Dinkum Journal of Economics and Managerial Innovations (DJEMI).

Publication History

Published: February 01, 2023




Fatemah Qabir &  Li Yu Kun, (2023). Relationship with workforce diversity and creative synergy on organizational performance. Dinkum Journal of Economics and Managerial Innovations, 2(02):82-92.


© 2023 DJEMI. All rights reserved

Relationship with Workforce Diversity and Creative Synergy on Organizational PerformanceOriginal Article

Fatemah Qabir1* and  Li Yu Kun2

  1. National University of Singapore; qabir_ fatemah9090@gmail.com
  2. National University of Singapore; li_yu8909@gmail.com

*             Correspondence: qabir_ fatemah9090@gmail.com

Abstract: The influence of workforce diversity on organizational performance has become a serious and fascinating issue of this era. Today workforce diversity is recognized as a source of competitive advantage and has caused a vast interest among business leaders, government, and civil society. Workforce diversity enhances innovation and creativity inside the organization and leads to more effective problem-solving since a more diverse workforce provides a variety of perspectives and a higher number of alternatives. This study has explored the association of workforce diversity and creative synergy on organizational performance in the presence of managerial expertise as a mediator. On the basis of the literature review, this research paper adopted an amended model that explains how workforce diversity and creative synergy may influence organizational performance. The quantitative method is used in order to measure the effect of workforce diversity and creative synergy on organizational performance. The primary data source is used in order to analyze the research questions and hypotheses as well as to analyze the impact of workforce diversity and creative synergy on organizational performance. The population for this research is the banking sector of Pakistan. Due to a shortage of time, the employees of different branches of Silk Bank were selected as the targeted population through a random sampling technique. The total number of respondents was N=100. Results of this research showed that creative synergy affects organizational performance individually and along with managerial expertise, while workforce diversity without managerial expertise does not significantly affect organizational performance. This study will help in understanding the effect of workforce diversity and creative synergy on organizational performance in the banking sector in Pakistan. This research can also be performed on other service sector organizations. This research investigated the influence of workforce diversity on organizational performance. As results showed, path coefficients of all the hypotheses have been supported and prove that workforce diversity, along with creative synergy, boosts organizational performance. Creative synergy has the strongest path relationship with organizational performance. Workforce diversity improves organizational performance when it is coped in productive ways.

Keywords: workforce diversity, managerial expertise, creative synergy, organizational performance


The influence of workforce diversity on organizational performance has become a serious and fascinating issue of this era. Today workforce diversity is recognized as a source of competitive advantage and has caused a vast interest among business leaders, government, and civil society [1]. Both the similarities and the differences between employees are what contribute to the diversity of the workforce. It interoperates distinctiveness on the basis of gender, age, working environment, ethnicity, perceptions, material status, sexual configuration, income, and nationality with one another in relation to the values of the organization [2]. The presence of a borderless workforce guarantees that the diversity of that workforce will be a component of the routine business conduct that is necessary for a successful business. The effect of globalization has resulted in a workforce that is more diverse and dynamic [3]. When workforce diversity is not managed effectively, a number of problems can arise, including interpersonal conflicts within the workforce, difficulties in communication, and voluntary employee turnover. On the other hand, when workforce diversity is managed effectively, it results in a more complex workforce, which in turn improves the performance of the organization. [4] Age, gender, and sexual orientation are the primary dimensions of diversity, and they exhibit the main differences and similarities among individuals [5]. These are easy to spot and act as a lens through which people view the world around them. Whereas income, education level, geographical location, and religion are examples of secondary aspects of diversity that are not immediately apparent [6]. The adoption of diversity is a strategy that many organizations take, in their own view, in order to become more diverse and open to change. In recent years, it has become essential for management to increase and improve the diversity of the workforce. This is because managing diversity is a challenge, and managers need special skills in order to manage a multicultural working environment [7]. Managers, by virtue of the specialized knowledge they possess, are in a position to teach not only themselves but also others within the organization how to respect the unique qualities of each employee and value their differences. A competitive advantage in expanded markets can be gained by a business organization through increased levels of both productivity and organizational performance at a high level [8]. When a company or organization establishes a setting in which people with extremely varied histories collaborate on projects, it develops a workplace culture that infuses a great deal of importance on respecting the rights and dignity of others. The employees are able to readily identify the positive qualities and skills possessed by the wide variety of people working alongside them [9]. However, the areas of study in the research are to see how workforce diversity in relation to age, gender, ethnicity [10], education & skills, and creative synergy affect the organizational performance in the banking sector of Pakistan and how workforce diversity can boost organizational performance. The importance of this study can be recognized with the help of the arguments that were stated above. It will also attempt to see the role of managerial expertise in enhancing a relationship between a diver’s workforce, creative synergy, and organizational performance. Further, it provides some references to guidelines for managers to be capable of dealing with diversity challenges in the banking sector [11]. This study determined the effect of workforce diversity on organizational performance and investigated the effect of creative synergy along with workforce diversity on organizational performance.


