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Effect of Workforce Diversity on Employee Performance in Nigerian Banking Industry (A Study of First Bank Nigeria Ltd., Ota Branch)
CHAPTER ONE
INTRODUCTION
1.0 Background to the Study
The world’s increasing globalization needs a lot of interaction among people from various backgrounds than ever before. This is so because, individuals no longer live and work in narrow surroundings; as they are currently a part of a worldwide economy competing in nearly all part of the world (Patel, 2016). On these grounds, organizations are aiming to become more diversified in order to gain competitive advantage by becoming more creative, innovative and open to useful change.
Today business workplace is changing at an increased speed and the change in the employees’ demographics, increase of jobs in the economy, continuing growth of the globalization and requirement for efficient and effective collaboration have surfaced as significant forces driving the importance of diversity in organizations. With the increase of globalization and competition, the workforce in all industrialized countries has become progressively heterogeneous. Advances in technology and the advent of a worldwide economy have brought the people of the world existing in the same place, nearer to each other. Griffin & Moorhead (2014) pointed out that having a diverse workforce requires managers to identify and manage the varied attribute that exist among the employees in the organization. Therefore, businesses, educational systems and other entities are investigating ways to better serve their constituents to attract and retain the finest and most qualified employees (Gupta, 2013). On these grounds, organizations are aiming to become more diversified in order to gain competitive advantage by becoming more creative, innovative and open to useful change.
Workforce diversity refers to those significant differences and similarities that are present among employees within an organization (Griffin & Moorhead, 2014). Nwinami (2014) said it represent those uniqueness which includes; an individuals personality, age, gender, ethnicity/race, religion, marital status, income, the work experience and all those views which supposes and sustains an organizations core values. It also means those organizations that are turning out to be more varied with respect to it workforce composition based on characteristics as age, ethnicity, expertise, etc. (Robbins & Judge, 2013).
Human resource is an important asset for any organization, and as such, having a diversified workforce is a primary concern for most organizations. Although, it has become necessary for organizations to employ a diversified workforce, at the same time, it has become quite challenging for organizations with increasing diversified workforce to reap the benefits of diversity while managing its potentially disruptive effects (Kreitz, 2008) (Kreitz, 2008; Saxena, 2014). Organizations have recognized the fact that it is through the collective effort of its diversified workforce that monetary resources are harnessed to achieve organizational goals.
For organizations to reach its goals, the skills, knowledge, attitude and efforts of its workforce have to sharpened occasionally to optimize the effectiveness of its workforce and to enable them to meet greater challenges. Organizations are made up of individuals and without the workforce, organizations cannot achieve its goals (Mullins, 2010). For this reason, the management of its human resources is also a a crucial issue for organizational leaders (Saxena, 2014).
To be successful, it is imperative that organizational leaders understand just how the social work environment have an effect on the employees’ beliefs about work and they must have effective communication skills to be able to develop the self esteem and confidence in all its members (Griffin & Moorhead, 2014). Hence, to achieve and maintain competitive advantage over competitors, managers must be able to draw from the most valuable resources i.e. the competencies of its workers. Based on the growing richness of diversity in the world and in the workforce, managers have to spread out their outlook and use innovative approaches to achieve success.
1.1 Statement of the Problem
The work environment is becoming more complex due to globalization and competition which as a result has necessitated the need for a workforce that is made up of people with varying age, experience, knowledge and backgrounds to maximize competitive advantage (Ragins & Gonzalez, 2003). According to Childs (2005) organizations that wants to gain competitive advantage must widen its perspective about workforce diversity and diversity management, and the management must commit themselves to ensure that diversity management is a part of it daily operations.
Nigeria is known to be the giant of Africa with a population of over 180 million people and more than half the population consists of people of working age (Akinnusi, Sonubi, & Oyewunmi, 2017). Hence, there is a large pool of talent of which organizations draw from to achieve its goals. To manage the workforce, managers have created diversity policies that are in line with the a Labour Act and other laws that have in put in place to protect all kinds of employees from discrimination because of his/ her social categorization (Ugwuzor, 2011). However, Foma (2014) opined that some organizations in a bit escape lawsuit or other legal actions and to also put on a public show that makes them gain good corporate image, they pretend to embrace diversity rather than show a genuine desire for it by demonstrating true commitment to the principles of diversity and inclusion.
