Blackwood Group
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Diversity and the Performance Relationship

Dr Mike Rugg-Gunn

Diversity at work means different things to different audiences; traditional definitions include reference to race, ethnicity, gender, age, religion, ability and sexual orientation. It can be viewed as a source of information, knowledge and expertise that delivers positive team outcomes as well as a factor creating subgroups within the team that may disrupt team process and performance; and there is the rub – it is a force for both effective and less effective work practices.

There is a strong social justice agenda to suggest that the encouragement of Diversity in all its variant forms is ‘the right thing to do’. Beyond this, many studies have sought to link Diversity to commercial performance criteria and nowhere has this been most prominent than in the Women on Boards debate where several studies purport to show a link between Women on Boards and financial performance. There are however strong methodological problems (e.g. reverse causation and lack of control experiments, to name but two) with many of these studies. More scientific and robust methodologies report very small correlations between the presence of female board members per se and financial success; in some findings this was neutral and others negative. This is perhaps unsurprising as serious academic research has found no significant difference between the leadership effectiveness of men and women.

One area of research that offers more substantive evidence of effective outcomes at work is Cognitive Diversity, defined for the purposes of this paper as ‘differences in perspective or information processing styles’. Such skills also include originality of thought, ability to manage complexity and to wrestle effectively with ambiguity. The particular culture or social grouping someone comes from gives us little insight into how they might problem solve and decision-make effectively. These are not predicted by gender or ethnicity and nor are they a necessary outcome of those with high IQ (one study of Research & Development scientists in a bio-tech business showed very little diversity of thought). Research supports the view that cross-functional teams who moderate their inquisitive and curiosity seeking behaviours at the outset of a task to become more acceptant of other’s perspectives as they drive towards consensus are higher performing than those that do not do this. However, such a positive view has not found universal acceptance; Apple has been criticised recently for prioritising Cognitive Diversity over other demographic diversity variables.

Cognitive Diversity which values bringing people together who hold differing views offers the most robust empirical support for its comparative effectiveness. Now is the time to move away from polarising (e.g. men and women; black and white; Millennial and Baby Boomer) comparisons and simplistic statistical analyses towards more subtle ways in which the conditions for Diversity can flourish through exploring further the moderators of the Diversity Performance relationship. Just putting ‘diverse’ people in a team and expecting improved commercial performance is unlikely to work. Teams need to adopt a Diversity mind-set (where everyone understands how Diversity can have positive effects on team processes) and also create an inclusive culture based on fostering team norms around robust information exchange and mutual trust.

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