thesis statement of diversity help or hindrance to group performance

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Diversity impact on organizational performance: Moderating and mediating role of diversity beliefs and leadership expertise

Jamshid ali turi.

1 Department of Management Studies, Bahria Business School, Bahria University, Islamabad, Pakistan

Sudhaishna Khastoori

2 Department of Management Sciences, SZABIST, Larkana, Pakistan

Shahryar Sorooshian

3 Department of Business Administration, University of Gothenburg, Gothenburg, Sweden

Nadine Campbell

4 Business school, Western Sydney University, Sydney, Australia

Associated Data

The data has been sent to the SZABIST center of research in Shaheed Zulfikar Ali Bhutto Institute of Science and Technology, 79 Clifton Road, Karachi 75600, Pakistan. To obtain the archive, should use the main author's name followed by the year 2021, "Ali Turi / Khastoori - 2021. Data set, the contact information for the SZABIST center of research is: Tel: (021) 358-21538-42 (EXT # 407) Fax: (021) 35830446 Email: kp.ude.tsibazs@ofni .

The current research examines the impact of four independent diversity variables, gender, age, educational background, and ethnicity, on the moderating role of diversity beliefs and the mediating role of leadership expertise to measure organisational performance in Pakistan. A self-administered questionnaire using a 6-point Likert scale approach was adopted to collect the responses from 176 employees. Quantitative analysis was done using SPSS, and SMART-PLS3 were used for was used to comprehend the objectives of the research. The findings indicate that age diversity, diversity beliefs, and leadership expertise have a statistically significant impact on organisational performance. Moreover, moderating variable diversity belief did not affect organisational performance, but leadership expertise plays a significant mediating role in organisational performance. Our study provides critical theoretical contributions to research diversity and organisational performance in Pakistan and examines the impact of workforce diversity on organisational performance with leadership expertise as mediator and diversity beliefs as a moderator.

1. Introduction

Diversity has many meanings, applications, and implications. Some organisations see it as an asset from which innovation and competitive advantages can springboard, while others see it as a hindrance, constrain, and biases. Traditionally, diversity included religion, language, age, gender, ethnicity, education, cultural and personality orientation [ 1 ]. Today, the concept of diversity has evolved to encompass strategic targets to improve organisational performance and effectiveness [ 2 ]. Therefore, organisations promote workforce diversity to bolster organisational performance [ 3 ]. However, many studies suggest that diversity exists in different forms with different intensities. If not managed properly, it has the potential to harm morale, intensify turnover and result in substantial communication problems.

The lack of diversity training and understanding of diversity beliefs, especially in developing countries with rigid social and cultural bonds, leads to organisational bias. To overcome these organisational biases, E-Vahdati et al. [ 4 ] recommended that firms should emphasise corporate governance, accountability, ethics, trust, and diversity. Moreover, organisations also need diversity for rational decision-making and promoting a conducive environment, where everyone’s beliefs are respected, leading to employees self-reflecting on the positive benefits [ 5 , 6 ]. However, if workforce diversity is mismanaged, this could lead to emotional conflicts, perceived organisational politics, miscommunication, power struggle, and higher employee turnover. As a result, having a diverse workforce would become an inhibitor for organisational development [ 7 , 8 ].

Muhammad Ali Jinnah, the founder of Pakistan, believed that diversity management involves four key concepts. One is democratisation which would guarantee cooperation amongst its citizens. Two, consistent social equity and equivalence through egalitarian Islamic values. Three, stringent laws with no room for bias or discrimination. Four, protectionism for minorities, women, and other disadvantaged groups [ 9 ]. Despite this, Pakistan is among the lowest-ranked diverse countries in the world. It ranked in the 22nd percentile for gender diversity and female economic activity in emerging economies due to its religious and cultural norms. Additionally, Pakistan’s sectoral diversity falls in the bottom five [ 10 ].

Previous studies on diversity focused on culture and ethnicity, but elements such as age, gender, and education have not been fully explored. Therefore, there is a need to examine different elements of diversity in different settings to understand its applications and managerial implications for sustainable organisational performance [ 11 – 13 ]. However, the subjective nature of diversity has left many practitioners ill-equipped to manage diversity effectively or determine which components play a role in diversity management and diversity-related issues [ 14 ].

The contradictory research results on diversity need to be further examined to increase our comprehension and better explain this phenomenon. Previous research has considered various diversity dimensions to identify their impact on organisational performance. For example, García-Granero et al. [ 15 ] and Georgakakis [ 16 ] explored the relationship between top management team functional diversity and the firm’s performance with the moderating role of top management (CEO) attributes. Other studies have used negative descriptors such as discrimination and racial prejudice to explore diversity.

However, no studies have examined the projectized environments or considered the role of leadership expertise and diversity beliefs. This research’s main queries are to determine how leadership expertise adds to organisational performance, value diversity beliefs, and organisational performance? Therefore, our contribution to the diversity literature will help us better understand and assess the impact of diversity on organizational performance by examining leadership expertise as a mediating variable and determining the extent to which diversity and organizational performance are related, using diversity beliefs as a moderating variable within Pakistan.

2. Literature review and hypotheses

Diversity is considering, recognising, and respecting others’ opinions and differences irrespective of their culture, gender, age, social status, race, physical capability, and so on [ 7 , 17 ]. It is used to find opportunities, face challenges, and explore new avenues [ 18 ]. Furthermore, diversity can be used to enhance knowledge and skill levels, help to understand behaviour, conflicts and fill the gaps within the organisation [ 7 , 19 ]. While there are many facets to diversity, this research aims to look more especially at gender, age, ethnicity, and educational diversity.

2.1 Gender diversity

Gender diversity represents the gender identities of men and women. It describes the emotional difference and experience publicly and culturally attached to men and women within any firm [ 20 ]. Research has found that a moderate level of gender diversity boosts the competitive edge, whereas greater levels of gender diversity reduce organizational performance. Other studies have shown that organisational success depends upon gender equality and equity [ 21 , 22 ];. Although western organisations have been moving closer to gender equality, Pakistan is way behind [ 21 ]. The gender-oriented inequities within the Pakistani workplace are reinforced by personal biases and stereotypes, referring that the status of men is perceived as superior to women. Many organisations prefer hiring male employees because they perceive men as better performers [ 23 ].

2.2 Age diversity

Age diversity is the ability of an organisation to accept different age groups. The business environment can only grow and succeed when various age groups within an organisation come with diverse experiences [ 24 – 26 ]. Recently, age diversity issues have gained significance because professionals are choosing to work past retirement age, and young adults are working part-timers while completing their studies [ 27 – 29 ]. Many organisations are welcoming this trend because they need skilled employees with experience and young talent with an innovative mindset for new ventures better organisational performance [ 30 , 31 ]. However, In Pakistan, young people face more discrimination in the labour market than old workers [ 32 ], as cultural norms are founded on respect for their elders.

2.3 Ethnic diversity

Ethnic diversity refers to differences in religion, language, and cultural background. Employees from different backgrounds working in the same organisation represent different lifestyles, cultures, beliefs, and skills that can improve strategic decisions [ 14 ]. Due to these perceived attributes and globalisation, organisations are focusing on multiplicity diversity building, but many companies struggle to produce and implement policies that reduce ethnic discrimination, which negatively impacts organisational performance [ 32 – 35 ]. Pakistani laws espouse that all citizens are equal irrespective of their religion, language, gender, or caste, but for minorities in Pakistan, this is a farfetched dream. According to EEOC data, ethnic diversity violations cost companies $112.7 million per annum due to ethnic diversity violations [ 3 ].

2.4 Educational diversity

Educational diversity denotes differences in knowledge, training, skills, experience, and qualification [ 18 , 36 ]. Some organisations refuse to employ highly qualified workers because they do not believe highly educated individuals are better performers, while others see employees with less education, skills, and training underperform [ 22 ]. The lowest level of education affects the earnings of rural workers in Pakistan, but old earners who receive more education earn more in urban areas. Organisations use educational diversity to have a mix of soft and hard-tech skills [ 37 ], and employees consider having educational diversity to significantly increase their ability in obtaining desirable jobs [ 38 , 39 ]. Age, gender, ethnicity, and educational diversity add to the synergetic pragmatism of the projects and organisation [ 30 , 40 ]. These findings lead us to the stance that H1 : Diversity has a significant positive impact on project performance .

2.5 Leadership expertise

Leadership expertise plays a crucial role in organisational performance, as it creates new directions, new philosophies, optimism, boost enthusiasm and cooperation among employees, and devises appropriate visions and strategies. Furthermore, leadership expertise considers diversity an organisational strength and promotes inclusion and diversity using various leadership styles as one leadership style may not work in diverse teams. The leader-member exchange (LMX) theory explains this approach best. It is a relationship-based approach with a dyadic relationship between the leader and their employees [ 41 ].

According to LMX [ 41 ], a leader uses a specific leadership style for each team member based on their mindset. The leaders share more knowledge and information, delegate responsibilities, and encourage participation in decision-making with some members and not others. LXM theory allows leaders to develop in-groups and spend more resources on the members they expect to perform better. This relationship between a leader and members gradually develops and reaches a high degree of dependence, mutual trust, and support. As a result, productivity increases. That eventually enhances employee retention, loyalty, and sustainable organisational growth.

Previous results maintain that effective diversity management at the workplace adds to both organisational and organisational performance [ 7 , 40 ]. Diversity, which has become an integral part of every organisation and project in this unified world, needs better leadership expertise to manage it at the micro and macro levels [ 34 , 42 ]. Research supports that a leader’s expertise, i.e., leading employees with respect regardless of their caste and creed, leading them with self-assurance, positively shaping their behaviour, results in enhanced employee performance, which eventually reflects increased organisational performance [ 43 ]. The findings lead us to H2 : Diversity with leadership expertise has a positive impact on organisational performance .

2.6 Role of diversity beliefs as a moderating variable

Diversity beliefs mean understanding that everyone is unique, and there is a need to recognise individual differences. These differences include race, ethnicity, gender, sexual orientation, socio-economic status, age, physical abilities, religious beliefs, political beliefs, or other ideologies [ 11 ]. Today, globalisation is one of the driving forces of diversity within organisations. However, accommodating diversity beliefs in terms of spiritual, cultural, and political views sometimes challenges a diverse organisation [ 12 , 25 ]. Staff needs to be reminded that they should not impose their opinions on others as their personal and ethnic beliefs are independent of their work obligations [ 27 , 44 ]. The employment practices linked with unbiased diversity beliefs can lead to constructive organisational results [ 11 , 26 ].

