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https://doi.org/10.1111/1748-8583.12225

1

Age diversity management and organisational outcomes: The role of diversity

perspectives

Abstract Several macro- and meso-level factors have led to unprecedented proportions of aged

employees in organisations, resulting in higher levels of age diversity. Little is known about

which age diversity practices and programs are effective in which types of organisations for

which outcomes. Derived from social exchange theory, this paper proposes and tests positive

relationships between: age diversity practices and organisational outcomes; and work-life

programs and organisational outcomes. Derived from contingency theory, it also proposes and

tests for a moderating effect of diversity perspective (fairness and discrimination vs. synergy)

on the two main relationships. Data were collected from 248 medium to large-sized for-profit

organisations. The results partially support both main effect hypotheses and one moderating

effect hypothesis. The findings suggest different organisational outcomes for age diversity

practices and work-life programs. Theoretical and practical implications are discussed.

Keywords: Age diversity, diversity practices, work-life programs, diversity perspectives,

social exchange theory

2

Introduction

‘Aged’ is defined differently in various reporting and social contexts, but generally refers to

people aged 60 years or above (United Nations, 2012). However, retirement planning and

managing diversity in organisations often focus on mature or older employees aged 45 or

above, referred to as ‘aged’ in these contexts (AHRI, 2014; Diversity Council Australia, 2013;

Vasconcelos, 2015; Warren, 2015; Wilkins, 2017). The ageing workforce (increasing

proportions of aged employees in an organisation’s workforce) is a challenge facing many of

today’s organisations (Jackson and Jenkins, 2014; Wilson, 2015). The factors contributing to

an ageing workforce include: an ageing population – increasing proportions of aged people,

attributed to increasing life spans and decreasing birth rates (Chand and Tung, 2014); higher

labour-force participation rates among aged people (OECD, 2016); skills shortages in changing

markets (Productivity Commission, 2013); delayed retirement of veterans and baby boomers

(Treasury, 2015); and organisations’ increased use of retention strategies (Kooij et al., 2014;

Stone and Tetrick, 2013). Scholars around the world have started focusing on the challenge of

managing an ageing workforce (Hertel and Zacher, 2016).

The ageing workforce literature can be categorised as follows: generational differences,

stereotypes and discrimination research (e.g. Chiu et al., 2001; Cogin, 2012; Lyons and Kuron,

2014; Parry and Urwin, 2011; Snape and Redman, 2003); organisational age diversity,

processes and outcomes research (e.g. Ali et al., 2014; Avery et al., 2012; Backes-Gellner and

Veen, 2013; De Meulenaere et al., 2015; James et al., 2011; Kunze et al., 2011; Li et al., 2011);

perceived diversity practices and employee outcomes research (e.g. Kooij et al., 2013; Kooij

et al., 2010; Peretz et al., 2015; Rabl and del Carmen Triana, 2014); and age diversity

management (diversity practices and work-life programs) and organisational outcomes

research (e.g. Boehm et al., 2014; Kunze et al., 2013). The research on generational differences,

stereotypes and discrimination helps with diversity training (Armstrong-Stassen and Templer,

3

2005). Organisational age diversity, processes and outcomes research provides evidence for a

business case for age diversity and thus helps managers seeking top-management commitment

(Donnelly, 2015), while perceived diversity practices and employee outcomes research assists

managers to micro-manage employee perceptions (Kooij et al., 2013). However, it is the age

diversity management research that can equip managers with the necessary tools (i.e. practices

and programs, such as examining performance rating distributions for aged employees and

sponsoring an aged-employees’ support group) to manage an age-diverse workforce for

positive outcomes (Boehm and Dwertmann, 2015; Kulik et al., 2014; Truxillo and Fraccaroli,

2013). Unmanaged or poorly managed diversity can result in negative outcomes such as high

turnover and lower organisational performance (e.g. Ali et al., 2015; Kunze et al., 2013;

Schneid et al., 2016).

While the first three research categories have received considerable attention, far less

is known about which age diversity practices and work-life programs produce superior

organisational outcomes. The empirical evidence is thin, both in terms of the number of studies

and the number of practices and programs studied (Bieling et al., 2015; Boehm et al., 2014;

Kunze et al. 2013). More importantly, there is little empirical evidence about which

organisational diversity management perspective (overall approach to diversity management)

strengthens or weakens the impact of age diversity management on organisational outcomes

(Dwertmann et al., 2016; Thomas and Ely, 1996). The fairness and discrimination perspective

aims for equal employment opportunities and the absence of discrimination, while the synergy

perspective focuses on actively valuing individuals’ differences to create positive outcomes

(Dwertmann et al., 2016).

This study advances our knowledge of age diversity management in several ways. First,

it tests social exchange theory (Emerson, 1976) and contingency theory (Galbraith, 1973) for

age diversity management. Specifically, it hypothesises and tests whether age diversity

4

practices and work-life programs lead to superior organisational outcomes. Moreover, it

pioneers research in proposing that the positive relationship between age diversity management

and organisational outcomes is contingent on an organisation’s diversity perspective

(Dwertmann et al., 2016). Second, the current study addresses important research gaps. It adds

to a very small body of research investigating the relationship between age diversity

management and organisational outcomes (Bieling et al., 2015; Boehm et al., 2014; Kunze et

al., 2013). More importantly, it provides pioneering evidence of a moderating effect of

diversity perspectives on the age diversity management–performance relationship.

