Increasing Organizational Performance through Diversity and Organizational Climate Initiatives: What works, what doesn't

Globalization of business leads to environmental uncertainty for corporate organizations. To establish competitive advantage, organizations need continuous introduction of new products and services to markets and quick implementation of new strategies. This paper shows what kinds of initiatives are required for companies to leverage a diverse workforce. Study 1 explores diversity initiatives that are effective in terms of innovativeness by dividing companies into three groups based on gender diversity in management and gender diversity in non-management. Companies that are high in gender diversity in management, diversity awareness training, network group support, and mentoring programs are effective in terms of innovativeness. In contrast, in companies that are low in gender diversity, a participative decision making climate improves innovativeness. Study 2 explores how the chief executive officer's (CEO) leadership style and commitment and initiatives to change employees' mindset influence climate formation. Transformational Leadership is effective for climate formation regardless of gender diversity in both management and non-management. The CEO's commitment and initiatives to change employees' mindset aren't effective in companies with high gender diversity in management. This may be due to backlash by male employees. Study 3 shows that Transformational Leadership influences inclusive initiatives and participative decision-making climate while top management teams' fault lines detract from Transformational Leaderships' impact on diversity initiatives and climate. Weakened fault lines (of age, external working experience, educational background and knowledge) are essential to maintain transformational leadership influences.