These diversity beliefs can be polarised perceptions or preferences towards homogeneity or heterogeneity [ 7 , 17 ]. A leader’s diversity beliefs may be one of the factors influencing organisational performance. Manoharan and Singal [ 42 ] found diversity positively affects organisational performance when supported by positive beliefs and values. Kundu and Mor [ 45 ] concluded that a generally positive view of workforce diversity could positively impact organisational and new venture (project) performance. Additionally, the perception of employees about workforce diversity is positively linked with organisational performance [ 46 ], and employees perceive their organisation more favourably when diversity management is perceived as positive [ 18 ]. However, due to organisational variations and cultural settings, diversity needs to be managed differently [ 14 , 47 ]. As such, we hypothesise that H3 : Diversity beliefs moderates the relationship between leadership expertise and organisational performance .

Furthermore, organisations bring people from different cultures to boost creativity, knowledge, and rational problem-solving approaches. Consequently, the leaders in this 21 st century have become highly alarmed with diversity management in organisations [ 48 ]. It is believed that diversity at the workplace positively impacts organisational performance, and the leadership expertise mediates this relationship. According to prior research [ 8 , 49 ], organisational leaders play a vital role in forming and promoting the workplace culture, free of prejudice and personal biases. The workforce mainly follows leaders to set the perspective wherein they would work in an organisational setting. Thus, forming such an environment that imitates respect, ethical behaviour, understanding, and encouraging cross-cultural values improves organisational performance. However, this relationship is moderated by the diversity beliefs. Everyone in the organisation does not hold the same values and beliefs. Still, a true leader who can determine the varied beliefs of employees and manage diversity in a way that is convincing for each team member can help organisations reach new heights [ 50 ]. The research findings lead to the hypothesis that H4 : Diversity significantly impacts organisational performance with the mediation of leadership expertise and moderation of diversity beliefs .

The Conceptual Model ( Fig 1 ) was developed based on the relationship between four dimensions of diversity most relevant to the Pakistani context, the leadership expertise, diversity beliefs, and organisational performance. This conceptual framework indicates the impact of workforce diversity on organisational performance in the presence of leadership expertise as mediating variable and diversity beliefs as moderating variable in the services sector and projectized organisations in Pakistan’s major cities.

3. Methodology

A quantitative approach using a correlational study was undertaken to determine the extent of a relationship constructs under investigation. A structured questionnaire was adopted from previous studies [ 51 , 52 ] to collect primary data using a survey, keeping in mind the objectives of the studies. The study used a 6-point Likert scale for grading the responses with the scale (1 = strongly disagree, 2 = disagree, 3 = partially disagree, 4 = partially agree, 5 = agree, 6 = strongly agree). The target population of the study was the project management professionals, working in the major cities of Pakistan. These cities were selected because many of the national and international developmental projects take place here. Organizations were selected from the services sector. The questionnaires were self-administered.

Additionally, a muti-level sampling procedure was adopted to make the respondent selection process more accurate and precise. In the first phase, stratified random sampling was applied to select the strata of the potential respondents. In the second phase, the quota sampling technique was applied to select the qualifying organizations, and in the third phase, convenient sampling was used to collect data. A total of 550 questionnaires were distributed, and 482 were returned. Questionnaires were assessed and screened for completeness. A total of 17 questionnaires were discarded as more than 10% of the values were missing. A further 12 were removed because of outliers. The remaining 451 were analysed using SPSS and Smart PLS.

4. Results and findings

4.1 participant demographics.

Table 1 contains the demographic details of the respondents. Among 176 respondents, 97 were male, and 79 were female. Most of the respondents were aged 30–35, had more than 5years’ experience working for their organisation, and held a bachelor’s degree or higher. This indicates that the participants were well educated and possessed sufficient skills and knowledge to answer all the survey questions proficiently.

4.2 Instrument validity

Table 2 indicates the loading factors for all the items are in the acceptable range of greater than 0.70. The average variance extracted (AVE) falls between 0.612–0.678 for the constructs, indicating a high-reliability level. Moreover, the composite reliability (CR) values range from 0.862 to 0.947 and are highly consistent and satisfy the convergent validity criteria. Furthermore, predictive accuracy, effect size, and predictive relevance were conducted for the goodness of fit, and their values fell in an acceptable range.

*OL = Organisational Leadership; AD = Age Diversity; ED = Ethnic Diversity; GD = Gender Diversity; EDD = Educational Diversity LE = Leadership Expertise; DB = Diversity Beliefs.

4.3 Discriminant validity: Fornell-Larcker Criterion

Discriminant validity of the constructs was checked using Fornell-Larcker Criterion. Discriminant validity confirms correlation among constructs if the values do not exceed 0.85 and the square root of AVEs is greater than the correlation of other constructs. Table 3 maintains that all values are less than 0.85, and their square root of AVEs was greater than their constructs’ off-diagonal values. These details satisfy the discriminant validity requirements.

*AD = Age Diversity; DB = Diversity Beliefs; ED = Ethnic Diversity; EDD = Educational Diversity GD = Gender Diversity; LE = Leadership Expertise; OP = Organisational Performance.

4.4 Discriminant validity: HTMT Criterion

HTMT refers to the average of the correlations of indicators between different constructs relative to the average of the correlations of indicators within the same construct. It measures the discriminant validity between the construct of the instrument. While conservative cut-off values are 0.9 is advocated a more stringent ratio of 0.85 as it offers the best criterion compared to all other methods of assessing discriminant validity [ 53 ]. Thus, any inter-construct ratio greater than 0.85 would be considered as having poor discriminant validity. The HTMT ratios obtained in this study, as shown in Table 3 , indicate no discriminant validity problems between the constructs.

4.5 Hypothesis testing

The path estimation or hypothetical relations was performed to observe the significant relationship in the inner path model. The entire hypothetical path in the framework was examined through the regression coefficient (β). Using the PLS Bootstrap technique, the value of β was checked to observe the proposed hypotheses in the structural model. Table 4 demonstrates the path coefficient assessment result where out of 10 direct hypotheses, six were supported, and four were not supported. The supported hypotheses were significant at least at the level of 0.05, have expected positive sign directions, and consist of a path coefficient value (β) ranging from 0.181 to 0.515.

Additionally, Table 5 shows that all six direct relationships were significant as the p-value is less than 0.05 and the t-value is higher than 1.96, depicted in Fig 2 . However, the other four hypotheses were unsupported because the p-value was higher than 0.05, and the t-values were less than 1.96.

In the case of moderating hypothesis, DB does not moderate the relationship between LE and OP. Therefore, it confirms that DB does not play any significant moderating role in the relationship between LE and OP.

4.6 Mediation hypothesis

For the mediating analysis, the bootstrapping technique was applied [ 54 ]. The mediation analysis results are presented in Table 6 and in Fig 3 , where among the four mediating hypotheses, three were supported, and one was not supported. The mediating path AD -> LE -> OP, ED -> LE -> OP, and EDD -> LE -> OP was significant as p < .005 and the values of LL and UL do not have zero (0) in between, which confirmed a mediating effect. However, the other mediating path GD -> LE -> OP was not significant as p < .005, and the zero (0) exists between LL and UL. In addition, among the three hypotheses, the AD -> LE -> OP path was partially mediated as the direct hypothesis was significant. However, the other two significant paths were fully mediated as their direct relationships were not significant.

5. Discussion

After many years of research on workplace diversity, there is considerable misperception over what diversity is. The broad definitions state that diversity seeks inclusion but does not identify the difference between social diversity where individuals of different races, ethnicity, religious beliefs, socio-economic status, language, geographical origin, gender, and/or sexual orientation bring their different knowledge, background, experience, and interest to increase organisational performance. Similarly, functional diversity where individuals with a variety of educational and training backgrounds are not examined. As a result, organisations are left confused about how to manage diversity to maximise organisational performance [ 55 – 58 ].

The present research provides a better understanding of the prevailing diversity scenario in Pakistan’s service sector and projectized organisations. The research indicates that three diversity variables, ethnic, gender, and education, do not significantly impact organisational performance. In contrast, age diversity has a significant impact on organisational performance.

The moderating hypothesis indicates that diversity beliefs play no significant role in improving organisational performance. This study challenges previous findings in the literature review sections, which proclaims that diversity and diversity beliefs significantly affect organisational performance. Therefore, organisations prefer to engage the workforce with diverse social, cultural, and ethnic backgrounds, bringing multi-facet experiences, learning, tacit and explicit knowledge to the organisation, boom effectiveness, and efficiencies, face challenges, and accept future challenges. This may be due to regional and cultural factors, that diversity beliefs are not promoting organisational performance, which may be explored in the future. Moreover, this study indicates that leadership expertise plays a significant mediating role, and diversity beliefs play a significant moderating role in organisational performance.

5.1 Theoretical implications

Our study provides critical theoretical contributions to research diversity and organisational performance. There is a gap in the current literature on the impact of workforce diversity on organisational performance, with leadership expertise as mediating variable and diversity beliefs as moderating variable in the services sector and projectized organisations in Pakistan. Specifically, we determined that leadership expertise mediates age, ethnicity, and educational diversity, and organisational.

Second, we contribute to research on the effective path by which diversity influences organisational performance by exploring the mediating role of leadership expertise. That is, our study not only examined that leadership expertise positively influences organisational performance. Building on these studies, our research uses leader-member exchange theory as an effective path and organisational performance as a goal. Drawing on the leader-member exchange theory, we determine that leadership expertise can impact diversity and enhance organisational performance. Our results suggest that leadership expertise is a crucial mechanism for diversity management and improving organisational performance in Pakistan.

Finally, our research explored the value of incorporating the moderator, diversity beliefs, and the mediator leadership expertise into a single theoretical model helps us better to understand the relationship between diversity and organisational performance. Our study showed that diversity beliefs do not moderate the relationship between leadership expertise and organisational performance. However, there were direct relationships between age diversity and leadership expertise, age diversity and organisational performance, diversity beliefs and organisational performance, and ethnic diversity and leadership expertise. Additionally, this study also found that there is partial and no mediation between age diversity, gender diversity, and organizational performance.

