Research,the application of ideas from the literature, problem solving and critical analysis (REPORT)

Transforming Human Resource Management Systems to Cope with Diversity

Fernando Martı́n-Alcázar •

Pedro M. Romero-Fernández •

Gonzalo Sánchez-Gardey

Received: 10 March 2010 / Accepted: 22 September 2011 / Published online: 13 October 2011

� Springer Science+Business Media B.V. 2011

Abstract The purpose of this study is to examine how

workgroup diversity can be managed through specific

strategic human resource management systems. Our review

shows that ‘affirmative action’ and traditional ‘diversity

management’ approaches have failed to simultaneously

achieve business and social justice outcomes of diversity.

As previous literature has shown, the benefits of diversity

cannot be achieved with isolated interventions. To the

contrary, a complete organizational culture change is

required, in order to promote appreciation of individual

differences. The paper contributes to this discussion by

exploring the implications of this change for human

resource management, and explaining how the systems of

practices should be changed when they are directed to

diverse groups. The model designed to test this notion

includes: (1) demographic and human capital diversity as

independent variables, (2) group performance (measured as

innovation outcomes) as the dependent variable and, (3) the

orientation of the strategic human resource management

system as a potential moderator of this relationship. The

main conclusion of the empirical analysis developed is that

different patterns of human resource management practices

can be used, depending on the type of diversity that the

organization faces, and the specific effects that it wishes to

manage. Concretely, three alternative management systems

are identified in this paper, with different moderating

effects. This result has interesting implications for human

resource management professionals, explained in the last

section. The limitations of this study are also discussed, as

well as some issues that future research in this field should

address.

Keywords Diversity � Strategic human resource management � Cognitive processes � Affective processes � Equality

Abbreviations

SHRM Strategic human resource management

SEM Structural equations modeling

Introduction

Recent empirical studies have confirmed that diversity is a

multifaceted reality, with important competitive and ethical

implications (McMahon 2010). As Gilbert et al. (1999)

argued increased diversity implies a ‘new organizational

paradigm’, which requires systematic and planned change

efforts. In the last two decades, organizations have reacted

differently to increasing workforce diversity. The first

attempts to respond to this phenomenon followed an

‘affirmative action’ approach. Affirmative action has been

defined as a ‘‘program designed to equalize hiring and

admission opportunities for historically disadvantaged

groups by taking into consideration those very character-

istics which have been used to deny equal treatment’’

(Shaw 1988, p. 763). Although the intent of affirmative

action is to ensure equal opportunities, these policies are, in

many cases perceived as ineffective and unjust. Several

F. Martı́n-Alcázar � P. M. Romero-Fernández � G. Sánchez-Gardey (&) Facultad de Ciencias Económicas y Empresariales,

University of Cádiz, Glorieta de Carlos Cano, s/n,

11002 Cádiz, Spain

e-mail: [email protected]

F. Martı́n-Alcázar

e-mail: [email protected]

P. M. Romero-Fernández

e-mail: [email protected]

123

J Bus Ethics (2012) 107:511–531

DOI 10.1007/s10551-011-1061-0

implementation problems and negative reactions associated

to affirmative action have been identified. The majority of

them are explained by the negative impact of preferential

selection, which is based on irrelevant workplace charac-

teristics (Gilbert et al. 1999; McMillan-Capehart et al.

2009).

Taking the limitations of affirmative action into account,

many organizations have changed they way in which they

address diversity, following a ‘Diversity management’

approach (Kelly and Dobbin 1998). Diversity management

can be defined as ‘‘a voluntary and planned program

designed to make differences between employees a source

of creativity, complementarity and greater effectiveness’’

(Stockdale and Crosby 2004, p. 12). Under this new

approach, organizations actively seek to take advantage of

differences between employees (Ivancevich and Gilbert

2000; Yang and Konrad 2011). Authors as Syed and Kra-

mar (2009) and Noon (2007) have recently criticized this

‘business case approach’ to managing diversity, arguing

that it is detrimental to equality and social justice. The

replacement of the social justice rationale by the business

rationale has potentially ‘fatal flaws which can undermine

equality outcomes and might ultimately prove to be dan-

gerous for social justice’ (Noon 2007, p. 773). As a con-

sequence of this, to what extent diversity management

programs can help the organization to create a sustainable

competitive advantage still remains in question (Kamp and

Hagendorn-Rasmussen 2004; Bendick et al. 2010).

Considering the above arguments, we can conclude that

neither ‘affirmative action’ nor the traditional ‘diversity

management’ approach has been fully able to simulta-

neously achieve business and social justice outcomes

associated with a diverse workforce. As Syed and Kramar

(2009) explained, a relational, multilevel framework of

managing diversity is required, focusing on a complete

organizational culture change (Gilbert et al. 1999, p. 66).

Diversity management requires a complete reconsider-

ation of strategic human resource management (SHRM), as

Roberson and Park (2007) and Cook and Glass (2009)

suggested. Commonly accepted definitions of SHRM

describe it as a function that involves systematically link-

ing human resource management philosophy and practices

to the strategic and social needs of the organization (Wright

and McMahan 1992; Jackson and Schuler 1995; Lavelle

et al. 2009). SHRM involves designing and implementing a

SHRM system, which can be defined as a specific set of

internally consistent polices and practices that are directed

at attracting, developing and maintaining firm’s human

capital (Martı́n et al. 2005a, b; Ferguson and Reio 2009).

As Kochan et al. (2003) explained the extent to which the

organization achieves equality and competitive benefits

from diversity depends on how it designs its SHRM system.

Policies such as compensation, recruitment or motivation

should be substantially changed when they are oriented

toward a heterogeneous workforce, as differences between

employees normally involve disparities of interests and

reactions. Nevertheless, as Benschop (2001) noted, the

majority of SHRM models have implicitly assumed work-

forces to be generic and homogeneous categories, without

considering internal differences between employees. Con-

sidering these limitations, authors as Kossek and Lobel

(2001) and Kochan et al. (2003) have noted the need to

incorporate diversity in the SHRM debate. This task has been

highlighted as one of the main challenges that future research

on SHRM must address (Curtis and Dreachslin 2008).

The purpose of this article is to contribute to this debate

exploring how the SHRM function has to change to cope

with diversity. In the first part of this article, we will

analyze how extant literature in the field of SHRM has

treated diversity. Secondly, we will move to the diversity

literature, looking for evidences about the effects of

diversity and the extent to which they can be managed

through a certain set of practices. A diversity-oriented

SHRM model will be proposed integrating arguments from

both fields of research.

Group Diversity and SHRM: Review of the Literature

Efforts to develop SHRM models orientated toward man-

aging diverse groups are still weak, and presented in too

general terms (Kossek and Lobel 1996; Benschop 2001).

Broadly speaking, and summarizing our review of previous

research, we argue that the way SHRM models have

introduced diversity has the following limitations.

1. A universalistic perspective: The majority of the studies

reviewed were intended to identify the best SHRM

practices to make heterogeneous groups perform better

(Arvey et al. 1996, 1975, Barber and Daly 1996). These

papers provide interesting suggestions about the way to

manage diversity, although the recommended practices

are analyzed in isolation and therefore fail to explain the

role that an SHRM system can play in this context.

Therefore, their conclusions must be taken with caution,

because of the limitations of the universalistic approach.

As Jackson et al. (1989), Brewster (1999), and March-

ington and Grugulis (2000) have pointed out, univer-

salistic models simplify reality in terms of direct and

linear causal relationships, so complex effects of group

diversity are difficult to explore.

