Top Management Diversity and Organizational Culture on the Performance of State Departments, Kenya ()
1. Background of the Study
In the present-day dynamic business environment, the capacity of an organization to improve its performance is becoming important for its short-term and long-term sustainability. The reduced product cycle and ever-increasing number of substitute products in the market have necessitated business firms to come up with different strategies that are aimed at improving their performance (Abosede, Obasan, & Alese, 2020). These strategies range from operational, financial, leadership and the capacity to align effectively internal resources. The appropriate realignment of organizational resources and capability in order to enhance firm performance can be augmented effectively by the top management team since they are the organizational decision makers. Effective strategic decision makers come from diversified backgrounds such as education, age, tenure or social perspective. Diversity in teams is often portrayed as a positive force leading to effective functioning of an organization (Ruiz-Jiménez & del Mar Fuentes-Fuentes, 2018).
Diversity in an organization’s top management team results in variance in ideas, creativity, and innovation, thereby generating better team performance. It is from this diverse knowledge of ideas that the decision-making groups in an organization would be able to produce a consensus from the initial ideas raised and be able to successfully implement a strategy because all the managers act on a common set of strategic priorities. Boone et al. (2019) assessed the relationship between top management team functional diversity and performance of telecommunication and found that sharing of the CEO experience has a significant influence on the performance of other members of staff. Diversity in groups and teams is often portrayed as a positive force leading to effective functioning of an organization (Ruiz-Jiménez & del Mar Fuentes-Fuentes, 2018). Diversity among the top management team in an organization therefore is expected to lead to better decision-making process and performance.
Statement of the Problem
State departments in Kenya perform diverse functions ranging from handling matters relating to land, public employees’ affairs, distribution of government revenues, controlling government budget, and auditing of the national and county government expenditure. While the performance of some state department has been lauded in the eyes of the public over time, the performance of some other state department has not been good as a result of skewed top management team (Gomez & Bernet, 2019). The question that comes into the mind of the researcher is whether diversity of the top management team has an influence on the performance of the state department in Kenya.
This has attracted the attention of different scholars that have looked at how an organization’s top management strategic leadership (Omolo, 2020) and gender diversity influence organization performance. However, these studies have not evaluated the joint effect of employee tenure, education, function, social diversities and employee performance determinants (Githuru, 2015)—but not their joint effects on organizational performance. Further, these studies have not examined the mediating role of organizational culture on the performance of state departments in shaping policy guidelines for appropriate top management team diversity strategies. Moreover, majority of scholars in both developing and developed countries have focused majorly in manufacturing sector and profit oriented firms without considering service sector and particularly government institutions.
By addressing this gap, the study aims to provide empirical evidence that can inform the development of policies on top management diversity within the State departments and the findings will be instrumental in formulating strategies that enhance efficiency and effectiveness in public service.
2. Literature Review
2.1. Theoretical Literature Review
A Theory is a set of properly argued ideas intended to explain a phenomenon by specifying variables of the laws that relate to the variables under consideration in the study (Adams, Khan, & Raeside, 2022). This study was anchored on the Upper echelon theory and Simon Normative Model.
The Upper Echelons Theory was developed by Hambrick and Mason (1984) and posits that an organization’s strategic choices and performance outcomes are a reflection of its top leadership’s values, experiences, and cognitive capabilities. The theory suggests that decision-making within an organization is influenced by the personal characteristics of its leaders, such as education, experience, and demographics, which shape their perceptions and interpretations of organizational challenges (Chen, Tjosvold, & Liu, 2016). The top management team strategic choices cover a wide range of organization principles and management science, adding up from innovation of products to diversification, from leverage on capital intensity to acquisitions and mergers and from administrative complexity to organizational design.
The Simon Normative Model was advanced by Herbert A. Simon in 1955 and attempts to explain how individuals even with complete set of information do not make rational decisions. The theory suggests that individuals are not efficient in their personal decision making and thus for optimal decision-making outcomes, it is imperative that diverse groups of persons with different competence be involved in the process of making decisions. Because of this limitation, Simon model assert that rather than seeking the optimal solution, individuals aim to find a satisfactory solution that meets their needs or goals. Therefore, a top management team with varying perspectives and objectives is required to collaborate to reach better informed decisions (Luciano, Nahrgang, & Shropshire, 2020). Diversity of the top management team can lead to more creative and innovative solutions to complex problems.
