Valuing Diversity Can Boost Sales

Federal and state laws make discrimination in the workplace illegal and to comply, many companies have developed their own diversity policies.

However, having a policy does not always mean a favorable diversity climate.

“Being a pro-diversity organization is more than legal compliance and hiring the ‘right’ number of minorities in the workforce,” said Patrick F. McKay of the School of Management and Labor Relations at Rutgers University.

Does the organization really embrace its policies and is diversity really valued throughout the workforce? In other words, McKay said, do organizations “walk the talk?”

To find out, McKay and his colleagues, Derek R. Avery of the University of Houston and Mark A. Morris of J.C. Penney Co. Inc., studied racial and ethnic differences in employee sales performances. They chose a large American retail company ranked in the “Top 50 Companies for Diversity” by Diversity Inc. magazine and surveyed 6,130 workers at nearly 750 stores around the country. Their findings were published in the summer issue of Personnel Psychology.

“A pro-diversity policy starts at the top. Leaders have to set the tone and climate throughout the organization and support the policy through practices and leadership,” McKay said.

Does a pro-diversity climate have an impact upon employees? “Absolutely,” McKay said.

The study showed that African-American employees in stores with high pro-diversity climates increased their sales by about $20 per hour, an annual sales gain of nearly $21,000. Hispanic employees increased hourly sales by $26, resulting in annual gain of $27,000.

Also, white sales personnel showed improvement in their sales figures, although not as strongly.

The bottom line? Organizations that foster hospitable diversity climates by providing equitable opportunities for their minority workers can experience greater profits and a more harmonious workforce. The researchers’ study clearly shows that sales performances for both African-American and Hispanic employees, and to a lesser extent white workers, produce significantly larger sales per hour in store units perceived to have highly pro-diversity work climate.

Workplace discrimination can manifest itself in promotions that do not follow posted guidelines or selecting favorites, setting hours in an unfair manner, and giving assignments to minorities that provide them less contact with customers.

McKay acknowledged that diversity climate applies to all workers regardless of race, sex and age.

It is important to communicate the value of all employees and make them feel an important part of the organization. That means putting minorities where they might better benefit the company. “For example,” McKay said, “a store located where there is a strong Hispanic customer base would benefit by a diverse workforce including Hispanic sales people.”

The idea is to use the unique knowledge and skills employees possess to benefit the company. “Employees should not be pigeon-holed into one area; rather give them access to training and sales positions. It’s a motivational-attitudinal function. Employees, no matter their ethnicity, who feel valued and are treated well, will be productive and add profitability to the organization,” McKay added.