2. Prescriptive orientation The few models proposed to

explain the role of SHRM in diversity management

have basically focused on recommending professional

512 F. Martı́n-Alcázar et al.

123

tools rather than on explaining the conditions under

which strategies can moderate the effects of diversity

(Richard and Johnson 2001).

3. ‘‘Black box’’ perspective As a consequence of previous

limitations, the effects of diversity have been consid-

ered only as simple relationships, without exploring

potential mediating and moderating factors that could

help to explain this complex reality (Lawrence 1997).

4. Lack of consensus regarding the concept of diversity:

Reviewing previous studies, we found that academics

normally do not select the same attributes to analyze

differences between individuals. Thus, as Richard

et al. (2002) indicated, scholars must pay special

attention to their definitions of the concept of diversity,

because their findings can vary substantially with

respect to different individuals’ characteristics.

5. Lack of specific SHRM typologies to describe the

different combinations of policies and practices

through which diversity can be managed. The majority

of papers draw on generic strategic patterns, but very

few empirical analyses have been proposed to describe

particular systems of diversity management practices.

Diversity-oriented initiatives are normally analyzed in

isolation, without exploring interrelationships and

synergies between them.

The Concept of Diversity

Several concepts and measures of diversity have been

introduced, focusing on different attributes, or using dif-

ferent indices to assess heterogeneity. As outlined above,

this explains the divergence of findings in prior research,

making it difficult to compare results. As Jackson et al.

(2003a, b) pointed out, the majority of scholars who have

empirically analyzed the effects of diversity have focused

on certain isolated demographic attributes. From their

review of the literature, it emerges that 51% of the

empirical studies focused on a single diversity variable, and

that only 25% of them analyzed four or more attributes

simultaneously. They also observed a clear preference for

readily detected and objective variables. In fact, tenure,

gender and ethnic diversity represented 38, 23, and 14%,

respectively of the empirical studies included in Jackson

et al.’s (2003a, b) meta-analysis. Nevertheless, it is also

possible to find studies that have assessed other, less visible

dimensions of diversity, such as values or cognitive attri-

butes, measuring them through demographic proxies that

are not tested but assumed. These indirect measures have

been criticized because, by simplifying reality, they fail to

explain internal relationships among different diversity

variables (Milliken and Martins 1996; Lawrence 1997;

Priem et al. 1999). As Jackson et al. (2003a, b) and Har-

rison and Klein (2007) noticed, it is necessary to concep-

tualize diversity in a more complex manner, not only

considering independent effects but also exploring more

deeply the internal elements and relationships that com-

prise the diversity construct.

In an attempt to respond to Jackson et al. (2003a, b)

call for a multidimensional approach to defining diversity,

we propose a concept that differentiates between two

dimensions that are closely interrelated: demographic

diversity and human capital diversity (Fig. 1). Underlying

this distinction is the assumption that demographic dif-

ferences influence group work not by themselves but

through other less visible variables that directly add value

to group activity, such as ‘‘knowledge, skills and other

forms of know-how’’ (Cornelius 2002, p. 119). In this

context, we consider that demographic diversity influ-

ences group dynamics because it determines a heteroge-

neous composition of a group’s human capital. Human

capital measures the added value embedded in group

members, so it can be considered the main input of group

processes (Lin 2001). As we can observe, this definition

of diversity is consistent with the SHRM model proposed,

and it allows differentiation between two kinds of heter-

ogeneity from which we can expect different conse-

quences for group dynamics.

Specifically, the attributes that describe the demographic

composition of workgroups can be classified according to

the literature into two categories (Lawrence 1997; Hope-

Pelled et al. 1999): (1) immutable characteristics such as

age, gender and nationality and, (2) a certain set of vari-

ables that describe individuals’ backgrounds, such as uni-

versity degrees, training, tenure and functional experiences

(Wiersema and Bird 1993).

On the other hand, to introduce human capital diversity,

we have expanded its traditional definition as a set of

knowledge, skills and abilities (Schultz 1961; Becker 1964;

Kilker 1966). For this purpose, we have considered two

other attributes that also add value to group dynamics and

that have been specially highlighted by diversity research:

values and individuals’ cognitive approaches (Daniels

et al. 1994; Gelfand et al. 1996). These concepts refer to

those ‘‘other forms of know-how’’ introduced by Lin

(2001). Following Lawrence (1997) and Harrison et al.

(1998), we consider that human capital diversity is directly

determined by demographic differences, so a causal rela-

tionship between both concepts has been included in the

model, as Fig. 1 shows.

Transforming Human Resource Management Systems 513

123

The Effects of Diversity on Group Dynamics

As suggested previously, a major assumption of our model

is that demographic diversity influences group dynamics by

determining a heterogeneous human capital pool (Gelfand

et al. 1996; Appelbaum et al. 1999). To understand the

effects of diversity, it is first necessary to consider certain

mediating processes through which heterogeneity influ-

ences group performance. The necessity to include these

intervening variables has been empirically demonstrated,

through formal tests for mediation that explored whether

group dynamics intervene in the relationship between

diversity and performance. Studies such as those proposed

by Shaw (1981), Elron (1997), and Chatman and Flynn

(2001) found support for this hypothesis, concluding that

diversity affects group outcomes through certain processes.

Reviewing the literature, we found several potential

mediators of the effects of diversity. To include these in the

empirical model, it was necessary to classify and order

them. To do so, and drawing on Milliken and Martins

(1996) and Benschop (2001), we distinguished between the

two following categories.

1. Cognitive effects Several studies have stressed that

diversity affects the way in which groups perceive

stimuli, process information and adopt decisions.

Underlying this argument is the assumption that

diverse demographic characteristics lead to different

cognitive characteristics (Olson et al. 2007). These

different mental models influence the decisions groups

make and how individuals interact in groups (Phillips

et al. 2006). Following Klimoski and Mohammed

(1994) and Prahalad and Bettis (1986), it is also

possible to speak of a ‘‘group mental model’’ as a

shared cognition that emerges from the interaction of

individuals. Diversity defines work groups character-

ized by the confluence of different cognitive

approaches, and this has consequences for basic group

processes. In this context, Cox (1993) and Rosenzweig

(1998) suggested that heterogeneity can lead to

positive synergies in idea generation and the percep-

tion of opportunities, because of the broader basis of

the shared mental model. Positive consequences have

also been posited about the meaning of decision-

making processes, basically in terms of creativity and

innovation (Rosenzweig 1998; Shaw and Barrett-

Power 1998; Dunphy 2004; Bassett-Jones 2005).

Nevertheless, negative cognitive effects have also

been found because of the difficulty in achieving

consensus, conflict resolution, decision making or

because of the generation of too many alternative

solutions (Jehn 1995; Milliken and Martins 1996;

Knight et al. 1999).

Hypothesis 1 Cognitive processes mediate the relation-

ship between diversity and group performance.

2. Affective effects In addition to cognitive effects,

scholars have argued that diversity is also likely to

have affective consequences on group cohesion,

Human Capital

diversity

+

+

+

+

+

+

Demographic diversity

Age diversity

Gender diversity

Nationality diversity

Educational level diversity

Training diversity

Tenure diversity

Functional diversity

Knowledge diversity

Cognitive diversity

Experience diversity

Value diversity

+

+ + + + +

Fig. 1 Multidimensional concept of diversity

514 F. Martı́n-Alcázar et al.

123

satisfaction and commitment (McKay et al. 2009;

Bendick et al. 2010). Affective effects of diversity

have been supported mainly by the social identity and

social categorization theories (Taylor et al. 1978;

Turner 1987; Jackson et al. 1995; Williams and

O’Reilly 1997). Byrne’s (1971) similarity attraction

paradigm has also contributed to this debate with

interesting propositions regarding inter-individual per-

ceptions. The basic assumption that underlies these

approaches is that individuals’ feelings of identifica-

tion depend on their perceptions of similarity (Chro-

bot-Mason 2004; Dalton and Chrobot-Mason 2007). In

this context, and following Pugh et al. (2008), one can

argue that heterogeneous groups are less likely to be

cohesive than homogeneous ones. In fact, perceived

differences lead group members to infer that their

colleagues do not share their values and attitudes. If we

consider that diversity has also been associated with

problems of stereotyping and prejudice (Jackson et al.