As Ugwuzor (2011) citing Mustapha (2005) pointed out, in Nigeria, there appear to still be cases of tribalism, regional identities, nepotism and discrimination both in the public and private organizations. Cases of ethnic bias and other forms of discrimination still take places in organizations during hiring, promotion and other employer-employee relation practices. Hence, managements are faced with the big challenge of managing its diverse workforce and the challenge of making sure that conflict of interest in policies and practice implementation are minimized (Akinnusi, Sonubi, & Oyewunmi, 2017).
Though some organizations train their new intake upon hiring on job related issues yet, individuals still take decisions and showcase attitudes and bahaviour that go against diversity principles. One reason could be that with diversity practices, employees enter into an environment that compels everyone to work together with other workers that are dissimilar to them. This kind of forced inclusion can create an environment of conflict amongst employees, discrimination and other challenges of diversity.
Nwinami (2014) said so long as individuals with differences work in the same environment, diversity in the workplace will always be an issue. Though our individual differences can promote creativity and increase satisfaction at work nonetheless, it can be the root of conflict and frustration betweens groups (Mullins, 2010). Hence, some organizations leaders have failed to understand how the workforce interacts with one another as individuals and as groups, and how the behaviour of the workforce can affect both employee and organizational performance (Ugwuzor, 2011). Performance is affected when managers fail to understand diversity and are not skilled enough to manage issues of diversity (Assefa, 2014). Another problem is the issue of organizations still depending on the old programs that they have been using over the years to manage the present issues of workforce diversity, minimize bias and increase diversity and inclusion in the workplace. It is important for management to know that the diversity plan that works or is encouraged by one organization may not work in another as it may be challenged by the hierarchical structure that is present in such organization. For this reason, some organizational leaders lack the knowledge on how to effectively management diversity, create an inclusive environment and what strategies to employ to assist them in dealing with issues of diversity in the organization.
From the web search on workforce diversity, it was discovered that only very few researches on workforce diversity and its relative effect have been conducted in Africa precisely Nigeria. Some that exist, focused more on diversity effect on organizational performance or productivity, not so much have been done to inspect the relationship and effect of workforce diversity and employees’ performance which in turn improves the entire organizational performance. Few of such studies that exist, have failed to deliver detailed examination of what workforce diversity is. Nigeria just like most countries of the world is diverse in its population content (e.g. people) and the people are ethnically or culturally diverse. Not only ethnically diverse, it is also characterized by other aspects of diversity which are even evident in organizations (e.g. age, gender, educational background etc.) Therefore, this study seek to add to already existing literature on workforce diversity by examining empirically and theoretically concept of workforce diversity in terms of age, gender, ethnicity and educational background and its relationship with employee performance (effectiveness and efficiency).
1.2 Research Objectives
The general objective of this study was to examine the relationship between workforce diversity and employee performance in an organization. The specific objectives of this study are to:
1. To examine the relationship between gender diversity and employee effectiveness in organization.
2. To investigate the relationship between age diversity and employee effectiveness in organization.
3. To examine the relationship between ethnic diversity and employee efficiency in organization.
4. To inspect the relationship between educational background and employee efficiency in an organization.
1.3 Research Questions
1. Is there any significant relationship between gender diversity and employee effectiveness?
2. Is there any significant relationship between age diversity and employee effectiveness?
3. Is there any significant relationship between ethnic diversity and employee efficiency?
4. Is there any significant relationship between educational diversity and employee efficiency?
1.4 Research Hypotheses
Hypothesis 1:
Ho: There is no significant relationship between gender diversity and employee effectiveness.
H1: There is a significant relationship between gender diversity and employee effectiveness
Hypothesis 2:
Ho: there is no significant relationship between age diversity and employee effectiveness.
H1: there is a significant relationship between age diversity and employee effectiveness
Hypothesis 3:
Ho: there is no significant relationship between ethnic diversity and employee efficiency.
H1: there is a significant relationship between ethnic diversity and employee efficiency.
Hypothesis 4:
Ho: there is no significant relationship between educational diversity and employee efficiency.
H1: there is a significant relationship between educational diversity and employee efficiency.
1.5 Significance of the Study
The aim of this study was to examine the effect of workforce diversity on employee performance by investigating the correlation between workforce diversity and employee performance in an organization.
Workforce diversity is a significant topic for government, organizations and the society (Akinnusi, Sonubi, & Oyewunmi, 2017). First and foremost, the findings of this study will add to existing knowledge that will aid in understanding of the workforce diversity in general and its relevance to employee performance, which in turn leads to organizational performance and it will be essential to organizations that are equipped with diversified workforce.
To researchers and academicians, the study will serve as a reference to other researchers who intend to conduct similar or related studies on workforce diversity in the future as it will provide reliable insight that are useful for educational purposes. This study has also provided information that could form the basis for future research.
