An Investigation of the Relationship between Workforce Diversity and Performance of Commercial Banks in Kampala, Uganda

Thesis Title: AN INVESTIGATION OF THE RELATIONSHIP BETWEEN WORKFORCE DIVERSITY AND PERFORMANCE OF COMMERCIAL BANKS IN KAMPALA, UGANDA

Student’s Name: AYESIGA JOYCE

Supervisors’ Names:

• RUTH MITALO
• LAURA MAMULI

ABSTRACT

The study aimed to explore the relationship between workforce diversity and organizational performance in commercial banks in Kampala, Uganda, considering the moderating role of organizational culture. The objectives included assessing the effects of educational, age, and gender diversity on organizational performance, and examining how organizational culture influences these relationships. This study hypothesized that is no statistically significant relationship between workforce diversity (educational, age and gender diversity) and organizational performance of commercial banks in Kampala, Uganda. Using a descriptive design, the study’s target population comprised of 7,194 employees across ten commercial banks out of which 376 respondents were selected through purposive, simple random and stratified sampling techniques. A pilot test was conducted with 38 respondents (10%) from three Centenary Bank branches in Kampala (Kawempe, Ntinda, and Rubaga) which had similar characteristics to the study populations. The researcher ensured construct and content validity by involving supervisors and SOBE experts in questionnaire construction, resulting in necessary improvements and refinements. Cronbach’s Alpha was used for instrument reliability at a threshold of 0.7, indicating all variables were reliable. The study findings revealed significant positive correlations between each diversity dimension and organizational performance. Educational diversity exhibited a strong positive correlation (r = 0.627), explaining 39.3% of the variance in performance. This suggests that diverse educational backgrounds enhance innovation and adaptability within organizations. Age diversity also showed a robust positive relationship (r = 0.650), accounting for 42.2% of the variance, indicating that combining different age groups fosters creativity and effective problem-solving. Gender diversity similarly had a strong positive correlation (r = 0.650), explaining 42.3% of the variance, emphasizing that gender-diverse teams improve decision-making and innovation. The regression analyses confirmed that educational, age, and gender diversity significantly predict organizational performance. The ANOVA results underscored the statistical significance of the regression models, highlighting the importance of workforce diversity in enhancing organizational outcomes. The study’s conclusions emphasized that promoting workforce diversity is crucial for improving performance, supported by the broader literature on diversity’s benefits. The study recommends that it’s critical for commercial bank managers to ensure that employees are diverse when hiring because this will promote better performance. Equal promotion of staff members is crucial since it inspires commitment to the job. Depending on the age of the workforce, firms must also create a positive work environment and conditions. Increasing diversity and making the most of work groups’ high levels of engagement and synergy would help the business perform better.