1995; Mayo et al. 1996), it could be expected that

diverse groups will find it more difficult to create a

positive climate. Problems of lack of satisfaction and

commitment will easily appear (Tsui et al. 1992;

Rosenzweig 1998), and interpersonal conflict will

become more important than task conflict (Janssen

and Veenstra 1999). Nevertheless, some studies have

concluded that these effects were not significant, and

that it was even possible to find positive consequences

(Harrison et al. 1998; Jehn et al. 1999). To explain

those results, Watson et al. (1993) and Benschop

(2001) argued that it is necessary to consider other

influences, such as human resource management or

leadership, which can moderate the affective effects of

diversity, fostering cohesion, commitment and satis-

faction in high diversity contexts.

Hypothesis 2 Affective processes mediate the relation-

ship between diversity and group performance.

Common to the different perspectives from which

diversity has been studied is an appreciation that hetero-

geneity can have both negative and positive consequences

for groups. Due to these opposite consequences, it is dif-

ficult to predict the effect of diversity on group perfor-

mance without considering potential moderators. In this

context, the analysis of the literature on cognitive and

affective consequences of diversity leads to the conclusion

that the effects of diversity will depend on a firm’s ability

to reinforce workforce integration, group cohesion and

commitment, and to foster open decision-making pro-

cesses, consensus seeking mechanisms, and internal com-

munication through formal and informal social interaction

(Benschop 2001; Pless and Maak 2004).

The Moderating Role of Strategic Human Resource

Management

Drawing on the literature reviewed in the previous section,

we can conclude that the extent to which consequences of

diversity are positive or negative will depend on how

SHRM practices are articulated and integrated in a diver-

sity-oriented system. The orientation of this system deter-

mines group composition and orientates group dynamics,

intervening in the relationship between heterogeneity and

group outcomes. In this context, and drawing principally

on the propositions of Benschop (2001), Sánchez and

Medkik (2004) and Shen et al. (2009), we consider in our

model the orientation of the SHRM system as a construct

that moderates the effects of demographic and human

capital diversity on group performance.

Through the interrelated set of practices that build the

SHRM system organizations manage their human capital.

As literature has explained, this system must be linked to

the firm’s business strategy, and both influences and is

influenced by the organizational and environmental context

(Delery and Doty 1996). Following the patterns proposed

by Tichy et al. (1982), Devanna et al. (1981), Miles and

Snow (1984), Walton (1985), Schuler and Jackson (1987a,

b), and Wright et al. (2001), it is considered in the proposed

model that the SHRM system can be divided into the fol-

lowing functional areas: staffing, job design and planning,

training and development, performance appraisal and

compensation.

Various attempts have been made to develop typologies

to categorize different orientations of the SHRM system.

Some studies assessed how generic strategic typologies lead

to certain patterns of human resource management practices

(Tichy et al. 1982; Fombrun et al. 1984; Miles and Snow

1984). Other studies have proposed specific human resource

management configurations (Walton 1985; Wright and

Snell 1991; Arthur 1994; Peck 1994; Lepak and Snell 1999;

Bamberger and Meshoulam 2000). However, moving to the

diversity literature, we find fewer typological analyses. In

fact, as we have concluded from our review of the literature,

one of the main limitations of diversity management

research was the lack of typologies that could help us to

understand different diversity management alternatives. For

this reason, following Richard and Johnson’s (2001) call for

research, this paper proposes an empirical exploratory

analysis, based on a generic HRM typology. Considering

this objective, we have opted to use a broad and compre-

hensive typology. Concretely, we will draw on the classical

distinction between control and commitment approaches to

HRM (Walton and Lawrence 1985; Bamberger and Mes-

houlam 2000). These two alternatives represent the

extremes of a continuum between which each possible

Transforming Human Resource Management Systems 515

123

SHRM system can be located. Drawing on the data obtained

from our sample, we will empirically extract human

resource management patterns and analyze to what extent

they tend to the control or commitment extreme.

Control HRM strategies have their origins in traditional

personnel practices, focusing mainly on specialization and

a precise definition of tasks (Walton 1985). Compensation

in these HRM systems is normally based on the assessment

of individual performance, and relationships with

employees almost exclusively on conflict resolution

(Arthur 1994). Furthermore, employee participation in

management decisions is restricted to union activity

through collective bargaining (Kerklaan 2011). Commit-

ment strategies represent the other side of the continuum.

Organizations characterized by this approach to managing

human resources define jobs in a broader way, emphasizing

more coordination and objective alignment than control

procedures. Hierarchical barriers are reduced, and com-

pensation reflects a not so objective performance appraisal.

Processes are focused on work groups and the participation

of employees in organizational objectives is fostered

(Johnson et al. 2002). Training is much more extensive,

and offered to a broader set of workers and the relation-

ships with trade unions are based not only on conflict

(Kerklaan 2011).

Walton and Lawrence (1985) presents commitment

strategies as the last step in the evolution of the relationship

between employer and employee in organizations. But, as

outlined above, more than closed types, control and com-

mitment strategies represent a continuum with infinite

intermediate possibilities. As Jan et al. (2009) posited, the

movement from control to commitment entails an impor-

tant shift in the underpinning philosophy of SHRM, and a

clear preference for human and social capital development

over efficiency and cost reduction.

Considering what previous literature has explained

about the effects of diversity, we can conclude that com-

mitment SHRM strategies are more effective in managing

workforce heterogeneity. From a cognitive point of view, a

commitment approach makes it easier for the organization

to build ‘‘shared mental models’’, because of their

emphasis on social interaction processes and their orien-

tation to employee participation (Prahalad and Bettis 1986;

Klimoski and Mohammed 1994). Groups managed under

this approach also benefit from the different ways of per-

ceiving stimuli, interpreting information and making

decisions that are embedded in heterogeneous groups. On

the other hand, by focusing their relationship with

employees on the mutuality of interests, commitment

strategies reinforce positive affective reactions to diversity.

In addition, as policies like assessment, compensation and

socialization are orientated toward groups rather than

individuals, commitment is also related to higher group

cohesion and workforce integration. As research on diversity

has pointed out, these are prerequisites for groups to effec-

tively accommodate heterogeneity (Benschop 2001).

Hypothesis 3 Commitment oriented Human Resource

Management Systems positively moderate the effects of

diversity on group performance.

As it was explained before, this hypothesis will be

verified through an exploratory procedure. The lack of

specific diversity-oriented configurations made us draw on

a generic typology. Therefore, the first step of the empirical

analysis will be to identify the different SHRM orientations

present in the sample, and analyze to what extent they fit

the theoretical typologies that have been just described. In

a second stage of the analysis, these empirically defined

orientations will be used to explore how SHRM moderates

the effects of diversity on group performance (Fig. 2).

