29(2), pp. 287-307. - qut · 2 introduction ‘aged’ is defined differently in various reporting...
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Ali, Muhammad & French, Erica(2019)Age diversity management and organisational outcomes: The role of di-versity perspectives.Human Resource Management Journal, 29(2), pp. 287-307.
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https://doi.org/10.1111/1748-8583.12225
1
Age diversity management and organisational outcomes: The role of diversity
perspectives
Abstract Several macro- and meso-level factors have led to unprecedented proportions of aged
employees in organisations, resulting in higher levels of age diversity. Little is known about
which age diversity practices and programs are effective in which types of organisations for
which outcomes. Derived from social exchange theory, this paper proposes and tests positive
relationships between: age diversity practices and organisational outcomes; and work-life
programs and organisational outcomes. Derived from contingency theory, it also proposes and
tests for a moderating effect of diversity perspective (fairness and discrimination vs. synergy)
on the two main relationships. Data were collected from 248 medium to large-sized for-profit
organisations. The results partially support both main effect hypotheses and one moderating
effect hypothesis. The findings suggest different organisational outcomes for age diversity
practices and work-life programs. Theoretical and practical implications are discussed.
Keywords: Age diversity, diversity practices, work-life programs, diversity perspectives,
social exchange theory
2
Introduction
‘Aged’ is defined differently in various reporting and social contexts, but generally refers to
people aged 60 years or above (United Nations, 2012). However, retirement planning and
managing diversity in organisations often focus on mature or older employees aged 45 or
above, referred to as ‘aged’ in these contexts (AHRI, 2014; Diversity Council Australia, 2013;
Vasconcelos, 2015; Warren, 2015; Wilkins, 2017). The ageing workforce (increasing
proportions of aged employees in an organisation’s workforce) is a challenge facing many of
today’s organisations (Jackson and Jenkins, 2014; Wilson, 2015). The factors contributing to
an ageing workforce include: an ageing population – increasing proportions of aged people,
attributed to increasing life spans and decreasing birth rates (Chand and Tung, 2014); higher
labour-force participation rates among aged people (OECD, 2016); skills shortages in changing
markets (Productivity Commission, 2013); delayed retirement of veterans and baby boomers
(Treasury, 2015); and organisations’ increased use of retention strategies (Kooij et al., 2014;
Stone and Tetrick, 2013). Scholars around the world have started focusing on the challenge of
managing an ageing workforce (Hertel and Zacher, 2016).
The ageing workforce literature can be categorised as follows: generational differences,
stereotypes and discrimination research (e.g. Chiu et al., 2001; Cogin, 2012; Lyons and Kuron,
2014; Parry and Urwin, 2011; Snape and Redman, 2003); organisational age diversity,
processes and outcomes research (e.g. Ali et al., 2014; Avery et al., 2012; Backes-Gellner and
Veen, 2013; De Meulenaere et al., 2015; James et al., 2011; Kunze et al., 2011; Li et al., 2011);
perceived diversity practices and employee outcomes research (e.g. Kooij et al., 2013; Kooij
et al., 2010; Peretz et al., 2015; Rabl and del Carmen Triana, 2014); and age diversity
management (diversity practices and work-life programs) and organisational outcomes
research (e.g. Boehm et al., 2014; Kunze et al., 2013). The research on generational differences,
stereotypes and discrimination helps with diversity training (Armstrong-Stassen and Templer,
3
2005). Organisational age diversity, processes and outcomes research provides evidence for a
business case for age diversity and thus helps managers seeking top-management commitment
(Donnelly, 2015), while perceived diversity practices and employee outcomes research assists
managers to micro-manage employee perceptions (Kooij et al., 2013). However, it is the age
diversity management research that can equip managers with the necessary tools (i.e. practices
and programs, such as examining performance rating distributions for aged employees and
sponsoring an aged-employees’ support group) to manage an age-diverse workforce for
positive outcomes (Boehm and Dwertmann, 2015; Kulik et al., 2014; Truxillo and Fraccaroli,
2013). Unmanaged or poorly managed diversity can result in negative outcomes such as high
turnover and lower organisational performance (e.g. Ali et al., 2015; Kunze et al., 2013;
Schneid et al., 2016).
While the first three research categories have received considerable attention, far less
is known about which age diversity practices and work-life programs produce superior
organisational outcomes. The empirical evidence is thin, both in terms of the number of studies
and the number of practices and programs studied (Bieling et al., 2015; Boehm et al., 2014;
Kunze et al. 2013). More importantly, there is little empirical evidence about which
organisational diversity management perspective (overall approach to diversity management)
strengthens or weakens the impact of age diversity management on organisational outcomes
(Dwertmann et al., 2016; Thomas and Ely, 1996). The fairness and discrimination perspective
aims for equal employment opportunities and the absence of discrimination, while the synergy
perspective focuses on actively valuing individuals’ differences to create positive outcomes
(Dwertmann et al., 2016).
This study advances our knowledge of age diversity management in several ways. First,
it tests social exchange theory (Emerson, 1976) and contingency theory (Galbraith, 1973) for
age diversity management. Specifically, it hypothesises and tests whether age diversity
4
practices and work-life programs lead to superior organisational outcomes. Moreover, it
pioneers research in proposing that the positive relationship between age diversity management
and organisational outcomes is contingent on an organisation’s diversity perspective
(Dwertmann et al., 2016). Second, the current study addresses important research gaps. It adds
to a very small body of research investigating the relationship between age diversity
management and organisational outcomes (Bieling et al., 2015; Boehm et al., 2014; Kunze et
al., 2013). More importantly, it provides pioneering evidence of a moderating effect of
diversity perspectives on the age diversity management–performance relationship.
