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.