5.2 Practical implications

In addition to the theoretical contributions, our research informs practitioners in several ways. First, our results show that age, ethnicity, and educational diversity directly contributes to organisational performance via leadership expertise. There was also a direct relationship between age and ethnic diversity and leadership expertise. These findings emphasise the relevance of diversity management in light of globalisation.

Leaders should employ leader-member exchange procedures to help sustain organisational performance in an increasingly diverse workforce. That is, leadership styles need to change based on the mindset of the various groups within the organisation. The leaders share more knowledge and information, delegate responsibilities, and encourage participation in decision-making with some members and not others. LXM theory allows leaders to develop in-groups and spend more resources on the members they expect to perform better. However, this study added to the body of knowledge, that leadership expertise may not contribute to well managed and effective group development, due to social, religious, and cultural limitations of the locality/respondents.

5.3 Limitations and future research directions

This study has several limitations. First, it focused on age, gender, ethnic, and education diversity management and did not take into account other demographic diversity practices implemented within the organisations. Previous research recognises that a broad spectrum of demographic diversity influences organisational performance [ 55 ]. Future research should investigate a broader range of demographic diversity to understand better what constitutes a comprehensive approach to diversity management. Second, the research is quantitative, and its moderate response rate may limit the generalisability of the results [ 59 ]. Future research could combine qualitative and quantitative methods to leverage both structured and unstructured data to enhance the depth of insights and provide more specific practical outcomes [ 60 ]. Third, the generalisability of findings should be interpreted with caution. Every society has its own culture, norms, and social values, and previous research has identified that organisational culture may influence the findings related to diversity management [ 61 ].

6. Conclusions

Workplace diversity is becoming one of the most popular ways to evaluate organisational performance. Thus, conducting training and creating awareness regarding diversity will lead to value generation, better productivity, and vitality. Managing diversity at the workplace considers leveraging and respecting cultural differences in employees’ competencies, ideas, and innovativeness to persuade them to contribute towards a common goal and do it in a way that gives a competitive edge to organisations. Hence, it is recommended to encourage a more diversified workforce and create awareness to increase organisational performance. In addition, this research has focused on diversity beliefs as a moderating variable. However, future research can be conducted that how leadership expertise can mediate between age and gender diversity and organizational performance. Additionally, organisational justice as a moderator between diversity dimensions and organisational performance needs to be explored. Moreover, in the current paper, the social traits of diversity have been studied, providing opportunities or gaps to study functional diversity traits in the future.

Ethical consent

The study was approved by the ethical committee of the SZABIST Larkana Campus. The consent was informed, and the information was collected through an approved structured questionnaire. Moreover, the authors declare that they have no conflict of interest.

Funding Statement

The author(s) received no specific funding for this work.

Data Availability

• PLoS One. 2022; 17(7): e0270813.

Decision Letter 0

16 Dec 2021

PONE-D-21-09151Diversity Impact on Organizational performance: Moderating and Mediating role of Diversity Beliefs and Leadership ExpertisePLOS ONE

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Reviewer #1: The study is interesting, and the results are useful for diversity related research. However, the manuscript needs to be thoroughly checked for language including grammar. Detailed review comments are attached.

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You get a minor revision, make a revision immediately, pay attention to the marked reviews, the introduction is quite clear but there are some things that need to be improved, the methods, data processing and others are quite good

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Author response to Decision Letter 0

24 Jan 2022

General: The whole paper was revisited and the help of the expert/native speaker was also incorporated. Additionally, some technical quality improvements are also considered.

Reviewer #1: The study is interesting, and the results are useful for diversity related research. However, the manuscript needs to be thoroughly checked for language including grammar. Detailed review comments are attached.

Suggestion accepted and incorporated . Thanks for your appreciation, the whole paper was revisited and the suggestions were incorporated

Reviewer #2: You get a minor revision, make a revision immediately, pay attention to the marked reviews, the introduction is quite clear but there are some things that need to be improved, the methods, data processing and others are quite good

Suggestion accepted and incorporated. Thanks for your appreciation, the whole paper was revisited and the suggestions were incorporated

Submitted filename: reviewers comments and responses.docx

Decision Letter 1

21 Jun 2022

Diversity Impact on Organisational Performance:

Moderating and Mediating Role of Diversity Beliefs and Leadership Expertise in Pakistan

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Diversity Impact on Organizational performance: Moderating and Mediating role of Diversity Beliefs and Leadership Expertise

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Diversity and Work Group Performance

Research shows that informational diversity stirs constructive debate around the task at hand.

November 01, 1999

Different types of diversity generate various sorts of conflict, which affects how a team performs.

The study of diversity in the workplace has taken on new importance as changing economics prompt many companies to downsize and restructure themselves into flatter, more decentralized entities. The result is that today’s corporations are built around groups that must find answers to novel and complicated business issues. These teams bring together diverse groups of people who incorporate a variety of backgrounds, ideas, and personalities. To learn more about them, Margaret Neale , who is the John G. McCoy-Banc One Corporation Professor of Organizations and Dispute Resolution at Stanford GSB, and her colleagues have developed a rich body of research on diversity.

People tend to think of diversity as simply demographic, a matter of color, gender, or age. However, groups can be disparate in many ways. Diversity is also based on informational differences, reflecting a person’s education and experience, as well as on values or goals that can influence what one perceives to be the mission of something as small as a single meeting or as large as a whole company. Diversity among employees can create better performance when it comes to out-of-the-ordinary creative tasks such as product development or cracking new markets, and managers have been trying to increase diversity to achieve the benefits of innovation and fresh ideas. Recently, Neale, with Gregory Northcraft of the University of Illinois and Karen Jehn of the University of Pennsylvania’s Wharton School, studied the effects of each kind of diversity on group performance.

“What you don’t see is diversity having a direct performance effect,” says Neale. It turns out that different types of diversity generate various sorts of conflict, which affects how a team performs. “The kind of group conflict that exists and how the team handles the conflict will determine whether this diversity is effective in increasing or reducing performance.”

The researchers found that informational diversity stirred constructive conflict, or debate, around the task at hand. That is, people deliberate about the best course of action. This is the type of conflict that absolutely should be engendered in organizations, says Neale. On the other hand, demographic diversity can sometimes whip up interpersonal conflict. This is the kind of conflict people should fear. “People think, ‘I have a different opinion than you. I don’t like what you do or how you do it. I don’t like you,’” says Neale. “This is what basically can destroy a group.”

The third type of diversity is based on goals and values, and it actually generates both types of conflict. This is the most potentially damaging of all the diversities. Without value-goal homogeneity, a team can accomplish little. But once a team recognizes and accepts a goal, it makes problems easier to deal with because each person knows the intentions of the others are the same.

Quote People tend to think of diversity as simply demographic, a matter of color, gender, or age. Attribution Margaret Neale

In their field research, Neale, Northcraft, and Jehn studied a relocation company with work teams. They measured informational diversity and value-goal diversity by surveying employees. They also obtained actual group performance data and supervisor assessments of how various teams were doing in terms of on-time delivery and services rendered. They found that the effects of diversity were more pronounced during complicated tasks that required the interdependent work of several groups. The more teams had to work together, the greater the effects the researchers observed.

Neale and her colleagues have tried to move back and forth between practitioner based field studies and research done in the statistical laboratory, where they can create contexts in which to study various group behaviors. In a related lab study, Neale and professors Katherine Williams, PhD ‘99, and Deborah Gruenfeld of Northwestern’s Kellogg Graduate School of Management and Elizabeth Mannix of Cornell’s Johnson Graduate School of Management looked at the effect social and informational ties had on how groups shared information. They set up groups of three people who were told to solve a murder mystery. In each group two members were social friends. The third member was a stranger. In half the groups, the friends had a common piece of information and the stranger was given a piece of unique information essential to solving the problem. In the other groups, one friend and one stranger had common information, while the other friend had the unique information. Which group was more likely to share information more effectively?

The groups with two friends having common information and the stranger with unique information did the most productive information sharing. “Our best guess is that the two friends know each other and expect that they have similar information because of their mutual experience,” says Neale. A stranger knows he or she is different and is more likely to share unique information. In groups where one of the friends had the special information, the friend suppressed the informational difference in order to keep social ties intact, researchers speculate.

For media inquiries, visit the Newsroom .

Explore More

Do first-gen college grads face bias in the job market, a first-of-its-kind look at which students get disciplined — and when, equity by design: how diversity ignites creativity, editor’s picks.

When Social and Knowledge Ties Are Incongruent: Effects on Group Information Sharing Deborah H. Gruenfeld Margaret Ann Neale Elizabeth Mannix Katherine Williams

Exploring Pandora's Box; The Impact of Diversity and Conflict on Work Group Performance Margaret Ann Neale Gregory B. Northcraft Karen A. Jehn

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Cultural diversity and work-group performance: Detecting the rules

Research output : Thesis › Doctoral Thesis

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• Cultural diversity and work-group performance Final published version, 65.6 MB

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• group work Social Sciences 100%
• cultural diversity Social Sciences 98%
• training method Social Sciences 72%
• performance Social Sciences 45%
• cultural difference Social Sciences 36%
• group membership Social Sciences 35%
• communication Social Sciences 31%
• Group Social Sciences 29%

T1 - Cultural diversity and work-group performance

T2 - Detecting the rules

AU - Girndt, T.

N2 - With greater levels of international cooperation, work-groups are increasingly composed of members from different cultures. These groups often suffer from communication problems; however, research suggests that they also benefit from their members cultural diversity and generate higher ranges of problem perspectives. This thesis investigates two questions: first, when do diverse groups generate a higher range of perspectives; second, which skill do group members need to benefit from cultural diversity? In order to investigate the conditions for diversity benefits, student groups of high national diversity were compared with student groups of low national diversity while working together creating a new game. Empirical findings suggest, first, cultural diversity inhibits idea generation in the initial stage; second, cultural diversity affects communication much less then expected, and, third, the absence of communication difficulties is no sufficient condition for achieving the diversity benefits. The author concludes that without training, group members have difficulty detecting cultural differences that could lead to greater idea variation. Hence, the second part of the thesis proposes a training method for the skill to detect cultural differences. An evaluation study of the training method comparing trained with un-trained students supports the effectiveness of the training method.

