Perceived inclusion climate for leader diversity: conceptualization and scale development

Abstract

Purpose

Although existing literature emphasizes the significance of diversity and inclusion in management roles for employees, there is a notable absence of a standardized scale to assess employees’ perceptions of an inclusive climate, particularly in relation to practices that encourage acceptance of demographically diverse leaders. This study aims to bridge this gap by developing the perceived inclusion climate for leader diversity (PICLD) scale.

Design/methodology/approach

The scale development process was carried out in five phases which included: qualitative component (interviews); test for face validity; check for content validity; construct and criterion-related validity; and nomological network testing.

Findings

Following the first three phases of scale development, 12 measurement items were produced. Phase four results indicate that PICLD is distinct from both the intercultural group climate scale and diversity-oriented leadership scale, in which all three scales were found to be positively correlated with job satisfaction. Phase five results show that PICLD positively correlates with organizational justice. Organizational justice also mediates the relationship between PICLD and three employee outcomes (performance, engagement and turnover intention).

Practical implications

Organizations are encouraged to be open to suggestions made by managers from historically marginalized groups that motivate diverse leaders to voice their concerns to foster inclusionary climate perceptions among employees. Welcoming diverse managerial perspectives can dismantle systemic barriers, enabling marginalized leaders to thrive while fostering employees’ perceptions of an inclusionary workplace.

Originality/value

This study introduces the PICLD Scale to enhance comprehension of how policies supporting leader demographic diversity impact employee perceptions of inclusive climate. This research also contributes to the advancement of social exchange theory and literature on organizational justice, performance and engagement.

Citation

Gip, H., Guchait, P. and Madera, J.M. (2024), "Perceived inclusion climate for leader diversity: conceptualization and scale development", International Journal of Contemporary Hospitality Management, Vol. 36 No. 13, pp. 77-96. https://doi.org/10.1108/IJCHM-09-2023-1378

1. Introduction

Discrimination based on ethnicity continues: A recent study revealed that 65% of African Americans feel that to advance in organizations, they must work harder than their counterparts compared to the 16% of white Americans who shared similar feelings (Center for Talent Innovation, 2019). Only 19% of lower and mid-level hospital management positions were held by people of color, according to a survey conducted by the American Hospital Association’s Institute for Diversity in Health Management in 2015 (Fifer, 2020). In the USA, the majority of management positions in various hospitality and tourism sectors are held by people who identify as white, including in food service at 71.2%, entertainment and recreation at 87.4% and lodging at 75.4% (U.S. Bureau of Labor Statistics, 2022). This is an area of concern, as the leisure and hospitality sector constitutes the fifth largest employment sector in the USA and employs a diverse workforce (Hubbard, 2020). For instance, women account for 60% and members of minority groups for 40% of frontline service positions in hotels. However, in terms of leadership roles, women hold only 20% and minorities 10% of hotel general manager positions (Wallis, 2021). These statistics indicate a need to increase leaders’ diverse representation (Davis, 2018). Considering these issues, this study explores how organizational policies can cultivate an inclusive climate perceived by employees, particularly by endorsing leaders from various demographic backgrounds.

While there have been calls for understanding the importance of diversity and inclusion among leaders for employees in the hospitality and tourism industry (Lee et al., 2023; Manoharan et al., 2021; Russen et al., 2023), the existing body of knowledge lacks comprehensive theoretical constructs and frameworks to propel research in this domain. Specifically, there are three glaring gaps in the literature. First, no scale in the current literature measures employee perceptions of inclusion climate for leader diversity. Inclusion climate is “the degree to which an employee perceives that he or she is an esteemed member of the work group through experiencing treatment that satisfies his or her needs for belongingness” (Shore et al., 2011). Second, there is limited research that has explored how employees’ perceptions of an inclusion climate can be fostered when an organization promotes the acceptance of demographic diversity among leaders. Third, scarce literature examines how employee perceptions of inclusion climate for leader diversity may influence their job attitudes and behaviors.

These are glaring gaps in the literature given that prior research reveals that:

• a diverse workforce is more positively influenced when they believe their organization has an inclusive climate (Bodla et al., 2018; Nishii, 2013);

• employees report inclusion is one of the benefits of a work environment that is perceived as open toward and appreciative of differences in leaders (Jansen et al., 2017);

• employee perceptions of management commitment to diversity influences important attitudes, like job satisfaction and commitment (Cho and Mor Barak, 2008; McCarty et al., 2005; Madera, 2018); and

• employees consistently indicate that inclusive climates in the workplace impacts various aspects of employee organizational life like innovation, trust, well-being, retention and service performance (Ali et al., 2022; 2014; Nishii, 2013; Travis and Mor Barak, 2010).

