2003) and developed by Kossek and Zonia (1993), “receptivity to
diversity” (total four items), and “receptivity to diversity management” (total four items)’
borrowed from the study of Soni (2000). Six items of “organizational performance” were

Category of employees
General Disabled Minority Socially disadvantaged Total

Gender
Male 96 26 42 54 218
Female 78 18 44 44 184 Table I.
Total 174 44 86 98 402 Distribution of sample
 ER taken from the study of Khandwalla (1977) and Som (2008). Thus, a 24-item survey
39,2 questionnaire was developed to obtain the responses from employees in IT industry about
their opinions on various research variables. Scale responses were scored on a five-point
Likert scale ranging from 1 (strongly disagree) to 5 (strongly agree) for diversity and 1
(much lower) to 5 (much higher) for organizational performance. The measure items can be
seen through Tables II and III.
170
Independent and dependent variables
Gender and category were used as the independent variables and the derived four factors from
the “diversity” construct (“receptivity to diversity and diversity management,” “equal
representation and developmental opportunities,” “hire and retain diverse employees,” and
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“promotion of gender diversity”) were used as the dependent variables in case of analysis of
variance (ANOVA). Whereas, the above-mentioned four diversity factors were used as the
independent variables and “perceived organizational performance” (single factor derived from
“organizational performance”) was used as the dependent variable in case of regression analysis.

Per cent of Cronbach

Factors Loadings Eigenvalue variance α

F1 Receptivity to diversity and diversity management 6.771 33.841 0.954

Diverse employees bring new perspectives to the
organization 0.911
Diversity management taps the contributions of all
the employees 0.908
All employees benefit from effective diversity
management 0.907
Information for working effectively in a diverse
workforce is welcomed 0.888
Perceptions of discrimination by diverse employees
necessitate attention to diversity management 0.874
I work with people who are different from me 0.871
Responsibility of top management in valuing
diversity 0.844
Administrators clearly communicate their vision
about diversity 0.677
F2 Equal representation and developmental opportunities 3.745 15.496 0.798
Development opportunities for socially
disadvantaged employees 0.803
Development opportunities for minority employees 0.757
Increased socially disadvantaged’s representation 0.724
Development opportunities for women employees 0.595
Increased minority representation 0.570
F3 Hire and retain diverse employees 1.218 11.968 0.801
Organization must hire and retain minority
employees 0.787
Organization must hire and retain socially
disadvantaged employees 0.774
Organization must hire and retain disabled employees 0.736
F4 Promotion of gender diversity 1.046 9.695 0.659
Table II.
Organization must hire and retain women employees 0.853
Factor loadings of
varimax rotated Gender diversity is important 0.789
principal components Total scale (18 items) 0.897
regarding perceptions Note: Item deleted: development opportunities for handicapped employees
of diversity Source: Author
 Statistical tools Workforce
Statistical tools like factor analysis, correlations, ANOVA, means, grand means, and diversity
regression analysis were used for analysis of collected data. Factor analysis was used to
reduce the data by bringing out the broader dimensions. Correlations were used to see the
relationship between various variables. Two-way ANOVA was employed to highlight the
significant differences in reactions and perceptions of employees of different gender and
categories. Means and grand mean scores were used to explicate the direction and magnitude 171
of the significant differences and finally, regression analysis was adopted to quantify the
effects of perceptions of diversity on perceived organizational performance. Cronbach’s α
values were also obtained to ensure the reliability of the measures and the data.
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Results
A total of 19 variables regarding diversity were subjected to principal component factor
analysis with varimax rotation. For stating the factors clearly, only items with a strong loading
of 0.50 or higher were retained (Nunnally and Bernstein, 1994), which led us to delete an item
“development opportunities for handicapped employees” from the “value efforts to promote
diversity” scale with loading below 0.50. We, therefore, ended up with final 18 variables and
four cleanest factors with eigenvalues greater than 1.00. The four factors extracted had
eigenvalues between 1.046 and 6.771 explaining 70.999 per cent of the total variance. The value
of commonalities ranged from 0.470 to 0.851 for various variables. Table II shows the factors,
loadings for all variables, eigenvalues, and percentage of variance explained by each factor.
The derived factors were considered as sub-scales and used for further analysis. The first
factor named “receptivity to diversity and diversity management” loaded significantly with
eight variables; it showed the perceptions of employees towards diversity and diversity
management. Second factor named “equal representation and developmental opportunities”
loaded significantly with five variables. This factor assessed the perceptions of employees
toward the availability of equal development opportunities to the workforce and equal
representation of diverse employees. Third factor was described as “hire and retain diverse
employees” and it loaded with three significant variables. This factor assessed the attitude of
employees towards hiring and retaining diverse employees in order to tap their contributions
and maintain the value of the organization. The final factor named “promotion of gender
diversity” loaded with two variables and measured the perceptions of employees toward
gender diversity and its importance. The Cronbach’s α values for the four sub-scales ranged
from 0.659 to 0.954 and for the full scale was found to be 0.897 (see Table II); all meeting the
acceptable value of 0.6 (Hair et al., 2006).
Table III shows the single extracted factor related to organizational performance, loadings
for all variables, eigenvalue, and percentage of variance explained by the factor. The extracted
factor had eigenvalue 4.536, explaining 75.597 per cent of the variance. The factor named as

