Leadership Diversity and Its Influence on Equality Initiatives and Performance: Insights for Construction Management

Gender-diverse leadership shapes the design and delivery of policies, programs, and practices implemented to address diversity management. Drawing on stakeholder theory, this paper proposes and tests the positive impacts of board gender diversity and top management team gender diversity on diversity-related human resource initiatives and work–life initiatives. Moreover, using strategic human resource management theory and ability–motivation–opportunity theory, this study proposes and tests the positive effects of human resource and work–life initiatives on organizational financial performance. Based on contingency theory, it proposes and tests the moderating effect of an inclusive diversity environment on the initiatives and financial performance relationship. Using time-lagged archival data collected from 367 Australian organizations, findings indicate board gender diversity is positively associated with both human resource and work–life initiatives designed and implemented to address diversity management. Work–life initiatives are positively associated with both increased operating revenue and profit before tax. Further, the work–life initiatives–profit before tax relationship was strongly positive for organizations with a high diversity environment. We discuss theoretical and research contributions and practical implications.

• Highlights the importance of increasing leadership gender diversity, particularly board diversity in the construction, property development, and manufacturing industries to improve diversity initiatives and, in turn, improve organizational financial outcomes. Women on boards can affect how firms select and implement equality/diversity initiatives for the material benefit of organizational outcomes.

• Strengthens the business case for diversity and the argument for increasing women on boards, while aiming to shift the views among many male managers that efforts to promote gender diversity are often motivated by “political correctness” or a goal of favouring women at the expense of men.

• Strengthens the business case for offering a wide range of work-life initiatives and assists industry HR managers and decision makers in securing the organisational commitment of resources in developing and offering work-life initiatives within their organisations.

• Study calls for positive diversity environment and the presence of work-life initiatives to assist the industries to be more attractive to and inclusive of women.

• Found that board gender diversity is positively associated with offering gender-equality HR and work-life initiatives and supports stakeholder theory suggesting that a gender-balanced board indicates their care for stakeholders through the promotion of gender-equality HR and work-life initiatives.

• Found a positive relationship between work-life initiatives and financial outcomes of increased operating revenue and profit before tax, supporting strategic human resource management (SHRM) and ability–motivation–opportunity (AMO) theories.

• This study extends contingency theory by examining the contextual variable of diversity environment and provides evidence that organisations offering work-life initiatives along with a strong diversity environment can expect improved performance.

• Provides pioneering evidence for the significant moderating effect of diversity environment on the work-life initiatives–performance relationship. Diversity environment has a significant influence on the diversity initiatives–financial performance relationship.