THE MEDIATING ROLE OF TRANSFORMATIONAL LEADERSHIP IN THE RELATIONSHIP BETWEEN HUMAN RESOURCE DIVERSITY AND HIGHPERFORMANCE WORK SYSTEMS.

Abstract

The purpose of this study is to examine the mediation role of transformational leadership in the relationship between human resource diversity and the implementation of high-performance work systems (HPWS) in Iraqi insurance companies. A theoretical model is proposed by the study that explains how transforming workforce diversity into a competitive advantage can be achieved through strategic application of transformational leadership and high-performance HR practices.

The research problem is grounded in the increasing complexity of managing diverse human resources in Iraq’s service sector, particularly in insurance companies, where diversity often results in coordination difficulties and cultural clashes. At the same time, the success of HPWS depends largely on leadership styles that foster motivation, inclusivity, and strategic integration.

The significance of this study lies in both theoretical and practical aspects. By integrating three variables into a unified explanatory framework, it theoretically fills a crucial gap in Arabic literature, a rarity in existing research. In practical terms, it offers practical guidance for HR managers and policymakers on how to turn diversity from a hindrance into a value-added aspect that enhances institutional performance.

Methodologically, the study employs a quantitative causal-correlational approach using SPSS and AMOS for structural equation modeling. The research sample consisted of 120 employees from the National Insurance Company in Iraq. The results reveal statistically significant positive relationships between all three variables, with transformational leadership demonstrating a strong mediating effect between workforce diversity and HPWS.

The findings indicate that transformative leadership significantly enhances the impact of workforce diversity on HPWS by motivating innovation, reducing conflict, and promoting inclusive team dynamics. The data analysis showed that introducing transformational leadership increased the explanatory power of workforce diversity on HPWS from 58.9% (direct effect) to 76.9% (total effect), with a strong indirect impact coefficient (β = 0.180, p < 0.001).

The study provides several practical recommendations:

• Institutionalize diversity as a strategic organizational priority.
• Invest in leadership development programs focused on transformational competencies.
• Redesign HR systems to reflect HPWS principles of selective hiring, training, empowerment, and performance-based rewards.
• Promote an inclusive organizational culture through awareness campaigns and bias mitigation.
• Establish KPIs to evaluate the impact of diversity and leadership on productivity and innovation.

At the policy level, the study recommends the adoption of national guidelines for leadership effectiveness, linking incentives to inclusive practices, and funding applied research in the insurance sector to support evidence-based reform.

This research contributes to the ongoing academic dialogue on leadership and diversity management in the Middle East and offers a replicable model for service-oriented organizations in multicultural and competitive environments.