Methodology

To test the set of relationships identified, this paper pro-

poses a quantitative analysis using data from a sample of

groups. Because of the complexity of the effects of

diversity, many authors in this field have preferred to use

qualitative techniques, generally through case studies

(Totta and Burke 1995; Iles and Hayers 1997; Gilbert and

Ivanicevich 2000; Jones et al. 2000; Kochan et al. 2003;

Kwak 2003). Nevertheless, the application of advanced

statistical methods, such as structural equation modeling

(SEM), allows testing of complex sets of causal relation-

ships, including mediating and moderating effects

(Diamantopoulos and Siguaw 2000) and accounting for the

effect of nonobservable constructs (Chin 1998).

Unit of Analysis and Sample

The empirical analysis in this paper is proposed at the

group level. Considering the research object of this article,

the selection of this unit of analysis is almost compulsory,

since diversity has been defined as a group characteristic.

Fig. 2 Theoretical model

516 F. Martı́n-Alcázar et al.

123

Results can differ substantially depending on the kind of

group selected in each case. Top management teams have

attracted the attention of a group of scholars (Wagner et al.

1984; Wiersema and Bantel 1992; Smith et al. 1994;

Knight et al. 1999; Bunderson and Sutcliffe 2002; Camp-

bell and Minguez-Vera 2008; Francoeur et al. 2008).

However, research has also reached relevant conclusions

analyzing other kind of groups, such as operations units

(Tsui et al.1992) and research and development groups

(Ancona and Caldwell 1992; Hope-Pelled et al. 1999;

Jassawalla and Sashittal 1999; Keller 2001; Reagans and

Zuckerman 2001). Following the latter references, we

decided to focus the empirical analysis on a single kind of

group devoted to new product development activities

To avoid biases because of the influence of contextual

variables, we opted to focus only on big firms (with more

than 250 employees) in the Spanish chemical industry.

Data show that this sector has experienced an interesting

growth in sales in the last 15 years and that much of this

evolution is explained by its ability to introduce new

products (Dı́az Fernández 2003). Therefore, we can expect

that sampling in this sector could provide us sufficient

variance in innovation variables to explain causal rela-

tionships. SABE (a database of Spanish firms) shows that

there are 238 chemical organizations with more than 250

employees in Spain. As the total population was small, we

did not perform any random sampling procedure, following

Thietart and Ed (2001) advice. Therefore, all of the firms

were contacted, and sample representativeness was con-

trolled for afterward.

Two different questionnaires were sent to each of the

238 firms. The first one was to be completed by group

managers. It included information about their own demo-

graphic and human capital attributes, as well as about

group processes and outcomes. In the second questionnaire

(a reduced version of the previous one), the remaining

members of the group responded only to a set of items

regarding their own demographic and human capital pro-

files. The reason for using two different questionnaires was

that, as we found, to obtain diversity measures it was

necessary to draw on individual information. These indi-

vidual measures were used to build group heterogeneity

indicators, using Blau’s index or Coefficients of variation.

After a long period of telephone follow-up of the

responses, 351 valid questionnaires were received. 81 of

them corresponded to group managers, while 270 respon-

ded to the shorter version directed to the rest of members of

the groups. As a consequence of this, our final sample was

comprised of 81 different groups (34.03% of the initial

sample). An ANOVA analysis verified that the sample was

representative of the entire population and that it was

proportionally distributed in terms of size, sales and reve-

nues. The nature of the analysis proposed, in which at least

four responses were necessary to validate a case, explains

the reduced final sample, which is similar to those obtained

in a similar empirical analyses of the effects of diversity at

the group level (i.e., Smith et al. 1994; West and

Schenk1996; Hope-Pelled et al. 1999; Knight et al. 1999;

Bunderson and Sutcliffe 2002).

Measures

To design both questionnaires, we followed the recom-

mendations of Drucker et al. (2001), Fowler (2002), and

Johnson and Harris (2002). These authors provided inter-

esting arguments about how items and scales should be

created in order to maximize the validity and reliability of

measures. A demographic profile of each member of the

group was measured directly using continuous, categorical

or ordinal variables, depending on the nature of each of the

attributes analyzed (Harrison et al. 1998; Ancona and

Caldwell 1992; Chuang et al. 2004). To measure human

capital diversity, we had to gather information about

individuals’ knowledge and experiences, as well as about

their cognitive characteristics and their individual values.

The first two were measured through Likert scales in which

group members were asked to evaluate their own level of

knowledge and experience in a certain set of areas of

chemical R&D (Mason and Wagner 1994; Walsh and

Lodorfos 2002). To measure cognitive abilities of group

members, we used the Cognitive Style Inventory (Van den

Broeck et al. 2003), which is a validated set of Likert scale

items that assesses individual approaches to perceiving and

interpreting information. To complete our human capital

diversity construct, it was also necessary to measure val-

ues. For this purpose, Schwartz’s scale was selected

(Schwartz 1999; Glazer et al. 2004). The literature on work

cultures offers alternative tools to assess individual values,

such as the Big Five Model (Digman 1990) or Adler’s

(1991) Cultural Dimensions, but for the purpose of this

study, we preferred to use Schwartz’s Scale, as it has been

previously applied and validated to measure cultural het-

erogeneity (Gelfand et al. 1996).

All these measures helped us to identify individual

demographic and human capital profiles. To measure

diversity in the above-mentioned attributes at the group

level, we had to use heterogeneity indicators. Two different

approaches were used, depending on the nature of the

variables available in each case. For nominal and cate-

gorical variables, diversity was measured through Blau’s

index (Blau 1977; Smith et al. 1994), while coefficient of

variation was used with continuous and Likert scale vari-

ables (Harrison et al. 1998; Chatman and Flynn 2001).

The two mediating constructs (cognitive and affective

processes) were measured through both sets of indicators,

based on scales developed in previous studies. Specifically,

Transforming Human Resource Management Systems 517

123

to assess cognitive effects, we introduced a group of items

designed to obtain information about a group’s ability to

perceive and interpret information, formulate problems,

generate alternative solutions, make decisions and reach

consensus (Ancona and Caldwell 1992; Watson et al. 1993;

Janssen and Veenstra 1999). To measure affective pro-

cesses, a second set of Likert scale items was included,

with the objective of measuring cohesion, relational con-

flict and cooperation between the members of the group

(DiTomaso et al. 1996; Hope-Pelled et al. 1999; Chatman

and Flynn 2001). Nevertheless, to simplify the analysis of

the moderating effect of SHRM, the variables used to

describe cognitive and affective effects were summarized

into two latent variables, using SEM: (1) quality of deci-

sion-making processes and (2) positive affective climate.

To explore the role of SHRM, we also needed infor-

mation about the orientation of human resource manage-

ment policies and practices. In this case, we opted to use

Schuler and Jackson (1987a) menu of practices. Using this

scale, we could gather information about how firms

designed group tasks, and about how they managed staff-

ing, performance assessment, compensation and training

and development.

Finally, to assess performance, we preferred not to use

organization-level indicators such as economic or financial

profitability. Following Rogers and Wright’s (1998) sug-

gestion we selected group performance indicators, directly

linked to group’s activity. As all the groups in our sample

were devoted to new product development, performance

was analyzed through innovation outcomes at the group

level. To be precise, eight items specifically designed to

measure innovation in the chemical industry were intro-

duced, drawing on previous literature in this field (Holmes

et al. 1993a, b; Arora 1997; Werner and Souder 1997).

Drawing on Werner and Souder (1997) recommendations,

we combined objective and subjective items, measuring not

only quantity of innovation, but also incrementality, and

the quality of innovation processes. The resulting construct

allowed us to assess collective innovation outcomes, and

isolate the effects that workgroup diversity has on this

measure of performance (Hutcheson et al. 1996).