Factors Loadings Eigenvalue Per cent of variance Cronbach α

Perceived organizational performance 4.536 75.597 0.934

Market share 0.903
Productivity 0.886
Return on equity 0.885 Table III.
Factor loadings of
Profitability 0.872
varimax rotated
Customer service 0.857 principal components
Quality 0.811 regarding
Total scale (6 items) organizational
Source: Author performance
 ER “perceived organizational performance” loaded significantly with six variables, i.e. market share,
39,2 productivity, return on equity, profitability, customer service, and quality. The α value for the
scale was 0.912 (see Table III), indicating a very high reliability (Hair et al., 2006).
Table IV shows the results of ANOVA for each sub-scale, the corresponding significance
levels of the main effects, i.e. gender effect and category effect and the interaction effect (i.e.
gender and category), where significant F-values indicated the differences of perceptions
172 between males and females and between various categories of employees (i.e. general, minority,
disabled, and socially disadvantaged) and the impact of both independent variables on each
other. Mean and grand mean scores of the variables are shown in Table V. For the scale
“receptivity to diversity and diversity management”, no significant differences were observed
according to the gender effect, category effect, and interaction effect. Further, perusal of the
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mean scores table indicated that male ðx ¼ 3:09Þ, female ðx ¼ 3:30Þ, general category
ðx ¼ 3:07Þ, minority ðx ¼ 3:56Þ, disabled ðx ¼ 3:19Þ, and socially disadvantaged category
ðx ¼ 3:22Þ respondents were positively receptive towards diversity and diversity management
efforts. However, general category male ðx ¼ 2:97Þ respondents underscored the importance of
diversity and diversity management. Thus, H1 and H1a were not supported. Further, the scale
“equal representation and developmental opportunities” depicted no significant differences
according to gender, category, and interaction effects. Considering the sample as a whole, the
respondents from all the categories, i.e. male ðx ¼ 3:23Þ, female ðx ¼ 3:45Þ, general category
ðx ¼ 3:30Þ, minority ðx ¼ 3:27Þ, disabled ðx ¼ 3:40Þ, and socially disadvantaged ðx ¼ 3:34Þ,

Effects
Gender (main) Category (main) Two-way interactions
Factors F-value F-value F-value

F1 Receptivity to diversity and diversity

management 1.351 (0.247) 1.012 (0.388) 0.052 (0.984)
F2 Equal representation and developmental
Table IV. opportunities 2.633 (0.106) 0.269 (0.847) 1.140 (0.334)
Summary results F3 Hire and retain diverse employees 1.456 (0.229) 4.272 (0.006)** 1.040 (0.376)
of analysis of F4 Promotion of gender diversity 10.384 (0.001)*** 0.592 (0.621) 0.236 (0.871)
variance (ANOVA) Notes: **p ⩽ 0.01; ***p ⩽ 0.001

Categories of employees
Factors General Minority Disabled Socially disadvantaged Grand means