United States first time saw the need to promote workforce diversity during the 1960s and 1970s. In order to end the discrimination by the government in employment, President John Kennedy 1961 recognized a President’s Committee on Equal Employment Prospect [12]. In addition, the Civil Rights Act of 1964 established new regulations to prevent discrimination in any activity. Policies were consistently developed in order to foster an environment that provides equal employment opportunities across all departments [13]. It was a turning point due to the fact that it swept away the discussion of various characters with different characteristics such as nationality, race, and skin color. It gave rise to the idea that in order to be fair to all parties, one should treat everyone in the same manner. Despite the fact that people have been talking about workforce diversity for the past three decades [14], there is still some debate and misunderstanding about what it actually entails. The concept of valuing, accepting, comprehending, and acknowledging the differences between people in terms of class, age, race, sexual orientation, gender, physical and mental ability, spiritual practices, and public assistance status is commonly known as workforce diversity [15]. Diversity denotes the assortment of people having a variety of perspectives, backgrounds, values, and benefits with which they interact with an organization. The successful management of people is essential to the productivity of an organization, and one of its most important components is the promotion of diversity. Diversity in the workforce contributes to an increase in overall innovation, as well as improved decision-making and a significant competitive advantage. When diversity is managed effectively, every member of an organization can contribute and perform to the best of their abilities [16]. According to the theory of heterogeneity, organizations with members who come from a variety of cultural backgrounds go through a variety of different organizational dynamics and end up with different organizational outcomes. People who come from the same cultural background tend to communicate with one another more frequently and in a wider variety of settings. They developed connections within the group as well as mutual insights, which ultimately led to consistency and the results desired by the organization [17]. On one nominal perimeter, the social association is encouraged, and on that same perimeter, people continue to maintain social connections not only with members of their own group but also with members of other groups. According to the social categorization theory, individuals are members of a large number of distinct groups [18]. They categorize themselves into distinct groups, each of which possesses a unique personality, in order to generate their unique identity and maintain the distinctiveness of the group. People who are different from one another are less likely to cooperate with one another because of the similarities between them. In this way, due to biasness, task-related information is never shared, which generates conflict [19]. According to [20], the similarities attraction theory postulates that individuals are more likely to be drawn to those with whom they share similarities rather than those with whom they share differences. People are only drawn toward others who exhibit personality traits that are congruent with their own [21]. In addition, the performance and outcomes of teams are impacted by the attraction between people who have different characteristics. People prefer to collaborate with those of a similar age group, ethnicity, and gender group [22]. This helps them to keep the group cohesive and improve their performance. Creative synergy is the collaboration of two or more causes or powers so that their mutual outcome is greater than the sum of their individual effects [23]. Organizational performance is affected by workforce diversity because when an organization becomes more diverse in terms of its workforce, it starts to promote a better understanding of market place, which increases its ability to penetrate in business horizon [24]. Workforce diversity enhances innovation and creativity inside the organization and leads to more effective problem-solving since a more diverse workforce provides a variety of perspectives and a higher number of alternatives. Managerial expertise can be defined as a process aimed at maintaining and creating a positive work environment [25], where all individual differences and similarities are valued in a way so that the contribution of all the individuals can be maximized in achieving the organization’s strategic objectives and goals [26]. The right combinations of skills and competencies available in an organization are measured by the recruitment, management, and maintenance of a diverse workforce. Strategic choice theorist stated that organizational outcomes and performance is affected by managerial decisions [27]. Conflicts among workers are caused by a low or moderate level of managerial expertise. Effective strategic choices are stressed upon free decision-making by the managers regarding workforce diversity [28]. Thus the management is assumed to have significant leeway in shaping their organization and managing diversity. Cognitive skills that enlarge a team’s informational capital and enhance its problem-solving abilities are based on demographical diversity and its management [29]. The strategic choice theory views incorporating workforce diversity in all stages of an organization for achieving the best outcomes. The modern concept of organizational performance is based on the Scientific Management theory of Fredric Taylor [30]. The difference between the intended and the actual outputs of an organization is called organizational performance. Organizational performance is considered on the basis of three factors: financial performance, product market performance, and shareholders’ return [31]. Organizational performance is the ability of an organization to use its resources both effectively and efficiently. Efficiency refers to the number of resources used by an organization to achieve its goals [32]. Resource-based view theory states that organizations have four categories of resources physical, financial, human, and corporate capital resources [33]. Resources that help an organization implement its strategies are a source of competitive uniformity, and the rare resources of an organization are always resources of competitive advantage [34]. The resources held by an organization determine its performance level. In order to achieve a sustainable competitive advantage, an organization has to use its dear, intermittent, and matchless possessions. These skills generally exist in the diver’s workforce [35].

