The Paradox of Inclusion in Elite Workforce Differentiation Practices: Harnessing the Genius Effect

We examine the assumption that making workforce differentiation practices more inclusive will cause employees to react more positively. We identify a fundamental ‘paradox of inclusion’, where practices designed to be more inclusive may in fact decrease employees' perceived inclusion. Drawing on social comparison theory and the ‘genius effect’ – using talent management practices as an empirical case – we found that both employees identified as ‘talents’ and ‘non-talents’ reacted more favourably to exclusive, secretive practices than to inclusive, transparent practices. Across four studies, we ran experiments testing managers' assumptions about employee reactions to talent practices (Study 1; N = 179); the reactions of ‘non-talents’ (Study 2; N = 576); the reactions of ‘talents’ (Study 3; N = 306); and conducted a field study (Study 4; N = 402). Managers' preferences for more inclusive practices were guided by their assumption that non-talents would react more positively to them. Non-talents, in fact, reacted more negatively to more inclusive practices in terms of envy, organization-based self-esteem, turnover intentions, and perceived inclusion. Keeping talent status a secret from employees buffered negative reactions. Based on these findings, we identify paradoxes inherent to workforce differentiation and extend theorizing on the tension between exclusive and inclusive practices within organizations.