Third, the conceptual framework, design and methods of our study provide strong

empirical evidence. In particular, we include a range of age diversity practices and work-life

programs (Truxillo et al., 2015). Past age diversity management research has focused on a

small set of age diversity practices and does not include work-life programs (e.g. Bieling et al.

2015; Kunze et al. 2013). However, Australian yearly reporting requirements for gender

equality initiatives include work-life programs as well as diversity practices (WGEA, 2012).

Thus, including work-life programs not only aligns this study with the Australian context but

also helps provide evidence for a comprehensive set of practices and programs. Moreover, this

study uses three organisational outcomes – voluntary turnover, return on assets and corporate

social responsibility (CSR) – to enhance the construct validity (Lumpkin and Dess, 1996). We

collected data on for-profit organisations through a human resource (HR) manager survey and

an archival database, thus improving internal validity (Tharenou et al., 2007). Data on return

on assets were collected a year after executing the survey.

Fourth, we tested the hypotheses in a relevant but rarely investigated, Australian context

(AHRC, 2015; Bennington, 2001; Brooke and Taylor, 2005; Encel, 2001). Australia is similar

to other Western democracies (e.g. the United Kingdom) in terms of being low in uncertainty

avoidance (i.e. few practices) (Hofstede, 2001; Peretz et al., 2015), having similar

5

discrimination legislation (e.g. age discrimination laws) and few regulations accompanied by

high managerial discretion (Burgess et al., 2007; Strachan et al., 2004). However, Australian

equal opportunity (EO) laws for the private sector (e.g. Workplace Gender Equality Act 2012)

focus on women (Syed and Kramar, 2009). Although no EO legislation for age diversity exists

(Encel, 2001), Australia’s Age Discrimination Act 2004 prohibits discrimination based on age

in areas including employment (Commonwealth of Australia, 2004).

Theoretical Underpinning and Hypotheses Development

Age diversity management and organisational outcomes

Social exchange theory suggests that individual (or parties) reciprocate attitudes and

behaviours (Blau, 1964; Homans, 1958). Homans (1958) emphasised social and economic

behaviours, while Blau (1964) stressed the importance of the social aspect in this exchange as

opposed to the economic component (Emerson, 1976; Redmond, 2015). For instance, a social

exchange may involve an exchange of rewards and costs onto which a value is placed where

profit equals rewards minus costs (Homans, 1961), but equity or fairness demands that the

perceived reward needs to be proportionate to the perceived degree of costs (Redmond, 2015).

The exchange may involve a series of interactions that are both interdependent and contingent

upon the actions of each party, and generates obligations between them (Cropanzano and

Mitchell, 2005). It does not matter whether these social exchanges between the ‘actors’ are

viewed as negotiated – they are ubiquitous and important (Cook et al., 2013). These

interactions have implications for behaviours, because individuals return the benefits they

receive (Cropanzano and Mitchell, 2005). While there remains some incongruity among

theorists on the type of interactions (Cropanzano et al., 2016), one basic tenet is that

relationships evolve over time into trust, loyalty and commitment, where the parties abide by

certain ‘rules’ of exchange (Cropanzano and Mitchell, 2005).

6

Social exchange theory is not limited to individual level exchanges. It also suggests that

an exchange relationship may exist between an organisation and its employees, and that this

relationship transcends the employment contract (Emerson, 1976; Redmond, 2015). Indeed,

the four employee-organisation relationship approaches to employment engagement identified

by Tsui, Pearce, Porter and Tripoli (1997) are different to the psychological contract and

involve mutual expectations about the nature of an exchange. The two balanced approaches

comprise: the pure economic relationship and the mutual investment relationship (Tsui et al.,

1997). The pure economic relationship focuses on short term pure economic inducements in

exchange for well specified contributions by employees. The mutual investment relationship

includes inducements an employer offers which go beyond short term monetary rewards to

include an extended consideration of an employee’s well-being and investments in employees’

careers. This exchange involves employee obligations and contributions to working outside

any agreements or expertise and generally considering the organisation’s interest as important

in their core job duties.

The two unbalanced approaches comprise: under-investment relationship and over-

investment relationship (Tsui et al., 1997). The under-investment relationship is where

employees are expected to undertake broad and open-ended obligations while the employer

reciprocates with short term and specified monetary rewards with no commitment to a long-

term relationship or investment in the employees training or career. The over-investment

relationship is where the employee performs only a well specified set of job-focussed activities,

but the employer offers open ended and broad ranging rewards including training and a

commitment to provide the employee with career opportunities. Employees are noted to

perform better on core tasks, demonstrate more citizenship behaviours and express higher

levels of affective commitment to an employer if they are in a mutual investment relationship

7

or in an over investment relationship, compared to those in the other two relationships

(Agarwala, 2003; Tsui et al., 1997; Whitener, 2001).

