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Diversity and inclusion


WHY DIVERSE TEAMS ARE SMARTER

Research shows they’re more successful in three important ways.
by
 * David Rock
   and
 * Heidi Grant

by
 * David Rock
   and
 * Heidi Grant

November 04, 2016
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Striving to increase workplace diversity is not an empty slogan — it is a good
business decision. A 2015 McKinsey report on 366 public companies found that
those in the top quartile for ethnic and racial diversity in management were 35%
more likely to have financial returns above their industry mean, and those in
the top quartile for gender diversity were 15% more likely to have returns above
the industry mean.

In a global analysis of 2,400 companies conducted by Credit Suisse,
organizations with at least one female board member yielded higher return on
equity and higher net income growth than those that did not have any women on
the board.

In recent years a body of research has revealed another, more nuanced benefit of
workplace diversity: nonhomogenous teams are simply smarter. Working with people
who are different from you may challenge your brain to overcome its stale ways
of thinking and sharpen its performance. Let’s dig into why diverse teams are
smarter.


THEY FOCUS MORE ON FACTS

People from diverse backgrounds might actually alter the behavior of a group’s
social majority in ways that lead to improved and more accurate group thinking.
In a study published in the Journal of Personality and Social Psychology,
scientists assigned 200 people to six-person mock jury panels whose members were
either all white or included four white and two black participants. The people
were shown a video of a trial of a black defendant and white victims. They then
had to decide whether the defendant was guilty.

It turned out that the diverse panels raised more facts related to the case than
homogenous panels and made fewer factual errors while discussing available
evidence. If errors did occur, they were more likely to be corrected during
deliberation. One possible reason for this difference was that white jurors on
diverse panels recalled evidence more accurately.

Other studies have yielded similar results. In a series of experiments conducted
in Texas and Singapore, scientists put financially literate people in simulated
markets and asked them to price stocks. The participants were placed in either
ethnically diverse or homogenous teams. The researchers found that individuals
who were part of the diverse teams were 58% more likely to price stocks
correctly, whereas those in homogenous groups were more prone to pricing errors,
according to the study, published in the journal PNAS.

Diverse teams are more likely to constantly reexamine facts and remain
objective. They may also encourage greater scrutiny of each member’s actions,
keeping their joint cognitive resources sharp and vigilant. By breaking up
workplace homogeneity, you can allow your employees to become more aware of
their own potential biases — entrenched ways of thinking that can otherwise
blind them to key information and even lead them to make errors in
decision-making processes.


THEY PROCESS THOSE FACTS MORE CAREFULLY

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Greater diversity may also change the way that entire teams digest information
needed to make the best decisions. In a study published in the Personality and
Social Psychology Bulletin, Katherine Phillips of Northwestern University and
her team divided sorority or fraternity members into four-member groups, each of
which had to read interviews conducted by a detective investigating a murder.
Three people in every group, referred to as “oldtimers” in the study, came from
the same sorority or fraternity, whereas the fourth, the so-called “newcomer,”
was either a member of the same sorority or fraternity or a different one. The
three oldtimers in each group gathered to decide who was the most likely murder
suspect. Five minutes into their discussion, the newcomer joined the
deliberation and expressed their opinion as to who the suspect was.

It turned out that although groups with out-group newcomers felt less confident
about the accuracy of their joint decisions, they were more likely to guess who
the correct suspect was than those with newcomers who belonged to the same
group.

The scientists think that diverse teams may outperform homogenous ones in
decision making because they process information more carefully. Remember:
Considering the perspective of an outsider may seem counterintuitive, but the
payoff can be huge.


THEY’RE ALSO MORE INNOVATIVE

To stay competitive, businesses should always continue to innovate. One of the
best ways to boost their capacity to transform themselves and their products may
involve hiring more women and culturally diverse team members, research
suggests. In a study published in Innovation: Management, Policy & Practice, the
authors analyzed levels of gender diversity in research and development teams
from 4,277 companies in Spain. Using statistical models, they found that
companies with more women were more likely to introduce radical new innovations
into the market over a two-year period.

In another study, published in Economic Geography, the authors concluded that
increased cultural diversity is a boon to innovativeness. They pooled data on
7,615 firms that participated in the London Annual Business Survey, a
questionnaire conducted with the UK capital’s executives that asks a number of
questions about their companies’ performance. The results revealed that
businesses run by culturally diverse leadership teams were more likely to
develop new products than those with homogenous leadership.

Though you may feel more at ease working with people who share your background,
don’t be fooled by your comfort. Hiring individuals who do not look, talk, or
think like you can allow you to dodge the costly pitfalls of conformity, which
discourages innovative thinking.

In a nutshell, enriching your employee pool with representatives of different
genders, races, and nationalities is key for boosting your company’s joint
intellectual potential. Creating a more diverse workplace will help to keep your
team members’ biases in check and make them question their assumptions. At the
same time, we need to make sure the organization has inclusive practices so that
everyone feels they can be heard. All of this can make your teams smarter and,
ultimately, make your organization more successful, whatever your goals.

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How to build a better, more just workplace.
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Read more on Diversity and inclusion or related topics Collaboration and teams
and Innovation
THIS ARTICLE APPEARS IN
Must Reads on Leading Teams
01
Why Diverse Teams Are Smarter
 * David Rock
 * Heidi Grant

Research shows they’re more successful in three important ways.


READING LISTS ARE A SUBSCRIBER-ONLY BENEFIT.





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 * DR
   David Rock is cofounder of the Neuroleadership Institute and author of Your
   Brain at Work.
 * Heidi Grant is a social psychologist who researches, writes, and speaks about
   the science of motivation. Her most recent book is Reinforcements: How to Get
   People to Help You. She’s also the author of Nine Things Successful People Do
   Differently and No One Understands You and What to Do About It.

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New!
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Diversity, Inclusion, and Belonging Course
Accelerate your career with Harvard ManageMentor®. HBR Learning’s online
leadership training helps you hone your skills with courses like Diversity,
Inclusion, and Belonging. Earn badges to share on LinkedIn and your resume.
Access more than 40 courses trusted by Fortune 500 companies.
How to build a better, more just workplace.
Start Course
Learn More & See All Courses

Read more on Diversity and inclusion or related topics Collaboration and teams
and Innovation



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