Paying to Reduce Disparity: Financially Incentivizing Workforce Diversity and its Effects on Managers’ Promotion Decisions and Employees’ Effort

Authors

Bret S. Sheeley, University of Nebraska-LincolnFollow

First Advisor

Todd Thornock

Committee Members

Amy Bartels, Ling Harris, Tom Omer, Marjorie Shelley, Todd Thornock

Date of this Version

5-2024

Document Type

Dissertation

Citation

A dissertation presented to the faculty of the Graduate College at the University of Nebraska in partial fulfillment of requirements for the degree of Doctor of Philosophy

Major: Business (Accountancy)

Under the supervision of Professor Todd Thornock

Lincoln, Nebraska, May 2024

Comments

Copyright 2024, Bret S. Sheeley. Used by permission

Abstract

Disparities in employee representation persist in higher-level organizational positions despite recent attention to workforce diversity and its associated benefits. In response, companies have begun integrating diversity initiatives with varying degrees of specificity (hereafter, “initiative specificity”) into their managers’ compensation packages to increase underrepresented employees’ representation in higher-level organizational positions. This study uses an experiment to examine how offering managers financial incentives to accomplish diversity initiatives (hereafter, “diversity incentives”) and initiative specificity interact to influence managers’ promotion decisions and employees’ effort choices in a promotion setting.

The results suggest that as underrepresented employees’ pre-promotion efforts increase relative to overrepresented employees’ efforts, diversity incentives increase managers’ likelihood of promoting underrepresented employees. Diversity incentives also increase managers’ extrinsic diversity motives, which prior research suggests may adversely affect their prejudice regulation in the workplace. Initiative specificity does not affect managers’ promotion decisions or extrinsic diversity motives.

I also find that employees choose similar pre-promotion efforts regardless of their group membership or managers’ diversity incentives. Responses to post-experiment questions suggest that employees expect managers to promote them based on effort instead of group membership. After the promotion decision, non-promoted employees whose managers receive diversity incentives choose the lowest effort. This study adds to the growing literature examining how to advance diversity within higher-level organizational positions and clarifies how incentives interact at different hierarchical levels within a company.

Advisor: Todd Thornock