LEADER OVERSIGHT BIAS (SUBMISSION ID: 10253) The Leader Oversight Bias in Justice and Hypocrisy Evaluations of Organisational Diversity Practices. Abstract Misalignment in diversity and inclusion (D&I) occurs when organisations make claims that they do not uphold through their practices. In the present study, we probed a leader oversight bias which may lead to ignorance of misalignment and, consequently, lower perceptions of organisational hypocrisy. Through an online experiment, we randomly allocated 198 participants to the role of either a leader or non-leader in a fictional organisation. T-tests showed that leaders perceived their organisation as less hypocritical than non-leaders. This effect was sequentially mediated by anticipated justice following exposure to a gender diversity statement, and perceived justice following exposure to organisational practices. Contrary to our predictions, gender did not moderate this effect. Our results demonstrate that leaders may perceive their organisations as more just and less hypocritical even when this may not be the case, because they attempt to confirm their prior, more favourable justice anticipations. This research calls for establishing better cross-hierarchical communication structures in organisations and for more effective management of leadership oversights. Future studies can examine this bias in field settings and isolate its driving mechanisms. Keywords: Organisational justice, Organisational hypocrisy, Diversity and inclusion Abstract word count: 186 LEADER OVERSIGHT BIAS 1 Introduction Increasing diversity within organisations is viewed as a crucial step in addressing societal inequalities (Zanoni, Janssens, Benschop, & Nkomo, 2010). Recently, van Dijk, van Engen, and Paauwe (2012) have called for integrating commitment to diversity into organisational values. In this way, diversity can also evoke positive organisational outcomes (Miller, 1995) such as innovation (Bell, Villado, Lukasik, Belau, & Briggs, 2011), workforce productivity brought about by stronger organisational identification (Roh & Kim, 2016), and increased employee wellbeing (Jaiswal & Dyaram, 2019). More and more organisations now attempt to show their commitment to diversity through their statements, which are often generic and can come across as ingenuine window- dressing (Singh & Point, 2006). This is because genericisms relating to workforce diversity may downplay its intricacies. Without appropriate management and integration of a diverse workforce, differences between people of different backgrounds may lead to team disruption, infighting, and higher turnover intentions (Cunningham & Sagas, 2004; Hobman, Bordia, & Gallois, 2005; van Knippenberg, van Ginkel, & Homan, 2013). Focusing only on surface-level diversity, which is concerned with demographic metrics, and neglecting integration of different groups of people, may also negatively relate to organisational wellbeing (Jaiswal & Dyaram, 2019). Instead, beneficial effects of employee wellbeing stemming from deep-level diversity are manifested when there is a sense of inclusion for all; that is, when organisational structures are such that they do not hinder people from underrepresented groups (Jaiswal & Dyaram, 2019; van Knippenberg et al., 2013). While ‘diversity and inclusion’ (D&I) has become somewhat of a catchphrase collapsed into a single term, Dwertmann, Nishii, and van Knippenberg (2016) stress that diversity does not automatically result in an inclusive organisational culture. Indeed, many LEADER OVERSIGHT BIAS 2 D&I initiatives such as unconscious bias training are often ineffective in turning diversity into genuine inclusion (Hays-Thomas & Bendick, 2013; Kalev, Dobbin, & Kelly, 2006). Organisations may therefore overlook the need for more integrative diversity practices, as evidenced by frequent gaps in the intention of a policy and how it is eventually experienced (MacIntosh & Doherty, 2005; Soldan & Nankervis, 2014). In the literature, such gaps are often ascribed to organisational hypocrisy, as they create a misalignment between an organisation’s espoused words and realised actions (Fortin & Fellenz, 2008; Gentile, Wetzel, & Wolf, 2015; Goswami, Ha-Brookshire, & Bonifay, 2018; Kılıcoğlu, 2017). However, this hypocrisy postulate presents some challenges, since the degree of misalignment may well be in the eye of the beholder. If there also exist perceptual differences in appraising D&I practices, then stakeholders may perceive less misalignment and, by extension, lower organisational hypocrisy. At the same time, onlookers may believe that misalignment is an intentionally deceitful attempt to improve organisational perceptions (Rosset, 2008), and thus attribute higher accountability and hypocrisy to the misaligning