H1: Workforce diversity positively affects organizational performance.

H2: Creative synergy will positively affect organizational performance.

H3: Workforce diversity will positively affect managerial expertise.

H4: Creative synergy will positively affect managerial expertise.

Figure 01 presents the conceptual model to understand the proposed relationship. The studied theories in this paper are defined and diagrammatically exemplified in the model. The conceptual model of this study demonstrates workforce diversity as the independent variable and relates it with organizational performance, which is a dependent variable [36]. Creative synergy refers to ideas, opinions, and innovation is also acting as an independent variable with reference to organizational performance, which stands in as a dependent variable. Organizational performance is the dependent variable. This study seeks to show the discrepancies in organizational performance described by workforce diversity and creative synergy as independent variables [37]. It is theorized that dependent variables do not directly affect the independent variables. The independent variables have an effect on managerial expertise, which further impacts the dependent variables. The managerial expertise further enhances the influence of workforce diversity and creative synergy on organizational performance. The base model was adapted from.

Figure 01: Modified Conceptual Model


In order to investigate the impact that a diverse workforce and creative synergy have on the overall performance of organizations in the baking industry, this study follows the quantitative method. The analysis of the research hypotheses and questions, as well as the analysis of the impact of workforce diversity and creative synergy on organizational performance, are all done with primary data sources. The banking industry of Pakistan will serve as the sample for this study’s population. A random sampling method is used to select the members of the target population from among the employees working at the various Silk locations. The sample population consists of N = 100 bank employees, and they were chosen using a sampling technique called convenience sampling. The general banking officers, cash officers, and consumer banking officers make up the unit of analysis. The use of questionnaires was the primary method of data collection. The following points were assigned to each category on the Likert scale: 1 for strongly agreeing, 2 for agreeing, 3 for neutral, 4 for disagreeing, and 5 for strongly disagreeing. The questionnaire was distributed to the employees in a direct manner. The resources listed below served as inspiration for the research instruments that were used.

Table 01: Construct Adopted and Amended

Construct Adapted From
Workforce Diversity Organizational Performance, Creative Synergy (Dahm, 2003).
Managerial Expertise

This section contains an analysis of the reliability and validity of measures, testing of the research model, and declaration of the significance of the hypothesis. Descriptive analysis is used in order to obtain the results and understand the nature and characteristics of data. The PSL model is usually interpreted and analyzed in different steps. To begin, there is the procedure of stage evaluation and modification of the measurement model’s competence. Second, the evaluation and calculation of the structural model are currently being carried out. Testing the hypotheses based on the structural model is the third method. This ensures that the measurements that were used in drawing conclusions and modeling the structural relationship are valid and reliable. The outer model provides an indication of reliability through the use of factor loading values and composite reliability, both of which are taken into consideration when testing reliability. In exploratory research, a factor loading threshold of 0.4 or higher is considered acceptable, whereas, in formalized research, a factor loading threshold of 0.70 or higher is considered to be preferable. Table 4 presents all of the items that are meeting the threshold values as required. The creative synergy score is 0.761, the organizational performance score is 0.849, and all of these scores are higher than 0.70. The composite reliability of workforce diversity is 0.806. The convergent validity of each latent variable is assessed using AVE, which stands for “average variance extracted.” (AVE) is used to assist in providing an interpretation of the results of the measurement of unidimensionality. A value of 0.5 is satisfactory for this purpose. The findings indicate that convergent validity has been well-established because the values are at an acceptable level. Therefore, it demonstrates that the construct is legitimate.