2.2. Empirical Literature Review
Luciano, Nahrgang and Shropshire (2020) suggest that well educated managers are in a better position to draw out implications for various functions and formulate sub-level strategies and appropriately deal with employee’s resistance to change that result from the introduction of various strategies that will affect their routine operations. Yadav and Lenka (2020) assert that top management team that has a diverse educational level has improved competency level and capabilities, the top management can take better strategic actions and more readily achieve its intended competitive position.
Mutinda, Otinga and Kitonga (2024) opine that educational diversity of top management is an important resource that a firm can use in decision making. Ishak et al. (2013) reinforce this position by arguing that top managers with diverse educational backgrounds result in a balanced collaboration and interrogation of a challenge at hand and this is expected to improve the decision-making because members from various backgrounds having different perspectives are involved in the process. Optimal decisions lead to improved organizational performance.
Zhou et al. (2023) suggest that group members’ individual experience set and the group’s total information led to different decisional implications because an informed decision alternative is not available to individual group members prior to discussion and teams can arrive at better decisions compared to individuals when non-redundant information is shared. Granted that there might be more conflicts in a functional diverse top management team, at the same time a heterogeneous team also facilitates strategic organizational changes that then improve firm performance.
Tanikawa and Jung (2016) suggest that the longer tenure of a top management team implies that they have been accepted by other team members, and this means that their decisions will be respected by the other members of staff. Klenke et al. (2013) claimed that with a diversified top management tenure, organization strategic decisions are made faster and with less intense conflicts, and similarly, decision are implemented quickly which means that an organization will be able to respond faster and appropriately to the market demands.
2.3. Conceptual Framework
A conceptual framework is full representation of principles and ideas that the research in question seeks to follow in order to achieve its objectives. Figure 1 represents the relationship between the independent and the dependent variables.
Figure 1. Conceptual framework.
3. Research Methodology
3.1. Research Design
This study adopted a cross-sectional descriptive survey design. Descriptive research or statistical research as also referred gives an entire description of the study phenomena and is commonly applied in both natural and physical sciences as it describes social events, structure and situations (Khanzode, 1995). This design is justified because the state departments are different in their operations and hence the need to evaluate the different perceptions.
3.2. Target Population
Target population is the aggregate or group of persons or corporate bodies of interest to the researcher. The target unit of analysis was 52 state departments. As at the end of the year 2023, the total number of policy makers (Job Group S and above) based at the headquarters in Nairobi was 3085 and senior management (Job Group P to R) was 6948 staff in senior management cadre in Job Group P to R. In the current research, the unit of analysis will be the employees at the different cadre levels of policy makers and senior management in the 52 state departments in Kenya.
3.3. Sampling Design and Techniques
A stratified sampling and basic random sample procedures was used. First, the State departments senior management that fall into the two job groups will be considered as strata from which the responders would be chosen. Because the population is diverse, stratification will be employed to account for the features of each stratum. The researcher used Kothari (2015) method to determine the number of respondents in each cadre; n = N/(1 + Ne2).
Where; n = sample size; N = Total population, i.e., the two cadres’ targeted population and e= stands for error tolerance. The research will use a 95% confidence level, which will result in a 0.05 margin of error. The following formula is used to determine the sample size; n = 10,033/(1 + 10,033*0.052); n = 10,033/73.6152; which with n = 136. Hence the 136 employees formed the sample size. To arrive at the sample size for each cadre, the researcher proportionately determines the number of targeted employees in each cadre with a view to arriving at a total number of 136 respondents.
3.4. Data Analysis
The data was measured at the interval and ratio levels; hence the distribution was presented in terms of variability and central tendency. Descriptive statistics that were used include mean scores, composite means, standard deviations, and composite standard deviations, coefficient of variation, ranges, frequency distribution and percentages. This helped in explaining data more accurately and in details than in graphical displays.
Inferential statistics was used to establish the relationships between independent variables. It included correlation analysis and regression analysis. Correlation analysis included computation of Pearson’s Product Moment Correlation Coefficient (r), which was used to determine the degree of the relationship of the independent variables with dependent variable.
