Socially responsible HRM and perceived workplace inclusion: the mediating role of psychological safety and moderating role of responsible leadership

Abstract

In contemporary organizations, the emphasis is on incorporating a diverse workforce into their structure. However, it is crucial to highlight whether this diverse workforce truly experiences a perception of workplace inclusion. The perception of workplace inclusion by employees is essential for fully harnessing the benefits of a diverse workforce. One of the United Nations' sustainable development goals “An inclusive world by 2030”, further underscoring the relevance and significance of this topic. Therefore, this study aims to investigate the connection between socially responsible HRM practices (specifically, legal compliance HRM and employee-oriented HRM) and employees' perception of workplace inclusion on the theoretical foundation of signaling theory. Additionally, this study aims to examine the mediating role of psychological safety and moderating role of responsible leadership. By using a survey questionnaire, the data is collected from employees working in the banking sector of Pakistan. The study used a total of 270 usable questionnaires for the final data analysis. The collected data is analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) in SmartPLS 4.0. The results of this study suggests that the implementation of socially responsible HRM practices, including legal compliance HRM and employee-oriented HRM, can serve as a valuable means of promoting psychological safety among employees. Additionally, this study found that psychological safety plays a crucial role in fostering employees' perception of workplace inclusion. Furthermore, the findings indicates that psychological safety acts as a mediator between socially responsible HRM practices and perceived workplace inclusion. Surprisingly, responsible leadership does not demonstrate any moderating effect on the relationship between employee-oriented HRM and psychological safety. Despite its importance, research on the relationship between socially responsible HRM practices and perceived workplace inclusion remains scarce. Consequently, this study makes a significant contribution to the literature by examining the interplay between two key forms of socially responsible HRM practices, legal compliance HRM and employee-oriented HRM, and their effect on employees' psychological safety and perceived workplace inclusion.