Cross-Level Effects of Workplace Diversity on Sales Performance and Pay

Abstract

Drawing on social identity theory and status-based perspectives, we describe how in-group/out-group dynamics affect performance differences and earnings inequalities between members of higher-status majorities (whites, males) and lower-status minorities (people of color, women). Among sales employees on 437 teams in 46 units of a large company, team demographic composition and unit management composition moderated the relationship between individual demographic attributes and pay. Ethnicity-based earnings inequalities were smaller in teams with proportionately more people of color, and gender- and ethnicity-based inequalities were smaller in units with proportionately more women and people of color as managers. Partial mediation by performance was found.