AB - With greater levels of international cooperation, work-groups are increasingly composed of members from different cultures. These groups often suffer from communication problems; however, research suggests that they also benefit from their members cultural diversity and generate higher ranges of problem perspectives. This thesis investigates two questions: first, when do diverse groups generate a higher range of perspectives; second, which skill do group members need to benefit from cultural diversity? In order to investigate the conditions for diversity benefits, student groups of high national diversity were compared with student groups of low national diversity while working together creating a new game. Empirical findings suggest, first, cultural diversity inhibits idea generation in the initial stage; second, cultural diversity affects communication much less then expected, and, third, the absence of communication difficulties is no sufficient condition for achieving the diversity benefits. The author concludes that without training, group members have difficulty detecting cultural differences that could lead to greater idea variation. Hence, the second part of the thesis proposes a training method for the skill to detect cultural differences. An evaluation study of the training method comparing trained with un-trained students supports the effectiveness of the training method.

M3 - Doctoral Thesis

SN - 9056680757

T3 - CentER Dissertation Series

PB - CentER, Center for Economic Research

CY - Tilburg

Effects of Diversity on Group Decision-Making Processes: The Moderating Role of Human Resource Management

• Published: 26 March 2011
• Volume 21 , pages 677–701, ( 2012 )

Cite this article

• Fernando Martin-Alcazar 1 ,
• Pedro M. Romero-Fernandez 1 &
• Gonzalo Sanchez-Gardey 1  

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Past empirical studies have demonstrated that differences among group members may have both positive and negative effects on decision-making processes. As direct models have failed to explain such intricate consequences, recent work has begun to propose models that are more complex by including mediating and moderating variables. In general, the literature has assumed that the extent to which differences between members benefit group decisions depends on certain conditions in the unit, especially its management. Drawing on a literature review, we find that the human resource management system can be one of these moderators. Using the estimates of a structural model, we discuss how certain choices in the definition of human resource policies can help the organization to improve decision-making processes in diverse groups.

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Martin-Alcazar, F., Romero-Fernandez, P.M. & Sanchez-Gardey, G. Effects of Diversity on Group Decision-Making Processes: The Moderating Role of Human Resource Management. Group Decis Negot 21 , 677–701 (2012). https://doi.org/10.1007/s10726-011-9243-9

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How Does Workplace Diversity Impact Team Performance?

Workplace diversity and team performance is a particular topic which was of interest to me, and so I decided to educate myself about it. I researched more about what diversity is and how it affects various spheres of our lives, especially our professional lives. Workplace diversity seems to affect team performance in many ways, which is clear from my research. What I found was quite interesting, and today, I would like to share that with you.

So, how does workplace diversity impact team performance? 

Diversity Leads to Better Team Performance by:

A team that has a diverse informational background, can find it easier to come up with solutions which are out of the box. It can improve team performance by ensuring that each team has a diverse set of talents. When an organization values inclusivity, it can also help strengthen the relationship with employees and thus lead to improved individual performance as well. However, while diversity is known to bring about a lot of positive changes, it can be challenging to incorporate effectively in an organization.

Diversity is not just about race or gender. Instead, diversity can mean differences in cultural backgrounds, socioeconomic backgrounds as well as age and seniority. Diversity seems to be a hot topic nowadays, especially in the work environment. It is intriguing, and a lot of research has been done over the years about how diversity affects various spheres of our lives.

Diversity Leads to Better Performance: Here is How

When most people think about diversity, they think about gender or race. However, diversity is more than just that. Although gender and race diversity is also essential, another essential factor in diversity is a person’s background and socioeconomic class. Why is it important? This was a question that I had asked, as well. When there are differences in background and socioeconomic classes, chances are there is a lot of difference among the group members in terms of the information and knowledge they have been exposed to.

This does not mean that one will be more educationally qualified than the other. Instead, it means that due to the differences in the nature of the information they have been exposed to, the chances are that they have been exposed to different types of situations as well. This, ultimately, helps in having a team which has a diverse group in terms of their problem-solving ability. Hence, some people may be more creative than others when it comes to coming up with a solution to a problem, and therefore ultimately lead to a better result for the group overall. With a diverse team, group performance is improved as people try to come up with unique and creative solutions for the task at hand.

When there is a diverse team, each team member is able to gain perspective into the other person’s world. They, thus, can become more understanding of the other over time, and hence, it can lead to better communication for the team overall. With better communication, team performance also improves.

As mentioned above, diversity is more than gender and race; it includes a lot more than just that. When you hire people who may be from a different geographic location, or at different stages of their career, or with different personalities, putting them in a group can be beneficial. A team which is diverse will show better performance.

When there is a diverse group, then the work is easily divided among the team members depending upon their skills. When one person is highly skilled at something, and someone else has a talent for something else, both of their abilities can be equally used to fulfil a task. Employees can strengthen and hone their skills faster, and team performance improves as a result of the work being assigned efficiently. When the different skills and talent that people in a group have are explored sufficiently, it helps the team understand what their strengths are. Some team members may not be as skilled as others in a particular task. They too can learn more by working as a team. Thus, not only does the team have a variety of skills, but it can also work together to hone and improve the collective skills.

For the organization, having diverse teams in terms of talents and skills are excellent, since it will ultimately lead to a large talent pool. Hence, an organization is able to expand the amount of talent that they have by hiring diverse workers in a group.

1. Stand out from your competitors

When a company has a diverse team, it ultimately helps them stand out from their competitors. It is not a surprise that most have still not understood the importance of having a diverse group. For most companies diversity does not seem to be the priority. With a diverse team, a company is able to come up with more creative ideas, and also have a large pool of talent. These two factors help in improving the performance of the team overall, and as a result, the performance of the organization. With a diverse team, everyone thinks outside of the box, and hence, they are able to show results that no one else can and come up with solutions that are more creative than others.

2. Foster a sense of inclusivity

It is no surprise that when companies seem to put emphasis on having diversity in their organization, employees feel a sense of inclusivity. When people belonging to different cultures, race, or gender, find that an organization values diversity, they feel cared for, and connected to the organization. Ultimately, it leads to the employees striving to perform better individually in the organizations, which leads to better performance for the team. When an employee is placed in a diverse group, then they are able to look at their team members and realize that their organization values inclusivity. Hence, when working in a diverse team, the value that inclusivity holds for the organization is reinstated over and over again.

As each employee strives to perform better individually, they also try to co-operate more with their group and improve communication. They strive to improve their performance in all spheres, which includes teamwork as well.

3. Diversity prevents grouping

When working with diverse people, it can be easy to form groups based on some similarity which you may find with the other. This is known as the herding instinct. However, a diverse team pushes employees past this instinct to ensure that the team is truly diverse and that the team members communicate with each other.

4. Diversity leads to better conflict resolution strategy

In a diverse workplace, conflict will arise. It is unavoidable. Hence, instead of trying to prevent it altogether, organizations should try to come up with strategies that will help reduce instances of conflict, and learn how they can manage conflict and prevent it from escalating further.

Thus, when working with a diverse team, the conflict resolution skills of the manager is honed, and it ultimately leads to a workplace environment with less friction.

5. Diversity in the workplace leads to genuinely inclusive environment

It is easy to hire people from different backgrounds. However, having a diverse workplace does not mean anything when the workplace does not have a staff which values diversity and inclusivity. A diverse team helps to counter this problem. When working with team members from different backgrounds, each member is able to interact in a one on one capacity with the other person. This helps in overcoming any prejudice which they may have, and also gain a better understanding of different cultures as well as their values and traditions.

Diversity in the Organization: The Adverse Effects on Team Performance

Cons of informational diversity.

Diversity is not always functional. When a team is diverse, it has the potential to give rise to conflict. Conflict is usually caused when people have a different perspective or opinion about a topic or a task at hand because of differences in their personal needs or demands. When a team is diverse, it is not a surprise that each person will have different priorities, as well as different views on how a task should be handled.

Informational diversity arises from differences in background. While this may be beneficial in the sense that it helps members come up with more creative solutions to issues at hand, it can also be harmful to team performance by giving rise to conflict. When everyone has a different solution to the same problem, there can be a lot of debate about which solution will be the right fit. As people have different perspectives on the same issue, it can be challenging to come up with a solution to the problem as a team.

In fact, when one member’s solution is picked over the other, it can also foster a sense of low self-esteem and resentment towards the other member. Hence, the issue must be handled effectively.

1. Differences in goals and values

A team can also differ in their goals and values. This results in a conflict which can be quite damaging to the team. A team in order to be effective should have goal homogeneity. Without each member agreeing on a single goal for the team, each member may be trying to accomplish a different result, which can ultimately lead to stagnant team performance. Without agreeing upon a single goal, the communication within a team is affected adversely. Hence, in order for diversity in a team to be effective, all members need to agree on a single goal for the team so that each person knows that the intention of the other is the same.

2. Differences in communication

Communication in any situation is essential. But, when there is a diverse team with people belonging to different cultures and backgrounds, each person may have different communication styles. Some people may have a more direct and assertive way of communication due to their background, which may be perceived as rude or brash by others in the team.

On the other hand, another person’s communication style may be more indirect. In such cases, a person may feel uncomfortable with asserting themselves, and hence, they will also be less likely to speak up if they happen to disagree on a particular issue.

When there is a barrier in communication, it can be difficult to understand the other members of the team, which can adversely affect team spirit and performance. Hence, while diversity may bring about some positive changes, without an effective way to communicate, it is fruitless.

By adopting the following strategies, these shortcomings can be handled easily:

Set roles for the group : the role of each member of the team should be clearly defined. This ensures that everyone is able to focus on their own tasks while also working together as a team. When roles are clearly defined, it is easier for each member to focus on their own task rather than trying to take up as much as they can in order to prove their worth.

Set ground rules : Setting ground rules in a diverse team is essential. Without a set of rules, a group discussion can quickly delve into chaos, which is not something that you would want. Hence, when there are clear ground rules and code of conduct, each member is more likely to adhere to them. With a clear set of ground rules, it is easier for each member to understand how they should conduct themselves.

Improve communication : A lot of conflicts that arise in a diverse team are due to a lack of effective communication. Hence, when managing a diverse workplace or team, it is essential that you try to improve communication among the employees. This is quickly done with the help of team exercise as well as by defining the goal of the team to each member.

