Does Diversity Improve Organizational Performance?
On the occasion of the celebration of the World Day of Cultural Diversity for Dialogue and Development, we ask ourselves if diversity really generates value for the company
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In today’s globalized world, diversity has become a buzz word that seems to catch everyone’s attention. Media representatives, politicians, business leaders, academics – we all talk about the importance of diversity. Most of public attention goes to two types of diversity, namely cultural (ethnic) diversity and gender diversity. While these two are undoubtedly important, they are not the only types of diversity. In most organizations or, more broadly, social groups one can find also generational diversity, linguistic diversity, educational diversity, or political diversity. In a nutshell, diversity is a presence of individuals with a range of different, often conflicting, characteristics.

Such a mix of individuals is supposed to generate more innovative ideas, to find new solutions to old problems, and, generally speaking, drive the organizational performance. No wonder then, that academics and researchers have been studying diversity as a source of competitive advantage. Hence comes the initial question: Does diversity improve performance? The answer is…

No!
There is no empirical evidence that diversity in itself leads to superior organizational performance. Diversity is a double-edged sword. In other words, it is not enough to put a diverse group of individuals on a team and wait for great results. Research shows that diversity generates so-called process losses that is inefficiencies in team (company) operations stemming from problems in communication and potential conflict. High diversity may result in lower team cohesion and lack of trust between the team members and lack of trust in the organization. However, diversity offers numerous benefits as discussed in the paragraph above. Therefore, why does it not improve performance? Well, to improve performance…

Diversity must be managed well
But what does it mean to manage diversity? First, we need to understand its nature and its effects. Broadly speaking, there are two “diversities” – surface level diversity and deep diversity. The former refers to any “differences” we can quickly see: race, gender, age, etc.; the latter refers to diversity of values and beliefs. While the former is easier to see, the latter is much more dangerous for team cohesion.

Research shows that the negative effects of surface level diversity gradually disappear with time, while diversity of values develops with time into a much severe conflict. It should come as no surprise as it is easier to imagine a white man working hand in hand with a black women than followers of PRI and Morena working together. Sometimes, the faultline between sub-groups goes not along racial or gender lines but it is hidden much deeper and the company must actively address that.

What are some other factors which must be considered while managing diversity? The nature of the task and the environment of the organization. Some tasks require flawless communication and hyper-efficiency, while others can use more flexibility and creativity. For instance, you don’t want to be sitting on a plane where the crew is very diverse and the captain and co-pilot are arguing about the most creative ways of landing the plane. On the other hand, a homogenous group of senior male marketing managers from the US is very unlikely to come up with innovative ways of attracting millennials growing up in Brazil to buy their new product. This is related to the final challenge – what is the environment of the organization? It is…

A question of utmost importance for Mexico
If the environment of the organization is stable and homogeneous, the organization itself shall be stable and homogeneous. However, when the environment is dynamic and diverse, the organization shall be diverse and dynamic as well. Mexican companies are still relatively homogenous which becomes a major challenge. Not only we are wasting a great opportunity to tap into a larger human talent pool and take advantage of the business benefits of diversity, but we are missing an opportunity to transform our society. We must remember that big companies are not only profit-making machines but might be also vehicles for social change.

Some of the most successful American companies such as Google, Facebook, or Marriott International actively engage in workplace diversity which is not only aimed at generating more profits for the company but to promote inclusiveness in the society and to professionally activate some underprivileged groups. Marriott is an interesting case as African American, Latino and other ethnic minorities make up more than 60% of its staff in the United States. While some may comment that the company does it simply to tap into vast resources of cheap labor, the company is constantly highly ranked as one of the best places to work for minorities and praised for its efforts to transform societies.

Through Diversity to Success
To conclude, diversity alone is not a guarantee for success but when used consciously and strategically can be a game changing resource providing the company with sustainable competitive advantage. The Mexican society has been and always will be diverse and it is time for the Mexican business to take advantage of this fact.