Third, the conceptual framework, design and methods of our study provide strong
empirical evidence. In particular, we include a range of age diversity practices and work-life
programs (Truxillo et al., 2015). Past age diversity management research has focused on a
small set of age diversity practices and does not include work-life programs (e.g. Bieling et al.
2015; Kunze et al. 2013). However, Australian yearly reporting requirements for gender
equality initiatives include work-life programs as well as diversity practices (WGEA, 2012).
Thus, including work-life programs not only aligns this study with the Australian context but
also helps provide evidence for a comprehensive set of practices and programs. Moreover, this
study uses three organisational outcomes – voluntary turnover, return on assets and corporate
social responsibility (CSR) – to enhance the construct validity (Lumpkin and Dess, 1996). We
collected data on for-profit organisations through a human resource (HR) manager survey and
an archival database, thus improving internal validity (Tharenou et al., 2007). Data on return
on assets were collected a year after executing the survey.
Fourth, we tested the hypotheses in a relevant but rarely investigated, Australian context
(AHRC, 2015; Bennington, 2001; Brooke and Taylor, 2005; Encel, 2001). Australia is similar
to other Western democracies (e.g. the United Kingdom) in terms of being low in uncertainty
avoidance (i.e. few practices) (Hofstede, 2001; Peretz et al., 2015), having similar
5
discrimination legislation (e.g. age discrimination laws) and few regulations accompanied by
high managerial discretion (Burgess et al., 2007; Strachan et al., 2004). However, Australian
equal opportunity (EO) laws for the private sector (e.g. Workplace Gender Equality Act 2012)
focus on women (Syed and Kramar, 2009). Although no EO legislation for age diversity exists
(Encel, 2001), Australia’s Age Discrimination Act 2004 prohibits discrimination based on age
in areas including employment (Commonwealth of Australia, 2004).
Theoretical Underpinning and Hypotheses Development
Age diversity management and organisational outcomes
Social exchange theory suggests that individual (or parties) reciprocate attitudes and
behaviours (Blau, 1964; Homans, 1958). Homans (1958) emphasised social and economic
behaviours, while Blau (1964) stressed the importance of the social aspect in this exchange as
opposed to the economic component (Emerson, 1976; Redmond, 2015). For instance, a social
exchange may involve an exchange of rewards and costs onto which a value is placed where
profit equals rewards minus costs (Homans, 1961), but equity or fairness demands that the
perceived reward needs to be proportionate to the perceived degree of costs (Redmond, 2015).
The exchange may involve a series of interactions that are both interdependent and contingent
upon the actions of each party, and generates obligations between them (Cropanzano and
Mitchell, 2005). It does not matter whether these social exchanges between the ‘actors’ are
viewed as negotiated – they are ubiquitous and important (Cook et al., 2013). These
interactions have implications for behaviours, because individuals return the benefits they
receive (Cropanzano and Mitchell, 2005). While there remains some incongruity among
theorists on the type of interactions (Cropanzano et al., 2016), one basic tenet is that
relationships evolve over time into trust, loyalty and commitment, where the parties abide by
certain ‘rules’ of exchange (Cropanzano and Mitchell, 2005).
6
Social exchange theory is not limited to individual level exchanges. It also suggests that
an exchange relationship may exist between an organisation and its employees, and that this
relationship transcends the employment contract (Emerson, 1976; Redmond, 2015). Indeed,
the four employee-organisation relationship approaches to employment engagement identified
by Tsui, Pearce, Porter and Tripoli (1997) are different to the psychological contract and
involve mutual expectations about the nature of an exchange. The two balanced approaches
comprise: the pure economic relationship and the mutual investment relationship (Tsui et al.,
1997). The pure economic relationship focuses on short term pure economic inducements in
exchange for well specified contributions by employees. The mutual investment relationship
includes inducements an employer offers which go beyond short term monetary rewards to
include an extended consideration of an employee’s well-being and investments in employees’
careers. This exchange involves employee obligations and contributions to working outside
any agreements or expertise and generally considering the organisation’s interest as important
in their core job duties.
The two unbalanced approaches comprise: under-investment relationship and over-
investment relationship (Tsui et al., 1997). The under-investment relationship is where
employees are expected to undertake broad and open-ended obligations while the employer
reciprocates with short term and specified monetary rewards with no commitment to a long-
term relationship or investment in the employees training or career. The over-investment
relationship is where the employee performs only a well specified set of job-focussed activities,
but the employer offers open ended and broad ranging rewards including training and a
commitment to provide the employee with career opportunities. Employees are noted to
perform better on core tasks, demonstrate more citizenship behaviours and express higher
levels of affective commitment to an employer if they are in a mutual investment relationship
7
or in an over investment relationship, compared to those in the other two relationships
(Agarwala, 2003; Tsui et al., 1997; Whitener, 2001).