The reliability of the measures selected was assessed

using the criteria described by Barclay et al. (1995). Fol-

lowing these authors, we assume that the set of indicators

measuring each latent construct must meet two conditions:

namely, convergent and discriminant validity. Convergent

validity evaluates the internal consistency of the indicators

as related to a latent construct. To measure it, we employ

the composite reliability index (qc), as developed by Werts et al. (1974). On the other hand, discriminant validity

assesses the extent to which the indicators associated with a

construct are significantly different from the others when

measuring a singular reality. Following Fornell and Larc-

ker (1981), we assess discriminant validity using the

average variance extracted index (AVE), which measures

the amount of variance captured by the construct in relation

to the amount of variance from measurement error. The qc and AVE values obtained are shown in Figs. 3 and 4. The

estimation of the measurement model confirmed the reli-

ability of the constructs designed to measure diversity,

cognitive and affective processes, performance, and SHRM

orientations.

Fig. 3 Moderating effect of SHRM patterns on cognitive

effects of diversity

518 F. Martı́n-Alcázar et al.

123

Method of Analysis

As mentioned above, to test the proposed model, we used

SEM, which has been considered a ‘‘second generation of

multivariate analysis’’ (Fornell 1987, p. 408). Compared

with other statistical techniques, such as regression, prin-

cipal component and variance analysis, SEM offers inter-

esting advantages under certain research conditions. It is

particularly useful for testing complex models, and when

scholars need to incorporate underlying variables that

cannot be directly measured (Chin 1998).

Due to the reduced size of our sample, we opted to use

SEM based on partial least squares (PLS) methodology,

which is an alternative to covariance-based procedures,

specifically designed to work with small datasets. It was

introduced by Wold (1980) and subsequently developed by

Hui (1982) and Lohmöller (1989). PLS constructs the

latent variables from their respective indicators, determin-

ing in each case the set of weights that maximize the

variance explained. From these, it extracts composite

scores for the different nonobservable variables that are

finally used to estimate causal relationships (Chin 1995).

To do so, PLS does not use a maximum likelihood proce-

dure but an iterative least squares method. Therefore, it

does not require data to be normally distributed (Haenlein

and Kaplan 2004). Moreover, PLS does not need to man-

age the entire covariance matrix, which can be especially

large when the model has many variables. In fact, it simply

estimates partial causal links between related constructs,

and that is the reason it is able to provide reliable param-

eters from a small number of cases (Barclay et al. 1995;

Chin and Newsted 1999).

Results

Defining the SHRM Construct

As was explained above, to measure SHRM, we used

Schuler and Jackson’s (1987a) menu of practices. Reli-

ability of these measures was confirmed by performing a

Cronbach’s a analysis. Nevertheless, this scale had too many items to be included in the SEM model, so it had

been reduced. In this case, we had no theoretical rationale

to explain how the different indicators should be grouped,

so we performed a factorial analysis with Varimax rotation

(using SPSS 11.0). This technique provided information

about the underlying structure of the SHRM system and

confirmed that it is a multidimensional construct. As

Table 1 shows that this construct can be described gener-

ally through three alternative dimensions, which explain

73.2% of the variance.

Component 1 This contains group indicators that describe

the extent to which the SHRM system is oriented to indi-

viduals or groups. Therefore, it was labeled group

orientation.

Component 2 This was formed by a set of items that

measure flexibility of the SHRM system. This component

gives information about the extent to which the group

makes their own decisions or if, on the other hand, they are

directly managed from outside the unit (flexibility).

Component 3 This is formed by only two items, but they

describe a singular dimension of the SHRM system: the

extent to which human resource managers prefer to use

Fig. 4 Moderating effect of SHRM patterns on affective

effects of diversity

Transforming Human Resource Management Systems 519

123

Table 1 Factorial analysis of HR practices (rotated matrix)

Items Component

1 2 3

Group orientation System flexibility Market orientation

HR Planning—fosters interactions between employees .952 .061 -.136

HR Planning—the group does not avoid confrontation of perspectives .939 .102 -.084

HR Planning—open channels to express points of view .932 -.013 -.093

HR Planning—a member receives and distributes the information .918 .121 .022

HR Planning—no pressures for decision making .912 .032 -.145

Training—focus on diversity .911 .197 .034

HR Planning—collective tasks .909 .038 -.153

HR Planning—there are periodical meetings with all members of the group .908 .131 .034

Training—focus on interdependence .907 .170 .023

Compensation—group oriented .905 .100 -.056

Training—participation .901 .182 -.085

HR Planning—informal, mutual coordination .899 .034 -.132

HR Planning—use of information systems to communicate within the group .894 .052 .146

Training—group oriented .889 .121 -.034

HR Planning——mutuality of interests .881 .048 -.189

HR Planning—Employee involvement .871 .302 -.185

HR Planning—long range .812 .187 .043

Performance appraisal—employee participation .813 .232 -.167

Performance appraisal—group oriented .777 .345 -.232

Training—emphasis on work climate improvement .699 .165 -.324

Training—planned and systematic .658 -.165 -.168

Compensation—objective criteria .632 .543 -.023

Training—long range .610 .321 -.127

Training—offered to a reduced group -.523 .040 .318

Staffing—emphasis on socialization -.501 -.033 -.106

HR Planning—tasks are not strictly delimitated -.161 .919 -.066

HR Planning—flexibility -.191 .912 -.064

Compensation—long range incentives .222 .911 -.062

Staffing—open, flexible .054 .909 .127

Compensation—flexibility .132 .904 -.027

Compensation—extras .203 .894 .064

Staffing—employees mobility .121 .893 .194

Staffing—dual careers .122 .890 .127

Staffing—Work/family balance .103 .887 .156

Compensation—security .304 .818 -.056

Compensation—high base pay .034 -.701 .297

Staffing—implicit criteria .182 .587 -.223

Staffing—multiple promotion possibilities .381 -.323 -.613

Staffing—preference for external recruitment .272 .334 .608

Performance appraisal—oriented to improve performance -.149 -.058 -.154

Performance appraisal—results oriented -.222 .171 .123

The possibility to use Factorial Analysis was confirmed through KMO index (0.751) and Bartlett Sphericity test (p value \ 0.000) Extraction method: principal components

Rotation method: Varimax normalization (Kaiser)

Rotation converged in 6 iterations

520 F. Martı́n-Alcázar et al.

123

internal or external recruitment to cover job positions

within the group. This third component described the tra-

ditional make or buy decision, so it was labeled market

orientation of the system.

Extraction of SHRM Systems

As indicated above, the elements that build the SHRM

system (group, flexibility and market orientation) can be

combined in different ways, describing alternative strategic

orientations. To identify these configurations, we grouped

the firms according to the relative importance that they

place on group, flexibility and market dimensions. This

was performed using a hierarchical cluster analysis (Ket-

chen and Shook 1996), which is a post-hoc classification

technique, so conglomerates are not previously known nor

conceptually defined. As Gordon (1999) indicated, con-

glomerates are formed according to the data and must be

subsequently interpreted by the researcher. The cluster

analysis identified three groups of firms. As can be

observed in Fig. 5, each group represents an alternative

pattern of SHRM practices, characterized by a concrete

combination of group, flexibility and market dimensions.