3. Differences in attitudes towards power-distance

Power distance refers to the seniority and status of another member in the team. In some countries, a person with higher status and security is respected more, and their opinions are valued. Those who have a lower power-distance often do not speak up against those with higher power distance.

Again, in some countries, the differences in power-distance are not so critically observed. Every person takes charge of the situation and strives to work together as a team where every member has the same position regardless of the status or seniority of the other.

This difference in attitude towards power distance can make it seem like those who respect owner distance lack self-confidence and are afraid to speak up. At the same time, it can make members who do not observe power-distance seem like they are disrespectful to the other.

Hence without a basic understanding of the other person’s background, it may be challenging to understand the intentions of the other person, and why they do the things they do, It can be easy to perceive others as being inferior to you simply because you do not understand their actions and you are only viewing them from your own perspective rather than trying to understand where they are coming from.

Related Questions

How can you avoid conflicts when working with a diverse team?   It is clear to see that workplace diversity can have beneficial effects. However, at the same time, it cannot be denied that in order for diversity in the workplace to be effective, it needs to be appropriately managed. When you put diverse people in a team, there is a great possibility of conflicts arising. Repeated conflicts can reduce team morale, and it can also reduce the efficiency of the group. An effective conflict resolution strategy should be drawn up by the manager of the team who has a special insight on each of the members.

How can an organization realize the full potential of a team which is diverse?  Even when you have a diverse team, you may not be seeing the results that you expected. This can be because even when a team seems to be working effectively on the surface, at a deeper level, each individual member may not be great at working with the other members of the unit. By helping build better communication channels, as well as fostering an environment where cultural diversity is truly valued, an organization can ensure that their diverse teams are truly effective. With an effective team, the performance of the organization as a whole improves.

Steve Todd, founder of Open Sourced Workplace and is a recognized thought leader in workplace strategy and the future of work. With a passion for work from anywhere, Steve has successfully implemented transformative strategies that enhance productivity and employee satisfaction. Through Open Sourced Workplace, he fosters collaboration among HR, facilities management, technology, and real estate professionals, providing valuable insights and resources. As a speaker and contributor to various publications, Steve remains dedicated to staying at the forefront of workplace innovation, helping organizations thrive in today's dynamic work environment.

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Please note you do not have access to teaching notes, when diversity helps performance: effects of diversity on conflict and performance in workgroups.

International Journal of Conflict Management

ISSN : 1044-4068

Article publication date: 8 April 2014

The aim of this paper is to explore whether national diversity in the form of national variety (differences in kind, e.g. number of nationalities) has a positive effect on group processes and performance whereas national separation (differences in attitudes and beliefs; i.e. social distance and national stereotypes) has a negative effect.

Design/methodology/approach

This cross-cultural comparative study examines the moderating role of national diversity in the relationship between social attitudes on conflict and performance across two samples. Participants are presented with one of the two national variety conditions (low or high national variety) who then report on social distance, national stereotype, conflict, and performance.

National separation negatively relates to performance and positively relates to conflict. However, there is less conflict and higher performance, despite national separation, when there is high national variety.

Research limitations/implications

This study is limited to individual perceptions. Research could be extended to experienced conflict and effects of individual national separation on conflict and performance at the group level.

Practical implications

Although social distances and negative stereotypes may not be completely eliminated, the results imply that managers can modify the effects by promoting and celebrating national variety. The results show that even conflict is modified (task conflict increases while relationship and process conflict decreases) when there is national variety despite social distances and negative stereotypes.

Originality/value

This study contributes to workgroup research on diversity and conflict management by exploring social attitudes and opinions. Individual attitudes are the bases of group processes and this study attends to two of the social attitudes that need to be added to our understanding of group processes.

• Performance
• Stereotypes
• Social distance

Ayub, N. and Jehn, K. (2014), "When diversity helps performance: Effects of diversity on conflict and performance in workgroups", International Journal of Conflict Management , Vol. 25 No. 2, pp. 189-212. https://doi.org/10.1108/IJCMA-04-2013-0023

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Copyright © 2014, Emerald Group Publishing Limited

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10 Diversity as Disagreement: The Role of Group Conflict

Karen A. Jehn, Melbourne Business School, The University of Melbourne, Malbourne, Australia

Lindred L. Greer, Work and Organizational Psychology, University of Amsterdam, Amsterdam, The Netherlands

• Published: 01 October 2013
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Conflict is critical for determining diversity’s influence on group effectiveness. A considerable amount of work has amassed on the relationships between team diversity, conflict, and team outcomes. This chapter will briefly review recent findings and developments in this area. Three specific complexities needing future research will then be highlighted, with special attention to how diversity may promote not only conflict but also asymmetric experiences of conflict in teams. The three areas for future research are (1) the role of different conceptualizations and operationalizations of diversity in predicting the emergence and asymmetric experience of conflict in teams; (2) the impact of new and understudied forms of diversity, such as lifestyle diversity or power diversity, on conflict and conflict asymmetries; and (3) the role of the perception of diversity in activating the relationship between diversity and conflict asymmetries.

Many questions remain about how diversity influences workgroup outcomes (cf. Horwitz & Horwitz, 2007 ). Numerous typologies of diversity characteristics have been created in an attempt to explain the varying effects of diversity on workgroup outcomes (e.g., visible vs. invisible; task-related vs. non–task-related; Pelled, 1996 ; social category vs. informational, Jehn, Northcraft, & Neale, 1999 ; surface- vs. deep-level, Harrison, Price, & Bell, 1998 ; Harrison, Price, Gavin, & Florey, 2002 ). However, recent reviews and meta-analyses (Jackson, Joshi, & Erhardt, 2003 ; Joshi & Roh, 2009 ; Mannix & Neale, 2005 ) suggest that there are no consistent direct effects of diversity on organizational performance, even when the different types are considered. More nuanced and context-dependent views of diversity are therefore needed to better understand how diversity affects group outcomes (cf. Joshi & Roh, 2009 ), and special attention is needed to the underlying processes that may explain how diversity affects group outcomes.

Conflict has been identified as a primary mediating process that has the potential to explain the effects of diversity upon important group outcomes, such as performance (cf. Jehn, Greer & Rupert, 2008 ; King, Hebl, & Beal, 2009 ; Lau & Murnighan, 1998 ; Williams & O’Reilly, 1998 ). In this chapter on diversity as disagreement, we focus on the multiple ways in which conflict may explain how and when diversity produces effective or ineffective outcomes in groups. This chapter will briefly review recent findings and developments in this area. Three specific complexities needing future research in the study of diversity and conflict in groups will then be highlighted, with special attention to how diversity may promote not only conflict but also asymmetric experiences of conflict in teams by diverse members. Areas for future research are the role of different conceptualizations and operationalizations of diversity in predicting the emergence and asymmetric experience of conflict in teams; the impact of new and understudied forms of diversity, such as lifestyle diversity or power diversity, on conflict asymmetries; and the role of the perception of diversity in activating the relationship between diversity and conflict asymmetries.

Group conflict

We begin by defining intragroup conflicts and discussing the different ways conflict can be conceptualized. Intragroup conflict has been defined as the process arising from perceived or real incompatibilities among group members (e.g., Boulding, 1962 ; De Dreu & Weingart, 2003 ; Thomas, 1992 ; Wall & Callister, 1995 ). The most common way researchers have approached the study of conflict in groups (i.e., intragroup conflict) is to examine the general level of conflict in groups (i.e. “how much conflict is there in this team?”).

More recently, researchers have begun to examine the asymmetry of conflict within groups. Recent work (e.g., Coleman, Kugler, Mitchinson, Chung, & Musallam, 2010 ; Jehn, Rispens, & Thatcher, 2010 ; Jehn, Rupert, Nauta, & den Bosche, 2010 ; Thatcher & Phillips, 2010 ) has highlighted how members in a group may have different perceptions of the level, amount, and type of conflict in the group, and as a result may exhibit more or less conflict behaviors than their other group members (e.g., Jehn, Greer, Rispens, & Jonsen, 2012 ; Mannes, 2009 ). For example, in a study of 51 workgroups, Jehn and colleagues ( 2010 ) examined the consequences of asymmetric conflict perceptions on the effectiveness of individuals and groups. Group conflict asymmetry was defined as the degree to which members differed in their perceptions of the level of conflict in the group. They found that group conflict asymmetry decreased performance and creativity in the workgroups. They also examined individual conflict asymmetry, which was defined as one member perceiving more or less conflict than other group members. Whether a workgroup member was a high or low perceiver of conflict (compared to the other group members) determined his or her individual performance and satisfaction with the team. They suggested multiple mechanisms by which this could occur. Diversity between members in their perceptions of conflict in the team decreases their trust in and respect for one another; it also frustrates members and increases their cognitive load as they spend time and energy trying to make sense of their divergent perceptions of the conflict environment in the team.

We believe that this multilevel conceptualization and understanding of the process of intragroup conflict is important for diversity researchers to consider when examining the effects of workgroup diversity on individual and team effectiveness. Perhaps one of the reasons why the effects of diversity and conflict have been mixed is that past conceptualizations of these relationships have overlooked the ability of diversity to differentially affect certain members within the team and to feed conflict asymmetries. To facilitate this goal, following our review of the current state of the literatures on conflict and diversity, we will then discuss how different types and configurations of diversity in workgroups may influence the multilevel and potentially asymmetric process of intragroup conflict and how this in turn may help explain how diversity ultimately affects individual and team outcomes. We highlight new types of diversity categorizations (e.g., lifestyle diversity, power diversity), configurations (e.g., faultline placement), and perceptions that directly relate to our multilevel view of conflict in workgroups and may provide answers to how diversity affects individuals in groups via conflict and disagreement.

Types of intragroup conflict

Past research on intragroup conflict has primarily focused on conflicts arising from either task or relationship issues (Amason, 1996 ; Guetzkow & Gyr, 1954 ; Jehn, 1995 ). Task conflicts involve problems among group members about ideas and opinions relating to the job the group is performing (e.g., De Dreu & Weingart, 2003 ; Jehn, 1995 , 1997 ), such as the focus for a major advertising plan. Relationship conflicts are about non–work-related issues between members, such as differences about politics, religion, environmental issues, or commuting that are often important to people but not necessarily related to the task they are working on (e.g., De Dreu & Weingart, 2003 ; Jehn, 1995 , 1997 ). Process conflicts involve logistical issues within the group, such as disagreements about the delegation of resources and task responsibilities (Behfar, Mannix, Peterson, & Trochim, 2011 ; Greer & Jehn, 2007 ; Jehn, 1997 ).