In assessing the mediating effect of organization culture on the relationship between the relationship of top management diversity on performance of state departments in Kenya, the study adopted Stepwise regression analysis model. Baron & Kenny (1986) noted that mediation is a hypothesised causal chain in which one variable affects a second variable that, in turn, affects a third variable. This test involves determining the statistical significance of the interaction between variables.
4. Results
4.1. Correlation Analysis of Top Management Diversity and Performance of State Departments in Kenya
In order to determine correlation between top management diversity and performance of State Departments in Kenya, Pearson coefficient analysis was run on the scores of each scale. The total of the scores was computed as a summation of the individual scores on each item by the respondent at 95% level of confidence. The results obtained are presented in Table 1.
Table 1. Correlation between top management diversity and performance of state departments in Kenya.
|
Performance of State Departments in Kenya |
Educational Diversity |
Functional Diversity |
Tenure Diversity |
Social Diversity |
Performance of State Departments in Kenya |
1 |
0.773 |
0.463 |
0.618 |
0.652 |
(p) Sig. (2 tailed) |
0 |
0.036 |
0.018 |
0.025 |
0.031 |
Educational Diversity (r) |
0.773 |
1 |
0.316 |
0.163 |
0.161 |
(p) (2 tailed) |
0.036 |
|
0.047 |
0.019 |
0.029 |
Functional Diversity (r) |
0.463 |
0.316 |
1 |
0.216 |
0.233 |
(p) Sig. (2tailed) |
0.018 |
0.047 |
|
0.047 |
0.046 |
Tenure Diversity (r) |
0.618 |
0.163 |
0.216 |
1 |
0.462 |
(p) Sig. (2tailed) |
0.025 |
0.019 |
0.047 |
|
0.014 |
Social Diversity |
0.652 |
0.161 |
0.233 |
0.462 |
1 |
(p) Sig. (2tailed) |
0.031 |
0.029 |
0.0464 |
0.014 |
|
The study found a strong positive correlation (r = 0.793) which was statistically significant as p ≤ 0.05 (p = 0.000) between educational diversity and performance of State Departments in Kenya. This implies that there is significant relationship between educational diversity and performance of State Departments in Kenya. In addition, the study found a moderate positive correlation (r = 0.463) which was statistically significant as p ≤ 0.05 (p = 0.000) between functional diversity and performance of State Departments in Kenya. This implies that there is significant relationship between functional diversity and performance of State Departments in Kenya. Further, the study found a strong positive correlation (r = 0.618) which was statistically significant as p ≤ 0.05 (p = 0.000) between tenure diversity and performance of State Departments in Kenya. This implies that there is significant relationship between Tenure diversity and performance of State Departments in Kenya. Finally, the study found a strong positive correlation (r = 0.652) which was statistically significant as p ≤ 0.05 (p = 0.000) between social diversity and performance of State Departments in Kenya. This implies that there is significant relationship between social diversity and performance of State Departments in Kenya.
This leads to the conclusion from the research findings that there is significant relationship between top management diversity and performance of State Departments in Kenya.
4.2. Regression Analysis for Top Management Diversity on Performance of State Departments in Kenya
A multiple linear regression analysis was done with the top management diversity and Performance of State Departments in Kenya. Thus, there were four predictors, namely educational diversity, functional diversity, tenure diversity and social diversity. Table 2 presents the findings of the study.
Table 2. Model summary of regression analysis for top management diversity and performance of state departments in Kenya.
|
R |
R Square |
Adjusted R Square |
Std. Error of the Estimate |
|
0.920a |
0.846 |
0.812 |
1.0355 |
ANOVAa |
Model |
Sum of Squares |
df |
Mean Square |
F |
Sig. |
|
Regression |
98.848 |
4 |
24.712 |
21.580 |
0.000b |
Residual |
129.396 |
113 |
1.1451 |
|
|
Total |
228.244 |
117 |
|
|
|
Coefficientsa |
Model |
Unstandardized Coefficients |
Standardized Coefficients |
t |
Sig. |
B |
Std. Error |
Beta |
|
(Constant) |
3.936 |
0.765 |
|
5.145 |
0.0000 |
Educational diversity |
0.741 |
0.236 |
0.646 |
3.140 |
0.0032 |
|
Functional diversity |
0.667 |
0.215 |
0.526 |
3.102 |
0.0035 |
|
Tenure diversity |
0.737 |
0.123 |
0.645 |
5.992 |
0.0000 |
|
Social diversity |
0.549 |
0.2654 |
0.442 |
2.069 |
0.0452 |
aDependent Variable: Performance of State Departments in Kenya; bPredictors: (Constant), Educational diversity, Functional diversity, Tenure diversity, Social diversity.