Table 02: Results of Reflective Outer Model

Latent Variable  


Reliability (Loading) Composite Reliability AVE (Average Variance Reliability)

Workforce Diversity

WDC4 0.735  




WDC5 0.812
WDG5 0.738

Creative Synergy

CS1 0.738  




CS2 0.711
CS3 0.703


Organizational Performance

OP2 0.707  






OP3 0.766
OP4 0.825
OP5 0.757

4.1 Discriminant Validity Analysis

The discriminant validity can be assessed with the help of two approaches, criterion and (HTMT) Heterotrait-Monotrait Ratio of correlation. The extent to which a construct is actually contradicted one another empirically refers to discriminant validity. It is used to compare the square root of average variance extracted (AVE) with the correlation of the latent construct. The square root of each construct (AVE) should have a greater value than the correlation with others. The latent variable Creative synergy (CS) AVE is found to be 0.515 (table 3); hence the square root becomes 0.718. This value is greater than the values in the column of Creative synergy (0.394, 0.446, and 0.377). Same as the latent variable managerial expertise (ME), it has a square root of 0.859 which is greater than the values in the column of managerial expertise (0.391) And 0.453) and also larger than the values that exist in the row of managerial expertise (0.394).While the value of the square root of organizational performance (OP) is 0.763, which is greater than the values of its row (0.377, 0.463, and 0.763). These results show that the discriminant validity is well established.

Table 03: Fornell-Lacker Criterion

CS 0.718
ME 0.394 0.859
OP 0.446 0.391 0.765
WD 0.377 0.463 0.404 0.763

The Heteritrait-Monotrait Ration of Correlation (HTMT) is an approach to assess the discriminant validity. It is considered a more outmoded measure of discriminant validity. The highest value of HTMT is 0.9, or, better, below 0.85. The value of HTMT is a part of the bootstrap output that should be smaller than 1. If it exceeds 1, it demonstrates a dearth of discriminant validity. The highest value of (the HTMT) ratio is 0.674(from Table 6), which is nicely below the conservative critical value of 0.85, which concludes that the discriminant validity has been established.

Table 04: Heterotriat-Monotrait Ratio

ME 0.600
OP 0.673 0.541
WD 0.649 0.674 0.580

Figure 2 represents the result of the Smart PLS algorithm showing the value for the path coefficient and R2. Partial least square (PLS) is a commonly accepted variance-based, descriptive predictor that can be used to test the hypothesis. The results indicate the coefficient of determination (R2), t-value, path coefficient, and confirmation and significance of hypotheses. R2 represents the elements of endogenous variables for explaining the independent variables. The acceptable R2 is o to 1.

Figure 02: Model Analysis through Algorithm

4.2 Explanation of Target Endogenous Variance

  • The coefficient of determination R2 is 0.279 for the organizational performance latent variable. This means that three latent variables (workforce diversity, creative synergy, and managerial expertise) moderately explain a 27.9% variance in organizational performance.
  • Workforce diversity and creative synergy together explain a 26.5% variance in managerial expertise.

4.3 Inner Model Path Coefficient and Size and Significance

The inner model suggests that managerial expertise has the strongest effect on organizational performance (0.279), followed by workforce diversity (0.210) and creative synergy (0.298).

  • The hypothesized path relationship between workforce diversity and organizational performance is statistically significant.
  • The hypothesized path relationship between creative synergy and organizational performance is statistically significant.
  • The Hypothesized path relationship between managerial expertise and organizational performance is statistically significant. Managerial expertise and creative synergy are both moderately strong predictors of organizational performance, while workforce diversity does not predict organizational performance directly.