Conflict and group effectiveness

When investigating the impact of diversity and conflict on group outcomes, the group outcomes typically studied fall into two general categories, those that are performance-related and those that are morale-related. Indicators of team performance can include departmental production records or supervisor ratings (e.g., Jehn, 1997 ; Pelled et al., 1999 ). Measures of morale typically focus on satisfaction with the group or member turnover intentions (Jehn, 1997 ; Murnighan & Conlon, 1991 ; Pelled et al., 1999 ). These indicators of morale are thought to represent team viability and are as important for group functioning and success as actual performance (Balkundi & Harrison, 2006 ; Hackman, 1987 ; Hackman & Wageman, 2005 ).

Research has shown that task conflict can improve performance under certain conditions (e.g., nonroutine tasks, open conflict norms) through improved consideration of different alternatives and group problem solving (e.g., Amason, 1996 ; Corseu & Schruijer, 2010 ; Greer et al., 2006 ; Jehn, 1997 ; Matsuo, 2006 ; Olson et al., 2007 ; Pelled, Eisenhardt, & Xin, 1999 ). Other research suggests that conflict interferes with the cognitive processing of group members (e.g., Carnevale & Probst, 1998 ). Task conflicts may impede a group member’s ability to adequately process information. While the cognitive processing perspective has received support (see the meta-analysis by De Dreu & Weingart, 2003 ), De Dreu and Weingart do suggest, consistent with Jehn ( 1995 , 1997 ), that under certain conditions task conflicts may still be able to increase group performance. Specifically, De Dreu and Weingart suggest that task conflict in groups performing nonroutine tasks in a trusting and psychologically safe environment can result in improved group performance.

The effects of task conflict on team viability (e.g., satisfaction, commitment, or willingness to work together again) are consistently negative (cf. De Dreu & Weingart, 2003 ; Jehn & Bendersky, 2003 ). In general, frustration and dissatisfaction are common reactions to any sort of disagreement or conflict among individuals (Ross, 1989 ). Therefore, relationship conflicts, as well as task conflicts, cause problems for team viability. If members are fighting, they are often unsatisfied and likely not to want to continue in the group, thus decreasing group morale. Relationship conflicts also interfere with successful group performance because of the misspent time and effort (Jehn & Bendersky, 2003 ) wasted on petty fighting over non–task-related issues or resolving the non–task-related issues, rather than on completing the task (e.g., Amason, 1996 ; Evan, 1965 ; Jehn, 1995 ; Li & Hambrick, 2005 ; Matsuo, 2006 ; Nibler & Harris, 2003 ; Pelled, 1997 ; Rau, 2005 ).

Regarding process conflict, some research has proposed that these disagreements in a team may improve group functioning as members’ ability are fit to the task requirements (e.g., Goncalo, Polman, & Maslach, 2010 ; Jehn, Northcraft, & Neale, 1999 ). Other research shows that process conflict decreases members’ cognitive abilities and distracts them from more important goal-related issues (e.g., Behfar et al., 2011 ; Greer & Jehn, 2007 ; Greer et al., 2006 ; Jehn & Mannix, 2001 ; Vodosek, 2007 ). Process conflict, as with the other types of conflict, is consistently found to decrease morale and satisfaction in the group due to the personal challenging and discomfort of individuals with conflict-filled interactions.

Past empirical findings on diversity and conflict

Social category heterogeneity and conflict.

Social category heterogeneity has been shown to increase relationship conflicts in groups (e.g., Ayub & Jehn, 2010 ; Jehn et al., 1999 ; Mohammed & Angel, 2004 ; O’Reilly, Williams, & Barsade; 1997 ; Pelled et al., 1999 ). This is thought to be because social identity and social categorization processes in diverse groups lead to discomfort, hostility, and tension (e.g., Jehn et al., 1999 ; Tajfel & Turner, 1986 ) and dislike between members of different demographic categories (Byrne, 1971 ). Social category heterogeneity also influences task conflict in groups (Ayub & Jehn, 2010 ; Curseu & Schruijer, 2010 ; cf. Jehn, Bezrukova, & Thatcher, 2006 ): when group members have different social category characteristics, they are likely to have different experiences or values (Dougherty, 1992 ). These different “thought worlds” can cause task conflicts and can also lead to process conflicts regarding how best to coordinate the task at hand (Behfar et al., 2011 ; Jehn et al., 1999 ). In support of these ideas, Vodosek ( 2007 ) found all three forms of conflict to mediate the negative impact of cultural diversity on team outcomes. However, a recent meta-analysis by Stahl, Maznefski, Voigt, and Jonsen ( 2010 ) found that cultural diversity is positively related to task conflict, but is not significantly related to either relationship or process conflict.

Functional heterogeneity and conflict

Functional differences, just like social category differences, elicit in-group/out-group comparisons that result in tensions within groups that can escalate to relationship conflicts due to increased communication problems and resentment across different areas (Strauss, 1962 ). Functional heterogeneity also increases task conflict. Members of different functional backgrounds, by definition, bring different education, training, and experience to the group (e.g., Lovelace, Shapiro, & Weingart, 2001 ). These different perspectives, or “representational gaps” (Cronin & Weingart, 2007 ), lead to debates and disagreements about the group task (Pelled et al., 1999 ). Jehn, Northcraft, and Neale ( 1999 ) found that functional diversity increased improved performance when mediated by task conflict. Knight and colleagues ( 1999 ), in their study of 76 top management teams, showed that functional diversity’s effects on goal consensus were mediated by relationship conflict and agreement seeking. Olson, Parayitam, and Bao ( 2007 ) showed that task conflict mediated the effect of cognitive diversity on team performance. In addition, members of different functional backgrounds rely on different working methods (Bantel & Jackson, 1989 ; Gruenfeld et al., 1996 ) and different views of how to coordinate a task (cf. Cronin & Weingart, 2007 ; Jehn et al., 1999 ) that can lead to process conflicts (Behfar et al., 2011 ; Jehn et al., 1999 ). Recent research by Klein, Knight, Ziegert, Lim, and Saltz ( 2011 ) contributed to this line of work by showing that the effects of functional diversity (operationalized as differences in work values) on team conflict depend on the style of the team leader. Work-value diversity was associated with team conflict only when leaders were person-focused rather than task-oriented.

Diversity faultlines and conflict

The concept of demographic faultlines (Lau & Murnighan, 1998 ) has arisen in response to critiques of the traditional conceptualization of diversity (see Chapter 4 in this book for a review). Demographic faultlines have been hypothesized to lead to increased levels of relationship conflict (e.g., Lau & Murnighan, 1998 ; 2005 ; Li & Hambrick, 2005 ; Thatcher et al., 2003 ). When faultlines occur in groups, the resulting subgroups, or coalitions, may increase the salience of in-group/out-group memberships, resulting in strain and polarization, and inter-subgroup competition (Lau & Murnighan, 1998 ). When group members align with others of similar demographics, they will see the others in the group as outsiders (Hogg, Turner, & Davidson, 1990 ), resulting in tensions that intensify relationship conflict within the group (Jehn, Bezrukova, & Thatcher, 2006 ). In addition, research indicates that aligned subgroups will have negative beliefs about members of the other subgroup, the “out-group,” causing feelings of inequity and disrespect (Hogg, 1996 ), which increase experiences of relationship conflict. This can distract members from the task and can cause competition within the group based on non–task-related dimensions (e.g., “we older workers know more than you young members” or “those of us from the U.S. are more capable than you others”). These distinctions and splits within a common-goal workgroup can cause decreased performance and negative attitudes that, in the end, will decrease the effectiveness of the task performance of the group.

While demographic faultlines are likely to increase relationship conflict, their effects on task conflict within the group are less clear. On the one hand, when in-group and out-group identities are salient, subgroups may polarize (Lau & Murnighan, 1998 ) and talk less with each other about work issues. When communication between subgroups declines, task conflict is less likely to occur. On the other hand, when members have subgroup members to share their opinion with, they may be more willing to hold onto their own opinion during group discussions (Asch, 1952 ; cf. Lau & Murnighan, 1998 ). Task conflicts are therefore more likely because members backed up by representative subgroup members may be more willing to enter into task conflicts, given the support they feel based on their alignments. Task conflicts may become even more intense as subgroups each rally around their own unique point of view (Lau & Murnighan, 1998 ).

In addition, the different backgrounds that members of different functional subgroups have may lead members to approach process issues differently (Bantel & Jackson, 1989 ; Gruenfeld et al., 1996 ; Pelled, 1996 ). These differences may be accentuated by subgroup dynamics relating to equity and appropriate delegation of staff and resources. When subgroups form, inter-subgroup competition may take place as to who should get the overall group resources and how to delegate sought-after tasks (Lau & Murnighan, 1998 ). When subgroups feel compelled to compete for group resources, higher levels of process conflict may also result.

Findings so far on the effects of faultlines on conflict and performance have been mixed. Li and Hambrick ( 2005 ) found that strong faultlines (based on age, tenure, gender, and ethnicity) led to increased task conflict, relationship conflict, behavior disintegration, and decreased performance. The relationship between faultline strength and behavioral disintegration (decrease in interaction, exchange, and collective effort) was entirely mediated by relationship conflict, but not by task conflict. They found that relationship conflict had a negative influence on performance, but did not find an effect of task conflict on performance. The group processes (relationship conflict, task conflict, and behavioral disintegration) fully mediated the negative relationship between faultline size and performance. Lau and Murnighan ( 2005 ) found that faultlines (based on gender and ethnicity) explained more variance in perception of team learning, psychological safety, satisfaction, and expected performance than single-attribute heterogeneity indices. Lau and Murnighan also found strong faultlines to decrease relationship conflict. Thatcher, Jehn, and Zanutto ( 2003 ) found that diversity faultlines (based on years of work experience, type of functional background, degree major, sex, age, race, and country of origin) were linearly associated with lower levels of relationship and process conflict, but did not find a linear effect on either task conflict, performance, or morale. In curvilinear tests, they found that faultline strength had a curvilinear effect on relationship conflict, process conflict, performance, and morale. Groups with low faultline strength (where no subgroups existed; i.e., Asian male accountant, Black male manager, Native American male salesman, and Hispanic male secretary) and groups with very strong faultline strength (where subgroups cleanly align on the basis of multiple characteristics; i.e., two Black male managers and two White female assistants) had higher levels of process and relationship conflicts and lower levels of performance and morale than groups where medium faultline strength existed (i.e., one female Asian consultant, one White female consultant, one White male assistant, one Black male assistant).