Age diversity practices and programs offered by an organisation can generate employee
perceptions that the organisation supports a diverse workforce (Allen et al., 2003). In exchange,
employees may demonstrate trust, loyalty and commitment to the organisation (Bishop, 2000;
Eisenberger, 2001; Kooij et al., 2010). These positive processes lead to superior organisational
outcomes in all three areas of performance: human resource management, financial
performance and social responsibility (Rhoades et al., 2001; Wayne et al., 1997). We identified
and investigated one relevant outcome from each of the three performance areas: voluntary
turnover from human resource management, return on assets from financial performance, and
CSR from social responsibility (Elkington, 2013). In essence, the perceived organisational
support developed through the social exchange process influences employee trust, loyalty and
commitment, which mediate the relationship between age diversity management and
organisational outcomes (see Figure 1). Due to the organisational level of analysis in this study,
we focus on the two ends as the mediating processes are best measured at the employee level.
-------------------------------- Insert Figure 1 about here
--------------------------------
Employee retention has become vital. ‘Consistently low birth rates and higher life
expectancy are transforming the shape of the EU-28’s [28 states of the European Union] age
pyramid … As a result, the proportion of people of working-age in the EU-28 is shrinking
while the relative number of those retired is expanding’ (Eurostat, 2016, para 1). Other OECD
countries are experiencing similar trends, with mere variations in numbers and causes (OECD,
2016). The costs and potential human and social capital losses associated with turnover far
outweigh any potentially beneficial effects of departing employees (Hancock et al., 2013;
Hausknecht and Trevor, 2011). Age diversity management practices can lead to increased job
8
satisfaction, employee commitment, distributive and procedural justice, and reduced perceived
age discrimination, which can lead to lower voluntary turnover (Bibby, 2008). For instance,
Boehm et al. (2014) found a significant negative relationship between age-diverse work
climates and turnover intentions.
Australian organisations are struggling with lower levels of productivity compared to
their counterparts from other developed nations (Hannan and Gluyas, 2012). Small
improvements in productivity levels can yield long-term organisational and social benefits.
Human resource management can be an important determinant of productivity (Huselid, 1995;
Wright et al., 2005). Social exchange theory suggests the following exchange: the employer
offers effective diversity management; in return the employees demonstrate trust, loyalty and
commitment (Emerson, 1976). Higher levels of trust, loyalty and commitment should lead to
improved productivity and increased revenue for the organisation, resulting in a higher return
on assets (Boehm et al., 2014). Past research has found significant positive effects of gender
diversity (e.g. Frink et al., 2003) and gender diversity management (e.g. Ali, 2016) on
productivity. However, little is known about age diversity management practices and work-life
programs and their links to financial outcomes.
CSR refers to an organisation’s voluntary contribution to a better society and cleaner
environment (Weber, 2008). CSR links an organisation to its employees and community, and
its importance has surged over recent years (Hatch and Stephen, 2015). While researchers
continue to debate its definition and constructs (Carroll, 1979; Turker, 2009; Wang, 2008), the
importance of CSR’s management through diversity practices is increasingly being recognised
(Finney et al., 2014). Social exchange theory suggests that the higher trust, loyalty and
commitment resulting from age diversity practices and work-life programs may lead to greater
employee participation in voluntary activities for the community and the environment
(Emerson, 1976). Research into demographic diversity or demographic diversity management
9
and their links to CSR continues to grow, particularly in the areas of gender, race and age
diversity (e.g. Harjoto et al., 2015; Williams, 2003). For instance, Kabongo et al. (2013) found
that diversity practices influence CSR more than demographic diversity alone.
In sum, age diversity management should lead to lower voluntary turnover (higher
retention), higher return on assets and superior CSR for the organisation. Thus, it is proposed:
Hypothesis 1a (H1a): Age diversity practices are positively associated with
organisational outcomes.
Hypothesis 1b (H1b): Work-life programs are positively associated with organisational
outcomes.
Role of diversity perspectives
Based on organisational contingency theory (Galbraith, 1973), we argue that the relationship
between age diversity management and organisational outcomes will be contingent upon an
organisation’s diversity perspective.
Scholars have identified various sets of perspectives on equality/diversity management.
For instance, Jewson and Mason (1986) discussed two approaches. The liberal approach is
concerned with providing a fair and equitable system for individual talent, removing all
collective barriers. The radical approach is based on the notion that organisations need to
intervene to support disadvantaged groups to provide a level playing field. Thomas and Ely
(1996) noted three perspectives. The discrimination and fairness perspective considers the
elimination of discrimination, ensuring justice and equality. The access and legitimacy
perspective considers diversity as mean to gain access and legitimacy within diverse markets.
The integration and learning perspective of diversity considers diversity as a resource for
learning and adaptive change in the workplace. Greene and Kirton (2009) investigated two
perspectives. The equal opportunities perspective is based on legal compliance and focuses on
10
certain groups. The diversity management emphasises is based on value in diversity and
involves a proactive and inclusive approach towards diversity. Dwertmann et al. (2016)
identified two perspectives. The fairness and discrimination perspective focuses on efforts to
ensure fairness and the absence of discrimination. The synergy perspective refers to actively
valuing differences between individuals and the integration of diverse views to enhance the
collective outcomes, particularly those related to learning and performance.