The findings of the regression analysis suggest that top management diversity, comprising educational diversity, functional diversity, tenure diversity, and social diversity, plays a crucial role in shaping the performance of State Departments in Kenya. The high coefficient of determination (R2 = 0.846, p < 0.001) indicates that 84.6% of the variation in performance can be attributed to these diversity dimensions.
The results from the interviewees suggest that education diversity facilitates a broader range of perspectives during a problem-solving session as well as strategic insights, which cumulatively enhances decision-making and innovation. To actualize the management educational diversity, the interviewees further noted that organizational recruitment and promotion policies need to prioritize educational diversity to drive better organizational outcomes and overall performance. In addition, the integration of inclusive practices in leadership development and succession planning was highlighted as an important step to realization of a diversified top management team in terms of their education. This aligns with previous studies that have emphasized the positive impact of leadership diversity on organizational effectiveness.
For instance, diversity in top management enhances decision-making by incorporating a broader range of perspectives, skills, and experiences. Similarly, van Knippenberg & Schippers (2020) highlight that a diverse leadership team fosters innovation and adaptability, leading to improved strategic outcomes.
The significant regression coefficients further support the notion that each dimension of diversity contributes meaningfully to organizational performance. Educational diversity (B = 0.741, p = 0.0032) suggests that varying academic backgrounds among top managers promote knowledge exchange and comprehensive problem-solving, which is consistent with the findings of Hambrick and Mason’s (1984) Upper Echelons Theory. Functional diversity (B = 0.667, p = 0.0035) implies that experience in different roles and departments enhances cross-functional collaboration, as supported by Li (2013), who found that functional heterogeneity in leadership teams improves team learning and strategic agility. Tenure diversity (B = 0.737, p < 0.001) also emerges as a key factor, corroborating findings by Wu et al. (2019) that balancing experienced and new leaders optimizes both stability and innovation. Social diversity (B = 0.549, p = 0.0452) shows a weaker but still significant influence, echoing the conclusions of Rao and Tilt (2016), who noted that social diversity contributes to organizational success by promoting inclusivity and reducing groupthink.
Overall, these results reinforce the argument that top management diversity enhances institutional performance by fostering varied perspectives, increasing adaptability, and encouraging innovative problem-solving. This is consistent with findings from prior research (Inkinen, 2017; Cyert & March, 2010), which emphasize that diverse leadership teams are better equipped to navigate complex and dynamic environments, ultimately leading to improved service delivery and efficiency in public institutions.
4.3. Mediating Influence of Organizational Culture on the Relationship between Top Management Diversity and Performance of State Departments in Kenya
A stepwise regression method was used to establish the mediating effect of organization culture on the relationship between top management diversity and performance. In the first step, a multiple regression analysis model was established that take the form of the dependent variable being influenced by the education, functional, tenure and social forms of diversity. As shown in Table 2, the model summary indicates a strong relationship between the independent variables (top management diversity dimensions) and the dependent variable (performance of State Departments in Kenya). The coefficient of determination, R2 = 0.846, implies that 84.6% of the variance in performance can be explained by the four diversity dimensions. The adjusted R2 value of 0.912 suggests that even after adjusting for the number of predictors, the model remains highly explanatory. The standard error of the estimate (1.0355) is relatively small, indicating that the model’s predictions are precise. The ANOVA results show that the regression model is statistically significant, F(4, 113) = 21.580, p < 0.05, meaning that the overall model reliably predicts the performance of State Departments. The significance value (p = 0.000) confirms that the relationship between the predictors and the dependent variable is unlikely to have occurred by chance. The results obtained are presented in Table 3.
Table 3. Model summary (including organizational culture as a mediator).
