Unveiling Diversity and the Unwanted Inequality in Organizational Leadership

Diversity in organizations has been mainly considered from the business case paradigm. Firms who foster diversity and equality management (DEM) policies and practices show better performance, net value-added, and legitimacy. Nevertheless, there is still a long way to go, regarding diversity rhetoric and equality, and inclusion practice. Consistent human resource practices in vertical alignment with the strategic core of the business have shown to be a way for firms to truly fulfill the social contract established toward DEM. Drawing from signaling and legitimacy theory under the broader scope of strategic human resources management (SHRM), we argue that leadership can be a proxy for DEM practices and that it can be measured through institutional reports. We analyze leadership diversity in 305 companies through a diversity indicator from the Global Reporting Initiative (GRI). The method used is panel analysis, and eight hypotheses are tested by the GRI diversity indicator which is composed of independent variables, such as the wage gap between genders, gender and age turnover, rules violation, and reported cases of gender discrimination. It was possible to verify that the diversity of gender and ethnicity shows more sensitivity to the variable components than age diversity. Thus, managers should focus more attention on diversity indicators such as wages, respect for rules, turnover causes, and cases of discrimination, as well as the inclusion of minority groups in company leadership, especially those that wish to obtain a greater commitment to sustainability.