Diversity perspectives can be seen as distinct categories or multiple points on a
continuum in terms of progress or development (Cockburn, 1991; Greene and Kirton, 2009):
from discrimination to equal opportunities and then to managing diversity. We use Dwertmann
et al.’s (2016) two diversity perspectives in this study for three reasons. First, based on
discrimination legislation, most Australian organisations take a compliance approach to
diversity (Ali, 2016), indicating the fairness and discrimination perspective. Second, beyond
legal compliance with discrimination laws, an approach based on the business case for age
diversity aligns with the synergy perspective. It explicitly links this approach with performance
which is also the focus of this study. Third, there are no equal opportunity laws in the area of
age diversity in Australia (Hicks et al., 2010). Therefore, organisations are not required to
report on their age diversity initiatives and age demographics.
Organisations with a fairness and discrimination perspective would experience only
weak positive effects of age diversity management on outcomes. This perspective considers
the elimination of discrimination and ensuring justice and equality to be the all-encompassing
rationales for diversity (Ely and Thomas, 2001; Thomas and Ely, 1996). The value of diversity
in itself is low, in that it is not well-recognised, with assimilation being the most important
feature. This diversity perspective has been linked to equality and its failure to stem ageism,
sexism and racism due to its principle of ‘sameness’. This age-blind, gender-blind and colour-
blind ideal is built on the assumption that, underneath, ‘“we are all the same” or “we aspire to
11
being all the same’; thus, placing pressures on employees to make sure that differences do not
count (Lorbiecki, 2001: 351-352). As such, difference is seen as problematic and a liability to
be neutralised. The benefits of diversity are limited to narrow spheres, for example when
employees of a certain age group deal with customers within that same age group (Foldy,
2004). In a study of the inclusion of minorities, Bernstein and Bilimoria (2013) found support
for this argument, as minority board members on not-for-profit boards of organisations with a
fairness and discrimination perspective of diversity did not experience greater feelings of
inclusion. The mismatch between age diversity management and the fairness and
discrimination perspective may result in low levels of trust, loyalty and commitment from
employees, leading to weak effects on voluntary turnover, return on assets and CSR.
In contrast, organisations with a synergy perspective would experience strong positive
effects of age diversity management on outcomes. This perspective considers differences as a
resource for adaptive change in the workplace. The characteristics of the synergy perspective
inform and enhance core work and work processes, placing a high value on identity and directly
linking diversity and work (Ely and Thomas, 2001; Thomas and Ely, 1996). The synergy
perspective is proposed as highly beneficial as it provides a strategic link to the organisation’s
core activities and existing systems so that the work is diversified – not just the staff (Dass and
Parker 1999; Lorbiecki, 2001). It encourages real cultural change by effectively inspiring
organisations to talk through their dimensions of difference (Greene and Kirton 2009;
Swanson, 2002); however, it is acknowledged as difficult to achieve and needs to be led by
senior management (Ng and Sears, 2012). Yet, senior management are often muddled in their
stance on ageism (Foster and Harris, 2005), with organisations continuing to respond in
different ways to age diversity including divisions based on industry sector and support by the
top management team (Parry and Tyson, 2009). Just as there is evidence that “some senior
women are unsupportive and act aggressively toward their women employees” (Hurst,
12
Leberman and Edwards, 2016: 74), aged top management teams may not be unbiased towards
aged employees. Bernstein and Bilimoria (2013) identified a link between the synergy
perspective and the inclusion experience of minority board members, demonstrating that
members feel included when they perceive they are valued for their differences, such as their
talents, contributions and abilities to assist the board in serving its mission. A match between
age diversity management and the synergy perspective may result in high levels of trust, loyalty
and commitment from employees, leading to strong effects on voluntary turnover, return on
assets and CSR.
In sum, the positive effects of age diversity management on organisational outcomes
will be contingent on an organisation’s diversity perspective. Thus, it is proposed:
Hypothesis 2a (H2a): The diversity perspective moderates the age diversity practices–
organisational outcomes relationship, such that the relationship is stronger for
organisations with a synergy perspective than for organisations with a fairness and
discrimination perspective.
Hypothesis 2b (H2b): The diversity perspective moderates the work-life programs–
organisational outcomes relationship, such that the relationship is stronger for
organisations with a synergy perspective than for organisations with a fairness and
discrimination perspective.
Methods
We used data from a survey of HR decision-makers and an archival source to test the
hypotheses in medium- to large-sized for-profit organisations operating in Australia.
Sample and data collection
In May 2013 a copy of the survey was sent to HR decision-makers (e.g. HR directors or HR
managers) at 2276 organisations across Australia. Managers from 248 organisations
13
participated in the survey, resulting in a response rate of 11.2% after adjusting for 55
undelivered surveys. They reported on their organisation’s age diversity practices, work-life
programs, diversity perspective, voluntary turnover, CSR, number of employees, year the
organisation was founded, organisation type (holding/subsidiary or stand-alone) and industry
group. Data on operating revenue for the year 2014 were obtained from the Orbis database in
July 2014. The final sample of participating organisations reflects a wide range of organisations
in terms of size and industry. Organisation size ranged from 40 employees to 65,000 employees
(mean 1639). The participating organisations were drawn from all ten industry groups (based
on two-digit standard industry classification (SIC) codes), with the following major
representations: 55 from Services; 54 from Manufacturing; 46 from Transportation,
Communications, Electric, Gas and Sanitary Services; and 19 from Mining.