Model |
R |
R2 |
Adjusted R2 |
Std. Error of the Estimate |
1 (Before Mediation) |
0.920 |
0.846 |
0.812 |
1.0355 |
2 (After Mediation) |
0.978 |
0.957 |
0.945 |
0.8742 |
The results from the mediating regression analysis indicate that the inclusion of organizational culture significantly enhances the explanatory power of the model. Initially, the model without mediation showed that top management diversity accounted for 84.6% (R2 = 0.846) of the variation in performance of state departments. However, after introducing organizational culture as a mediator, the R2 value increased to 0.957, meaning that 95.7% of the variance in performance is now explained. This substantial increase suggests that organizational culture plays a crucial role in shaping the relationship between diversity in top management and overall performance. Additionally, the reduction in the standard error of the estimate from 1.0355 to 0.8742 demonstrates improved accuracy of the model in predicting performance.
The results obtained are presented in Table 4.
Table 4. ANOVA results for moderated regression model.
Model |
Sum of Squares |
df |
Mean Square |
F |
Sig. |
Regression |
115.862 |
5 |
23.172 |
25.937 |
0.000 |
Residual |
112.382 |
112 |
1.003 |
|
|
Total |
228.244 |
117 |
|
|
|
The ANOVA results further confirm the significance of the mediating effect. The F-statistic increased from 21.580 to 25.937 after incorporating organizational culture into the model, with a corresponding p-value of 0.000, indicating that the improved model is highly statistically significant. This suggests that the introduction of organizational culture strengthens the relationship between top management diversity and performance. The significance of the interaction terms between organizational culture and different diversity dimensions further underscores its mediating role.
The results obtained are presented in Table 5.
Table 5. Regression coefficients (including organizational culture as a mediator).
Predictor |
Unstandardized Coefficients (B) |
Std. Error |
Standardized Coefficients (Beta) |
t |
Sig. |
(Constant) |
2.865 |
0.698 |
|
4.105 |
0.000 |
Educational Diversity |
0.621 |
0.189 |
0.546 |
3.286 |
0.001 |
Functional Diversity |
0.553 |
0.172 |
0.482 |
3.216 |
0.002 |
Tenure Diversity |
0.589 |
0.134 |
0.519 |
4.396 |
0.000 |
Social Diversity |
0.478 |
0.218 |
0.421 |
2.193 |
0.032 |
Organizational Culture (Mediatorr) |
0.732 |
0.145 |
0.612 |
5.052 |
0.000 |
Educational Diversity × Org. Culture |
0.219 |
0.071 |
0.274 |
3.085 |
0.003 |
Functional Diversity × Org. Culture |
0.187 |
0.068 |
0.231 |
2.75 |
0.007 |
Tenure Diversity × Org. Culture |
0.201 |
0.059 |
0.268 |
3.407 |
0.001 |
Social Diversity × Org. Culture |
0.158 |
0.074 |
0.198 |
2.135 |
0.035 |
In terms of individual predictor variables, the unstandardized coefficients for educational diversity, functional diversity, tenure diversity, and social diversity remain statistically significant after mediation, though their beta values slightly decrease. This suggests that while diversity independently contributes to performance, its impact is amplified when organizational culture is factored into the equation. The coefficient for organizational culture itself is B = 0.732, p < 0.001, signifying a direct positive relationship between a strong organizational culture and improved performance.
The interaction effects between organizational culture and each diversity dimension are all statistically significant (p < 0.05), with positive coefficients. This indicates that organizational culture enhances the impact of diversity on performance, rather than diminishing it. Specifically, the interaction term for educational diversity and organizational culture (B = 0.219, p = 0.003) suggests that organizations with a strong culture can better leverage the diverse educational backgrounds of top managers for improved performance. Similarly, functional diversity (B = 0.187, p = 0.007) and tenure diversity (B = 0.201, p = 0.001) interact positively with organizational culture, highlighting the importance of a shared culture in integrating diverse professional experiences and tenures to drive better decision-making. The interaction effect for social diversity (B = 0.158, p = 0.035), though lower than the others, remains significant, indicating that while social diversity contributes to performance, its impact is maximized when aligned with a cohesive organizational culture.