This study aims to address these literature gaps by developing a new construct and measure of perceived inclusion climate for leader diversity (PICLD). In doing so, the current research integrates inclusion and diversity to develop the PICLD scale. First, leader diversity refers to demographic characteristics that make them unique from those considered the majority. Second, inclusiveness reflects principles, processes or activities in an organization aimed to promote a culture where leaders from diverse demographic backgrounds are accepted, allowing them to thrive in their roles. On this basis, PICLD is conceptualized as the degree to which organizational members believe that organizational policies encourage and foster the acceptance of leaders who are demographically diverse. The new PICLD scale will measure employees’ perceptions of workplace inclusion based on the organizational practices that promote the acceptance of leaders from diverse demographic backgrounds and their interpersonal relationships with them. Therefore, attention must shift toward better understanding:

• What embodies a thriving PICLD from an employee standpoint?

• How do employees evaluate PICLD?

• How does PICLD influence employees’ attitudes and work-related behavioral outcomes (i.e. organizational justice, performance, engagement and turnover intention)?

This study aims to develop and validate a measurement construct for PICLD according to Hinkin et al.’s (1997) guidelines, structured around five key phases: Phase 1 involves conducting interviews with leaders and employees in the hospitality sector to generate a pool of potential scale items. In Phase 2, the face validity of these items is evaluated. Phase 3 is dedicated to assessing the content validity of the items. Phase 4 focuses on testing the construct and criterion validity of the scale. Finally, Phase 5 explores the scale’s relationships with variables like organizational justice, performance, engagement and turnover intention.

2. Literature review

2.1 Theoretical foundation and need for perceived inclusion climate for leader diversity scale

Shore et al. (2018) used the regulatory fit theory (Higgins, 1998) to argue that organizations have two ways of fostering a goal of perceived inclusion: prevention orientation and promotion orientation. Under prevention orientation, management adopts policies and practices to avoid exclusion concerning organizational safety and security. By showing commitment and compliance with laws through the adoption of appropriate procedures, organizations can avoid becoming liable due to exclusionary activities. While policies and processes can serve as the foundation for an inclusionary organization, they cannot alone indicate a commitment to diversity due to limiting perceived inclusion experiences for members from historically marginalized groups.

Under promotion orientation, management seeks growth and accomplishment to reach inclusionary climate goals. Unlike the prevention orientation approach, the promotion orientation approach actively seeks efforts to increase diverse representation among leaders (Lucas and Baxter, 2012). With increased organizational commitment via a promotion orientation approach, the number of management positions held by those of historically marginalized groups should also increase. Through the implementation of practices and processes, the theme of “recognizing, honoring, and advancing diversity” should foster a climate of inclusion, employees’ sense of perceived inclusion and show an organization’s ability to retain and expand talent, especially for diverse leaders. Employees can credit inclusion efforts based on their perceptions of the work group, the leader or the organization based on focused practices and processes.

Therefore, this research combines both approaches under the regulatory fit theory (i.e. prevention orientation and promotion orientation) established in literature to develop and advance an inclusive climate for leader diversity. Previously validated scales in the current literature focus primarily on the inclusion climate concerning diverse employees; however, they fall short of measuring the inclusion of leader diversity. Consequently, there is a lack of understanding of how organizational practices promoting leader demographic diversity acceptance might influence employees’ perceptions of workplace inclusivity. Theoretically, diversity in employee levels and leader levels is an important distinction. For example, an organization can have a diverse workforce, but a lack of diversity among its leaders might imply a barrier to leadership roles for employees from diverse backgrounds. The representation of different and diverse groups among leader ranks is important because leaders serve as role models, providing signals to employees from diverse backgrounds that the organization is inclusive. Moreover, prior research indicates that the inclusion of leader diversity is crucial because even when racial minorities are offered paths toward securing leadership positions, there may be conditions where they still experience prejudice and discrimination, negatively affecting their employment outcomes (Obenauer and Langer, 2019). As a result, embracing diversity in leaders should extend beyond creating equitable opportunities and shift toward becoming a continuous process after appointing diverse leaders. Thus, there is a need to measure the inclusion of leader diversity to understand how organizational practices promoting leader demographic diversity acceptance might influence employees’ perceptions of workplace inclusivity.

2.2 Similarities and differences to other inclusion climate scales

Research on inclusion encompasses several concepts, in which current inclusion climate scales that exist in literature can be found in Table 1 in supplementary content. In the following section, the distinctiveness and similarities of the new PICLD scale will be compared to other inclusion climate scales broken down into three categories: specific diversity characteristics, authenticity, belongingness and uniqueness and leadership behaviors.

Specific diversity characteristics. The climate for inclusion scale developed by Nishii (2013) emphasizes the elimination of gender interpersonal bias, whereas Nelissen et al.’s (2017) Inclusive climate scale aims to promote the acceptance and treatment of disabled colleagues. The new PICLD scale will be similar to Nishii’s (2013) climate for inclusion scale; in that, employees are able to assess diverse leaders’ inclusion in decision making. This means employees can evaluate if diverse perspectives of leaders are welcomed and integrated (Ely and Thomas, 2001; Mor-Barak and Cherin, 1998) and perceptions of organizational barriers aimed to silence (Morrison and Milliken, 2000) diverse leaders are removed to actively promote their inclusion. This will allow employees to understand the unique traits and backgrounds of leaders who are members of out-groups (Ensari and Miller, 2006). However, the new PICLD Scale will be different in that it does not just focus on one demographic characteristic (e.g. gender and disability), and instead is broadened to include all demographic characteristics that could make a leader unique. Moreover, it will measure employees’ perceptions about organizational directives regarding acceptance, treatment, and their ability to form interpersonal relationships with leaders from diverse demographic backgrounds.