Molleman ( 2005 ) found that both demographic faultline strength and distance (see Bezrukova, Jehn, Zanutto, & Thatcher, 2009 ; Thatcher, Jehn, & Zanutto, 2003 , for overview of faultline strength and distance) increased general intragroup conflict (the average of task and relationship conflict items). He also found that faultlines formed on the basis of personality types significantly interacted with team autonomy in predicting intragroup conflict, such that when personality faultline distance was high and team autonomy was high, intragroup conflict was the highest, and when faultline distance was low and team autonomy was low, intragroup conflict was the lowest.

Furthermore, Pearsall, Ellis, and Evans ( 2007 ) found that relationship conflict mediated the relationship between activated gender faultlines and team creativity, such that faultlines were positively related to relationship conflict and relationship conflict was negatively related to team creativity. Choi and Sy ( 2010 ) found that social category faultlines, such as gender/age or age/race faultlines, were positively related to relationship conflict, which was indirectly negatively related to team performance. Lastly, Jehn and Bezrukova ( 2010 ) found that activated racial faultlines positively influenced general levels of conflict in the team, which negatively affected team outcomes.

In sum, research on faultlines and conflict has mixed results. Faultlines have been shown to both positively and negatively relate to general levels of intragroup conflict. We suggest by taking a more nuanced view of conflict, in terms of how it is asymmetrically perceived in groups, and investigating the effect of diversity and faultlines on conflict asymmetry, we may be able to gain better insight into how diversity and faultlines affect the conflict dynamics and ultimate outcomes of diverse groups. Therefore, we provide a new framework for understanding diversity and disagreement in groups using the conflict asymmetry perspective.

A new framework for understanding diversity and conflict: conflict asymmetry

We suggest that research needs to consider the asymmetry of perceptions by members of diverse groups to more thoroughly explain the effects of diversity and disagreement on group conflict and outcomes. Past conflict research often assumes that all members interacting on a work task perceive and experience the same amount of conflict (De Dreu & Weingart, 2003 ; cf. Jehn & Chatman, 2000 ). This assumption ignores the possibility that different parties involved in a conflict may perceive different levels of conflict. For example, one person in a workgroup may perceive a high level of conflict, while another may perceive little or no conflict. This view of asymmetric conflict perceptions has often been ignored in past research on conflict (e.g., Amason, 1996 ; Jehn, 1995 ; Pelled, 1996 ; cf. Jehn & Rispens, 2007 ). Similarly, research on organizational groups and teams in general often takes the view that groups possess shared team properties, or that experiences are commonly held by team members (Klein & Kozlowski, 2000 ; Mason, 2006 ), rather than configural team properties, or properties that reflect the differences in attitudes and perceptions among individuals working together (Chan, 1998 ; Klein & Kozlowski, 2000 ).

Recent research (Jehn et al., 2010 ) shows that group conflict asymmetry (the degree to which members differ in perceptions of the level of conflict in the group) decreases performance and creativity in groups. This effect was explained by the social processes (e.g., communication, cooperation) and the group atmosphere (e.g., trust, respect) that resulted from asymmetric perceptions. In addition, at the individual level, high perceivers of conflict reported lower performance and satisfaction with the team than did low perceivers of conflict. We therefore suggest that it is critical to assess individuals’ different perceptions of conflict levels to accurately predict the effects of diversity on group and individual behavior and outcomes.

In addition to perceiving different levels of conflict, individuals may also respond or behave differently when conflict is perceived in a team. Individual conflict engagement is defined as an individual’s behavioral confrontation of conflict issues (Greer & Jehn, 2010 ). This distinction between conflict perceptions and behaviors traces back to the classic work of Pondy ( 1967 ) on felt versus manifest conflicts. As an example of the differences between asymmetries in conflict perceptions and conflict engagement, imagine a team meeting in which a member perceives that others’ opinions are in disagreement with her own, but has not yet expressed her own opinion. Perceptual conflict asymmetry may exist at this point. She may choose whether or not to verbally contradict the opinions of the others. If she does choose to express a contradictory opinion, this would be defined as conflict engagement. Similar to asymmetries in perceptions of conflict, individual engagement in conflict can also have negative outcomes for the individual within a team. Behaviorally engaging in relationship or process conflicts can distract individuals from the task and create tensions with other team members (Jehn & Bendersky, 2003 ), while behaviorally engaging in task conflict may help the individual to showcase his or her expertise on the issue and may increase the individual’s intellective engagement with the issue as the individual formulates the argument. Therefore, by distinguishing between group-level and individual-level conflict perceptions and behaviors, more nuanced and clearer understanding of conflicts can be obtained (cf. Jehn et al., 2012 ; Korsgaard et al., 2008 ) and better insight gained into the exact process by which diversity influences team outcomes.

Given these different views of conflicts (asymmetry of perception and engagement), we suggest three areas for future research to move forward the study of diversity and disagreement in groups: (1) How do different conceptualizations of diversity affect these more nuanced conceptualizations of conflict in groups? (2) How do different understudied types of diversity (e.g., lifestyle and power) influence conflict perceptions and behaviors? (3) How does the perception of diversity add to or differ from the examination (as is common in much past research) of objective diversity when predicting multifaceted notions of conflict in teams?

Research question 1

As previously discussed in this chapter, the concept of demographic faultlines, wherein demographic characteristics align within a team in such a way as to create a clear dividing line between dissimilar team members (Lau & Murnighan, 1998 ), has generated a steady stream of research over the past decade. However, these studies have revealed contrasting results. We suggest that this is because past views of faultlines have been too simplistic and do not allow the possibility of understanding how different configurations of diversity differentially affect the conflict perceptions and behaviors of individual team members.

Recent work by O’Leary and Mortenson ( 2010 ) as well as by Polzer and colleagues ( 2006 ) and Greer, Jehn, Thatcher, and Van Beest ( 2010 ) all suggest that not all faultlines are created equal. Rather, the way in which faultlines divide a group (such as between two equally sized subgroups or between a larger subgroup and an excluded individual) may have not only important implications for group-level conflict (e.g., Polzer et al., 2006 ) but also important implications in that different faultlines may create important differences in the perception and expression of conflict between individuals within the same group. For example, Greer and colleagues ( 2010 ) show that when faultlines create a solo member, that solo member is more likely to perceive higher levels of conflict than other group members, but less likely to behaviorally engage in conflict. They show that this can then translate into impaired team climate and performance.

Future investigation of how different configurations of diversity can create differential experiences within the same team is therefore an important future research direction. The distinction between, for example, solo members or subgroup members based on demographic characteristics is theoretically and practically very relevant for the understanding of diversity and disagreement in groups. This is because in diverse teams, the solo members in particular need to share their opinions in order for the team to capitalize on the “value of diversity” within the team (Homan et al., 2007 ), but this is difficult as solos are likely to tend to conform to the dominant subgroup (Asch, 1952 ). Therefore, we suggest that it would be useful for future research to identify ways to make sure that all individuals on either sides of a faultline in a team have similar perceptions of conflict and feel empowered to speak about these perceptions when they are about the task. Research would benefit from both experimental designs that can create and compare different forms of subgroups in common-goal groups and also field research to examine the natural placement and perceptions of members based on their demographics and how they view the conflict in the group. For example, in a recent study of faultlines (Jehn & Bezrukova, 2010 ), members were placed into groups based on demographic alignment (e.g., Black males vs. White females). An interesting result of this research was that not all members perceived there to be a faultline and in turn did not perceive conflict or act in a conflict-filled way. The members who did perceive faultiness were more engaged in conflict and dissatisfied, thus leading to lower performance. This suggests that future research incorporate measures of both objective (calculated) and perceived demographic faultlines and relate these to individual perceptions of conflict to capture the asymmetry of conflict within the group that may exist.

Research question 2

We offer another line of inquiry challenging the assumptions often made in past diversity typologies. That is, we raise the question of whether there are non–task-related invisible characteristics that may be important. Much of the research assumes that all social category variables are visible and that all deep-level characteristics (often invisible) are task-related (e.g., personality traits, work values; Rink, 2005 ). We therefore seek to introduce a broader conceptualization of social category diversity. This is desirable because relying on prior conceptualizations of social category diversity has often led to contradictory results regarding conflict across studies. The typical troika of social category variables studied in the literature (age, sex, and ethnicity) could be classified as “visible” social category variables that often increase relationship conflict. While obviously a crude categorization (people do not always look their age, or look like they belong to a certain ethnic group), these features are usually more transparent to study than other potential social category variables (such as sexual orientation, marital status, social class, family background, whether one is a parent, whether one has a history of substance abuse, or whether one has changed his or her name), which may explain why they have been the focus of attention when examining conflict in organizational workgroups. Yet the knowledge that a group member falls into one of these latter categories is likely to activate the same categorization and comparison processes as occurs with the visible social category diversity variables. Thus, future research needs to more thoroughly examine what categories individual members are basing their behaviors and attitudes on (i.e., what is salient to them) in order to determine what type or level of conflict is likely to occur.

Lifestyle heterogeneity and conflict

An interesting and potentially highly influential demographic characteristic in teams that has yet to receive much empirical investigation in the workgroup setting is lifestyle diversity. Lifestyle diversity, as we have defined it, could be considered a form of value diversity related to nonwork issues (e.g., marital status, sexual orientation). We propose that stigmas against sexual orientation, substance abuse, and certain social classes will affect stereotyping and prejudice (Brauer, 2001 ; Button, 2001 ; D’Emilio, 1983 ; Fussell, 1983 ; Hartmann, 1970; Herek, 1993 ; Newcomb, Mercurio, & Wollard, 2000 ; Plummer, 1975 ; Sorensen, 2000 ), and ultimately performance, as much or more than the traditional social category aspects examined (i.e., age and gender). In related, initial studies of this form of diversity, Jehn and colleagues ( 1999 ) introduced value diversity, a third type of diversity, distinct from social category or functional diversity. Value diversity represents differences in the values that members hold regarding work. Value diversity was found to increase all three conflict types and to decrease perceived and actual performance as well as morale. Research on various other lifestyle characteristics suggests that this form of diversity will also increase conflict in groups, but has been understudied within organizations for a number of reasons. First, it is very controversial to ask employees about these characteristics; however, a study on punk rock bands by Jehn, Conlon, and Greer ( 2010 ) demonstrated that these characteristics may have a larger influence on workgroup processes such as conflict and performance outcomes (e.g., productivity and morale) than the more traditional diversity characteristics (e.g., gender, race, work experience). In addition, the theory regarding these characteristics is underdeveloped. Therefore, more examination is required to determine how people who lead different lifestyles will perceive conflict differently, similar to the more visible social categories, and how this will influence the effects of conflict.