F1 M 2.97 3.44 3.13 3.09 3.09

F 3.19 3.72 3.24 3.39 3.30
GM 3.07 3.56 3.19 3.22
F2 M 3.13 3.29 3.31 3.30 3.23
F 3.52 3.24 3.48 3.40 3.45
GM 3.30 3.27 3.40 3.34
F3 M 2.92 3.77 3.51 3.26 3.22
F 3.38 3.70 3.58 3.41 3.47
GM 3.13 3.74 3.54 3.33
F4 M 3.40 3.23 3.24 3.31 3.33
F 3.81 3.56 3.80 3.61 3.73
Table V. GM 3.58 3.36 3.52 3.45
Summary of Notes: F1, receptivity to diversity and diversity management; F2, equal representation and developmental
means and grand opportunities; F3, hire and retain diverse employees; F4, promotion of gender diversity; M, male; F, female;
mean scores GM, grand mean
 valued the efforts to improve social justice in organizations in terms of equal development Workforce
opportunities and increased representation of diverse employees. Accordingly, the results did diversity
not support H2 and H2a.
Various categories of employees differed significantly ( p ⩽ 0.006) on the scale “hire and
retain diverse employees.” Minority ðx ¼ 3:74Þ, disabled ðx ¼ 3:54Þ, and socially
disadvantaged category ðx ¼ 3:33Þ respondents valued the efforts to promote diversity,
in terms of hiring and retaining diverse employees and rated the importance of 173
diversity efforts higher than did general category ðx ¼ 3:13Þ respondents, especially general
category male ðx ¼ 2:92Þ respondents did not favour diversity efforts. No significant
difference was found according to gender effect and interaction effect of independent
variables. Thus, results evidenced support for H3a, but H3 was not supported.
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Furthermore, male and female employees differed significantly ( p ⩽ 0.001) on the scale
“promotion of gender diversity.” Females ðx ¼ 3:73Þ held significant favourable attitude
toward gender diversity efforts than did males ðx ¼ 3:33Þ, especially general category
females ðx ¼ 3:81Þ had the most favourable attitude towards gender diversity compared
with other category females. No significant differences were found according to the category
and interaction effects. Hence, H4 was supported and no support was evidenced for H4a.
Means, standard deviations, and bivariate correlations for all the emerged variables are
reported in Table VI. Two variables, namely “equal representation and developmental
opportunities” and “promotion of gender diversity” were found to be significantly correlated
with perceived organizational performance. Variance inflation factors (VIFs), average VIF,
and tolerance statistics were calculated to examine the degree of multicollinearity in the
regression equation. Lack of multicollinearity among the independent variables was
supported by the obtained VIF values; ranging from 1.0 to 1.68, well below the cut-off value
of 10 (Field, 2009). The average VIF (1.32) was found to be close to 1 and not substantially
greater than 1 and therefore, regression was not biased (Bowerman and O’Connell, 1990).
The lowest tolerance value was 0.61, which was far above the common cut-off threshold
value of 0.10 (Hair et al., 1998). This confirmed no risk of multicollinearity.
Table VII summarizes the results of regression analysis showing the effects of perceptions
of diversity on perceived organizational performance. Model 1 was taken as the base model

No. of
Variables items Mean SD 1 2 3 4 5 6 7

1. Total workforce – 1,220 0.650 –

2. Total employees’
experience – 7.1 0.356 −0.039 –
3. Receptivity to
diversity and diversity
management 8 3.18 1.21 −0.026 −0.127 –
4. Equal representation
and developmental
opportunities 5 3.33 0.59 −0.045 0.049 0.239** –
5. Hire and retain diverse
employees 3 3.33 0.82 −0.072 −0.017 0.255** 0.589** –
6. Promotion of gender
diversity 2 3.51 0.78 −0.126 0.047 0.012 0.401** 0.356** –
7. Perceived
organizational Table VI.
performance 6 3.54 0.96 −0.166* −0.002 0.102 0.192** 0.137 0.413** – Means, standard
Notes: *p ⩽ 0.10; **p ⩽ 0.05 deviations, and
Source: Author correlations
 ER Dependent variable
39,2 Perceived organizational performance
Independent variables Model 1 Model 2