Age diversity practices and programs offered by an organisation can generate employee

perceptions that the organisation supports a diverse workforce (Allen et al., 2003). In exchange,

employees may demonstrate trust, loyalty and commitment to the organisation (Bishop, 2000;

Eisenberger, 2001; Kooij et al., 2010). These positive processes lead to superior organisational

outcomes in all three areas of performance: human resource management, financial

performance and social responsibility (Rhoades et al., 2001; Wayne et al., 1997). We identified

and investigated one relevant outcome from each of the three performance areas: voluntary

turnover from human resource management, return on assets from financial performance, and

CSR from social responsibility (Elkington, 2013). In essence, the perceived organisational

support developed through the social exchange process influences employee trust, loyalty and

commitment, which mediate the relationship between age diversity management and

organisational outcomes (see Figure 1). Due to the organisational level of analysis in this study,

we focus on the two ends as the mediating processes are best measured at the employee level.

-------------------------------- Insert Figure 1 about here

--------------------------------

Employee retention has become vital. ‘Consistently low birth rates and higher life

expectancy are transforming the shape of the EU-28’s [28 states of the European Union] age

pyramid … As a result, the proportion of people of working-age in the EU-28 is shrinking

while the relative number of those retired is expanding’ (Eurostat, 2016, para 1). Other OECD

countries are experiencing similar trends, with mere variations in numbers and causes (OECD,

2016). The costs and potential human and social capital losses associated with turnover far

outweigh any potentially beneficial effects of departing employees (Hancock et al., 2013;

Hausknecht and Trevor, 2011). Age diversity management practices can lead to increased job

8

satisfaction, employee commitment, distributive and procedural justice, and reduced perceived

age discrimination, which can lead to lower voluntary turnover (Bibby, 2008). For instance,

Boehm et al. (2014) found a significant negative relationship between age-diverse work

climates and turnover intentions.

Australian organisations are struggling with lower levels of productivity compared to

their counterparts from other developed nations (Hannan and Gluyas, 2012). Small

improvements in productivity levels can yield long-term organisational and social benefits.

Human resource management can be an important determinant of productivity (Huselid, 1995;

Wright et al., 2005). Social exchange theory suggests the following exchange: the employer

offers effective diversity management; in return the employees demonstrate trust, loyalty and

commitment (Emerson, 1976). Higher levels of trust, loyalty and commitment should lead to

improved productivity and increased revenue for the organisation, resulting in a higher return

on assets (Boehm et al., 2014). Past research has found significant positive effects of gender

diversity (e.g. Frink et al., 2003) and gender diversity management (e.g. Ali, 2016) on

productivity. However, little is known about age diversity management practices and work-life

programs and their links to financial outcomes.

CSR refers to an organisation’s voluntary contribution to a better society and cleaner

environment (Weber, 2008). CSR links an organisation to its employees and community, and

its importance has surged over recent years (Hatch and Stephen, 2015). While researchers

continue to debate its definition and constructs (Carroll, 1979; Turker, 2009; Wang, 2008), the

importance of CSR’s management through diversity practices is increasingly being recognised

(Finney et al., 2014). Social exchange theory suggests that the higher trust, loyalty and

commitment resulting from age diversity practices and work-life programs may lead to greater

employee participation in voluntary activities for the community and the environment

(Emerson, 1976). Research into demographic diversity or demographic diversity management

9

and their links to CSR continues to grow, particularly in the areas of gender, race and age

diversity (e.g. Harjoto et al., 2015; Williams, 2003). For instance, Kabongo et al. (2013) found

that diversity practices influence CSR more than demographic diversity alone.

In sum, age diversity management should lead to lower voluntary turnover (higher

retention), higher return on assets and superior CSR for the organisation. Thus, it is proposed:

Hypothesis 1a (H1a): Age diversity practices are positively associated with

organisational outcomes.

Hypothesis 1b (H1b): Work-life programs are positively associated with organisational

outcomes.

Role of diversity perspectives

Based on organisational contingency theory (Galbraith, 1973), we argue that the relationship

between age diversity management and organisational outcomes will be contingent upon an

organisation’s diversity perspective.

Scholars have identified various sets of perspectives on equality/diversity management.

For instance, Jewson and Mason (1986) discussed two approaches. The liberal approach is

concerned with providing a fair and equitable system for individual talent, removing all

collective barriers. The radical approach is based on the notion that organisations need to

intervene to support disadvantaged groups to provide a level playing field. Thomas and Ely

(1996) noted three perspectives. The discrimination and fairness perspective considers the

elimination of discrimination, ensuring justice and equality. The access and legitimacy

perspective considers diversity as mean to gain access and legitimacy within diverse markets.

The integration and learning perspective of diversity considers diversity as a resource for

learning and adaptive change in the workplace. Greene and Kirton (2009) investigated two

perspectives. The equal opportunities perspective is based on legal compliance and focuses on

10

certain groups. The diversity management emphasises is based on value in diversity and

involves a proactive and inclusive approach towards diversity. Dwertmann et al. (2016)

identified two perspectives. The fairness and discrimination perspective focuses on efforts to

ensure fairness and the absence of discrimination. The synergy perspective refers to actively

valuing differences between individuals and the integration of diverse views to enhance the

collective outcomes, particularly those related to learning and performance.

Diversity perspectives can be seen as distinct categories or multiple points on a

continuum in terms of progress or development (Cockburn, 1991; Greene and Kirton, 2009):

from discrimination to equal opportunities and then to managing diversity. We use Dwertmann

et al.’s (2016) two diversity perspectives in this study for three reasons. First, based on

discrimination legislation, most Australian organisations take a compliance approach to

diversity (Ali, 2016), indicating the fairness and discrimination perspective. Second, beyond

legal compliance with discrimination laws, an approach based on the business case for age

diversity aligns with the synergy perspective. It explicitly links this approach with performance

which is also the focus of this study. Third, there are no equal opportunity laws in the area of

age diversity in Australia (Hicks et al., 2010). Therefore, organisations are not required to

report on their age diversity initiatives and age demographics.