The first pattern, which groups 41 of the 81 firms of our

sample, represents an SHRM orientation characterized by:

(1) individual work systems, (2) a certain degree of rigid-

ity, and (3) a stronger emphasis on buying human capital

rather than on building it internally. As further analysis

showed, these firms used performance assessment practices

to control results and improve performance, through pro-

cesses that are normally organized and managed from the

human resource management department, without the

participation of group members. Training and planning

policies, on the other hand, do not emphasize employee

involvement or integration. Tasks are strictly defined and

controlled using formal procedures, and individuals have

very limited capability to manage their own work. There-

fore, we could say that this orientation represents the most

traditional approach to SHRM (Chang and Huang 2005;

D’Art and Turner 2006). Groups are perceived as an ele-

ment to be managed, not as a strategic factor that could be

developed. This fact could explain SHRM centralization,

as well as the firms’ preference for recruiting potential

employees externally. Considering the above comments

and combining the terminologies previously used by

Walton and Lawrence (1985), Gunnigle (1992), and Von

Glinow et al. (2002), we labeled this pattern the ‘‘indi-

vidualistic-control orientation’’.

On the other hand, the second of the clusters shows the

opposite orientation. Despite the lower number of firms

grouped in this conglomerate, their SHRM strategic ori-

entation seems more clearly defined. As can be observed in

Fig. 5, compared with the first cluster, values for the three

dimensions are more divergent from sample means. It can

be seen that firms in this group are characterized by a much

more collectivistic approach, which influences their plan-

ning, training, and compensation policies. Therefore,

interaction between employees is fostered, as well as their

participation in group dynamics. Similarly, these organi-

zations emphasize establishment of mutual interests, and to

do so, they use group criteria in performance assessment

and compensation decisions. To define the market dimen-

sion, data show a second distinctive characteristic. Figure 5

shows how these firms prefer to build competences inter-

nally instead of buying them in labor markets. This evi-

dence seems to indicate that firms in the second cluster

recognize the importance of idiosyncratic human capital

(Rodrı́guez Pérez and Ordóñez de Pablos 2002). To

establish these collective systems, they use open and

flexible SHRM practices that allow groups to manage

themselves. Human resource management decisions are not

uniformly adopted for the whole group. In fact, many of

these decisions are made in consideration of individual

requirements, something that, as Heneman et al. (1996)

argued, is necessary to include different individuals within

the same group. Trying to highlight both its collectivistic

orientation and its emphasis on human capital accumula-

tion, we labeled this second cluster as the ‘‘group devel-

opment’’ pattern, drawing on Peck’s (1994) concept of

building strategies.

Conceptual interpretation of the third cluster is not so

easy, because it does not represent such an extreme ori-

entation. In fact, we could say that it is an intermediate

approach between the two previous patterns. As can be

observed, firms in this conglomerate place a strong

emphasis on group issues. As cluster 2, they also try to

foster interactivity and participation, but they differ

Fig. 5 Comparison of SHRM patterns: mean (standard deviation)

Transforming Human Resource Management Systems 521

123

substantially in the procedures that they use to do so. If

firms with a group development approach prefer flexible

SHRM systems and self-managed groups, organizations

within this third conglomerate manage groups through

formal policies, strictly defining work systems and con-

trolling them through rigid mechanisms. Groups are

therefore perceived as a strategic factor but are not

empowered. On the contrary, they are managed in a much

more paternalistic way, so we labeled this approach the

‘‘group management’’ SHRM pattern. Considering the

reduced number of firms grouped in this cluster, we could

say that this approach represents a minority orientation in

our sample or even a particular case of conglomerate 2.

Nevertheless, analyzing the hierarchical classification

process described in the dendrogram, we can observe that

the ‘‘group management orientation’’ represents a single

management pattern, which is separated from the two

previous clusters in an early stage of the clustering process.

As the three SHRM patterns found have been defined on

the basis of three orthogonal variables, they can be repre-

sented in a three-dimensional graphic, as Fig. 6 shows.

This representation helps us to understand and compare

their positions in the geometrical space in which clusters

have been defined (x: flexibility, y: group, z: market).

Sphere diameters are proportional to the size of each of the

clusters.

The Moderating Effect of HRMS

Considering the differences between the three management

orientations identified, we suspected that they would have

different effects on the internal dynamics of diverse groups.

According to the arguments in previous literature, we could

expect that the ‘‘group development’’ approach would be

the best SHRM pattern to take advantage of heterogeneity

(and minimize its potential problems). Nevertheless, the

effects of diversity are too complex to be explained in such

a simple manner. A deeper analysis is required to differ-

entiate between the effects of demographic and human

capital diversity as well as the consequences that both have

on cognitive, affective and communication processes. With

this objective, a set of structural models was estimated. It

was necessary to analyze how the SHRM system moderates

the effects of diversity, distinguishing between firms with

‘‘individualistic control’’, ‘‘group development’’ and

‘‘group management’’ orientations. To do so, a new con-

struct (SHRM) was defined, using the three dimensions of

the system as observable indicators (group, flexibility and

market). Because we wished to explore how the moderat-

ing role of this construct varied when the firm followed a

concrete orientation, we built three new variables to cap-

ture these differences, using a two-step procedure.

To analyze how the system moderates the effects of

demographic and human capital diversity, we created

interaction terms (SHRM*DEM-DIV and SHRM *HC-

DIV).

To analyze how this moderating effect varies when firms

follow a concrete SHRM orientation, three dummy vari-

ables (Searle and Udell 1970; Craig and Henry 1975) were

created, with the following values.

orient1: 1 - if the firm follows an ‘‘individualistic

control’’ pattern

0 - any other case

orient2: 1 - if the firm follows a ‘‘group development’’

pattern

0 - any other case

orient3: 1 - if the firm follows a ‘‘group management’’

pattern

0 - any other case

By multiplying these variables with the interaction

terms, it is possible to isolate the moderating effect of each

of the SHRM configurations. For example, the coefficient

estimated for the term SHRM*DEM-DIV*orient2 would

describe how SHRM systems oriented to group develop-

ment influence the consequences of demographic diversity.

As PLS algorithms are not affected by multicollinearity, it

was possible to include simultaneously the three dummy

variables in the models, so their effects could be analyzed

together and compared (Cassel et al. 2000).

Causal relationships in the first model confirm that when

groups are managed with an ‘‘individualistic-control’’

approach, the cognitive benefits of diversity on decision-

making processes are lower (b = -0.254*). In contrast, this coefficient is positive in the other two management

patterns, which, as was observed before, are characterized

by a collectivistic orientation. This result seems to indicate

that, to strengthen diverse groups’ capability to perceive

1,0,8

-,5

,6

0,0

,5

,4 ,5

1,0

,2

1,5

,0 0,0-,2-,4 -,5-,6-,8

gr ou

p

marketflexibility

2

1

3

- Conglomerate 1: Individualistic control orientation (-0,18; -0,67; 0,20)

- Conglomerate 2: Group development orientation (0,55; 0,81; -0,78)

- Conglomerate 3: Group management orientation (-0,73; 1,13; 0,92)

Fig. 6 Results of cluster analysis of SHRM patterns

522 F. Martı́n-Alcázar et al.

123

and interpret information and make high-quality decisions,

the SHRM system needs to emphasize employee interac-

tion and participation. When the dummy variables orient2

and orient3 are introduced, coefficients for their respective

interaction terms are similar (b = 0.345** and b = 0.393*). Two main conclusions can be extracted from this result: (1) to manage the cognitive dynamics of human

capital diversity, the SHRM system must focus on collec-

tive issues, and (2) this group-oriented system can be

implemented both through flexible structures (empowering

groups and giving them higher autonomy) and through

rigid mechanisms (controlling group functioning).