Constant 4.642*** 2.573***

Total workforce −0.166* −0.095
Employees’ total experience 0.009 −0.039
174 Receptivity to diversity and diversity management – 0.088
Equal representation and developmental opportunities – 0.074
Hire and retain diverse employees – 0.028
Promotion of gender diversity – 0.382***
Table VII. R² 0.028 0.193
Results of regression
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Adjusted R² 0.018 0.168

analysis showing
R² change 0.028 0.165
effects of perceptions
of diversity on F-statistic 2.808* 7.715***
perceived n 402 402
organizational Notes: *p ⩽ 0.05; **p ⩽ 0.01; ***p ⩽ 0.001
performance Source: Author

that included the control variables only (i.e. total workforce and employees’ total experience)
and was found significant according to F-statistics ( p ⩽ 0.05). Total workforce showed
significant impact on perceived organizational performance ( β ¼ −0.166, p ⩽ 0.05), whereas the
other control variable, i.e. employees’ total experience did not show significant effect on
perceived organizational performance. Model 2 captured the direct effects of employees’
perceptions of diversity on perceived organizational performance. It was found to be significant
at p ⩽ 0.001 level (considering the F-statistics). Coefficient of the factor “promotion of gender
diversity” was found positive and significant for perceived organizational performance
( β ¼ 0.382, p ⩽ 0.001), whereas the coefficients of other factors, i.e. “receptivity to diversity and
diversity management,” “equal representation and developmental opportunities,” and “hire and
retain diverse employees” were found to be positive but, not significant. Hence the results
supported the H8 alone and H5-H7 were not supported.