Australian Context
Australia’s diversity dates back to thousands of years, with the indigenous population speaking
about 250 distinct languages at the time of first European settlement (ABS, 1996). The first
settlers arriving in 1788 also belonged to more than 28 European countries (Strachan et al.,
2014). The 20th century immigration from Europe and Asia further increased the diversity
(Gerner, 2010). However, the dominant Anglo male culture and its values, shared by many
European and American Anglo societies, led to discrimination towards Indigenous Australians,
women and people from non-English speaking backgrounds (NESB) (Strachan et al., 2014).
During the 1960s and 1970s, international civil rights and women’s movements and the United
Nations and International Labour Organisation conventions drove a range of anti-
discrimination legislation in Australia (French et al., 2010). Based on the social justice case,
the legislation prohibits discrimination on the basis of race, sex, disability, national extraction,
age, religion, etc. Based on the business case, the EO legislation, going beyond prohibiting
14
discrimination, requires attracting and managing a diverse workforce (Strachan et al., 2007;
Thornton, 1990). The EO legislation for the Australian public service focuses on Indigenous
Australians, people from the NESB, women and people with disabilities (APS, 2012), while
the EO legislation for the private sector focuses on women (WGEA, 2012). However, an ageing
population and younger skilled migrants have also made the Australian workforce highly age
diverse (Hicks et al., 2010; Price et al., 2010). The Age Discrimination Act 2004, its
amendments in 2009 and 2012, and the appointment of an Age Discrimination Commissioner
indicate the significance of the issue, but age discrimination still exists (AHRC, 2016; Sargeant,
2016). In the absence of EO legislation in the area of age diversity, most organisations are not
proactively managing their age-diverse workforce (Thornton and Luker, 2010). Managing
diversity seems to be a low priority for Australian organisations (Kramar, 2012). Many
Australian organisations take a ‘compliance with legislation’ approach towards managing
diversity and offer only few diversity practices (Ali, 2016; D’Netto et al., 2014; Fenwick et al.,
2011).
Measures
Predictors. Age diversity practices were measured using 12 items from Konrad and
Linnehan’s (1995) HR structures scale, with a reported reliability of .93 (see the Appendix for
a list of items). Some items were adapted to focus on age diversity management. For this study,
the Cronbach’s alpha was .77. The responses were coded as follows: never (1), sometimes (2),
most of the time (3) and always (4). The total score for the 12 items (ranging from 12 to 48)
indicated the level of age diversity practices. Work-life programs were measured using nine
items. Five items were drawn from Konrad and Mangel’s (2000) work-life programs scale,
with a reported reliability of .77. Four items were added to this scale to include programs not
covered in the original scale: compressed week, flexible holidays, unpaid extra holidays and
15
aged-employees’ support group (see Appendix for a list of items). The response options were:
does not offer (1), offered to few employees (2), offered to most employees (3) and offered to
all employees (4). The Cronbach’s alpha for the current study is .71. The final scores for work-
life programs (ranging from 9 to 36) were calculated by adding the responses to each item.
Outcomes. We used three performance measures relevant to age diversity
management: voluntary turnover, return on assets and CSR. The survey asked HR decision-
makers to report the total number of employees who voluntarily left the organisation during
the last 12 months. This number was multiplied by 100 and then divided by the total number
of employees to calculate the percentage voluntary turnover for each organisation. These
voluntary turnover percentages were deducted from 100 (for regression analyses) to align this
outcome measure with the other two outcome measures; that is, a higher percentage is
desirable. Return on assets data were obtained from the Orbis database for 2014, one year after
the survey data were collected. Orbis calculates return on assets as net income divided by total
assets (Orbis, 2016). CSR was measured using a seven-item scale with a reported reliability of
.89 (Turker, 2009). The Cronbach’s alpha for the current study is .88. A representative item
from the scale is: ‘The organisation encourages its employees to participate in voluntary
activities.’ The respondents reported on each item using a five-point scale, coded as follows:
strongly disagree (1), disagree (2), neutral (3), agree (4) and strongly agree (5). The mean of
the responses to the seven items indicated the level of CSR demonstrated by the organisation.
Moderator. Diversity perspective was measured using two categories: fairness and
discrimination perspective and synergy perspective (Dwertmann et al., 2016). The survey
asked respondents to select their organisation’s overall diversity perspective. A dummy
16
variable called ‘diversity perspective’ was created, with ‘0’ representing ‘fairness and
discrimination’ and ‘1’ representing ‘synergy’.
Controls. The analyses controlled for the effects of organisation size, organisation age,
organisation type and industry type. Organisation size is associated with diversity practices
(Kotey and Sheridan, 2004). Consistent with previous research, organisation size was
operationalised as the total number of full-time equivalent employees (Alexander et al., 1995).
Organisation age may have an impact on the adoption of diversity practices (Blum et al., 1994).
It was operationalised as the number of years since the organisation was founded (Perry-Smith
and Blum, 2000). Holding companies or subsidiaries, compared to stand-alone organisations,
may benefit from their combined financial resources (Richard et al., 2003). Therefore, a
dummy variable called ‘Organisation type’ was created, with ‘0’ representing ‘Holding or
subsidiary’ and ‘1’ representing ‘Stand-alone’. The impact of HR practices on operating
revenue may vary across industries (Datta et al., 2005). The ten SIC groups of the sample
organisations were collapsed into Services and Manufacturing (Ali et al., 2011). A dummy
variable called ‘Industry type’ was created, with ‘0’ representing ‘Services’ and ‘1’
representing ‘Manufacturing’.