Figure 4 shows the structural model that was estimated

to analyze how the SHRM configurations moderated the

affective effects of diversity. Data confirmed that when

firms applied a ‘‘group development’’ system to their R&D

groups, they were most able to reduce the negative con-

sequences of demographic diversity on interpersonal rela-

tionships. As we said before, this pattern is characterized

not only by their focus on building collective competences

but also by their strong emphasis on system flexibility.

Considering that the remaining approaches do not show a

significant moderating effect, we can conclude that affec-

tive reactions to demographic diversity can only be miti-

gated through flexible management and control structures.

As previous literature has explained, social identification

and subgroup formation would only disappear if the SHRM

system is able to make employees ‘‘recategorize’’ them-

selves (Harrison et al. 1998; Clark et al. 2000; Richard and

Shelor 2002; Cunningham 2007). To do so, it is necessary

to motivate them to identify with the group as a whole and

not with demographic subgroups. Nevertheless, as Chat-

man and Flynn (2001) argued, these processes cannot be

imposed, because recategorization processes depend on

informal interactions between employees. As has been

pointed out before, this fact could explain the results

obtained for the ‘‘group management’’ pattern. To moder-

ate affective dynamics in diverse units, not every group-

oriented system is useful. It is necessary to promote

inclusion, participation and mutual interests, but through

informal procedures that foster interpersonal contact

between employees.

Analyzing the statistics that PLS analysis uses to eval-

uate structural models (R2 and Q2), we concluded that by

analyzing the joint effect of practices (SHRM systems), it

is possible to explain relevant moderating effects. This fact

would confirm that there are synergic relationships

between practices that it is necessary to introduce in

models, as the configurational literature has suggested

(Delery and Doty 1996). In fact, isolated SHRM decisions

seem to have a very limited ability to manage the effects of

diversity. To promote cognitive benefits or minimize

potential affective conflicts, it is necessary to change the

orientation of the whole SHRM system toward certain

objectives, depending on the type of diversity that the

organization wants to manage and the concrete effects that

it causes.

Conclusions and Implications

The empirical analysis developed in this paper shows that,

to take advantage of group diversity a complete reconsid-

eration of SHRM is needed, as Gilbert et al. (1999) or Syed

and Kramar (2009) suggested. To benefit from cognitive,

affective and communicational effects of diversity, orga-

nizations need to promote inclusiveness, collectivism, and

appreciation of individual differences. The results obtained

from our structural equations model confirm that these

outcomes can be achieved through certain patterns of

SHRM practices that can help the organization to moderate

the effects of diversity on group performance.

To propose the model, we have integrated previous

research on diversity and SHRM. As Benschop (2001) or

Kochan et al. (2003) previously noticed, much seems to be

gained by integrating constructs and relationships from

both fields. The analysis developed in this paper shows that

this integration is possible, as multiple common points

exist between the diversity and SHRM literature in terms of

concepts and measures.

Trying to avoid deficiencies in the diversity literature that

authors such as Lawrence (1997) and Lau and Murnighan

(1998) have indicated, we started from a multidimensional

concept of diversity. Our main independent construct was

defined by two connected dimensions: a first set of primary

observable demographic characteristics, which we labeled

demographic diversity, and another group of personal attri-

butes related to human capital measures (human capital

diversity). Testing this concept, we verified that demo-

graphic heterogeneity has consequences for group working

and performance not only in itself but also by fostering the

other type of diversity (related to employees’ knowledge,

skills, abilities, values and cognitive approaches). As evi-

dence confirmed, this kind of differences was particularly

important in groups that perform complex tasks, such as

those analyzed in this paper.

The estimation of the model confirmed that cognitive

and affective processes mediate the relationship between

diversity and group performance, so hypotheses 1 and 2

could be accepted. The evidence analyzed rejected a

deterministic view of the consequences of diversity,

assuming that the extent to which they benefit group per-

formance depends on certain conditions that can be directly

or indirectly managed by the SHRM function.

In exploring the nature of diversity management

mechanisms, we also reached interesting conclusions.

Transforming Human Resource Management Systems 523

123

Contrary to the explanation of the universalistic approach,

it was not possible to find a best diversity management

option. On the contrary, the best pattern of SHRM practices

would depend on the type of diversity that the organization

is facing (demographic or human capital) and the concrete

effects that heterogeneity causes in each case (cognitive or

affective). Different SHRM configurations can be used,

depending on the effects of diversity that the organization

wishes to moderate, so it is especially interesting for the

organization to analyze and understand which differences

are more important within their own groups, and which

internal dynamics they induce.

Hypothesis 3 could be only partially accepted. The model

estimation confirmed the moderating effect of the SHRM

system. Nevertheless, the effect is not as simple as predicted.

The traditional distinction between control and commitment

SHRM systems does not fully explain how organizations can

achieve business and social justice outcomes of diversity. To

do so, more specific typologies are needed. Identifying these

configurations would provide managers with tools for man-

aging differences, as well as criteria for choosing an adequate

pattern of SHRM practices. This was the main objective of

the exploratory analysis developed in this paper. Drawing on

the results of cluster and structural equations models, we

identified three alternative approaches, from which different

moderating effects can be expected.

1. ‘‘Individualistic control orientation’’: The majority of

the firms analyzed showed an SHRM system charac-

terized by an individualistic orientation. Employee

participation or integration is not a strategic objective

for the firms in this cluster. On the contrary, human

resource managers are much more interested in

establishing rigid control mechanisms. The tasks that

each employee is expected to develop are clearly

delimited, and the firm places a strong emphasis on

performance appraisal techniques. Human resources

are seen more as factors that firms must manage than

as strategic resources to develop. This fact could

explain the preference for labor markets as sources of

recruitment in this kind of organization. The structural

analyses developed showed that the adoption of an

individualistic control orientation hinders decision-

making processes in heterogeneous groups. Individu-

alistic management does not facilitate open discussion,

which, as we have seen, is a necessary condition to

take advantage of the benefits that diversity has on a

group’s perceptual and interpretative capabilities.

Similarly, internal communication processes are neg-

atively affected by the isolation caused by task

delimitation and the absence of shared objectives.

Nevertheless, not all the effects of this management

approach are so negative. We observed that the

individualistic control orientation had no moderating

effect on affective processes. Therefore, we can

conclude that it does not complicate the relational

problems that demographic diversity causes, as inter-

action between members of the group is reduced.

2. ‘‘Group development orientation’’. This approach is

opposite to the individualistic control configuration. In

fact, firms in this cluster are characterized by a

collectivistic orientation. Interaction between members

of the group is valued and fostered, as well as employee

involvement. Similarly, common objectives are empha-

sized in planning, performance appraisal and compen-

sation practices. A second distinctive characteristic of

the group development approach is its preference for

flexible work systems. Contrary to the centralization

and strict control of the previous cluster, this approach

fosters group self-management and reinforces informal

mutual adaptation as a coordination mechanism.

Regarding the market dimension, firms in this cluster

also showed a different behavior. In fact, they place a

stronger emphasis on the internal development of

knowledge and abilities, instead of acquiring them

externally. This leads us to believe that group devel-

opment systems value, at least implicitly, idiosyncratic

human capital as a strategic factor. Data confirmed that

this type of SHRM system incorporates almost all of

the positive moderating effects identified in previous

literature. The collectivistic orientation identified in

this pattern explains its positive moderating effect on

decision-making processes, as perceptual and interpre-

tative capabilities of diverse groups are substantially

improved. At the same time, firms with this SHRM

approach normally rely on mutual adaptation to

coordinate behaviors. Informal relationships between

members of the group are not only valued but also

encouraged. This result confirms Harrison et al. (1998)

contact hypothesis, which explained that the problems

originating in the perception of demographic differ-

ences could be reduced if SHRM systems fostered

interactions between individuals. According to these

authors, continued contact between members of a

heterogeneous group helps them to disconfirm stereo-

types and dissolve identity subgroups.

