What increases firms’ chances of winning the race?

The simple answer: nationality diversity! But, in order to truly have a positive impact on employer attractiveness, not only are diversity initiatives in the firm required – but an implementation of diversity at the very top of the organization, i.e., in the top management. Our empirical analyses for a sample of firms from four European countries reveal that diversity in the top management team (TMT) has a direct positive effect on employer attractiveness for job seekers from foreign countries. What is more, TMT diversity may enhance initiatives to promote diversity in the firm, which then in turn positively affects the perceived favorability of the firm for talent from abroad.

We argue that this is because diversity, either in the form of TMT members’ background or concrete initiatives, affects the brand of the employer, i.e. the firm’s perception. Employer branding that appears to place emphasis on diversity signals to potential employees that a firm offers a positive environment and development opportunities for them irrespective of one’s origin. As a consequence, potential employees might be more likely to apply, fueling firms in the global race for talent. However, the association between diversity and employer attractiveness may come across a bit abstract, and begs the question:

So what can firms do practically?

There are several hands-on measures firms can consider in their race strategy for talent. To begin with, be open with regard to nationality background when appointing new TMT members – and not just favor those for top positions who went through the ranks of the focal firm in a conventional “domestic career”.

But, at the same time, avoid pure signaling and lip service by introducing nationally diverse top managers only for the sake of having them. Actual initiatives to enforce a supportive climate for diversity matter as well – or might serve as a mediator that only enables an (indirect) association between TMT diversity and employer attractiveness in the first place: refocusing our empirical analyses on all job seekers, instead of just foreign job seekers, we show that TMT diversity by itself has no direct effect on employer attractiveness for the entire pool of talent. However, once again, it affects firms’ efforts to promote diversity, which may then impact favorability as an employer. In other words, for all job seekers, diversity initiatives are mandatory in order to have a positive employer attractiveness effect of diversity at all.

Given the empirically evident association between TMT diversity and firms’ efforts to promote diversity, it appears to make sense to directly tie the responsibility and ownership for diversity initiatives to individual members of the TMT. This might signal credibility of firms’ statements to foster diversity in their organizations. Examples of diversity initiatives could include, but are not limited to, mentoring programs, special trainings for people with a non-domestic background or efforts to enable equality e.g. in terms of pay.

In a nutshell: firms that depend on talent from all over the world should embrace diversity, but in a credible and long-term oriented manner. Of course, this is easier said than done, but firms appear to be the architects of their own fortune … or not?

So it’s all in the firms’ hands?

Not entirely. Indeed, firms can do a lot to signal a favorable climate for diversity in their organization. But their sphere of influence is also limited. Especially country level factors could hamper diversity efforts of firms. Is there a welcoming societal and governmental climate for foreign employees? Is the country struggling with (military) conflict? Are there protectionist measures that signal that an economy is shutting off? These could be factors preventing foreign job seekers from considering a firm as a potential workplace, despite efforts to offer an inclusive environment for people with diverse backgrounds.

However, this is not meant to discourage firms from enhancing the diversity of the top management or introducing initiatives to promote diversity. Macro level factors might be subject to change as well, and eventually, firms’ diversity focus will pay off. Or, returning to the metaphor, the winner’s rostrum in the global race for talent will be in sight.