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Dear Information Age
I am writing in regard to David Braue's recent article: ‘How do you measure diversity in your business’.
This entire article is based on the premise of "We know diversity gives organisations a competitive edge". But at no point in this article is this premise proven. The author just assumes it to be true.
When I clicked the headline, I had hoped this article was going to discuss the value of, and how to measure diversity of thought – the wider the range of ideas that are presented, the more likely one of them will stick as a winner. I entirely agree with this.
Alas, this article does not discuss diversity of thought, but rather diversity of identity.
I don't understand how a diversity of identity (gender, race, sexuality, culture, nationality, language, etc.) can translate into business competitiveness? Nor have I seen any studies or metrics that corroborate this premise.
In fact, I've seen quite the opposite, with the "Get woke, Go broke" tagline being attached to the phenomenon of business ventures tanking after embracing a diversity of identity ideology. Examples include Marvel Comics, The 2016 reboot of Ghostbusters, The Star Wars: The Last Jedi movie, EA's Battlefield 5, and most recently P&G's Gillette.
Even if we assume this premise is true, then wouldn't the first step to effecting change be to convince people that this premise is true? Without doing this first, I doubt an organisation like Melbourne's Cultural Infusion will ever achieve meaningful change.
I'm asking this in an honest, good faith effort to achieve a better understanding through challenge and debate... Could I request for ACS to publish an article that proves, or at least shows the logic behind, the assertion that "diversity (of identity) gives organisations a competitive edge"? Or perhaps an article that shows the other side of the debate?
Information Age Reader
(Name and email supplied)
Information Age forwarded this letter to Cultural Infusion for comment.
Dear Information Age,
We appreciate being given this opportunity to respond to your reader.
There are a number ways to understand diversity in the workplace. Organisations are expected to reflect the societies in which they exist and thus have diverse workforces because Australian society is diverse. The failure of an organisation to match the diversity of the society it serves and from which it draws its workforce indicates biases in recruitment that can undermine its ability to provide services. For this reason, the British Civil service and The HealthWest Partnership recognise the value of ensuring a level of mutuality between society and organisational make-up (Plowman, 2018).
Another way to understand diversity is through its link to business performance which bring us to the reader’s central claim.
Significant research has been done by the business and academic communities into the effects of diversity on business performance. But rather than attempting to draw a straight line between diversity and the bottom line, research tends to examine a particular characteristic of diversity in a particular organisational context.
Thus, it is common for studies to look at the effects of various types of diversity (as an input) on the performance (output) of teams. This is quite different from studies that have shown that for example, ethnic diversity at the board level increases overall profitability without further explanation. (Hunt, Yee, Prince, & Dixon-Fyle, 2018)(Hunt, Layton, & Prince, 2015) (Barta, Kleiner, & Neumann, 2012).
In general, the business community has been more optimistic about the benefits of diversity than the academic community which tends to undertake more granular analysis of specific issues. Constraining the scope of research projects in warranted because ‘the varied perspectives and approaches to work that members of different identity groups bring’ (Ely & Thomas, 1996) make the scientific study of diversity extremely complex. Especially since ‘predictions about any one diversity variable differ depending on which of its dimensions they [researchers] see as critical to determining its impact’ (Ely & Thomas, 2001).
The relationship between diversity and business performance is highly complex and thus difficult to measure. Some of the reasons for this are; lack of consensus over what is meant by diversity, the context dependent nature of diversity in any study, problems in defining the parameters by which categories of diversity can be established (Mannix & Neale, 2005) (Stirling, 2007)(Roberson, 2006) (Roberge & van Dick, 2010) (Podsiadlowski, Gröschke, Kogler, Springer, & van der Zee, 2013) (Stahl, Maznevski, Voigt, & Jonsen, 2009). There has also been institutional reluctance to provide researchers with access to real organisational settings due to sensitivities associated with diversity (Kochan et al., 2003). It should be pointed out that it has been shown that the factor most disruptive to social integration, group communication, and conflict in the performance of teams is not cultural or gender diversity but differences in length of tenure (Mannix & Neale, 2005).
A number of studies have conducted meta-analysis of research literature. These aggregate and summarise the findings of multiple studies and show that there are overall net benefits and costs (Mannix & Neale, 2005) (Ely & Thomas, 2001) (Apfelbaum, Phillips, & Richeson, 2014). For this reason, diversity is thought about as a ‘double-edged sword’ (Jayne & Dipboye, 2004) (Herring, 2009).
The work that has found benefits associated with diversity find that it enhances creativity and innovation because ‘dyads with heterogeneous attitudes (eg, liberal and conservative) generated more creative solutions to problems than did dyads with homogeneous attitudes’ (Mannix & Neale, 2005, p. 33). Heterogeneous groups have been shown to outperform homogeneous groups, as the expression of alternative perspectives can lead to novel insights and solutions (Nemeth, 1986 in Mannix and Neale 2005).
Additionally, the presence of a ‘minority’ perspective within a group enhances cognitive flexibility of other members and leads to more divergent thinking as individuals see and think about problems differently (Hong & Page, 2001). Alesina and La Ferrara’s analysis of the link between diversity and performance, found a ‘positive effect of racial and gender diversity on creativity and task completion’ (Alesina & La Ferrara, 2005). Herring’s empirical study found that diversity has a positive effect on ‘sales revenue, number of customers, market share, and profits relative to competitors’ (Herring, 2017)
The costs associated with diversity usually stem from inaction on the part of organisations to adequately deal with the potential negative impacts of difference and failing to consider the effects of behavioural traits such as ‘familiarity attraction’ and ‘in-group bias’. When managed effectively the latent benefits of diversity can be realised, but as Jayne and Boyle pointed out some organisation gave ‘little or no attention to the specific situation to which [diversity and inclusion] programs are applied’ (Jayne & Dipboye, 2004, p. 414). Mannix and Neale observed that, ‘organisations have a long way to go to reap the benefits of the diverse teams within their midst’ (Mannix & Neale, 2005, p. 49). This is probably because the ‘the management of diversity is more complex than is currently articulated in both practitioner and scholarly research’ (Roberson, 2006).