Organisations with a fairness and discrimination perspective would experience only

weak positive effects of age diversity management on outcomes. This perspective considers

the elimination of discrimination and ensuring justice and equality to be the all-encompassing

rationales for diversity (Ely and Thomas, 2001; Thomas and Ely, 1996). The value of diversity

in itself is low, in that it is not well-recognised, with assimilation being the most important

feature. This diversity perspective has been linked to equality and its failure to stem ageism,

sexism and racism due to its principle of ‘sameness’. This age-blind, gender-blind and colour-

blind ideal is built on the assumption that, underneath, ‘“we are all the same” or “we aspire to

11

being all the same’; thus, placing pressures on employees to make sure that differences do not

count (Lorbiecki, 2001: 351-352). As such, difference is seen as problematic and a liability to

be neutralised. The benefits of diversity are limited to narrow spheres, for example when

employees of a certain age group deal with customers within that same age group (Foldy,

2004). In a study of the inclusion of minorities, Bernstein and Bilimoria (2013) found support

for this argument, as minority board members on not-for-profit boards of organisations with a

fairness and discrimination perspective of diversity did not experience greater feelings of

inclusion. The mismatch between age diversity management and the fairness and

discrimination perspective may result in low levels of trust, loyalty and commitment from

employees, leading to weak effects on voluntary turnover, return on assets and CSR.

In contrast, organisations with a synergy perspective would experience strong positive

effects of age diversity management on outcomes. This perspective considers differences as a

resource for adaptive change in the workplace. The characteristics of the synergy perspective

inform and enhance core work and work processes, placing a high value on identity and directly

linking diversity and work (Ely and Thomas, 2001; Thomas and Ely, 1996). The synergy

perspective is proposed as highly beneficial as it provides a strategic link to the organisation’s

core activities and existing systems so that the work is diversified – not just the staff (Dass and

Parker 1999; Lorbiecki, 2001). It encourages real cultural change by effectively inspiring

organisations to talk through their dimensions of difference (Greene and Kirton 2009;

Swanson, 2002); however, it is acknowledged as difficult to achieve and needs to be led by

senior management (Ng and Sears, 2012). Yet, senior management are often muddled in their

stance on ageism (Foster and Harris, 2005), with organisations continuing to respond in

different ways to age diversity including divisions based on industry sector and support by the

top management team (Parry and Tyson, 2009). Just as there is evidence that “some senior

women are unsupportive and act aggressively toward their women employees” (Hurst,

12

Leberman and Edwards, 2016: 74), aged top management teams may not be unbiased towards

aged employees. Bernstein and Bilimoria (2013) identified a link between the synergy

perspective and the inclusion experience of minority board members, demonstrating that

members feel included when they perceive they are valued for their differences, such as their

talents, contributions and abilities to assist the board in serving its mission. A match between

age diversity management and the synergy perspective may result in high levels of trust, loyalty

and commitment from employees, leading to strong effects on voluntary turnover, return on

assets and CSR.

In sum, the positive effects of age diversity management on organisational outcomes

will be contingent on an organisation’s diversity perspective. Thus, it is proposed:

Hypothesis 2a (H2a): The diversity perspective moderates the age diversity practices–

organisational outcomes relationship, such that the relationship is stronger for

organisations with a synergy perspective than for organisations with a fairness and

discrimination perspective.

Hypothesis 2b (H2b): The diversity perspective moderates the work-life programs–

organisational outcomes relationship, such that the relationship is stronger for

organisations with a synergy perspective than for organisations with a fairness and

discrimination perspective.

Methods

We used data from a survey of HR decision-makers and an archival source to test the

hypotheses in medium- to large-sized for-profit organisations operating in Australia.

Sample and data collection

In May 2013 a copy of the survey was sent to HR decision-makers (e.g. HR directors or HR

managers) at 2276 organisations across Australia. Managers from 248 organisations

13

participated in the survey, resulting in a response rate of 11.2% after adjusting for 55

undelivered surveys. They reported on their organisation’s age diversity practices, work-life

programs, diversity perspective, voluntary turnover, CSR, number of employees, year the

organisation was founded, organisation type (holding/subsidiary or stand-alone) and industry

group. Data on operating revenue for the year 2014 were obtained from the Orbis database in

July 2014. The final sample of participating organisations reflects a wide range of organisations

in terms of size and industry. Organisation size ranged from 40 employees to 65,000 employees

(mean 1639). The participating organisations were drawn from all ten industry groups (based

on two-digit standard industry classification (SIC) codes), with the following major

representations: 55 from Services; 54 from Manufacturing; 46 from Transportation,

Communications, Electric, Gas and Sanitary Services; and 19 from Mining.