Authenticity, belongingness and uniqueness: The inclusive climate scale by Jansen et al. (2014) gauges how employees perceive their workgroup’s ability to make them feel like they belong and can be authentic. Similarly, Chung et al.’s (2020) workgroup inclusion scale assesses inclusion by considering both belongingness and uniqueness, emphasizing that enhancing belongingness does not diminish individual uniqueness. Both scales measure group-level inclusivity. The new PICLD Scale will be distinct from Jansen et al.’s (2014) inclusive climate scale and Chung et al.’s (2020) workgroup inclusion scale. While it allows employees to assess whether diverse leaders have opportunities to fulfill their belongingness needs while retaining their individual differences, it will differ by measuring employees’ perceptions of how organizational practices promote diverse leaders’ group inclusion and their ability to interact with these leaders.

Leadership behaviors. The organizational diversity and inclusiveness scale developed by Mulqueen et al. (2012) measures employees’ perceptions of their leaders’ interpersonal skills and how their behaviors influence the development of organizational diversity and inclusion. The inclusive leadership scale developed by Al-Atwi and Al-Hassani (2021) measures how leadership behaviors contribute to fostering a sense of belongingness within employees. The new PICLD scale will be similar to Mulqueen et al.’s (2012) organizational diversity and inclusiveness scale and Al-Atwi and Al-Hassani’s (2021) inclusive leadership scale in that the attention will be on employees’ perceptions of inclusive organizational practices which are reflected by leaders. However, the new PICLD Scale will be unique from these two scales in that it will not measure employee’s perceptions of leadership behaviors in fostering an inclusion climate. Instead, it will measure employees’ beliefs that organizational practices are accepting of and encourage a fully inclusive climate for leaders who come from diverse demographic backgrounds.

3. Scale development methods and results

3.1 Phase one: Item generation

Participants and procedures. In the initial phase, we conducted interviews with four managers and six employees from the hospitality and tourism sector, using an inductive approach. This approach is chosen when exploring relatively uncharted territory or phenomena with limited existing theory (Hinkin et al., 1997). Respondents were asked to describe their feelings about leader diversity within organizations. The purpose of interviews was to use data to edit, modify, refine, add or eliminate scale items adopted from Kruithof’s (2001) Intercultural Group Climate Scale to measure the new PICLD construct. Adopting scale items from previously validated measurements increases the likelihood of their appropriateness and effectiveness in the context of the new scale (Keszei et al., 2010; Luijters et al., 2008) adopted Kruithof’s (2001) Intercultural Group Climate Scale while also drawing on Harquail and Cox’s (1993) argument that cultural diversity plays a central role in promoting inclusion among employees due to how an organizational group embraces and perceives this attribute to be advantageous to the organization. The new PICLD scale is similar in that it advocates for leader diversity, in which a leader’s differing characteristics are valued and tolerated because these attributes are perceived to be an advantage in organizational settings, ultimately playing a central role in both minority and majority employees’ feelings of inclusion. Refining Kruithof’s (2001) scale items in the context of leader diversity allowed us to emphasize the importance of organizational practices that promote their acceptance. When demographically diverse leaders are fully embraced, valued and perceived as an asset it can foster an increased sense of inclusivity within employees in their working environment.

In total, six questions were asked including: Do organizations value diversity at the management level? Is diversity important at the management level? How can organizations ensure there is diversity at the management level? Should employees believe there is diversity at the management level? What factors ensure employees that there is diversity at the management level? What factors inhibit diversity at the management level? Information gathered from informants helped create a pool of scale items for measuring the new construct. Interviews were carried out over a span of two weeks via a recorded Zoom call. Interviews lasted between 20 min to 1 h.

Results. Through the analysis of interview transcripts involving four leaders and six employees, along with the inclusion of six items from Kruithof’s (2001) Intercultural Group Climate Scale, a pool of 13 scale items was created for potentially measuring PICLD (see Table 2 in supplementary content).