To employers and management of organizations, this study has provided in-depth knowledge explaining how workforce diversity has an effect on performance. The study provides key information in terms of recommendations and suggestions that will be useful in improving the general policies and practices of workforce diversity management in organizations. It provides information that will help organizational leaders to be able to make out solid strategies and best practices for hiring or recruiting, developing, retaining, engaging and motivating a high performing diversified workforce. This study is also beneficial to organizations striving to create a culture that is inclusive rather than exclusive. Also, multinational organizations will also understand the need for diversity management so as to manage its workforce across the globe and also understand the social structures (i.e. the religion, language, etc.) of the country where it is operating.
To Employees: This study will help the employees to accept and respect the unique diversity of follow colleagues who are not only similar to them but also those who are dissimilar. It will help them to realize that working together can help improve their performance.
To Government: Diversity management is a vital topic for a country like Nigeria that is so culturally diverse. This study will help the government in its quest to manage the diversity of its population across regions. It will awaken the government to look into the issue of diversity and ensure the laws that suppose diversity are obeyed by every organization. This study will help the government to fully embrace the richness of our diversity and harness the benefits that comes from it.
To Society: Nigeria as a country is rich in ethnic diversity. This study will be an eye opener to our society as it will help people to begin to see diversity as a blessing rather than a curse that needs to be avoided. It will help the society to see the need for having diversity. It will confirm that we as a society can work together because of our differences not despite our differences. The community will see the need to value the many cultural differences that makes up the nation Nigeria.
1.6 Research Methodology
In answering the research questions, the research made use of primary and secondary source of information.
Primary source made use of information gathered from First Bank of Nigeria through structured questionnaire prepared by the researcher. The questions concentrated on finding out the organization’s view on workforce diversity in characteristics like; age, gender, educational background and ethnicity and how they affect employees’ performance.
The secondary source of information was gathered from books, journals, conference papers and the internet regarding workforce diversity. The secondary data were collected by surfing the internet, reviewing books and other related academic materials to get hold of relatable information for the research.
1.7 Scope of the Study
The study was restricted to only First Bank Nigeria Plc. It examined the effect of workforce diversity on employees’ performance in First Bank. The study was also limited to few workforce diversity- age, gender, ethnicity and educational background diversity and also limited to employee performance. The population of the study was limited to employees of employees of First Bank Nigeria Plc., Ota (Main Branch and Ota II branch), Ogun State.
1.8 Limitation of the Study
It is imperative to note that the research findings only reveal the view of the organization under study. Therefore, it is can not to be assumed to be generally applicable to all organizations. Time factor can be considered as the main limitation to the study. The findings of this study were solely based on the information provided by the respondents and the information gotten from the secondary source of data. Another limitation to the study is that the researcher only looked at few dependent variables. However, other variables exist which can reflect the differences in employees’ performance.
1.9 Outline of the Chapters
The study is broken down into chapters for analysis and comprehension.
Chapter One: gives an overview of the study by providing background information of the study, the statement of the problem, the research objectives to be achieved. This chapter further outlines the research questions to be answered, the hypotheses to be tested, significance of the study, scope of the study, and limitations of the study, as well as the background study of the organization under view and finally definition of terms to aid the users understanding of the key terms. Chapter Two- centers on the reviewed literature of the academic arguments from the secondary sources of information like; books, journal articles, etc. This chapter also present some empirical studies which were reviewed by the researcher to allow the researcher to put up the hypotheses and theoretical framework for the study. Chapter Three discusses the research methodology adopted for the study in terms of the research design, the population of the study, sampling technique and the sample, and the data collection technique. Chapter Four, presents the analyses and interpretation of the data collected. Chapter Five which is the last chapter of the research study, it gives the summary of this research finding, conclusions and provides recommendations.
1.10 Background Study of the Organization
• First Bank of Nigeria
First Bank Nigeria Limited is Nigeria’s premier and most valuable banking brand, and largest financial services institution by total assets and gross earnings. With more than 10 million customer accounts, First Bank has more than 750 of its branches that provide an extensive variety of corporate and retail and financial services. The Bank has global presence as a result of its subsidiaries like FBN (UK) Ltd in London and Paris, FBN in Ghana, Republic of Congo, The Gambia, Sierra-Leone, Guinea, Senegal, and also other representative offices in Beijing, Abu Dhabi and Johannesburg.
