IMPACT OF WORKFORCE DIVERSITY

ON EMPLOYEE PERFORMANCE
A CASE STUDY OF TUNS FARM AGRO ALLIED LIMITED
IKIRUN, OSOGBO, OSUN STATE

BY

UGWUANYI JERRY CHINEDU

BA/HND /F23/ 6585

SUBMITTED TO:
THE DEPARTMENT OF BUSINESS ADMINISTRATION,
SCHOOL OF BUSINESS AND MANAGEMENT STUDIES,
THE FEDERAL POLYTECHNIC OFFA,
KWARA STATE.

IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE

AWARD OF HIGHER NATIONAL DIPLOMA (HND) IN
BUSINESS ADMINISTRATION
 INTRODUCTION

Background to the Study

Business that intends to be successful must have a borderless view and an underlying
commitment to ensure that workforce diversity is part of its day-to-day business conduct.
Workforce diversity was globally perceived to attract a broader talent pools of employees, it
needs to embrace an organizational culture of workforce diversity. This will lead to an
enhanced corporate reputation and strengthened cultural values.

Organizations hire employees from diverse countries, cultures, values, and styles.
While employees expect returns from the organization, their effective performance is
significant for its success. It’s therefore important to consider the effect of diversity on
employee output. Workforce diversity could present excellence challenges as well as
opportunities to the organization in terms of effective management.

Today’s managers are responsible for both leading employees and responding to the need of
customers who are more ethnically diverse, older, and in greater need of child and elder care.
Leaders in both public and private sectors focus more attention on the issue of diversity.
When diversity is not managed properly, there will be a potential for higher turnover, difficult
in communication and interpersonal conflicts. Overall, it will be adversarial to organization’s
performance, profitability and reputation.

The demographic changing in an organization affects the organization’s businesses and its
financial and non-financial performance. To be effective, organization needs to motivate
employees towards more contributing to building this organization. Employees must be
aware of and get the most out of the diversity of the workforce.

Understanding how to interact and work with people with diverse background is even more
crucial than just bringing them into the workforce. However, as the role of females and
minorities continue to develop in the workforce, organization that embrace the nation’s
changing demographics will maximize the benefits and achieve the competitive advantage.

Organization are facing diversity challenges in multiple forms as demographic

changes in manpower integrated with global markets and worldwide rivals that should be
managed strategically (Kreitz, 2008). To manage diversity strategically and successfully
organizations needs human resources manager with essential skills in developing
organization, enhancing leadership skills, developing positive communication and
correspondence tools, besides implementing effective assessment process.

Research Questions

The research questions of this proposed study are:

i. What is the effect of demographic diversity on employee performance?

ii. To what extent does skill diversity impact on employee performance?
iii. To what extent does values diversity influence employee performance?
iv. Is there any significant relationship between educational diversity and employee
performance?

Objectives of the Study

The main purpose of this study is to examine the impact of workforce diversity on
employee’s performance in an organization. The specific objectives of this study are:

i. To investigate the effect of demographic diversity on employee’s performance.

ii. To determine the impact of skill diversity on employee’s performance.
iii. To examine the values diversity on employee’s performance.
iv. To inspect the relationship between educational background and employee’s
performance.

Hypotheses of the Study

The hypotheses for the study are stated as:

HYPOTHESIS I

H0 Demographic diversity does not have significant effect on employee’s performance.

H1 Demographic diversity has significant effect on employee’s performance

HYPOTHESIS II

H0 Skill diversity does not have significant impact on employee’s performance.

H1 Skill diversity has significant impact on employee’s performance

 LITERATURE REVIEW

Meaning of Employee Performance

Performance has been perceived as a variable that is dependent on variables such as training,
knowledge, skills, and motivation other than workforce diversity (Odhiambo, 2014). This
supports Beziiowe (2015) who argued that during the industrial revolution, many
organization viewed performance as a variable that was principally concerned with “input
aspects”, particularly financial resources, however, in this modern-day, organization have
realized the need to embrace diversity due to a holistic business knowledge that diverse work
teams are creative, innovative and more responsive to the global market economy (Mollel,
Mulongo and Market, 2015).

Durga (2017) defined performance as the act of executing a task or an accomplishment or

achievement. He adds that employee performance is how well an employee is effectively
fulfilling his/her job requirement or discharging his/her duties so as to achieve good results.