Australian Context

Australia’s diversity dates back to thousands of years, with the indigenous population speaking

about 250 distinct languages at the time of first European settlement (ABS, 1996). The first

settlers arriving in 1788 also belonged to more than 28 European countries (Strachan et al.,

2014). The 20th century immigration from Europe and Asia further increased the diversity

(Gerner, 2010). However, the dominant Anglo male culture and its values, shared by many

European and American Anglo societies, led to discrimination towards Indigenous Australians,

women and people from non-English speaking backgrounds (NESB) (Strachan et al., 2014).

During the 1960s and 1970s, international civil rights and women’s movements and the United

Nations and International Labour Organisation conventions drove a range of anti-

discrimination legislation in Australia (French et al., 2010). Based on the social justice case,

the legislation prohibits discrimination on the basis of race, sex, disability, national extraction,

age, religion, etc. Based on the business case, the EO legislation, going beyond prohibiting

14

discrimination, requires attracting and managing a diverse workforce (Strachan et al., 2007;

Thornton, 1990). The EO legislation for the Australian public service focuses on Indigenous

Australians, people from the NESB, women and people with disabilities (APS, 2012), while

the EO legislation for the private sector focuses on women (WGEA, 2012). However, an ageing

population and younger skilled migrants have also made the Australian workforce highly age

diverse (Hicks et al., 2010; Price et al., 2010). The Age Discrimination Act 2004, its

amendments in 2009 and 2012, and the appointment of an Age Discrimination Commissioner

indicate the significance of the issue, but age discrimination still exists (AHRC, 2016; Sargeant,

2016). In the absence of EO legislation in the area of age diversity, most organisations are not

proactively managing their age-diverse workforce (Thornton and Luker, 2010). Managing

diversity seems to be a low priority for Australian organisations (Kramar, 2012). Many

Australian organisations take a ‘compliance with legislation’ approach towards managing

diversity and offer only few diversity practices (Ali, 2016; D’Netto et al., 2014; Fenwick et al.,

2011).

Measures

Predictors. Age diversity practices were measured using 12 items from Konrad and

Linnehan’s (1995) HR structures scale, with a reported reliability of .93 (see the Appendix for

a list of items). Some items were adapted to focus on age diversity management. For this study,

the Cronbach’s alpha was .77. The responses were coded as follows: never (1), sometimes (2),

most of the time (3) and always (4). The total score for the 12 items (ranging from 12 to 48)

indicated the level of age diversity practices. Work-life programs were measured using nine

items. Five items were drawn from Konrad and Mangel’s (2000) work-life programs scale,

with a reported reliability of .77. Four items were added to this scale to include programs not

covered in the original scale: compressed week, flexible holidays, unpaid extra holidays and

15

aged-employees’ support group (see Appendix for a list of items). The response options were:

does not offer (1), offered to few employees (2), offered to most employees (3) and offered to

all employees (4). The Cronbach’s alpha for the current study is .71. The final scores for work-

life programs (ranging from 9 to 36) were calculated by adding the responses to each item.

Outcomes. We used three performance measures relevant to age diversity

management: voluntary turnover, return on assets and CSR. The survey asked HR decision-

makers to report the total number of employees who voluntarily left the organisation during

the last 12 months. This number was multiplied by 100 and then divided by the total number

of employees to calculate the percentage voluntary turnover for each organisation. These

voluntary turnover percentages were deducted from 100 (for regression analyses) to align this

outcome measure with the other two outcome measures; that is, a higher percentage is

desirable. Return on assets data were obtained from the Orbis database for 2014, one year after

the survey data were collected. Orbis calculates return on assets as net income divided by total

assets (Orbis, 2016). CSR was measured using a seven-item scale with a reported reliability of

.89 (Turker, 2009). The Cronbach’s alpha for the current study is .88. A representative item

from the scale is: ‘The organisation encourages its employees to participate in voluntary

activities.’ The respondents reported on each item using a five-point scale, coded as follows:

strongly disagree (1), disagree (2), neutral (3), agree (4) and strongly agree (5). The mean of

the responses to the seven items indicated the level of CSR demonstrated by the organisation.

Moderator. Diversity perspective was measured using two categories: fairness and

discrimination perspective and synergy perspective (Dwertmann et al., 2016). The survey

asked respondents to select their organisation’s overall diversity perspective. A dummy

16

variable called ‘diversity perspective’ was created, with ‘0’ representing ‘fairness and

discrimination’ and ‘1’ representing ‘synergy’.

Controls. The analyses controlled for the effects of organisation size, organisation age,

organisation type and industry type. Organisation size is associated with diversity practices

(Kotey and Sheridan, 2004). Consistent with previous research, organisation size was

operationalised as the total number of full-time equivalent employees (Alexander et al., 1995).

Organisation age may have an impact on the adoption of diversity practices (Blum et al., 1994).

It was operationalised as the number of years since the organisation was founded (Perry-Smith

and Blum, 2000). Holding companies or subsidiaries, compared to stand-alone organisations,

may benefit from their combined financial resources (Richard et al., 2003). Therefore, a

dummy variable called ‘Organisation type’ was created, with ‘0’ representing ‘Holding or

subsidiary’ and ‘1’ representing ‘Stand-alone’. The impact of HR practices on operating

revenue may vary across industries (Datta et al., 2005). The ten SIC groups of the sample

organisations were collapsed into Services and Manufacturing (Ali et al., 2011). A dummy

variable called ‘Industry type’ was created, with ‘0’ representing ‘Services’ and ‘1’

representing ‘Manufacturing’.