3.2 Phase two: Face validity

Participants and procedures. In the second phase, a face validity check was conducted on scale items using Zaichkowsky’s (1985) guidelines. Checking for face validity is crucial in the scale development process because it determines the extent to which the construct measures what it is supposed to measure (Nunnally and Bernstein, 1995). 75 hospitality and tourism employees were recruited from the crowdsourcing platform Prolific, in which 61 respondents (85.2% female, M_age=34.4) submitted complete surveys. Those who participated in the study were compensated $1.05 for their efforts. Participants were instructed to assess the representativeness of each scale item aimed to measure the new construct. Based on the definition provided for PICLD, “as the degree to which organizational members believe that organizational policies encourage and foster the acceptance of leaders who are demographically diverse,” employees were instructed to rate whether each scale item is as follows: clearly representative; somewhat representative; and not representative of the new construct. Each item must receive a 75% agreement score of combined “clearly representative” or “somewhat representative” among judges to be retained as measurement items. If an item fails to receive a 75% agreement rate among judges, it was eliminated as a construct measure.

With the exception being Item 10 (34.4% agreement score among judges), all scale items surpass the threshold of 0.80 (see Table 2 in supplementary content). However, Item 10 was originally developed as a negatively worded item (i.e. In our organization, leaders from diverse demographic backgrounds are ignored) with the intention of being reverse scored for subsequent analysis but was modified to a positively worded item (i.e. In our organization, leaders from diverse demographic backgrounds are not ignored) to avoid respondent confusion.

3.3 Phase three: Content validity

Participants and procedures. In the third phase, scale items that passed face validity checks underwent a content validity check using Yusoff’s (2019) guidelines. Content validity is the degree for which elements of the assessment instrument are determined to be both relevant and representative of the targeted construct for a specific assessment purpose (Cook and Beckman, 2006; Haynes et al., 1995). Eight subject matter experts, being hospitality and tourism, and diversity, equity and inclusion (DEI) professors across various universities in the USA, were asked to rate each scale item’s ability to measure the new PICLD construct on a scale from 1 to 4: 1 = the item is not relevant to the measured domain; 2 = the item is somewhat relevant to the measured domain; 3 = the item is quite relevant to the measured domain; and 4 = the item is highly relevant to the measured domain. Two formulas were adopted to ensure content validity: scale content validity divided by average (S-CVI/Ave) and scale content validity divided by universal agreement (S-CVI/UA).

Results. Table 3 in supplementary content, shows that expert relevance rating results for S-CVI/UA was 0.69, which is below the 0.80 threshold suggested by Shrotryia and Dhanda (2019). To improve S-CVI/UA score Item 3 (i.e. “In our organization, leaders’ diverse demographic backgrounds are discussed openly”) and Item 4 (i.e. “In our organization, leaders’ diverse demographic backgrounds are taken into account”) were eliminated as construct measures. After removing these two items, the S-CVI/UA score was recalculated and showed improvement at 0.82 (see Table 4 in supplementary content), exceeding the 0.80 threshold to establish content validity (Shrotryia and Dhanda, 2019). Moreover, based on consistent expert feedback that Item 2 was double-barreled (i.e. “In our organization, we accept and understand leaders from diverse demographic backgrounds”), therefore it was divided into two separate items (i.e. “In our organization, we accept leaders from diverse demographic backgrounds” and “In our organization, we are understanding of leaders from diverse demographic backgrounds”). In total, the new PICLD scale has 12 measurement items.

3.4 Phase 4: Construct and criterion-related validity

In the fourth phase, this study adopts Hinkin et al. (1997) guidelines to ensure convergent, discriminant and criterion-related validity of the PICLD scale. Items for the new PICLD Scale derived from Phases 2 and 3 underwent initial testing for reliability and construct validation (Hair et al., 2014; Taheri et al., 2018). The objective was to confirm the PICLD Scale’s uniqueness compared to existing measures of diversity-oriented leadership and intercultural group climate. Diversity-oriented leadership, which involves leaders valuing contributions from employees of diverse backgrounds (Luu et al., 2019), shares elements with PICLD but focuses more on how leaders promote organizational diversity. In contrast, PICLD examines employee perceptions of an inclusive climate influenced by policies encouraging leader diversity acceptance. Intercultural group climate, defined as an environment of mutual respect and inclusion of culturally diverse employees (Harquail and Cox, 1993), also needed to be distinct from PICLD. This distinction was vital, especially as PICLD adopted four items from the original six-item intercultural group climate scale by Kruithof (2001) after adjusting the scale in Phase 3.

Furthermore, a criterion-related validity assessment check was conducted on the new construct measure in relation to job satisfaction. Previous research has shown climate for inclusion has a significant and positive relationship with employee job satisfaction (Brimhall and Mor Barak, 2018). Therefore, it is posited that PICLD will have a positive correlation with employee job satisfaction.

Participants and procedures. At a leadership training summit, 120 leaders from the US hospitality and tourism sector were recruited using a representative sampling method to participate in a survey. They were assured of data confidentiality, with access restricted to the study’s researchers. Respondents evaluated 25 statements on a seven-point Likert scale, ranging from “strongly disagree” (1) to “strongly agree” (7). Out of 120 distributed surveys, 100 were returned completed, resulting in an 83% response rate. Due to the sample size being under 200, it is classified as small, prompting the adoption of partial least squares (PLS) structural equation modeling (SEM) for data analysis, recognized for its efficacy in small sample contexts (Haenlein and Kaplan, 2004).