O’flynn et al (2011) citing William and O’Reilly (2012). Said employee performance is
defined using three criteria. First criteria, is that employees’ output meets the standard of
performance set by the organization’s external customers. Secondly, employee performance
can be defined in terms of how the social processes utilized in the performance of their jobs
enhances or maintain the capability of the employees to work together on subsequent groups
tasks. Finally, that employee’s personal needs are satisfied instead of them being frustrated
by the group performance. Performance is an individual’s behavior and results. It is also seen
as the way in which people get their work done (Armstrong, 2012).

However, O’flynn, et al. (2011) citing William (2012) argues that the performance of
employees is not truly representative of what a group performance is. Rather, it is the
personal experience of group members and the subsequent ability of the employees to
perform in the future that also defines the employee’s performance, O’flynn, et al. (2001).
Citing Ancona (2002) argues that there are multiple dimensions when it comes to rating of
performance seeing that different constituents have their different performance criteria and
access to data. For instance, management may be interested in looking at the output of the
employee whereas; the employee may be interested in creating a productive environment for
themselves. They may have daily information about their interactions with co-workers or
group members and use this data to evaluate performance. Information and decision making
theory predict that a positive outcome exist between employee performance in intellectual
and complex data and information as employees have diverse knowledge, skills, experience
and expertise which results in innovation new product design and improved decision making.

Rahman, Hussain and Hussain (2011) citing Scott and Walker (1995) stated that employee
performance can be determined based on three (3) factors; Work environment, ability and
motivation, thus expressed by the formula; performance =F (work environment * ability*
motivation). Ability here has to do with the employee’s physical, emotional and intellectual
capacity to carry out his task. That is the employee, the skills and knowledge needed for the
job.

There are various definitions of employee performance highlighted in different studies. For
example, a study by Odhiambo (2014) a human capital development, defined performance as
the effective discharge of duty for which one is hired to do. The author further explained that,
regardless of numerous duties once has to perform; he/she can be regarded to have performed
well if the performance outcomes are related to the goals and the objectives of the
organization. In another definition by Tinofirel (2011) employee performance is define as the
successful completion of tasks by a selected individual, as a set and measured by a supervisor
or organization, to pre-define the acceptable standards, while effectively and efficiently
utilizing available resources within a change environment.

Types of Employee Performance

i Numerical Rating Scale

Due to its simplicity, this is one of the most widely used systems and tends to be
highly effective. It is also popular because it allows employers to measure employee
performance because it allows employer to measure employee performance on a pattern of
area such as teamwork, communication, skills and reliability. A numerical rating scale is
beneficial because a business can customize the system to rate whatever employee traits or
characteristics it deems as important. This commonly involves rating individuals on a (1 to 5)
or a (1 to 10) scale with lower numbers being unsatisfactory and higher numbers being
satisfactory in turn, employers can use tangible data to determine if an employee’s
performance is poor, average, good or great. Gasper, J.E, Bierma (2009)
ii Objective-Based

This is another simplicity evaluation system and is a clear cut way to track progress in
an objective-based evaluation on employer and employee will agree upon a specific goal for
the employee meet coupled with a deadline. If the employee meet the objective, then it
speaks highly of them and vice-versa. This is perhaps the most black and white of all systems
and is a practical way to monitor the overall success of employees. Gasper, J.E, Bierma
(2009).

iii 360-Degree Appraisal

If you are looking for comprehensive feedback on an employee’s performance to form

in-depth insights, than this is the way to go. A 360-degree appraisal work by gathering
feedback from multiple parties such as managers, co-workers, customers and even vendors,
the more information collect the more accurate the performance review becomes, and the
more the Picture comes into focus, Although this form of evaluation is somewhat laborious
and time consumed when compared to the first two techniques. Many employers prefer it
because of the unbiased data they receive and the multi-dimensional vantage point it creates.
Gasper, J.E, Bierma (2009).

iv Critical Incidents

This system is defined as “ A method of performance appraisal involving identifying and

describing specific events ( or Incidents) where the employee did something really well or
something requiring improvement “ for example, you might record an instance of a stressful
situation where an employee out-shined and exceeded expectations. On the other hand, you
might record a serious mistake an employee made that was detrimental to productive and
created a lot of lingering problems. For a critical incidents evaluation system to be effective,
It’s important to keep detailed records and you may want to implement a rating system for
increased objectivity. Gasper, J.E, Bierma (2009).
 METHODOLOGY

Introduction

This chapter provides the methods that were utilized in this research. The basic
content of this chapter include; the research design, population of the study, sampling design,
research instrument, validity and reliability, data collection and data analysis.

