infonet-economy

While prior research has related diversity climate to a range of desirable outcomes, much less is known about which factors shape employees' perceptions of organizational diversity-related policies, practices, and procedures. Our study aims at filling this gap in research by examining the interplay of leadership at different organizational levels for fostering diversity climate. Based on a social exchange perspective, we propose that high organizational-level leader-member exchange (LMX) quality—i.e. the degree to which leaders throughout an organization maintain high quality relationships with their followers—promotes employees' positive appraisal of organizational diversity climate. Moreover, we argue that this positive relationship is dependent on the degree to which organizations' top management leadership is perceived to be collective-focused and thereby to favor diversity. Our hypotheses are supported by structural equation modeling analyses in a multi-source dataset of 15,864 employees in 125 companies. Our findings have high practical relevance for organizations as we can show that diversity climate ultimately also enhances organizational performance and reduces employees’ turnover intentions.