Measures. PICLD was measured using the 12 items validated that passed face and content validity checks in prior stages of scale development. Scales from Luu et al. (2019) and Kruithof (2001) provided measurements for diversity-oriented leadership and intercultural group climate, respectively. Job satisfaction was measured using a scale developed by Cammann et al. (1983), refer to Table 1.

Common method variance. The data were collected through self-reports from a single source, making it crucial to address potential common method bias (Podsakoff et al., 2003). This phase of scale development incorporated procedural safeguards and statistical techniques to mitigate such bias. Participants were guaranteed anonymity, ensuring data would remain exclusive to the research team (Podsakoff et al., 2003). Further, exploratory factor analysis (EFA), using Harmon’s single factor test, indicated the predominant factor accounted for only 42% of the total variance, staying below the 50% threshold that signifies concern (Podsakoff and Organ, 1986). These steps verified that common method bias was not a significant issue in our data.

Outer model results. In the initial phase, the study assessed factor loadings of scale items, with all but one item for intercultural group climate (Item 2 = 0.17), exceeding the 0.50 threshold for inclusion (Costello and Osborne, 2005). This item was removed, and the rest advanced for further analysis. Cronbach’s alpha values for all constructs were above 0.70, demonstrating internal consistency (Nunnally, 1978). Composite reliability for all constructs passed the 0.70 mark, and AVE scores exceeded 0.50, confirming convergent validity (Fornell and Larcker, 1981). Multicollinearity was dismissed as VIF values were under 10 (Chatterjee and Price, 1991; Midi and Bagheri, 2010), detailed in Table 1. The Fornell–Larcker criterion and the heterotrait–monotrait (HTMT) ratio of correlations confirmed discriminant validity, with AVE square roots surpassing inter-construct correlations and HTMT values below 0.85 (Henseler et al., 2015), seen in Tables 5 and 6 of supplementary content.

Structural model results. Bootstrapping analysis with 5000 resamples was performed, which revealed that diversity-oriented leadership (β = 0.49, p < 0.01), intercultural group climate (β = 0.21, p < 0.05) and PICLD (β = 0.17, p < 0.05) had a significant and positive relationship with satisfaction. For more details on structural model results refer to Table 7 in supplementary content.

3.5 Phase 5: Nomological network

Following Hinkin’s (1995) guidelines, this study assesses the nomological validity of the new PICLD construct in its associations with other variables including organizational justice, performance, engagement and turnover intention. In total, four hypotheses were empirically tested including:

H1.

PICLD will have a positive influence on organizational justice.

H2.

Organizational justice will mediate the relationship between PICLD and employee work performance.

H3.

Organizational justice will mediate the relationship between PICLD and employee work engagement.

H4.

Organizational justice will mediate the relationship between PICLD and employee turnover intention.

The supplementary content document provides an extensive literature review and in-depth theoretical reasonings for all the hypotheses proposed in Figure 1.

Participants and procedures. Using Prolific, 220 hospitality and tourism employees were recruited. Employees were instructed that they had to work in a customer service facing role in the hospitality and tourism sector (i.e. restaurants, hotels, catering, cruising, etc.) in the USA to participate in the current study. Participants were redirected from Prolific to Qualtrics via a link to complete survey questionnaires, who were assured of anonymity, with data accessible only to this study’s researchers. Participants were instructed to use their unique Prolific-generated code for data linkage across two collection points to avoid common method bias issues (Kock et al., 2021). Employees were compensated for submitting completed survey questionnaires (Time 1 = $1.63 and Time 2 = $1.63). At Time 1, employees evaluated the new PICLD Scale, organizational justice (mediator) and were asked to provide demographic information. Two weeks later, those of the original 220 employees who submitted completed surveys in Time 1 were invited back to complete surveys in Time 2. In Time 2, 183 employees completed survey questionnaires where they evaluated their performance, work engagement and turnover intention.

To make sure the sample size was adequate for model assessment, a priori sample size calculation was conducted (Soper, 2021; Westland, 2012). This calculation was used with an anticipated effect size of 0.30, desired statistical power level set to 0.8 and 0.05 input as the required probability level, whereby a required sample size of 150 was revealed. The current data set consisted of 183 participants, surpassing the minimum requirement for model assessment. However, the sample size was still considered small (less than 200). Therefore, PLS-SEM was chosen for data analysis as it has been shown to be useful for analyzing conceptual models with smaller sample sizes (Haenlein and Kaplan, 2004).

