Just what are the benefits of diversity?

I often come across blog posts and think, "I must write something about that," then I get side tracked and completely forget about it. Which is why I am a couple of weeks late in responding to this post on diversity and innovation from Chris Dillow, which, in turn, was prompted by this piece from Steve Sailer.

Steve Sailer questioned the received wisdom, that diversity stimulates innovation, and argued that it might even restrict it by making political correctness more mandatory.  Chris Dillow responded by arguing that diversity is associated with superior performance. He quoted  this paper from 2002 which says that  companies with higher proportions of women or people from ethnic minorities on their management teams, tend to perform better.

Much of the debate around diversity is clouded by wishful thinking.  We live in a society which is becoming more ethnically and culturally diverse. Wouldn't it be great, therefore, if we could prove that this is a Good Thing and that, rather than being a problem to be managed, it is actually a benefit? 

Alas, even though most studies of diversity in organisations start from this optimistic assumption, few have produced conclusive evidence to demonstrate that cultural diversity improves performance. In 2004, the Chartered Institute of Personnel and Development, the Human Resources Managers' professional body, examined 49 separate studies on diversity and found that there was no evidence that it brought tangible business benefits.  The Institute, a keen champion of diversity policies, concluded:

[T]he research to date shows that in academic terms the jury is still out on the business case for diversity.

The research also pointed out that diversity is not without its problems, notably:

increased conflict among the workforce as differences in opinion make it more difficult to agree on solutions;

poorer internal communication, because levels of knowledge and comprehension differ between employees; and

increased management costs that arise from dealing with potential conflict and communication problems.

Commenting on the research, in Personnel Today, Stephen Overell found that other studies had shown similar results:

Helen Williams, an occupational psychologist at Leeds University Business School, has also done extensive reading on diversity. As someone deeply committed to the equality agenda, her research has not always yielded happy conclusions. In task-related activities, greater diversity brings innovation. But it can also make teams less cohesive, and less able to make decisions.

To those of us who are familiar with the workings of management teams none of this should come as a great surprise.  While senior people in most organisations talk enthusiastically about managing diversity, few of them are any good at it.  Most boards struggle to build constructive working relationships among the differing personality types among their own members.  Even those management teams in which the majority of people are white Europeans find that they have enough trouble dealing with each other. 

Persuading senior managers to value each others differences in approach is difficult. Getting from "You're so fucking rigid and inflexible" to "It's great to have someone who brings structure to the team", or from "You're away with the fairies most of the time" to "I'm glad we have someone like you who thinks beyond the obvious",  is hard work and takes a lot of time.

To get over these difficulties requires people to have honest conversations with each other. If people sit quietly and fume at what they perceive to be another person's stupidity or bloody-mindedness, they never reach that point where they can work together and use their differences constructively.  However, most of us have been brought up to be polite and to avoid confrontation so, while we may mutter privately to ourselves about a colleague's behaviour, few of us make the effort to see what is behind that behaviour.

If people find it hard enough to work with people who think differently, when you add in another layer of complexity in the form of ethnic and cultural differences, the task becomes even more difficult. People are even more likely to keep their feelings to themselves and to hide behind politeness and good manners.  Confrontation, even the constructive sort, is uncomfortable at the best of times.  If people are worried about falling foul of their company's diversity policy, or about trying to fit in with their white co-workers, they will be even less likely to have frank conversations with their colleagues. 

Any creative tension that might be useful in a culturally diverse group therefore disappears beneath a blanket of politeness and unspoken criticism. The team may look harmonious but, in reality, everyone has checked out because challenging the status quo is just too hard and they want a quiet life. 

It may be that, if you could manage diversity effectively, you could get some great results but unfortunately, few people can. In many cases, especially where the task is clearly defined, a more homogeneous group might achieve results more quickly. In a diverse team, any gains in innovation and creative thinking are often offset by the amount of management time and effort needed to manage the resulting tensions.

None of which is to say that organisations don't need to get better at managing diversity.  We have an increasingly culturally diverse society. To exclude people from jobs just because they are not like the majority of people in the organisation could lead to de facto segregation, where the senior levels of some organisations remained closed to people from certain ethnic groups.  This would, of course, be illegal and rightly so.  Whether or not there are sound economic reasons for promoting diversity, and the evidence is not very encouraging, there are good social reasons for doing so. All organisations are part of the wider society and cannot insulate themselves from it.  They have obligations to behave in a socially responsible way. 

Whatever their views on diversity, executives need to improve their ability to manage diverse teams. This would be a lot easier, though, if people were able to discuss cultural differences, and the impact it has on their teams, openly and honestly.  Instead, most organisations, encouraged by the threat of draconian punishments for non-compliance, promote cultural diversity and justify it by claiming that it improves their performance. Few challenge these claims, for breaking ranks on the issue of  diversity could weaken the company's defence against litigation by aggrieved employees. Managers in most organisations are therefore implicitly discouraged from discussing the issues around diversity unless they take the accepted line - that cultural diversity contributes to increased profits.

The trouble is, there is no evidence to back up this claim and quite a lot that refutes it. If we are going to improve the way we manage more culturally diverse workforces in future, a bit more honesty about the benefits and pitfalls of employing culturally diverse teams would be a good place to start.

Comments

[Guessedworker]

Since large organisations trading across datelines are at one with the corporate aspect of the power elite, they are tainted in respect of diversity assessment.

The remainder of the large and medium company sector operate within a Marxised environment in which it is impossible to always employ the best people, and necessary to sound ethusiastic about our coloured guests. A sizeable proportion is dependent on public sector contracts. Many others just want low-cost labour to compete in export markets and with the emerging East. Taint is everywhere, such is the madness of our world.

With luck and courage in ten, perhaps twenty years all this will be swept aside - or will be if we wish to survive. Then the pigs at the trough will promptly discover that a racially cohesive workforce with a high mean IQ was the answer all along.

[Serf]

I would be unsurprised if one day I were to read that Diversity is good in creative industries and bad in more mundane sectors.

There is also the factor of forced versus choice.

Diversity in Silicon Valley at the height of the boom (vast numbers of companies started or run by Chinese, Indians etc), was driven simply by the need to have quality employees, in an environment where the employees held all the cards.

To discriminate in such an environment would have been commercial suicide.

However, if companies are trying to fill quotas, then they will not be picking the best for the job, and the results will reflect that.

[dearieme]

The benefits of diversity are many and varied.

[Alex]

More importantly, what are the costs of non-diversity? There isn't a cost-free option of going back to the mythic past. I suspect that the financial and anti-libertarian impact would be substantial. If you don't want diversity, you have to discriminate, and if you discriminate on the grounds of something other than ability, you guarantee suboptimal allocation of resources.