Results
To assess the common-method bias for voluntary turnover and CSR, we performed Harman's
single-factor test (Harman, 1967; Podsakoff and Organ, 1986). Results indicated that a single
factor explained only 14.72% of variance (less than 50% is acceptable), suggesting the
common-method bias was not an issue (e.g. Kooij and Boon, 2017). Table 1 presents the means,
standard deviations and correlation coefficients for all variables. Low to moderate correlations
17
between control variables, predictors and the moderator suggest multicollinearity was not an
issue.
-------------------------------- Insert Table 1 about here
--------------------------------
We used hierarchical multiple regression to test the hypotheses. The predictor variables
of age diversity practices and work-life programs were centred to reduce multicollinearity with
the interaction terms. H1a proposed a positive association between age diversity practices and
organisational outcomes. H2a predicted a positive relationship between work-life programs
and organisational outcomes. To test these two hypotheses for voluntary turnover, return on
assets and CSR, each of the outcome measures was regressed on age diversity practices and
work-life programs (see Table 2). Controls were entered in step 1 (see Model 1 columns in
Table 2), and age diversity practices and work-life program variables were entered in step 2
(see Model 2 columns in Table 2). The results supported: H1a for CSR, as age diversity
practices had a significant positive effect (β = .21, p < .01) on CSR (see CSR Model 2 column
in Table 2); and H1b for voluntary turnover, as work-life programs had a significant positive
effect (β = .19, p < .05) on 100 - voluntary turnover (see 100 - voluntary turnover Model 2
column in Table 2). All other effects were non-significant and, thus, we found partial support
for H1a and H1b.
-------------------------------- Insert Table 2 about here
--------------------------------
H2a proposed that the positive age diversity practices–organisational outcomes
relationship would be stronger in organisations with a synergy perspective than for
organisations with a fairness and discrimination perspective. H2b predicted that the positive
work-life programs–organisational outcomes relationship would be stronger in organisations
with a synergy perspective than for organisations with a fairness and discrimination
18
perspective. The moderator variable of diversity perspective and the interaction terms (age
diversity practices × diversity perspective and work-life programs × diversity perspective) were
entered in step 3 (see Model 3 columns in Table 2). The results indicate that only the interaction
term of work-life programs × diversity perspective was significant (β = .23, p < .05) for return
on assets.1 We plotted the relationships between work-life programs and return on assets in the
two categories of organisations – fairness and discrimination perspective vs. synergy
perspective – as seen in Figure 2. The relationships were positive and significant for
organisations with the synergy perspective (B = 1.21, p < .05) as hypothesised. However,
contrary to the hypothesis, the relationships were negative but non-significant for organisations
with the fairness and discrimination perspective (B = -.41, n.s.). Thus, partial support was found
for H2b and no support was found for H2a.
-------------------------------- Insert Figure 2 about here
--------------------------------
Discussion
The main objectives of this study were to: (1) examine age diversity practices and work-life
programs in organisations and their impact on three organisational outcomes, and (2)
investigate the moderating effects of the diversity perspectives (fairness and discrimination vs.
synergy) on the above-mentioned relationships. The results support a positive age diversity
practices–CSR relationship and work-life program–turnover (100 - voluntary turnover)
relationship. We also found a positive work-life programs–return on assets relationship for
organisations with a synergy perspective. We interpret these findings as: managing age
diversity practices, work-life programs and an organisation’s diversity management
1 Multicollinearity among predictor and control variables may lead to incorrect inferences (Becker, 2005). We repeated the regression analyses reported in Table 2 without control variables. In the absence of control variables, the following terms remained significant: work-life programs (β = .15, p < .05) for 100 - voluntary turnover, diversity practices (β = .22, p < .01) for CSR, and work-life programs × diversity perspective (β = .21, p < .05) for return on assets.
19
perspective are the new imperatives for influencing positive outcomes across human resource
management, financial and CSR performance.
Our findings strengthen, extend and refine the business case for age diversity
management. The positive impact of work-life programs on voluntary turnover (lower
voluntary turnover) strengthens the evidence provided by literature. For instance, Boehm et al.
(2014) found the indirect impact of five age-inclusive practices (e.g. recruitment) on perceived
organisational performance and collective turnover intentions. Similarly, Caillier (2016) and
Ali et al. (2015) reported positive impact of a range of work-life programs or diversity
management practices on employee retention levels. The positive age diversity practices–CSR
relationship found in the current study extends the business case for age diversity management.
No prior study has tested the effect of age diversity practices on CSR; however, research on
broader EO and diversity management practices has found a link between those practices and
CSR (e.g. Finney et al., 2014; Kabongo et al. 2013). Age diversity literature provides some
evidence of positive impact of diversity practices on other outcomes. For example, Bieling et
al. (2015) found that age-inclusive appraisals and compensation practices had a positive effect
on perceived organisational performance. In the current study, the pioneering positive work-
life programs–return on assets relationship found in organisations with the synergy perspective
refines the business case for age diversity management for financial performance (Bardoel et
al., 2008).