Power diversity

Another form of diversity that is understudied and does not readily fit into past categorization schemes of diversity forms is diversity in power or status within teams. Initial research and theorizing in this area has suggested that differences in power or status within a team may have the potential to both benefit group interactions and to harm group interactions. On the one hand, power diversity offers a heuristic solution to problems of resource allocation (De Cremer, 2003 ; Keltner, van Kleef, Chen, & Kraus, 2008 ) and can facilitate order and coordination in groups (Magee & Galinsky, 2008 ). On the other hand, power diversity has the potential to make salient feelings of inequality and injustice (Henderson & Frederickson, 2001 ; cf. Lawler & Proell, 2009 ; Muller, 1985 ) and can breed rivalry and competition (Bloom, 1999 ; cf. Harrison & Klein, 2007 ). Greer and Van Kleef ( 2010 ) reconciled these viewpoints by showing that the effects of power dispersion depend on the amount of resources available to the group. When a group has low power, power dispersion is helpful, but when a group has high power, power dispersion leads to power struggles and conflict within the team. Further research into the potential moderators of power diversity and the exact underlying dynamics by which groups create and change power diversity within their team would be interesting.

Directly integrating work on power and status with work on traditionally studied demographic characteristics would also be an interesting pathway for future research. A potential mechanism by which differences in, say, gender exert their influence on group conflict may be through the instigation of power differences and inequalities within the team, which promote perceptions of conflict and are also likely to result in actual conflict behaviors, given their degree of personal importance to members. For example, Greer and colleagues ( 2006 ) found that status moderated the effects of demographic diversity, such that high-status demographic solo members in workgroups were less likely to perceive conflict, but more likely to act on conflict when perceived, than low-status solo members in teams. Therefore, integrating notions of power and status into research on diversity and conflict is important for future research.

Research question 3

One key direction in future research that has been largely neglected thus far is the distinction between actual diversity and perceived diversity (for exceptions, see Dooley, Freyxell, & Judge, 2000 ; Harrison et al., 1998 , 2002 ; Jehn et al., 1999 ). Most past work on diversity has focused on objective demographic characteristics, such as gender, age, or race (cf. Williams & O’Reilly, 1998 ), that can potentially influence team processes, such as conflict, and team outcomes. However, as seen in the recent reviews and meta-analyses on diversity and group processes and outcomes (Jackson et al., 2003 ; Mannix & Neale, 2005 ; Stewart, 2006 ; Webber & Donahue, 2001 ; Williams & O’Reilly, 1998 ), findings on diversity have been largely inconsistent. We propose that one possible way of explaining these contradictory findings is by proposing that diversity affects group process and outcomes only when it is perceived or salient. Research has proposed and shown, for example, that individuals are not always accurate when assessing the degree of diversity in their work unit as compared to other work units (cf. Harrison & Klein, 2007 ).

Therefore, considering the perception, as well as the actuality, of diversity may help us better understand the effects of diversity on intragroup conflict and outcomes. In addition, as we mentioned before, members may have different perceptions of the level of conflict in the group, as well as different degrees of behavioral involvement. A member of a certain demographic category, when perceiving himself or herself to be in the minority, may be more likely to perceive the conflict as relationship-based rather than task-based, but less likely to engage in actual conflict behaviors while in a perceived minority position. If individuals feel that others are getting more resources or the best tasks within the group, they may be more likely to perceive process conflict rather than perceiving that it is a task conflict or based on task capabilities.

There is a conceptual distinction between objective and perceived demographic differences within groups (Garcia-Prieto, Bellard, & Schneider, 2003 ; Harrison & Klein, 2007 ; Zellmer-Bruhn, Maloney, Bhappu, & Salvador, 2008 ) that has been acknowledged in the empirical work on surface- and deep-level diversity (Cunningham, 2007 ; Harrison, Price, & Bell, 1998 ; Harrison, Price, Gavin, & Florey, 2002 ; Phillips & Loyd, 2006 ; Phillips, Northcraft, & Neale, 2006 ), mentoring relationships (e.g., Lankau, Riordan, & Thomas, 2005 ), value and goal diversity (e.g., Jehn, Northcraft, & Neale, 1999 ; Mannix & Jehn, 2004; Rink, 2005 ), face-to-face versus computer-mediated communication (e.g., Bhappu, Griffith, & Northcraft, 1997 ), and perceived variability/homogeneity in in-groups and out-groups (e.g., Lee & Ottati, 1993 ). Research on supervisor–subordinate relations has suggested that perceived differences often have a greater effect on interactions than objective demographic differences (c.f., Riordan, 2000 ; Strauss, Barrick, & Connerley, 2001 ; Turban & Jones, 1988 ). Ashforth and Mael ( 1989 ) explain this by suggesting that the effect of demographic differences is through individuals’ perceptions. Thus, we propose that these different perceptions of members’ demographics and their difference in the group may also lead to different perceptions of conflict.

This same discrepancy between perceived and actual diversity is also a point of contention in the literature on demographic faultlines. Most work on faultlines conceptualizes faultlines based on objective demographic characteristics that can potentially influence team processes and team functioning (Gibson & Vermeulen, 2003 ; Lau & Murnighan, 2005 ; Li & Hambrick, 2005 ; but for an exception see Earley & Mosakowski, 2000 ). However, as Lau and Murnighan ( 1998 ) put forth in their original article on faultline theory, groups may have many potential faultlines, “each of which may activate or increase the potential for particular subgroupings” (p. 328). Since faultlines can remain inactive and go unnoticed for years without influencing the group process (Lau & Murnighan, 1998 ), it is important to take into account whether team members actually perceive or experience these subgroup splits and to what extent these faultline perceptions determine intragroup processes and outcomes. Recent work on faultline activation (the process by which objective faultlines become perceived within a group; Jehn & Bezrukova, 2010 ) suggests one possible route toward exploring the relationship between actual and perceived diversity and conflict experienced in a group. In this research, faultlines were activated when there were group members with certain personalities in each subgroup (e.g., narcissism, entitlement) that pulled the groups apart and made the faultlines salient, hence increasing perceptions of conflict. Future research should also examine other factors that may activate faultlines and pull the demographically aligned subgroups apart, such as specific demographic characteristics or perceptions and attitudes of group members. It is also important to note that certain group aspects can “deactivate” faultlines; that is, when groups had a superordinate group identity, the faultlines were less likely to be perceived, and conflict was decreased (Jehn & Bezrukova, 2010 ). By understanding this and other such factors that can lead to faultline activation, researchers can increase their understanding of the role of faultlines in the perceived conflicts of workgroups; that is, one subgroup may perceive all is fine while the other subgroup is experiencing large amounts of conflict. What this means for actual conflict behavior is also interesting. If there are asymmetric perceptions, conflict behavior may be potentially less manifest than if all subgroups perceived the conflict. However, this also means such conflicts may be more difficult to resolve and more negative for group outcomes.

Other work looking at identity salience as a mediator of the relationship between intragroup conflict and outcomes (e.g., Garcia-Prieto et al., 2003 ; Randel, 2002 ) may also represent another way to better understand the effects of diversity on conflict and group outcomes. Faultlines may become activated and instigate conflict only when identity salience relating to the faultlines is high—and identity salience may vary between members within the team, leading to individual differences in perceptual faultline activation and conflict perceptions and behaviors. We therefore propose that it is the workgroup members’ perceptions that matter and that inform ultimate behaviors and group outcomes.

This chapter reviewed past research on diversity and disagreement in groups and proposed new frameworks to resolve the inconsistencies in past work and move the area forward. Three complex issues needing future research in the study of diversity and conflict in groups were presented, with special attention to how diversity may promote not only conflict but also asymmetric experiences of conflict in teams by diverse members. The areas for future research were the role of different conceptualizations and operationalizations of diversity in predicting the emergence and asymmetric experience of conflict in teams; the impact of new and understudied forms of diversity, such as lifestyle diversity or power diversity; and the role of the perception of diversity in activating the relationship between diversity and disagreement in teams. By examining these areas, we hope that research will continue to advance our understanding of diverse teams and how they interact, as well as providing suggestions for group leaders, members, and managers.

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How and Where Diversity Drives Financial Performance

• Rocio Lorenzo
• Martin Reeves

According to a survey of 1,700 companies in eight countries.

Does diversity really drive performance? To assess this claim, the Boston Consulting Group surveyed more than 1,700 companies across eight countries to examine the relationship between managerial diversity, the presence of enabling conditions, and innovation outcomes. They examined the correlation of multiple aspects of diversity — gender, age, national origin, career path, industry background, and education — both individually and collectively. They found that companies with above-average total diversity had both 19% higher innovation revenues and 9% higher EBIT margins, on average. The presence of enabling conditions for diversity — such as fair employment practices, participative leadership, top management support, and open communications — is worth up to 12.9% in innovation revenue. These relationships between innovation and diversity were strong in all geographies, though the precise patterns of diversity and performance varied across cultures. There are, therefore, multiple paths to harness diversity. A broad-based approach that values multiple aspects of diversity produces the best results.

Diversity is both an issue of fairness and, some say, a driver of innovation and performance. To assess the latter claim, we undertook a large, cross-country study into the relationship between multiple aspects of managerial diversity, the presence of enabling conditions such as leadership support for diversity, and innovation outcomes.

• RL Rocio Lorenzo is a partner in The Boston Consulting Group’s Munich office and can be reached at [email protected] .
• Martin Reeves is the chairman of Boston Consulting Group’s BCG Henderson Institute in San Francisco and a coauthor of The Imagination Machine (Harvard Business Review Press, 2021).

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