Board Diversity and Employee Satisfaction: The Mediating Role of Progressive Programs

Abstract

While a number of previous studies have examined how the demographic diversity of corporate board members influences firm performance and diversity policies, we know little about its effects on employee attitudes. Drawing on organizational support and social exchange theories, we propose that firms with demographically diverse boards are more likely to adopt progressive management programs valued by employees and that such corporate-level practices, in turn, promote higher levels of employee satisfaction. We analyze data from 420 companies across many industries to examine the effects of corporate board diversity on employee satisfaction, and find the relationship to be mediated by the implementation of specific corporate practices. Firms with diverse boards are more likely to adopt programs that signal organizational support for employees and benevolence, and these programs foster more positive satisfaction levels.