Person-environment fit: a luxury good for those who can afford it?

Purpose - The study integrates organizational demography theory into person-environment fit theories to question the assumption that all employees can afford to strive for person-environment fit. The ethnic/racial diversity in organizations is investigated as a boundary condition in order to develop implications to mitigate the challenges of employees with precarious jobs, especially persons of color (POCs), in the society. Design/methodology/approach - Publicly accessible and objective data from organizations in the S&P 1500 index were collected through Compustat, ExecuComp, the Bloomberg Terminal and the websites of Fortune, the United States Census Bureau and the U.S. Department of Labor. A path analysis of time-lagged data was performed to support causal relationships between the examined constructs while controlling for alternative explanations. Findings - Unsafe working conditions moderate the U-shaped relationship between ethnic/racial diversity and turnover and turn it into an inverted U-shaped relationship because employees in precarious jobs, especially POCs, cannot afford to leave unsafe working conditions. Organizations with unsafe working conditions are more likely to invest in sustainability initiatives. However, organizations' financial performance does not benefit from this investment. Originality/value - The circumstance that not all employees can afford person-environment fit and its organizational outcomes are identified and empirically tested. Scholars can integrate this boundary condition in future research. Implications for practice and policy are also derived.