Theoretical contribution and implications
The theoretical contributions and implications of this study are worth noting. Our findings
provide indirect support for social exchange theory (Emerson, 1976). The organisational-level
focus of our research led to the study of two ends of the social exchange process – age diversity
management implemented by organisations and organisational outcomes (see Figure 1). A
20
direct test of social exchange theory for age diversity management would require examining
the full exchange, including the mediating processes (Boehm et al., 2014). Essentially,
employers’ offering of age-diversity practices and work-life programs leads to perceived
organisational support among employees (Allen et al., 2003); as an exchange, employees then
show trust, loyalty and commitment (Cook et al., 2013), leading to superior human resource
management, financial and social performance for the organisation (Cropanzano and Mitchell,
2005). Moreover, our findings refine our understanding of social exchange theory (Cropanzano
et al., 2016). The exchange between employer and employee is reflected in different
performance measures for different elements of age diversity management: CSR for age
diversity practices and lower voluntary turnover for work-life programs. A multilevel test of
age diversity management at the organisational level and mediating processes (trust, loyalty
and commitment) at the employee level would reveal how the different elements of age
diversity management trigger different mediating processes, leading to different impacts on
outcome measures (Colquitt et al., 2013).
The results provide some support for contingency theory (Galbraith, 1973); the findings
suggest that the positive effects of work-life programs on financial performance are contingent
upon the development of a synergy perspective (Dwertmann et al., 2016). This study presents
detailed theoretical arguments for different effects of age diversity management on
organisational performance depending on the diversity management perspective, linking it
back to social exchange theory and its elements (Emerson, 1976). Thus, it helps improve our
lack of theoretical understanding of the contingent impact of age diversity management on
human resource management, financial and social performance (Bardoel et al., 2008;
Cropanzano et al., 2016).
Practical contributions and implications
21
The findings of this study offer practical contributions with implications. First, the results
provide support for a strong business case for managing an age-diverse workforce through age
diversity practices and work-life balance programs. Effective age diversity management can
lead to superior people (retention), profit (return on assets) and planet (CSR) performance
(Elkington, 2013). The strong evidence provided by this study may help HR managers secure
top-management team commitment to diversity management (Hunt et al., 2015). In particular,
this pioneering Australian research on age diversity practices and work-life programs will help
Australian managers in formulating a range of evidence-based diversity policies and programs
(Guest, 2011). Second, the strengthened business case for work-life programs (impact on
retention) and extended business case for age diversity practices (impact on CSR) can help
managers focus on relevant performance measures for different elements of age diversity
management. A more focused evaluation of diversity management elements can produce
accurate results for the organisation (Mensi-Klarbach, 2012).
Third, our findings indicate that an organisation’s diversity perspective greatly
influences its ability to capitalise on the benefits of work-life programs (Dwertmann et al.,
2016). Managers should pay particular attention to aligning the context with diversity
management for positive outcomes (Murray and Syed, 2005). A clearly articulated diversity
perspective, aligned with age diversity management, can help to achieve high levels of
employee trust, loyalty and commitment as an exchange (Emerson, 1976). This research found
that the majority of Australian organisations take the fairness and discrimination perspective
on age diversity management, possibly failing to capitalise on age diversity. The moderating
effect findings encourage managers to further develop their diversity perspective by valuing
the differences between young and mature-aged employees, the synergy perspective. In the
absence of equal opportunity legislation for age diversity in Australia which could require
22
organisations to proactively manage age diversity, the organisations with a synergy perspective
may gain an advantage over competition (Noe et al., 2006).
Fourth, the findings indirectly (suggested by social exchange theory but not tested in
this study) suggest that managers should monitor and reinforce exchange in the form of positive
processes (trust, loyalty and commitment) to ensure benefits of age diversity management. Any
negative processes predicted by competing theories, such as age stereotype and barriers, should
be weakened for a net positive exchange (Compton et al., 2014). For a meaningful exchange,
firms should not only implement age-inclusive practices and programs, but also actively
communicate them to increase employee awareness (Boehm et al., 2014). Fifth, the evidence
for a business case for managing age diversity provided by this study and future Australian
research in this direction may initiate a debate around introducing equal opportunity legislation
in the area of age. Such legislation may not only respond to high age diversity in the Australian
workforce (Thornton and Luker, 2010), but may also require organisations to actively manage
their age diverse-workforce (Hicks et al., 2010). Such effective age diversity management,
currently rare in Australian organisations, can also lead to positive employee outcomes (Rabl
and del Carmen Triana, 2014). EO legislation and positive employee and organisational
outcomes might encourage more organisations to implement voluntary practices beyond
compliance, taking a diversity management perspective on age diversity.
Limitations and avenues for future research
This study has several limitations. First, it focused on age diversity management and did not
take into account other demographic diversity practices implemented within the organisations.
Research recognises that a broad spectrum of demographic diversity influences organisational
outcomes (Pelled, 1996; Muchiri and Ayoko, 2013). Future research should investigate a wider
range of diversity management practices, focusing on multiple forms of demographic diversity.
23
This is an important step forward in understanding what constitutes a comprehensive approach
to diversity management (Kulik et al., 2014). Research in this direction can also benefit from
adopting the ‘bundles of HR practices’ approach (development, maintenance, utilisation and
accommodative) towards diversity management (Kooij et al., 2014; Truxillo et al., 2015).