Overall, the findings suggest that a strong and well-defined organizational culture enhances the positive effects of diversity in top management on performance. Organizations with a cohesive culture are better able to harness the benefits of diversity by fostering collaboration, reducing conflicts, and ensuring that diverse perspectives contribute constructively to decision-making processes. Therefore, to fully leverage the advantages of top management diversity, state departments must actively cultivate an inclusive and performance-driven organizational culture that supports diverse leadership.
5. Summary and Conclusion
5.1. Summary of Findings
The study findings indicate that educational diversity among top management significantly influences the performance of state departments in Kenya. Departments with leaders who possess varied educational backgrounds benefit from a broader range of knowledge, perspectives, and problem-solving approaches, which enhances strategic decision-making and innovation. A diverse educational background fosters adaptability and the ability to navigate complex policy environments, leading to improved efficiency and service delivery.
The results reveal that functional diversity within top management plays a crucial role in enhancing organizational performance. State departments led by individuals with diverse professional experiences benefit from a wide array of skills, expertise, and industry-specific knowledge, leading to better resource allocation and policy implementation. Additionally, it promotes cross-functional teamwork, enabling different departments to work more cohesively toward achieving strategic objectives.
The study establishes that tenure diversity within top management positively impacts the performance of state departments. A mix of experienced and newly appointed leaders ensures a balance between institutional memory and fresh perspectives, which contributes to both continuity and innovation. This dynamic interplay fosters resilience, adaptability, and progressive leadership, ultimately enhancing public sector efficiency and responsiveness.
The study highlights that organizational culture plays a significant moderating role in shaping the relationship between top management diversity and performance. A strong and adaptive organizational culture amplifies the positive effects of diversity by fostering cohesion, shared values, and a commitment to common goals. When diversity is supported by an inclusive and well-structured culture, the potential challenges of differing perspectives—such as conflicts or inefficiencies—are minimized, allowing departments to fully harness the benefits of diverse leadership. Conversely, in the absence of a strong organizational culture, the advantages of diversity may be underutilized, leading to misalignment and inefficiencies in decision-making and policy execution. Therefore, cultivating a positive organizational culture is essential for optimizing the impact of diversity on state department performance.
5.2. Conclusion
The study concludes that educational diversity among top management brings unique perspectives, specialized knowledge, and innovative problem-solving skills that enhance decision-making and strategic planning. The ability to integrate insights from multiple disciplines fosters creativity and adaptability, which are essential for addressing the dynamic challenges in public administration.
Functional diversity within top management has also been found to significantly impact the performance of state departments through diverse professional experiences that contribute to a broader skill set that enhances operational efficiency and service delivery.
The study further concludes that tenure diversity in top management positively influences state department performance by balancing experience with fresh perspectives.
Additionally, social diversity has been established as a key factor in enhancing state department performance. Socially diverse leadership teams, which include individuals from different gender, ethnic, and socio-economic backgrounds, create more inclusive and representative decision-making processes.
Lastly, the study concludes that a strong organizational culture—characterized by shared values, inclusivity, and effective communication—enhances the positive impact of diversity by fostering cohesion and mutual respect among leaders.
6. Recommendations
Based on the study’s findings, it is recommended that state departments actively promote top management diversity to enhance organizational performance.
Government agencies should establish policies that encourage hiring and promoting leaders with varied academic backgrounds. Capacity-building initiatives should be introduced to ensure that leaders continuously expand their knowledge base.
To optimize the benefits of functional diversity, state departments should adopt a more structured approach to leadership appointments and career progression. The government should develop rotational leadership programs that allow employees to gain experience in multiple functional areas before taking up top management positions.
With regard to tenure diversity, state departments should balance leadership teams by integrating both experienced managers and new appointees. This can be achieved through structured succession planning and leadership transition programs that ensure a smooth transfer of knowledge and expertise between different generations of leaders.
The study also recommends that state departments enhance social diversity in top management by implementing inclusive hiring and promotion policies. Affirmative action strategies should be reinforced to ensure gender, ethnic, and socio-economic diversity in leadership positions.
Finally, to leverage the moderating effect of organizational culture, state departments should cultivate a workplace environment that supports diversity, collaboration and shared values. In addition, government agencies should establish strong communication frameworks that encourage dialogue and inclusivity in decision-making.