Measures. PICLD was measured using 12-items that passed the face, content and construct validity checks in Phases 2, 3 and 4 of scale development. Sample items include, “In our organization, we think positively about leaders from diverse demographic backgrounds” and “In our organization, it is important to include leaders from diverse demographic backgrounds.” Organizational justice was measured using a six-item scale adopted from Ambrose and Schminke (2009). Sample items include, “In general, I can count on this organization to be fair” and “In general, the treatment I receive around here is fair.” Performance was measured by adopting Williams and Anderson’s (1991) 6-item scale. Sample items include, “I adequately complete assigned duties” and “I meet formal performance requirements of the job.” Engagement was measured with a six-item scale adopted from Saks (2006). Sample items include, “Being a member of this organization is very captivating” and “I am highly engaged in this organization.” Turnover intention was measured using a four-item scale developed by Walsh et al. (1985). Sample items include, “I am starting to ask my friends/contacts about other job possibilities” and “I am thinking about quitting my job.”

Demographics. For more details regarding respondent demographics refer to Table 8 in supplementary content.

Common method variance. To address potential common method bias, two statistical analyses were conducted. Initially, an EFA using principal axis factoring extraction was performed. This aimed to ascertain the unrotated factor count and explain data variance (i.e. Harman’s one-factor, Podsakoff et al., 2003). The EFA revealed five factors with eigenvalues exceeding 1.0, indicating no dominant single factor. The largest factor explained only 20.90% of variance, significantly below the 50% threshold (Podsakoff et al., 2003). Additionally, a confirmatory factor analysis (CFA) was conducted with AMOS, and the results showed that the one-factor model had a significantly poorer fit (χ2 = 1292.733, df = 526, p< 0.001, χ2/df = 2.458 < 3, CFI = 0.879, IFI = 0.880, RMSEA = 0.089) compared to the five-factor model (χ2 = 1114.033, df = 517, p < 0.001, χ2/df = 2.155 < 3, CFI = 0.906, IFI = 0.907, RMSEA = 0.080). After analyzing the EFA and CFA results, it was determined that there was no common method bias in the data set. Subsequently, we used the partial least squares (PLS) method, specifically SmartPLS 4, for measurement and structural model analysis.

Measurement model analysis. For more information on descriptives and correlations among variables, refer to Table 9 in supplementary content. Scale items for all constructs had factor loadings that exceeded the 0.50 benchmark (see Table 10 in supplementary content); therefore, all items were retained (Costello and Osborne, 2005). The Cronbach’s alpha values for PICLD (α = 0.96), organizational justice (α= 0.94), performance (α = 0.91), engagement (α = 0.95) and turnover intention (α = 0.95) exceeded the 0.70 threshold, indicating internal consistency (Nunnally, 1978). The AVE scores for PICLD (0.69), organizational justice (0.79), performance (0.70), engagement (0.81) and turnover intention (0.86) all surpassed the 0.50 threshold, establishing convergent validity (Fornell and Larcker, 1981). All composite reliability scores for PICLD (0.96), organizational justice (0.96), performance (0.93), engagement (0.96) and turnover intention (0.96) exceeded the 0.70 benchmark, further confirming convergent validity (Fornell and Larcker, 1981), refer to Table 10 in supplementary content. According to the Fornell-Larcker criterion (see Table 11 in supplementary content), all constructs square root of AVE were greater than the other construct’s coefficients, indicating discriminant validity (Fornell and Larcker, 1981). The HTMT ratio of correlations were all below 0.85 (see Table 12 in supplementary content), indicating further discriminant validity (Henseler et al., 2015).

Structural model analysis. Bootstrapping, with 5,000 subsamples, confirmed a significant and positive relationship between PICLD and organizational justice (β = 0.579, p < 0.001), supporting H1. Following Hayes and Scharkow’s (2013) guidelines, mediation effects are established when the 95% CI does not encompass zero. PICLD was found to have a statistically significant indirect effect on performance through organizational justice with a standard estimate of 0.139 (95% CI = 0.070; 0.246), supporting H2. PICLD was found to have a statistically significant indirect effect on engagement through organizational justice with a standard estimate of 0.341 (95% CI = 0.254; 0.439), supporting H3. Finally, PICLD was found to have a statistically significant indirect effect on turnover intention through organizational justice with a standard estimate of −0.323 (95% CI= −0.422; −0.244), supporting H4 (refer to Table 2).

4. Discussion

4.1 Theoretical implications

This study has several theoretical implications. First, the unequal representations of those who carry with them diverse characteristics can be attributed to inequality in all organizational hierarchies (Morfaki and Morfaki, 2022), but more specifically for those on the management level. Morfaki and Morfaki (2022) suggest investigating the role of leaders in combination with internal organizational contexts (i.e. organizational culture, strategy and human resource practices) to promote better inclusion so that performance levels can increase for all members. This study responds to this research gap by examining employees’ perceptions of whether organizational policies promote and support leader demographic diversity. Given the absence of an existing instrument in the literature to gauge an inclusive climate for leader diversity from an employee viewpoint, this study introduces a novel PICLD Scale.