Second, the low response rate may limit the generalisability of the results. A higher response
rate would strengthen the findings of this study. Some diversity research conducted in Australia
has been successful in achieving higher response rates (e.g. D'Netto and Sohal, 1999), while
other research has comparable low response rates (e.g. Fenwick et al., 2011). Third, the
generalisability of findings to non-Anglo cultures should be interpreted with caution. Previous
research has identified that organisational culture may influence the findings related to
diversity management (Chiu et al., 2001). A comparative study of age diversity management
across cultures might provide valuable insights into contextual diversity management. Future
research can also benefit from investigating the moderating effects of age diversity climate and
age-inclusive leadership (Boehm and Dwertmann, 2015). Positive evidence for supportive age
diversity climate and age-inclusive leadership will also be invaluable for promoting contextual
age diversity management (Ulrich and Dulebohn, 2015), which is still lacking in Australia,
despite some supporting evidence for its business benefits.
24
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TABLE 1 Means, standard deviations and correlationsa
Variable Mean SD 1 2 3 4 5 6 7 8 9
Controls
1. Organisation size 1639.15 6310.99
2. Organisation age 49.59 42.91 .08
3. Organisation type (0 = Holding/subsidiary; 1 = Stand-alone)
.42 .49 -.14* .07
4. Industry type (0 = Services; 1 = Manf.)
.42 .49 .11 .19** .03
Predictors
5. Age diversity practices 19.66 5.50 .04 .05 -.10 -.10
6. Work-life programs 19.66 4.55 -.02 -.06 -.01 -.14* .26**
Moderator
7. Diversity perspective (0 = fairness and discrimination, 1 = synergy)
.40 .49 .00 .11 .16* .14* -.04 -.02
Outcomes
8. Voluntary turnover 14.23 17.34 -.07 -.14 .04 -.26** -.04 -.17* -.08
9. Return on assets 5.52 20.63 -.07 .14 .02 -.11 .16* .06 -.10 .04
10. Corporate Social Responsibility 3.89 .70 .17* .04 .02 -.05 .26** .18* -.04 -.16* -.09
a2-tailed; * p<.05, ** p<.01
41
TABLE 2 Hierarchical regression analyses
Variable
100 - Voluntary turnover
Return on assets
Corporate social responsibility
β (Model 1) β (Model 2) β (Model 3) β (Model 1) β (Model 2) β (Model 3) β (Model 1) β (Model 2) β (Model 3)
Controls Organisation size .03 .05 .05 -.09 -.12 -.11 .18* .18* .18* Organisation age .10 .10 .09 .16 .15 .21* .03 .03 .01 Organisation type -.03 -.03 -.03 -.04 -.03 -.02 .04 .07 .08 Industry type .23** .25** .25** -.19* -.17* -.15* -.09 -.04 -.03
Predictors Age diversity practices .01 .01 .12 .22* .21** .22* Work-life programs .19* .19* .06 -.09 .13 .25*
Moderator Diversity perspective (0 = fairness and discrimination, 1 = synergy)
.03 -.11 -.03
Interaction terms Age diversity practices × diversity perspective -.01 -.14 -.03
Work-life programs × diversity perspective -.01 .23* -.18
R2 .07 .11 .11 .05 .07 .12 .04 .11 .13
F 3.67** 3.72** 2.46* 2.20 2.00 2.21* 1.87 3.86** 3.08**
∆R2 .07 .04 .00 .05 .02 .05 .04 .07 .02
F for ∆R2 3.67** 3.62* .15 2.20 1.56 2.50 1.87 7.57** 1.46
n = 192 (voluntary turnover), 159 (return on assets), 189 (corporate social responsibility) Standardized coefficients are reported * p<.05, ** p<.01, *** p<.001
42
FIGURE 1 Conceptual framework
Work-Life Programs
FIGURE 2 Interaction effects of work-life programs and diversity perspectives on return on assets
Appendix
‐10
‐5
0
5
10
15
20
25
30
10.0 11.2 12.3 13.5 14.6 15.8 16.9 18.1 19.2 20.4 21.5 22.7 23.8 25.0 26.1 27.3 28.4 29.6 30.7 31.9 33.0
Fairness & Discrimination Perspective Synergy Perspective
Trust
Loyalty
Commitment
Age Diversity Management
Age Diversity Practices
Work-life Programs
Ret
urn
on A
sset
s
Outcomes
Voluntary Turnover
Return on Assets
CSR
43
Age diversity practices (Konrad and Linnehan, 1995) 1. Employees are informed about the specifics of the EO/diversity plan 2. An outside EO/diversity expert is consulted to develop or modify employment practices 3. Positions for which EO goals have not been achieved are noted on the job requisition 4. Employment agencies which specialise in finding aged candidates are used 5. The hiring manager is informed if EO goals for the position have not been met 6. EO concerns influence the hiring decision 7. Being an aged person is a criterion considered in hiring decisions 8. Managers are trained in their EO/diversity responsibilities 9. Aged employees are specifically targeted to receive management development training 10. Aged employees who are potential candidates for management jobs are identified and targeted
for promotion 11. Performance rating distributions are examined for aged employees 12. Turnover rates are calculated for aged employees Work-life programs (First five items from Konrad and Mangel, 2000) 1. Flexi-time 2. Job-sharing 3. Part-year work 4. Part-time work 5. Voluntary reduced time (work fewer hours and then may return to their full-time status) 6. Compressed week (a standard workweek is compressed to fewer than five days) 7. Flexible holidays 8. Unpaid extra holidays 9. Aged-employees’ support group