Results

To assess the common-method bias for voluntary turnover and CSR, we performed Harman's

single-factor test (Harman, 1967; Podsakoff and Organ, 1986). Results indicated that a single

factor explained only 14.72% of variance (less than 50% is acceptable), suggesting the

common-method bias was not an issue (e.g. Kooij and Boon, 2017). Table 1 presents the means,

standard deviations and correlation coefficients for all variables. Low to moderate correlations

17

between control variables, predictors and the moderator suggest multicollinearity was not an

issue.

-------------------------------- Insert Table 1 about here

--------------------------------

We used hierarchical multiple regression to test the hypotheses. The predictor variables

of age diversity practices and work-life programs were centred to reduce multicollinearity with

the interaction terms. H1a proposed a positive association between age diversity practices and

organisational outcomes. H2a predicted a positive relationship between work-life programs

and organisational outcomes. To test these two hypotheses for voluntary turnover, return on

assets and CSR, each of the outcome measures was regressed on age diversity practices and

work-life programs (see Table 2). Controls were entered in step 1 (see Model 1 columns in

Table 2), and age diversity practices and work-life program variables were entered in step 2

(see Model 2 columns in Table 2). The results supported: H1a for CSR, as age diversity

practices had a significant positive effect (β = .21, p < .01) on CSR (see CSR Model 2 column

in Table 2); and H1b for voluntary turnover, as work-life programs had a significant positive

effect (β = .19, p < .05) on 100 - voluntary turnover (see 100 - voluntary turnover Model 2

column in Table 2). All other effects were non-significant and, thus, we found partial support

for H1a and H1b.

-------------------------------- Insert Table 2 about here

--------------------------------

H2a proposed that the positive age diversity practices–organisational outcomes

relationship would be stronger in organisations with a synergy perspective than for

organisations with a fairness and discrimination perspective. H2b predicted that the positive

work-life programs–organisational outcomes relationship would be stronger in organisations

with a synergy perspective than for organisations with a fairness and discrimination

18

perspective. The moderator variable of diversity perspective and the interaction terms (age

diversity practices × diversity perspective and work-life programs × diversity perspective) were

entered in step 3 (see Model 3 columns in Table 2). The results indicate that only the interaction

term of work-life programs × diversity perspective was significant (β = .23, p < .05) for return

on assets.1 We plotted the relationships between work-life programs and return on assets in the

two categories of organisations – fairness and discrimination perspective vs. synergy

perspective – as seen in Figure 2. The relationships were positive and significant for

organisations with the synergy perspective (B = 1.21, p < .05) as hypothesised. However,

contrary to the hypothesis, the relationships were negative but non-significant for organisations

with the fairness and discrimination perspective (B = -.41, n.s.). Thus, partial support was found

for H2b and no support was found for H2a.

-------------------------------- Insert Figure 2 about here

--------------------------------

Discussion

The main objectives of this study were to: (1) examine age diversity practices and work-life

programs in organisations and their impact on three organisational outcomes, and (2)

investigate the moderating effects of the diversity perspectives (fairness and discrimination vs.

synergy) on the above-mentioned relationships. The results support a positive age diversity

practices–CSR relationship and work-life program–turnover (100 - voluntary turnover)

relationship. We also found a positive work-life programs–return on assets relationship for

organisations with a synergy perspective. We interpret these findings as: managing age

diversity practices, work-life programs and an organisation’s diversity management

1 Multicollinearity among predictor and control variables may lead to incorrect inferences (Becker, 2005). We repeated the regression analyses reported in Table 2 without control variables. In the absence of control variables, the following terms remained significant: work-life programs (β = .15, p < .05) for 100 - voluntary turnover, diversity practices (β = .22, p < .01) for CSR, and work-life programs × diversity perspective (β = .21, p < .05) for return on assets.

19

perspective are the new imperatives for influencing positive outcomes across human resource

management, financial and CSR performance.

Our findings strengthen, extend and refine the business case for age diversity

management. The positive impact of work-life programs on voluntary turnover (lower

voluntary turnover) strengthens the evidence provided by literature. For instance, Boehm et al.

(2014) found the indirect impact of five age-inclusive practices (e.g. recruitment) on perceived

organisational performance and collective turnover intentions. Similarly, Caillier (2016) and

Ali et al. (2015) reported positive impact of a range of work-life programs or diversity

management practices on employee retention levels. The positive age diversity practices–CSR

relationship found in the current study extends the business case for age diversity management.

No prior study has tested the effect of age diversity practices on CSR; however, research on

broader EO and diversity management practices has found a link between those practices and

CSR (e.g. Finney et al., 2014; Kabongo et al. 2013). Age diversity literature provides some

evidence of positive impact of diversity practices on other outcomes. For example, Bieling et

al. (2015) found that age-inclusive appraisals and compensation practices had a positive effect

on perceived organisational performance. In the current study, the pioneering positive work-

life programs–return on assets relationship found in organisations with the synergy perspective

refines the business case for age diversity management for financial performance (Bardoel et

al., 2008).