Discussion
The purpose of the research was to study the perceptions of employees towards diversity and
the effect of these perceptions on perceived organizational performance. We tested our
hypothesized relationships on a sample of 402 Indian IT professionals. With reference to the
personal value attached to diversity and its management, findings indicated that respondents,
regardless of their gender and categories positively perceived/valued, and did not differ
significantly on their insights of receptivity to diversity and diversity management. Although
not significant, results were also indicative of the differences in insights of employees based on
their gender and category regarding receptivity to diversity and diversity management, where
general category males were found to be least (negatively) receptive. On the contrary, Soni’s
(2000) study demonstrated significant differences between gender and ethnic groups of
employees in their receptivity to diversity and diversity management. The lack of significant
main effect for gender and category on receptivity to diversity and diversity management may
represent a selection effect due to the environment studied. In this respect, Schaafsma (2008)
found that work contexts affect the degree of receptivity towards diversity, wherein employees
from departments with high skilled professional work are more receptive to diversity compared
with employees working in structural characteristics of settings with low skill work. Patrick and
Kumar (2012), in a study of Indian IT industry, confirmed this finding that the employees were
mostly “diversity realists” and could cope with diversity; few being diversity optimists as well.
 Regarding the findings related to the perceptions of employees towards the organizational Workforce
support for diversity through fair employment practices (i.e. equal representation and diversity
development opportunities, hiring and retaining diverse employees, and promotion of gender
diversity), the results revealed lack of significant perceptual differences among employees
regarding equal representation and development opportunities in organizations. On the
contrary, perceptual differences toward equal representation and development opportunities
of diverse employees have been cited in the studies of Kundu (2003, 2004) conducted in Indian 175
settings across industries. However, particularly the studies conducted in IT industries in
different contexts confirm the findings, the study of Indian IT industry by Patrick and Kumar
(2012) supported the findings that men and women employees both believed that their
organizations provided opportunities for them to work in areas where they were expected to
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develop. Similarly, in a study of IT industry in the USA, Wikina (2011) concluded that men
and women did not differ in their perceptions of diversity including equal access to
opportunities and representation of different demographic groups.
Further, the study found that female respondents irrespective of their categories were
more supportive of promoting gender diversity than men. As compared with females, male
respondents undermined the significance of gender diversity. This mirrored the social
barrier of gender inequality in India. The finding is confirmed through a recent survey of
nearly 30,000 employees from 118 firms by worldwide management consulting firm,
McKinsey & Company (2015), that men were less likely than women to think that their
organization should do more to increase gender diversity, and few percentage of men
believed it was harder for them to advance because they were disadvantaged by gender-
diversity programmes. Similarly, in Indian context, Kundu (2004) pointed out that men see
less value in the diversity initiatives that can correct the gender disparity. Findings also
highlighted that general category male respondents did not value employer’s efforts of
hiring and retaining diverse employees, whereas minority, disabled, and socially
disadvantaged respondents emphasized the importance of hiring and retaining employees
from their categories in order to remain excellent. Females in general valued these efforts
more than males, whereas general category females were less supportive as compared with
other categories of females. This is substantiated through the findings of numerous studies
which highlighted that women and minorities were found to be the most supportive of the
diversity initiatives compared with white (general category in Indian context) males
(Hansken and Tippins, 2012; Kossek and Zonia, 1994; Kundu, 2003; Mor Barak et al., 1998).
The studies of Kundu (2003) and Kossek and Zonia (1993) have further validated the need of
hiring and retaining employees from diverse categories and gender in order to remain an
excellent organization. Likewise, the need for inclusion of the disadvantaged in the future
policy initiatives of the Indian IT industry is echoed by Upadhya (2007) and Ilavarasan
(2007) in their studies.
Concerning the effects of employees’ diversity perceptions on perceived firm
performance, the findings of the study have revealed that employee “receptivity to
diversity and diversity management” has no significant effect on perceived organizational
performance. Contrary to this, studies have depicted the positive association of perceived
diversity (Allen et al., 2007) and perceived diversity management (Choi and Rainey, 2010)
with the perceptions of organizational performance. The lack of significant effect supports
the notion that although the employees of Indian IT industry are receptive to diversity and
diversity management, yet long standing views of caste and other diversity issues still
remain persistent and merits additional analysis.
Pertaining to the effects of employee perceptions of organizational support for diversity
on perceived organizational performance, results have revealed that employee perceptions
of “promotion of gender diversity” has significant effect on perceived organizational
performance. Findings have, thus, supported the notion that the promotion of gender
 ER diversity provides opportunities for enhancing the perceived organizational performance.
39,2 A study by Mercer-NASSCOM (2008) shared similar findings and revealed the perceived
benefits of gender inclusivity initiatives of organizations, which included a stronger
employer brand, higher levels of productivity and profits, and reduced attrition within the
workforce. Similarly, various other studies showed significant relationship between
employee perceptions of increased diversity efforts and perceived organizational outcomes
176 (Avery et al., 2007; Gonzalez and Denisi, 2009; McKay et al., 2011). The finding supported
extant research and re-established the importance of perceptions of diversity (e.g. Cox, 1993;
Gonzalez and Denisi, 2009; Hicks-Clarke and Iles, 2000; Kaplan et al., 2011; Mor Barak et al.,
1998). However, no significant effects were observed in the case of “equal representation and
developmental opportunities” and “hiring and retaining diverse employees” on perceptions
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of organizational performance. This inconsistency may be rooted in difference between the

extent of focus Indian IT industry places on different diversity initiatives.
A recent survey by global HR firm, Mercer (2012) exemplified that gender is the main
focus of the diversity efforts of companies in India and consistent with this focus the most
common diversity programmes offered are gender-related. Similarly, Haq (2012), through a
recent study, verified that voluntary efforts of managing diversity in Indian MNCs currently
focus exclusively on women. Visibility of these gender directed programmes in the
organizations may foster a possible impact on the insights of the employees of the
organizations. This renders a possible explanation of the results obtained in the study.
Also, one possible interpretation is that gender diversity may be a less sensitive issue in
workplace, as compared to cultural diversity (Choi and Rainey, 2010), and thus, employee
perceptions of organizational efforts for promoting gender diversity might foster more
positive beliefs about the competence of their organization. Overall, this study provides an
excellent explanation of employees’ insights regarding workforce diversity and their effects
on perceived organizational performance.