organisation (Knobe, 2003; 2010; Monroe, Reeder, & James, 2015; Ohtsubo, 2007). Following empirical work by Alicke, Gordon, and Rose (2013) on the lay conceptions of hypocrisy, we define organisational hypocrisy as the degree of perceived word-action misalignment with an element of intent to deceive. It logically follows that perceived misalignment is conditional upon how efficacious the actions or practices of an organisation are thought to be. Therefore, in a gender D&I context, we operationalise the subjective efficacy of practices as their perceived justice. Drawing especially from social exchange fairness heuristic theory (van den Bos, Lind, & Wilke, 1997), we posit that leaders will perceive their organisation’s D&I practices as more just than non-leaders, and thus discern lower misalignment. By extension, leaders will ascribe lower hypocrisy to their organisations. Because D&I is closely related to demographic characteristics, we also expect that LEADER OVERSIGHT BIAS 3 perceptions of D&I misalignment will be higher for women, as they are likely to feel less included than men (Buelenger, Leroy, & de Stobbeleir, 2018). Misalignment and impact on organisational perceptions Word-action misalignment in D&I has been shown to create organisational perceptions resembling hypocrisy in employees and outsiders. For example, Windscheid et al. (2016) showed that organisations which claim commitment to diversity, yet have male- dominated boards, are thought to lack behavioural integrity. This consequently damages their attractiveness as potential employers. Behavioural integrity measures the extent to which an organisation is thought to stay true to its word (Simons, 2002), and thus captures the perceived misalignment aspect of hypocrisy. Furthermore, Smith, Morgan, King, Hebl, and Peddie (2015) have demonstrated that, when employee statements do not match the statements made by an organisation’s spokesperson such that the organisation engages in window-dressing, the organisation is considered to be inauthentic. This suggests that, in line with our definition of hypocrisy, word-action misalignment may also create perceptions of deceit. Our focus on hypocrisy as the focal construct of interest is based on this prior work, as it captures both the perceived lack of behavioural integrity, but also the degree to which the organisation erodes trust by being perceived as inauthentic and deceitful. However, as previously mentioned, the impacts of a policy may be vastly different from initial management intentions during its implementation, leading some employees to reason that their organisations do not ‘practice what they preach’ (Soldan & Nankervis, 2014). In this case, lack of trust towards an organisation seems to play a key role. For example, Marcinko (2020) found that organisations which commit to diversity while lacking a diverse workforce are perceived as less hypocritical when they admit that they have not yet LEADER OVERSIGHT BIAS 4 reached their diversity goals. This is possibly due to the organisation signalling that they do not intend to deceive the onlooker through their diversity commitment. Nonetheless, it is likely that employees at more junior levels are more likely to distrust their organisation by default. This is because an organisation’s practices are not normatively assessed and may be anchored to things such as an employee’s prior experiences with organisational hypocrisy (Jordan, Ferris, & Lamont, 2019). By virtue of holding more precarious positions that are more reliant upon organisational justice, non-leaders may thus be more likely to scrutinise diversity initiatives due to scepticism and a gap between what they intend and how they are eventually experienced (Nishii & Wright, 2008). If this is true, then leaders are likely to overlook justice issues with their organisation’s policies, and therefore see their organisation as less hypocritical. The case for biased perceptions of justice The idea that employees at lower organisational levels are more likely to closely scrutinise D&I practices is tied to how fair these practices are perceived to be. Central to this is fairness heuristic theory (van den Bos et al., 1997), which posits that fairness judgments are used to determine whether a figure of authority can be trusted or not, especially when one has no prior experience or other sources of information on said authority. This is likely to expose leaders to an oversight bias towards their D&I practices. Given that senior leaders are the figures of authority in an organisation, they do not need to make any assessments on whether they can trust themselves. Conversely, employees will still need to rely on fairness judgments in order to determine whether they can trust the authority, as a defence mechanism