Second, the new PICLD construct and scale contributes to inclusion, diversity and leadership literature. Specifically, the current paper developed a new construct – PICLD – and its measure to show how employees use organizational policies and practices to make perceptions of how an organization fosters diversity among leader positions. Research indicates that employees are genuinely concerned about how they will be treated within an organization. It is crucial for them to work for companies that prioritize fair treatment and personal development (Greening and Turban, 2000). In essence, organizational members often hold implicit expectations that their current or prospective workplace will uphold fairness. By implementing organizational policies that encourage and foster the acceptance of leader demographic diversity, organizations send a powerful signal to their members. In doing so, organizations demonstrate a commitment to egalitarian values that align with the implicit expectations of fair treatment within the organization. Using a SET lens, this commitment, in turn, can foster a positive perception among employees, strengthening their belief in the organization’s dedication to treating individuals fairly. As shown in the nomological validity study (Phase 5), the current study provides evidence that PICLD does positively relate to organizational justice. Thus, the new PICLD and its measures provide scholars researching inclusion, diversity and leadership with new avenues for future research.

Third, Garg and Sangwan (2021) lament that studies on diversity and its outcomes are abundant, but atheortical. The scholars suggest that future research examine the topic of inclusion and related outcomes using theoretical support. The current study answers to this call for research by proposing relationships between PICLD with outcomes including organizational justice, performance, engagement and turnover intention, while drawing from Blau’s SET (Blau, 1964) to justify the proposed relationships. Organizations must work to remove unfair barriers that inhibit group cohesion (Hu and Liden, 2015) by relaying honest signals to support established diversity and inclusion objectives. Issues of diversity, conflict and turnover decrease when organizations promote a climate of inclusion (Nishii, 2013) for leader diversity. Therefore, organizations must foster inclusionary climates for leader diversity deemed fair to align with their DEI initiatives to relay honest signals to employees. In doing so, employees will be more motivated to contribute toward fair inclusionary practices by increasing their levels of performance, engagement and lowering their turnover intention, which will help the organization secure a competitive advantage.

Fourth, Li et al. (2019) posit that the majority of investigations in current literature examine fairness climate or integrate inclusion and fairness items into one measurement. Additionally, studies conducted on inclusion climate are restricted in that more focus is placed on the fairness dimension (Li et al., 2019). The current study addresses this by investigating PICLD and organizational justice as two distinct measures. The results indicate that an inclusive climate for leader diversity positively has a direct and separate influence on employees’ perceptions of organizational justice.

Fifth, this study expands on the understanding of the regulatory fit theory developed by Higgins (1998), in which Shore et al. (2018) proposed two methods that can foster the goal of inclusion: prevention orientation and promotion orientation. The current research draws from both the prevention and promotion orientation framework and posits that by fostering an inclusive climate founded on policies that encourage the acceptance of leader diversity, employees will perceive that organizational practices actively generate opportunities for those who come from historically marginalized groups to retain their talent. The newly developed PICLD scale helps to establish an inclusion climate that is perceived amongst employees and illustrates an organization’s ability to retain and expand diverse leader talent.

4.2 Practical implications

The development of the PICLD scale also has several practical implications. First, it can help find specific barriers that could potentially cause diverse leaders to feel excluded in an organization, such as bias and discrimination (Stamps, 2021). By administering this scale, it can assist with designing interventions to tackle barriers to promote a more inclusive climate for leader diversity. Second, this scale can serve as a valuable tool for organizations to assess the need for progress or to pinpoint areas requiring improvement in fostering an inclusive climate that encourages leader diversity. Through cultivating an inclusive environment that embraces leader diversity, organizations can effectively harness the advantages of varied viewpoints and experiences (Thomas and Ely, 1996) at the management level.

Furthermore, this study found a positive connection between PICLD and employees’ perceptions of organizational justice. Therefore, it is recommended that organizations reevaluate their policies in regard to improving, recruiting and retaining leaders from diverse demographic backgrounds to enhance employee perceptions of organizational justice. Nishii et al. (2017) states that organizations often implement diversity programs without setting clear expectations for outcomes. Therefore, organizations should be mindful when designing programs aimed to improve, recruit and retain leader diversity through an inclusion climate that one of the outcomes is to enhance employee perceptions of organizational justice.

Finally, organizations are encouraged to foster an inclusive workplace, particularly for diverse leaders, by nurturing mutual understanding and acceptance within the management team. Studies have shown that integrating diverse viewpoints, especially from underrepresented minority groups, into management roles allows these individuals to identify and address imbalances in personnel management and decision-making (Andrews and Ashworth, 2015). Such disparities can negatively impact employee performance and engagement and potentially increase their likelihood of leaving the organization (Shore et al., 2018; Roberge et al., 2021), especially if they feel that the management does not support an inclusive environment receptive to diverse leader perspectives. In today’s contemporary society, we must assume that biases among managers often stem from misinformation and long-standing work practices. It is crucial for managers to be receptive to differing opinions, understanding that these discussions are not personal attacks. Welcoming diverse managerial perspectives is key to breaking down systemic barriers and establishing an inclusive culture. This approach not only allows leaders from historically underrepresented groups to prosper in their roles but also plays a significant role in lowering employee turnover and enhancing their engagement and performance.