Research Design

Research design is a planned structure or procedural strategy that a researcher adopts

in order to obtain answers to the research problems or questions (Kumar, 2011).

Descriptive design was used since the study will gather quantitative on the “Impact of
Workforce Diversity on Employee Performance”. The study was descriptive in nature as it is
deemed appropriate because it involves used of written questionnaires administered to
respondents.

According to Wimner and Dominic “(1999) “a descriptive survey attempts to picture or

document condition or attitude that exist in a moment”.

Sampling Design

Kothari, (2004) defines samples as small group of respondents drawn from population
about which a researcher is interested in getting the information so as to arrive at a
conclusion. It might be difficult and impossible to use all population in research; therefore,
downsizing is necessary to reduce the population to manageable size which is highly
representative of the population.

80 staffs were selected from the entire population as sample. The researcher used simple
random sampling method in which respondent or as randomly selected in such a way that all
members of the population has equal chance of being chosen.

Methods of Data Analysis

Descriptive statistics has to do with presenting the data collected in Tables and also
calculating the percentages, averages, measures of distribution and explain the data(Offredy
& Vickers, 2010). The researcher analyzed the data collected from the respondent using
frequencies and simple percentages. The hypotheses were tested using Chi-Square method to
analyze the relationship between the variables (workforce diversity and employee
performance). Analytical procedure was also conducted to ascertain the effect of workforce
diversity on employee performance. The formula for chi-square is X2 = ∑(O-E)2/E
 DATA PRESENTATION, ANALYSIS AND INTERPRETATION

The research hypotheses formulated are tested to achieve the objectives of the study. Chi-

square method was used to achieve objective one (1) and two (2) and three (3) while

correlation analysis was used to achieve objective four (4).

TEST OF HYPOTHESES

Hypothesis one – demographic diversity does not have significant effect on employee’s

performance.

The analysis of data was carried out using chi-square formula

X2 = ∑ (O-E)2 /E

Where

X2= Chit square

O= Observation frequency

E= Expected frequency

€= Summation

HYPOTHESIS I

H0 Demographic diversity does not have significant effects on employee performance

H1 Demographic diversity has significant effects on employee performance

To test these Hypothesis use the table below

Age diversity in the company has led to increase in employees conflicts.

Perception Frequency Percentage (%)

Strongly Agreed 20 28.6
Agreed 30 42.9
Undecided 15 21.4
Disagreed 3 4.2
Strongly Disagreed 2 2.9
Total 70 100
Contingency Table

O E O-E (O – E)2 (O – E)2/E

20 14 6 36 2.571
30 14 16 256 18.286
15 14 1 1 0.071
3 14 -11 121 8.643
2 14 -12 144 10.286
Total 39.856

The chi-square computed = 39.856

Chi-square tabulated (X2) = K=N-1

=X2 5-1

=X2 4

=9.488

The chi-square table value = 9.488

Decision: since the chi-square (X2) calculated (39.856) is greater than the chi-square (X 2)
table value (9.488), the null hypothesis (H0) is rejected and the alternative hypothesis (H1) is
accepted.

HYPOTHESIS II
H0 Skill diversity does not have significant impact on employee’s performance
H1 Skill diversity has significant impact on employee’s performance
Diversity in employee’s skills has improved overall firm productivity

Perception Frequency Percentage (%)

Strongly Agreed 40 57.1
Agreed 20 28.6
Undecided 2 2.9
Disagreed 4 5.7
Strongly Disagreed 4 5.7
Total 70 100
Contingency Table

O E O-E (O – E)2 (O – E)2/E

40 14 26 676 48.286
20 14 6 36 2.571
2 14 -12 144 10.28
4 14 -10 100 7.143
4 14 -10 100 7.143
Total 75.429

The chi-square computed = 75.429

Chi-square tabulated (X2) = K=N-1
=X2 5-1
=X2 4
=9.488
The chi-square table value = 9.488
Decision: since the chi-square (X2) calculated (75.429) is greater than the chi-square (X 2)
table value (9.488), therefore, the null hypothesis (H0) is rejected and the alternative
hypothesis (H1) is accepted.

SUMMARY

The test of the hypotheses was carried out using the chi-square method. The null hypothesis
(H0) was rejected where the calculated chi-square was greater than the table value chi-square,
otherwise was accepted. Also, the hypothesis was tested positive and the result shows that
truly there is significant impact of skill diversity on employee performance, there is
significant relationship between demographic diversity and employee performance, and there
is significant relationship between value diversity and employee performance and there is
significant impact between educational diversity and employee performance.