This section represents the results of the hypotheses projected in this article. The assessment criteria for approving each hypothesis were the use of the t-value for each path loading. The cut-off criteria were used as follows: * Significance at 10% (1.645) p<0.10, ** Significance at 5% (1.96) – p<0.05, *** Significance at 1% (2.576) p<0.01. Hypothesis H1 stated that workforce diversity and organizational performance have a positive relationship. The assumed path for H1 was positive and significant with (B=0.210, p<0.01) and was supported. Hypothesis H2 suggested that there is a positive relationship between creative synergy and organizational performance. The hypothesized path for H2 was positive and significant (B=0.298, p<0.01) and was supported. H3 hypothesis stated that managerial expertise and workforce diversity has a positive relation (B=0.336, p<0.01) and was supported. Hypothesis H4 suggested that creating synergy and managerial expertise has a significant positive relationship with (B=0.256, p<0.01) and was supported. The H5 hypothesis suggested that there is a significant positive relationship between organizational performance, creative synergy, managerial expertise, and organizational performance (B=0.177, p<0.05).

Table 05: Results







Path Coefficient T-






H1 WD–>Op  


0.210 3.311 P<0.01 Yes
H2 CS–>OP + 0.298 5.701 P<0.01 Yes
H3 WD–>ME + 0.336 4.448 P<0.01 Yes
H4 CS–>ME + 0.256 5.701 P<0.01 Yes
H5 ME–>OP + 0.177 2.501 P<0.05 Yes

This research investigated the influence of workforce diversity on organizational performance. As results showed, path coefficients of all the hypotheses have been supported and prove that workforce diversity, along with creative synergy, boosts organizational performance. The path relationship between creative synergy and organizational performance is the strongest possible one. When dealt with in helpful ways, differences in the workforce can actually improve an organization’s overall performance. Young employees can work more efficiently and effectively than older employees in this modern era of technical expertise and innovation. This is because many older employees when they reach their retirement age, start to become less engaged in their work because they think that they are going to live in that organization for the rest of their lives. Young employees can work more efficiently and effectively than older employees in this modern era. While there are many other employees who are regarded as the experienced treasure of an organization, they continue to work with full devotion even in their later years, which helps the organization improve its overall performance. Young staff members are more likely to readily embrace new technology and innovation and to do so themselves. Employees of varying genders in an organization bring with them distinct bodies of knowledge, perspectives, and skill sets, which improves their ability to collaborate and advance the organization’s goals. This also contributes to a stronger feeling of working together in groups towards shared objectives. Employees who come from a variety of cultural backgrounds bring to the workplace a variety of experiences, attitudes, approaches, perspectives, and levels of commitment, all of which can have an impact on the organization as a whole and its ability to function effectively. According to the findings of this study, the performance of an organization can be improved by cultivating creative synergy and by managing the diversity of the workforce in an efficient and effective manner. Management expertise is absolutely necessary in order to successfully manage the workforce of the diver and improve horizontal linkages between all of the employees for the purpose of information exchange, education, and the promotion of innovative ideas. The expertise that managers hold creates a linkage between diverse workforces and the creative synergy that they contribute, which ultimately leads to improved organizational outcomes. Since the framework of the earlier research, in which organizational performance was evaluated solely on the basis of workforce diversity, was put to the test by this research, we can say that this research was successful. The model has been modified to include two new tools as a result of this research. The SMART-PLS program was used to put the analysis techniques into practice. PEL and Silk Nasomboon, B. (2014) were the sources of the data that was collected. The connection between the commitment of leadership, the performance of the organization, and the engagement of its workforce. 7(9), 77 in the journal International Business Research. Nevertheless, it is possible to expand it even further to include other organizations in the manufacturing and service sectors. Alterations to the methodology, such as conducting data analysis with ADANCO or SPSS, are also an option. For the purpose of future research, the effectiveness of various aspects of workforce diversity can be compared with organizational performance.


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Publication History

Published: February 01, 2023




Fatemah Qabir &  Li Yu Kun, (2023). Relationship with workforce diversity and creative synergy on organizational performance. Dinkum Journal of Economics and Managerial Innovations, 2(02):82-92.


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