3. ‘‘Group management orientation’’. This approach is

not as clearly defined as the individualistic control or

group development orientations. Nevertheless, by

analyzing how it moderates the effects of heterogene-

ity, we can also extract interesting conclusions about

how diversity can be managed. According to the scores

obtained by the firms in this cluster in the three SHRM

factors, we observe that the group management

524 F. Martı́n-Alcázar et al.

123

orientation describes an intermediate position. As the

group development approach, it also places a strong

emphasis on collective work systems, as well as

fostering interaction and employee participation. How-

ever, to achieve these objectives, it follows a different

management model. In this sense, it is much more

similar to the first configuration described because it

defines rigid systems, strictly controlled by SHRM.

Because of this, individuals are not empowered to

make decisions by their own, and groups are normally

managed from outside the unit. Firms in this cluster

also showed a clear preference for external markets to

recruit potential employees. In our opinion, this result

is consistent with the above remarks about group

management orientation. In fact, we consider that

external recruitment and selection processes can be

more easily controlled by a firm than internal building

of capabilities, which is directly influenced by infor-

mal dynamics within the group. The SHRM system

identified in this third conglomerate is similar to the

paternalistic model described by Guest (1989). The

strategic importance of teamwork is recognized, but

firms do not allow groups to develop by themselves

and manage their own processes. On the contrary,

group working is directly supervised and controlled by

SHRM. Including the moderating effect of this cluster

in structural models, we reached especially interesting

conclusions. We observed that, as also happened with

the first configuration, decision-making processes were

substantially improved when a group management

approach was applied. However, a different result was

obtained with regard to relational processes. In fact,

data showed that this type of SHRM has no effect at all

on the negative affective reactions that normally

appear in demographically diverse groups. This evi-

dence suggests that to foster cognitive benefits of

diversity, it is only necessary to adopt a collectivistic

and interactive strategy, regardless of whether SHRM

is implemented through rigid or flexible management

systems. However, to mitigate affective problems

associated with stereotyped perceptions and identity

subgroups, something more is necessary. Data con-

firmed that recategorization processes require groups

to be flexible and self-managed rather than strictly

controlled by the organization. In these cases, group

members will be encouraged to coordinate, and

informal relationships will easily appear. This result

confirms the propositions of a group of authors

(Harrison et al. 1998; Clark et al. 2000; Richard and

Shelor 2002) who qualified the contact hypothesis,

arguing that not all types of interaction help to

disconfirm stereotypes and dissolve identity groups.

To do so, individuals need to define and establish

relationships with different individuals on their own,

without perceiving that they are forced to do so or that

such interactions are strictly controlled by the

organization.

In interpreting the results of this study, some limitations

should be kept in mind. First, from a conceptual point of

view, it must be remembered that demographic and human

capital attributes have been analyzed in an aggregated

form. It would be interesting to explore whether the con-

crete indicators from which these constructs have been

defined create particular effects, as Jackson et al. (2003a, b)

suggested. Similarly, we must also acknowledge that our

analysis has been restricted to just two of the effects that

diversity may cause. In fact, we have not included in our

structural models the impact that this variable has on group

communication processes. Milliken and Martins’ (1996)

work provides interesting arguments in this context,

explaining how differences between individuals can affect

the way in which they communicate. These authors also

propose that diversity influences how external agents per-

ceive the group, and how these symbolic images influence

their contacts outside the organization. Secondly, we also

acknowledge some empirical limitations of this study.

Generalization of the results is conditioned by the partic-

ularities of our sample, which was restricted to a single

sector in a single country (Spain). Further studies are

necessary to confirm that the moderating effects identified

and the relationships described are influenced by specific

contingent factors. Similarly, the empirical analysis was

also conditioned by sample size. As explained above, to

measure human capital attributes accurately, we had to

assume a significant reduction in the size of the dataset. In

fact, to validate one sample case, we needed direct

responses from at least four members of the group. The

study of group conclusions would be much stronger if the

results of the structural analysis could be confirmed with a

bigger sample, using another estimation procedure, such as

covariance-based SEM techniques (LISREL, AMOS).

While recognizing these limitations, we still believe that

the results of the empirical analyses developed in this

article are relevant for SHRM professionals and academics.

As we have seen, differences between individuals can have

both positive and negative consequences on group func-

tioning. They may improve creativity and decision-making

processes, but at the same time diversity can also be a

source of relational conflict, dividing the unit into opposite

identity groups. The results of the structural analyses

confirmed that the overall effects of diversity depend to a

great extent on the orientation of the SHRM system.

However, as the empirical analysis suggests, there are

different types of diversity that have different conse-

quences on group functioning. Therefore, to define

Transforming Human Resource Management Systems 525

123

diversity-oriented SHRM strategies, firms must avoid uni-

versalistic prescriptions, and start with a systematic anal-

ysis of their diversity profiles, studying the concrete

affective and cognitive dynamics that heterogeneity causes.

Appendix

See Table 2.

Table 2 Summary of measures

Variable Measures Scales References

Block I: Diversity

1. Demographic attributes:

Age Direct Continuous Tsui and O’Reilly (1989);

Harrison et al. (1998)

Gender Direct Dichotomic Graves and Powell (1995)

Nationality Country of origin (open) Categorical, nominal Chatman et al. (1998)

Education Number of years of education Continuous Ancona and Caldwell (1992)

Highest educational level

reached

Categorical, ordinal Tsui and O’Reilly (1989), Farh

et al. (1998), Chrobot-Mason

(2004)

Kind of training Degree Categorical, nominal Wiersema and Bantel (1992);

Spanish Ministry for Science

and Education

Tenure Number of years working in

the group

Continuous Smith et al. (1994)

Number of years working in

the organization

Continuous Chuang et al. (2004)

Functional experience Functional area in which the

individual has developed

mainly his/her career

Categorical, nominal Krishnan et al. (1997)

2. Human capital attributes

Knowledges Subjective evaluation on

individuals’ knowledge on

certain relevant categories

Likert scale 1–7

Experiences Subjective evaluation on

individuals’ knowledge on

certain relevant categories

Likert scale 1–7

Cognitive Styles Cognitive Style Inventory Likert scale 1–5 Van den Broeck et al. (2003)

Values Schwarz’s Scales Version:

Glazer et al. (2004)

Likert scale 1–7 Schwartz (1992, 1994, 1999)

Gelfand et al. (1996)

3. Heterogeneity measures

For nominal and

categorical variables.

Blau’s index 0 (homogeneity) to 1

(high diversity)

Smith et al. (1994), Eigel and

Kuhnert (1996), Harrison

et al. (1998), Knight et al.

(1999), Blau (1977)

For continuous variables

and Likert scales.

Coefficient of variation 0 (homogeneity) to 1

(high diversity)

Harrison et al. (1998), Hope-

Pelled et al. (1999), Knight

et al. (1999), Chatman and

Flynn (2001).

Block II: group processes

1. Cognitive effects

Capability to perceive and

interpret information

1 item Likert scale 1–7 Watson et al. (1993)

Capability to formulate

problems

1 item Likert scale 1–7 Watson et al. (1993)

Capability to generate

alternatives of solution

2 items Likert scale 1–7 Watson et al. (1993)

526 F. Martı́n-Alcázar et al.

123

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