4.3 Limitations and future studies

This study comes with limitations. First, all scale development procedures were carried out using a sample of hospitality and tourism employees, leaders and college educators working in the USA, future research should test this scale in different countries (i.e. Turkey, Philippines, China, Australia, etc.) and work sectors (i.e. medical, construction, education, etc.) or more specific service sectors (i.e. casinos, cruising, events, etc.) to improve generalizability. Second, in the fifth phase of scale development, this study did not incorporate an objective outcome measure while assessing the nomological validity of the newly developed PICLD construct alongside other variables. Consequently, interpretations of the results should be approached cautiously, as the ability of PICLD to predict outcomes like organizational justice, performance, engagement and turnover intention may appear subjective. It is strongly recommended that future studies explore the predictive capacity of PICLD more conclusively by incorporating objective measures (e.g. turnover rate, employee income, RevPAR, etc.) into their conceptual framework to address this limitation. Moreover, the current study does not examine moderators on the relationship between PICLD and outcomes. Future research should investigate whether an interaction effect exists by testing employees’ perceived ethics, inclusion/exclusion and demographic characteristics (e.g. age, race, gender, etc.) for a moderation effect between PICLD and organizational justice. Fourth, the current study investigates organizational justice as a mediator between PICLD and various outcomes (i.e. performance, engagement and turnover intention), in which future research should explore additional mediators such as trust, corporate integrity and organizational support. Finally, future research should consider examining different outcomes of PICLD, such as voice behavior, OCB and innovative behavior.

Figures

Figure 1.

Conceptual model

Table 1.

Standardized loadings, VIF, Cronbach’s alpha, composite reliabilities and AVE

Variable	Item	Loading	VIF	Alpha	CR	AVE
Intercultural group climate	1. In our organization, we think positively about cultural differences of colleagues	0.791	1.871	0.802	0.861	0.840
	2. In our organization, we understand and accept different cultures. Eliminated
	3. In our organization, we recommend working with people with culturally different backgrounds	0.858	2.537
	4. In our organization, differences in cultural backgrounds are discussed openly	0.710	1.624
	5. In our organization, we take differences in traditions and habits (like religion, celebrations) into account	0.793	2.306
	6. In our organization, we see the advantage of differences in cultural backgrounds of employees	0.833	2.506
Diversity-oriented leadership	1. My manager is committed to a workforce representative of all segments of society	0.929	4.172	0.936	0.954	0.840
	2. My manager works well with employees of different backgrounds	0.926	5.456
	3. I feel that my manager does a good job of managing people with diverse backgrounds	0.957	7.455
	4. My manager asks for the input of employees that belong to different demographic and expertise groups	0.852	2.340
Perceived inclusion climate for leader diversity	1. In our organization, we think positively about leaders from diverse demographic backgrounds	0.756	3.239	0.922	0.934	0.545
	2. In our organization, we accept leaders from diverse demographic backgrounds	0.788	3.400
	3. In our organization, we are understanding of leaders from diverse demographic backgrounds	0.826	3.220
	4. In our organization, we advocate working with leaders from diverse demographic backgrounds	0.827	3.574
	5. In our organization, we see the advantage of having leaders from diverse demographic backgrounds	0.733	2.129
	6. In our organization, we have opportunities to work with leaders from diverse demographic backgrounds	0.814	2.757
	7. In our organization, it is important to include leaders from diverse demographic backgrounds	0.591	2.698
	8. In our organization, we expect to work with leaders from diverse demographic backgrounds	0.600	2.134
	9. In our organization, leaders from diverse demographic backgrounds are not ignored	0.564	1.772
	10. In our organization, we are comfortable working with leaders from diverse demographic backgrounds	0.810	2.917
	11. In our organization, we try to retain leaders from diverse demographic backgrounds	0.695	2.149
	12. In our organization, it is transparent that leaders are representative of diverse demographic backgrounds	0.782	2.433
Satisfaction	1. All in all I am satisfied with my job	0.945	3.364	0.766	0.865	0.691
	2. In general, I do not like my job	0.560	1.171
	3. In general, I like working here	0.932	3.343

Notes:

Loadings: standardized loadings; VIF = variance inflation factor; Alpha = Cronbach’s alpha; CR = composite reliabilities; AVE = average variance extracted

Source: Authors’ own creation

Table 2.

Hypothesis testing results

	β	t-value	CIL	CIU	P	Decision
H1. PICLD → justice	0.579	9.686	0.462	0.683	0.000	Supported
H2. PICLD → justice → performance	0.139	3.033	0.070	0.246	0.003	Supported
H3. PICLD → justice → engagement	0.341	6.937	0.254	0.439	0.000	Supported
H4. PICLD → justice → turnover	−0.323	7.089	−0.422	−0.244	0.000	Supported

Notes:

CIL = lower-level confidence interval; CIU = upper-level confidence interval; P = p-value; PICLD = perceived inclusion climate for leader diversity

Source: Authors’ own creation

Supplementary material

The supplementary material for this article can be found online.