Despite the complexities in studying the effects of diversity, it has become axiomatic that the positive effects of diversity are optimised through action taken to ensure that workers are made to feel accepted and included (Jayne & Dipboye, 2004; KPMG, 2018; Mannix & Neale, 2005).
This is behind both Cultural Infusion’s efforts to drive cultural and social harmony, and the institutional tendency within government and business to take diversity and inclusion seriously.
As the reader has requested evidence, I have included here references to peer-reviewed publications that have shaped the way Cultural Infusion thinks and talks about diversity in both social and professional contexts.
CEO, Cultural Infusion
Alesina, A., & La Ferrara, E. (2005). Ethnic Diversity and Economic Performance. Journal of Economic Literature, 43(3), 762–800. https://doi.org/10.1257/002205105774431243
Apfelbaum, E. P., Phillips, K. W., & Richeson, J. A. (2014). Rethinking the Baseline in Diversity Research: Should We Be Explaining the Effects of Homogeneity? Perspectives on Psychological Science, 9(3), 235–244. https://doi.org/10.1177/1745691614527466
Barta, T., Kleiner, M., & Neumann, T. (2012). Is there a payoff from top-team diversity? McKinsey Quarterly. https://doi.org/10.1094/cchem-07-11-0085
Ely, R. J., & Thomas, D. A. (1996). Making Differences Matter: A New Paradigm for Managing Diversity. Harvard Business Review, (Oct), 79–90.
Ely, R. J., & Thomas, D. A. (2001). Cultural Diversity at Work: The Effects of Diversity Perspectives on Work Group Processes and Outcomes. Administrative Science Quarterly, 46(2), 229–273.
Herring, C. (2009). Does Diversity Pay?: Race Gender and the Business Case for Diversity. American Sociological Review, 74(April), 208–224.
Herring, C. (2017). Is Diversity Still a Good Thing? American Sociological Review, 82(4), 868–877. https://doi.org/10.1177/0003122417716611
Hong, L., & Page, S. E. (2001). Problem Solving by Heterogeneous Agents. Journal of Economic Theory, 97(1), 123–163. https://doi.org/10.1006/jeth.2000.2709
Hunt, V., Layton, D., & Prince, S. (2015). Diversity matters. McKinsey & Company. Retrieved from https://www.richlandcountyfoundation.org/upload/documents/diversity_matters.pdf
Hunt, V., Yee, L., Prince, S., & Dixon-Fyle, S. (2018). Delivering through diversity. McKinsey & Company. Retrieved from https://www.mckinsey.com/business-functions/organization/our-insights/delivering-through-diversity
Jayne, M. E. A., & Dipboye, R. L. (2004). Leveraging diversity to improve business performance: Research findings and recommendations for organizations. Human Resource Management, 43(4), 409–424. https://doi.org/10.1002/hrm.20033
Kochan, T., Bezrukova, K., Ely, R., Jackson, S., Joshi, A., Jehn, K., … Thomas, D. (2003). The effects of diversity on business performance: Report of the diversity research network. Human Resource Management, 42(1), 3–21. https://doi.org/10.1002/hrm.10061
KPMG. (2018). Inclusion is about all of us: Inclusion and Diversity Report. Retrieved from https://assets.kpmg/content/dam/kpmg/au/pdf/2018/inclusion-diversity-report.pdf
Mannix, E., & Neale, M. A. (2005). What Differences Make a Difference? The Promise and Reality of Diverse Teams in Organisations. Psychological Science, 6(2), 31–55.
Nisbett, R. E., Peng, K., Choi, I., Ames, D., Atran, S., Cheng, P., … Yates, F. (2001). Culture and Systems of Thought: Holistic Versus Analytic Cognition. Psychological Review, 108(2), 291–310. https://doi.org/10.1037//0033-295X.108.2.291
Park, D. C., & Huang, C. M. (2010). Culture wires the Brain: A cognitive neuroscience perspective. Perspectives on Psychological Science, 5(4), 391–400. https://doi.org/10.1177/1745691610374591
Plowman, M. (2018). The HealthWest Partnership Standards for Workforce Mutuality. Footscray. Retrieved from http://healthwest.org.au/wp-content/uploads/2018/05/HW_WorkforceMutualityStandards_1stedition.pdf
Podsiadlowski, A., Gröschke, D., Kogler, M., Springer, C., & van der Zee, K. (2013). Managing a culturally diverse workforce: Diversity perspectives in organizations. International Journal of Intercultural Relations, 37(2), 159–175. https://doi.org/10.1016/j.ijintrel.2012.09.001
Roberge, M. É., & van Dick, R. (2010). Recognizing the benefits of diversity: When and how does diversity increase group performance? Human Resource Management Review, 20(4), 295–308. https://doi.org/10.1016/j.hrmr.2009.09.002
Roberson, Q. M. (2006). Disentangling the meanings of diversity and inclusion in organizations. Group and Organization Management, 31(2), 212–236. https://doi.org/10.1177/1059601104273064
Stahl, G. K., Maznevski, M. L., Voigt, A., & Jonsen, K. (2009). Unraveling the effects of cultural diversity in teams; A meta-analysis of research on multicultural work groups. Journal of International Business Studies, 41(4), 690–709.
Stirling, A. (2007). A general framework for analysing diversity in science, technology and society. Journal of the Royal Society Interface, 4(15), 707–719. https://doi.org/10.1098/rsif.2007.0213