Theoretical contribution and implications

The theoretical contributions and implications of this study are worth noting. Our findings

provide indirect support for social exchange theory (Emerson, 1976). The organisational-level

focus of our research led to the study of two ends of the social exchange process – age diversity

management implemented by organisations and organisational outcomes (see Figure 1). A

20

direct test of social exchange theory for age diversity management would require examining

the full exchange, including the mediating processes (Boehm et al., 2014). Essentially,

employers’ offering of age-diversity practices and work-life programs leads to perceived

organisational support among employees (Allen et al., 2003); as an exchange, employees then

show trust, loyalty and commitment (Cook et al., 2013), leading to superior human resource

management, financial and social performance for the organisation (Cropanzano and Mitchell,

2005). Moreover, our findings refine our understanding of social exchange theory (Cropanzano

et al., 2016). The exchange between employer and employee is reflected in different

performance measures for different elements of age diversity management: CSR for age

diversity practices and lower voluntary turnover for work-life programs. A multilevel test of

age diversity management at the organisational level and mediating processes (trust, loyalty

and commitment) at the employee level would reveal how the different elements of age

diversity management trigger different mediating processes, leading to different impacts on

outcome measures (Colquitt et al., 2013).

The results provide some support for contingency theory (Galbraith, 1973); the findings

suggest that the positive effects of work-life programs on financial performance are contingent

upon the development of a synergy perspective (Dwertmann et al., 2016). This study presents

detailed theoretical arguments for different effects of age diversity management on

organisational performance depending on the diversity management perspective, linking it

back to social exchange theory and its elements (Emerson, 1976). Thus, it helps improve our

lack of theoretical understanding of the contingent impact of age diversity management on

human resource management, financial and social performance (Bardoel et al., 2008;

Cropanzano et al., 2016).

Practical contributions and implications

21

The findings of this study offer practical contributions with implications. First, the results

provide support for a strong business case for managing an age-diverse workforce through age

diversity practices and work-life balance programs. Effective age diversity management can

lead to superior people (retention), profit (return on assets) and planet (CSR) performance

(Elkington, 2013). The strong evidence provided by this study may help HR managers secure

top-management team commitment to diversity management (Hunt et al., 2015). In particular,

this pioneering Australian research on age diversity practices and work-life programs will help

Australian managers in formulating a range of evidence-based diversity policies and programs

(Guest, 2011). Second, the strengthened business case for work-life programs (impact on

retention) and extended business case for age diversity practices (impact on CSR) can help

managers focus on relevant performance measures for different elements of age diversity

management. A more focused evaluation of diversity management elements can produce

accurate results for the organisation (Mensi-Klarbach, 2012).

Third, our findings indicate that an organisation’s diversity perspective greatly

influences its ability to capitalise on the benefits of work-life programs (Dwertmann et al.,

2016). Managers should pay particular attention to aligning the context with diversity

management for positive outcomes (Murray and Syed, 2005). A clearly articulated diversity

perspective, aligned with age diversity management, can help to achieve high levels of

employee trust, loyalty and commitment as an exchange (Emerson, 1976). This research found

that the majority of Australian organisations take the fairness and discrimination perspective

on age diversity management, possibly failing to capitalise on age diversity. The moderating

effect findings encourage managers to further develop their diversity perspective by valuing

the differences between young and mature-aged employees, the synergy perspective. In the

absence of equal opportunity legislation for age diversity in Australia which could require

22

organisations to proactively manage age diversity, the organisations with a synergy perspective

may gain an advantage over competition (Noe et al., 2006).

Fourth, the findings indirectly (suggested by social exchange theory but not tested in

this study) suggest that managers should monitor and reinforce exchange in the form of positive

processes (trust, loyalty and commitment) to ensure benefits of age diversity management. Any

negative processes predicted by competing theories, such as age stereotype and barriers, should

be weakened for a net positive exchange (Compton et al., 2014). For a meaningful exchange,

firms should not only implement age-inclusive practices and programs, but also actively

communicate them to increase employee awareness (Boehm et al., 2014). Fifth, the evidence

for a business case for managing age diversity provided by this study and future Australian

research in this direction may initiate a debate around introducing equal opportunity legislation

in the area of age. Such legislation may not only respond to high age diversity in the Australian

workforce (Thornton and Luker, 2010), but may also require organisations to actively manage

their age diverse-workforce (Hicks et al., 2010). Such effective age diversity management,

currently rare in Australian organisations, can also lead to positive employee outcomes (Rabl

and del Carmen Triana, 2014). EO legislation and positive employee and organisational

outcomes might encourage more organisations to implement voluntary practices beyond

compliance, taking a diversity management perspective on age diversity.

Limitations and avenues for future research

This study has several limitations. First, it focused on age diversity management and did not

take into account other demographic diversity practices implemented within the organisations.

Research recognises that a broad spectrum of demographic diversity influences organisational

outcomes (Pelled, 1996; Muchiri and Ayoko, 2013). Future research should investigate a wider

range of diversity management practices, focusing on multiple forms of demographic diversity.

23

This is an important step forward in understanding what constitutes a comprehensive approach

to diversity management (Kulik et al., 2014). Research in this direction can also benefit from

adopting the ‘bundles of HR practices’ approach (development, maintenance, utilisation and

accommodative) towards diversity management (Kooij et al., 2014; Truxillo et al., 2015).