FBN has been constantly building relationships with its customers which focused on the fundamentals of excellent governance, optimized risk management and leadership and strong liquidation since it was established in 1894. For five times in a row starting from 2011, 2012, 2013, 2014 and 2015, First Bank has been named the “Most Valuable Bank Brand in Nigeria” by the global well-known “The Banker Magazine” of the Financial Times Group; and “Most Innovative Bank in Africa” in the EMEA Finance African Banking Awards 2014. Also, the Bank clinched the “Best Retail Bank in Nigeria” award by The Asian Banker for the fifth consecutive time.
The Bank has a diverse working environment that welcomes people of different genders, ethnicities, ages, culture and abilities. At the top of the banks structure, commitment regulatory compliance and culture is the issue of diversity and inclusion. The bank integrates diversity policies and awareness into its corporate practices and has over the years seen itself as equal opportunity employer. To ensure that diversity is incorporated into its policy, the bank has a diversity team that is responsible for ensuring that the Bank has a diverse workforce and an inclusive workplace offering opportunities for the talents of all its employees to create value and develop innovative solutions for the markets it serves. The Bank also sets aside a Diversity and Inclusion Day to create awareness and ensure an inclusive workplace culture. The Bank also opens its recruitment and posting doors to everyone, so long as they have the qualification not minding the ethnical or cultural differences, age or gender. To ensure that gender diversity is included in its policies, the Bank reviewed it gender policies and demographics. The Bank has a male and female ration at 61% and 39% respectively across its workforce, while at it management level the male and female ratio is 66% and 34% respectively. At the Board level, the male and female ratio is 84% and 16% respectively. FirstBank currently has nine women on its respective boards of subsidiaries that make up FBN Holdings and this has been recognized as the highest of any holding company in Nigeria.
The Bank has a diversity objective to recognize industry leader in workforce diversity and leveraging diversity for its growth and the success of the customers and the communities it serves, by creating a working environment where the various workforce generations will thrive.
1.11 Operationalization of Research Variable
Operationalization is a mathematical presentation of the variables in a construct. The research questions and hypothesis consist of x and y variables. X is the ‘independent’ variable and ‘input’ variable. It is also considered as the ‘cause’ of behavior, while Y is the ‘dependent’ variable. It is the ‘effect’ ‘outcome’ or ‘response’ variable.
Therefore, the mathematical presentation of the variables is given as;
Employee performance is a function of workforce diversity
y= f(x) i.e. EP=f( WD)
Where y= dependent variable and x= independent variable
Thus, x= workforce diversity- independent variable is the variable with many components.
That is, x=f (x1, x2, x3, x4…xn)
x1= gender
x2= age
x3= ethnicity
x4= educational background
y= (y1…yn)
Where;
Employee Performance – dependent variable
y1= employee effectiveness
y2= employee efficiency
These diversity variables (age, gender, ethnicity and education diversity) are important for explaining the variance in employee performance (effectiveness, efficiency) Employee performance can be determine by other factors such as motivation, employee engagement, capacity, promotional rate, etc.
1.12 Definition of Terms
Diversity: means any characteristic that makes people different from one another (Robbins & Judge, 2013). It is the differences and similarities between employees in terms of gender, age, educational background, ethnicity, sexual orientation, or other dimensions. Diversity includes everybody (Daft, 2008).
Workforce: is a combination of male and female employees coming from various backgrounds, older or younger employees, workers who are physically challenged and various other workers who are different from each other (Rao & Bagali, 2014).
Workforce Diversity: this refers to the important similarities and differences that exist among employees of organizations (Griffin & Moorhead, 2014). It means a workforce composed of people with different human qualities or who belong to various cultural groups (Daft, 2008).
Age, Gender, and Educational background: these are physical dimension of diversity and they refer to demographic diversity which is indicated by the number of people having different demographics in the company, ultimately which will affect employees’ performance (Assefa, 2014).
Age Diversity: looks at the ability to accept the different types of age within a business environment.
Gender Diversity: is when a company is represented by a more equal proportion of men and women. It is the equal treatment and acceptance of both male and female in an organization. Ethnic Diversity: Ethnic diversity implies diversity in language, religions, races and cultures. (Gupta, 2013). It refers to a socio-cultural workforce diversity which is specified by the number of people who have dissimilar ethnicity in the company.
Diversity Management: is defined as acknowledging, understanding, valuing, celebrating, and accepting differences among people with respect to age, gender, ethnicity, class, mental and physical ability (Gupta, 2013).
Employee performance: performance is the act of carrying out an action, or an accomplishment or achievement. 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 (Durga, 2017). Armstrong (2012) citing Vroom (1994) said performance or effectiveness is a function of ability and motivation. Thus, employees need both ability and motivation for effective performance.