Linking Organizational Political Diversity with Satisfaction and Performance: The Implications of Presidential Elections

Abstract

In these politically polarizing times, we suggest that political diversity (having both conservative and liberal employees) has implications for organizational culture and value satisfaction, primarily when political ingroup-outgroup identities are salient (i.e., U.S. Presidential elections). To test these organizational-level relationships over time, we obtain publicly available archival data for 15 years (four election cycles from 2008 to 2022) for Standard & Poor’s 100 U.S. organizations. During years when organizations had greater political diversity (based on employee donations to politically affiliated groups), their employees tended to report less satisfaction with the organization’s culture and values (based on Glassdoor ratings) than when organizations had less political diversity, controlling for variables like size and political leaning of the organization. Further, time-varying effect modeling (TVEM) shows stronger inflections for the effect of political diversity on dissatisfaction during the 2008, 2012, and 2016 Presidential election years, consistent with the idea that outgroup hostility becomes stronger when political identities are salient. The effect of political diversity diminished in 2020 in contrast to our predictions. However, the pattern of effects continues to follow our model and theoretical assumptions because the prevalent work-from-home requirements during the pandemic likely made political dissimilarities less salient and divisive. Overall, the costs to organizational culture and value satisfaction call for policies addressing political outgroup bias at work during election years.