Second, the low response rate may limit the generalisability of the results. A higher response

rate would strengthen the findings of this study. Some diversity research conducted in Australia

has been successful in achieving higher response rates (e.g. D'Netto and Sohal, 1999), while

other research has comparable low response rates (e.g. Fenwick et al., 2011). Third, the

generalisability of findings to non-Anglo cultures should be interpreted with caution. Previous

research has identified that organisational culture may influence the findings related to

diversity management (Chiu et al., 2001). A comparative study of age diversity management

across cultures might provide valuable insights into contextual diversity management. Future

research can also benefit from investigating the moderating effects of age diversity climate and

age-inclusive leadership (Boehm and Dwertmann, 2015). Positive evidence for supportive age

diversity climate and age-inclusive leadership will also be invaluable for promoting contextual

age diversity management (Ulrich and Dulebohn, 2015), which is still lacking in Australia,

despite some supporting evidence for its business benefits.

24

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TABLE 1 Means, standard deviations and correlationsa

Variable Mean SD 1 2 3 4 5 6 7 8 9

Controls

1. Organisation size 1639.15 6310.99

2. Organisation age 49.59 42.91 .08

3. Organisation type (0 = Holding/subsidiary; 1 = Stand-alone)

.42 .49 -.14* .07

4. Industry type (0 = Services; 1 = Manf.)

.42 .49 .11 .19** .03

Predictors

5. Age diversity practices 19.66 5.50 .04 .05 -.10 -.10

6. Work-life programs 19.66 4.55 -.02 -.06 -.01 -.14* .26**

Moderator

7. Diversity perspective (0 = fairness and discrimination, 1 = synergy)

.40 .49 .00 .11 .16* .14* -.04 -.02

Outcomes

8. Voluntary turnover 14.23 17.34 -.07 -.14 .04 -.26** -.04 -.17* -.08

9. Return on assets 5.52 20.63 -.07 .14 .02 -.11 .16* .06 -.10 .04

10. Corporate Social Responsibility 3.89 .70 .17* .04 .02 -.05 .26** .18* -.04 -.16* -.09

a2-tailed; * p<.05, ** p<.01

41

TABLE 2 Hierarchical regression analyses

Variable

100 - Voluntary turnover

Return on assets

Corporate social responsibility

β (Model 1) β (Model 2) β (Model 3) β (Model 1) β (Model 2) β (Model 3) β (Model 1) β (Model 2) β (Model 3)

Controls Organisation size .03 .05 .05 -.09 -.12 -.11 .18* .18* .18* Organisation age .10 .10 .09 .16 .15 .21* .03 .03 .01 Organisation type -.03 -.03 -.03 -.04 -.03 -.02 .04 .07 .08 Industry type .23** .25** .25** -.19* -.17* -.15* -.09 -.04 -.03

Predictors Age diversity practices .01 .01 .12 .22* .21** .22* Work-life programs .19* .19* .06 -.09 .13 .25*

Moderator Diversity perspective (0 = fairness and discrimination, 1 = synergy)

.03 -.11 -.03

Interaction terms Age diversity practices × diversity perspective -.01 -.14 -.03

Work-life programs × diversity perspective -.01 .23* -.18

R2 .07 .11 .11 .05 .07 .12 .04 .11 .13

F 3.67** 3.72** 2.46* 2.20 2.00 2.21* 1.87 3.86** 3.08**

∆R2 .07 .04 .00 .05 .02 .05 .04 .07 .02

F for ∆R2 3.67** 3.62* .15 2.20 1.56 2.50 1.87 7.57** 1.46

n = 192 (voluntary turnover), 159 (return on assets), 189 (corporate social responsibility) Standardized coefficients are reported * p<.05, ** p<.01, *** p<.001

42

FIGURE 1 Conceptual framework

Work-Life Programs

FIGURE 2 Interaction effects of work-life programs and diversity perspectives on return on assets

Appendix

‐10

‐5

0

5

10

15

20

25

30

10.0 11.2 12.3 13.5 14.6 15.8 16.9 18.1 19.2 20.4 21.5 22.7 23.8 25.0 26.1 27.3 28.4 29.6 30.7 31.9 33.0

Fairness & Discrimination Perspective Synergy Perspective

Trust

Loyalty

Commitment

Age Diversity Management

Age Diversity Practices

Work-life Programs

Ret

urn

on A

sset

s

Outcomes

Voluntary Turnover

Return on Assets

CSR

43

Age diversity practices (Konrad and Linnehan, 1995) 1. Employees are informed about the specifics of the EO/diversity plan 2. An outside EO/diversity expert is consulted to develop or modify employment practices 3. Positions for which EO goals have not been achieved are noted on the job requisition 4. Employment agencies which specialise in finding aged candidates are used 5. The hiring manager is informed if EO goals for the position have not been met 6. EO concerns influence the hiring decision 7. Being an aged person is a criterion considered in hiring decisions 8. Managers are trained in their EO/diversity responsibilities 9. Aged employees are specifically targeted to receive management development training 10. Aged employees who are potential candidates for management jobs are identified and targeted

for promotion 11. Performance rating distributions are examined for aged employees 12. Turnover rates are calculated for aged employees Work-life programs (First five items from Konrad and Mangel, 2000) 1. Flexi-time 2. Job-sharing 3. Part-year work 4. Part-time work 5. Voluntary reduced time (work fewer hours and then may return to their full-time status) 6. Compressed week (a standard workweek is compressed to fewer than five days) 7. Flexible holidays 8. Unpaid extra holidays 9. Aged-employees’ support group