infonet-economy

Growing workforce diversity increases the likelihood that managers and subordinates will differ along demographic lines, a situation that has important implications for relationship quality and organizational outcomes. In a sample of 1,256 employees from 54 work-units, we investigate the effects of differences in age and disability status on leader-member-exchange (LMX) relationships and employee performance ratings. Compared to standard dissimilarity (supervisor much older, both have no disability), constellations in which supervisor and subordinate are the same age or in which the supervisor is much younger lead to better LMX relationships. Regarding disability, a situation in which one member of the dyad has a disability leads to lower LMX ratings. Further, we test whether an inclusive unit climate can buffer the negative effects of demographic dissimilarity (Nishii, in press) and find support for this effect for situations in which the subordinate, but not the supervisor, has a disability. Ultimately, poorer LMX relationships lead to lower individual performance. This study contributes to the growing literature on diversity by showing that it is not difference per se, but the direction and magnitude of differences that drive outcomes, which extends prior work examining the presence of differences (Colella & Varma, 2001). In addition, we are among the first to empirically examine effects of climate for inclusion, a potential tool for organizations that wish to better leverage diversity in their firms, and show that it can help to buffer the negative effects of dissimilarity on LMX (Ryan et al., 2012).