Conclusions, managerial implications, and limitations

The current study provides considerable insight on present diversity scenario in Indian IT
industry through the perceptions of employees. The results highlight that the employees,
irrespective of their gender and category, are mostly aware of the effect of diversity on
organizations and the need for diversity initiatives, and thus, attach importance to and believe
in diversity and diversity management. However, the findings also infer that perceptions of
employees towards organizational support for diversity through fair employment practices like
hiring and retaining diverse employees and promotion of gender diversity varies based on their
categories and gender, respectively. Apparently, there may be a general level of acceptance and
appreciation for diversity and diversity management that mitigates not all, but most of the
differences in supporting organizational efforts. Yet, traces of gender and category differences
are still evident on some aspects of diversity issues perceived.
The empirical findings highlight that perceptions of diversity can have important effects on
organizations. This research sheds light on this issue and found that employee perceptions of
promotion of gender diversity are significantly related to perceived organizational
performance. More specifically, the results have demonstrated that employee perceptions of
hiring and retaining more women employees, increasing women’s representation among
workforce and placing importance to gender diversity are positively related to perceived
performance benefits of organizations. Based on these findings, it appears to be important for
organizations to not only focus on increasing the implementation of diversity initiatives, but to
also be sure to increase the perceptions towards these practices within their workforce.
These perceptions of organizational support for diversity, especially gender diversity, are
obviously critical to influencing positive employee attitudes and behaviours which in turn lead
to higher levels of organizational performance.
 A major managerial implication of this study is that employers should invest in initiatives for Workforce
promoting diversity, especially gender diversity, in order for employees to feel that their diversity
organization is committed to diversity. Not only will the investment be helpful for improving
positive employee attitudes and behaviours towards organization but bottom line performance
as well. Our findings suggest that employees view diversity initiatives seriously and expect the
visibility of such efforts in organizations. Organizations are required to convey the intent of
diversity initiatives to embrace all employees, to demonstrate fairness and equity, and mitigate 177
potential negative perceptions on the part of employees. The results further suggest that
organizations are required to continue making systematic and continuous efforts to
communicate diversity goals to employees (Soni, 2000) to ensure the positive receptivity of
employees to diversity and diversity management. As significant differences were found among
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gender for promoting gender diversity and among categories for hiring and retaining diverse
employees, organizations ought to develop an inclusion mind-set and awareness in the workforce
towards various diversity issues by placing emphasis on gender/diversity sensitization training
programmes. Further, to foster acceptance toward these diversity initiatives and to instigate shift
in attitude of employees, managers need to ensure that men and majority group employees are a
part of the gender/diversity initiatives of the organizations. Engaging men and majority group
employees in programmes like diversity mentorship and diversity training would make them
realize the challenges encountered by women and minorities and furthermore support them in
advance in their careers and corporate world. Moreover, IT industry needs to reassess their
hiring strategies to accomplish intended benefits of diversity; HR managers should design
diversity programmes with goals in mind, if not quotas.
Despite the contributions discussed above, this study also possesses some limitations
and consequently, provides directions for future research. First, the primary data for the
study were collected using a self-reporting questionnaire, making it possible that a common-
method variance inflated the relationships between variables (Podsakoff et al., 2003).
Harman one-factor test was conducted for verification of common-method bias.
Furthermore, the results of the principal factor analysis revealed four factors and not just
one, with eigenvalues greater than 1 that accounted for 72.705 of the total variance, where
the first factor accounted for only 28.31 per cent of the variance. Hence, common-method
variance was not a subject of concern as the majority of covariance in the variables was not
explained by a single factor (Podsakoff and Organ, 1986). To constrain the occurrence of
common-method bias, future empirical studies in this area should collect data using multiple
methods (e.g. interviews, surveys, peer reports, etc.).
Second, our survey was conducted in India and the results of the study cannot be generalized
across other countries, since diversity is also shaped by different national cultures and values.
Comparative and cross-cultural studies can be conducted by the future researchers. Third, in this
study, we controlled only for the effects of the total workforce and the employees’ experience.
Future researchers should endeavour to incorporate the other factors such as age and type of the
organizations when investigating the links between workforce diversity and organizational
performance. Besides, respondents of the present study only included employees of IT industry.
Future researchers should include employees of various industries as independent variables to
bring out the comprehensive and better results. It would also be interesting to see if the
perceptions of the employees of various hierarchical levels significantly differed.

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Corresponding author
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