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Consider a product development team at BMW, the so-called “innovation council” which includes one purchasing manager, one software engineer, one industrial engineer, one executive vice president of marketing, and one production manager. Not only does this group have diverse and complementary expertise, but it is also likely diverse in values and beliefs. Some group members may believe passionately in the merits of revolutionary leading-edge technologies to create new sports cars like the BMW i8, while others may strongly believe in maintaining the status quo and incrementally improving the existing BMW Series. Members of this team also have good relationships with diverse organizational groups, providing them with additional resources. For instance, the software engineer has lunch regularly with other engineers, and the production manager meets weekly with the manufacturing department to coordinate workflow.

In a group like this, diversity can be beneficial to the team because it provides a valuable source of human and social capital because of the variety of information and access to external networks. However, diversity does not always lead to good things. Sometimes it can invite divisions within the group that are detrimental to team functioning, such as power and status differentials or by expertise, like all the engineers on one side and the managers on the other. To better understand and manage a diverse team like this, my colleague Maria Kakarika from Neoma Business School and I have reviewed the last two decades of diversity research and developed a framework that helps managers think about both the opportunities and challenges of diversity. We categorize diversity into four types: variety of information, variety of access, differences in values and differences in status.

  1. Variety of Information

Different members bring their unique knowledge and information to a team. This is particularly important in organizations because it increases the cognitive resources available to the team and enhances problem solving and creativity. For example, management teams are usually comprised of people from different expertise and educational background and this diversity can develop a consistent strategy for the whole organization. In the end, the diversity that comes with a variety of information is a source of competitive advantage for the organization.

  1. Variety of Access

Teams do not operate in an organizational vacuum, but rather they are part of the organizational systems Diversity enables access to the various internal and external networks in which each member of the management team, for example, is an ambassador in front of other organizational members. For example, project teams like the product of development teams of BMW tend to be composed of members representing different functional areas within the organization. Their connections with members of other teams build the social capital that is crucial for completing the task successfully. These diverse teams are better equipped to interpret and enact the external environment.

  1. Differences in Values

Diversity not only brings unique expertise and social capital but also different people may have different values, beliefs or attitudes. As people represent broader social groups such as gender, race or even functional expertise, these social identities can invite emotional conflict and intergroup biases that can disrupt team cohesion and performance. For example, the same project team may focus on their different values rather than their expertise. In this case, their functional area may become salient among team members to position themselves against others. They may create subgroups of engineers versus managers. These divisions within the team inhibit collaboration and therefore lower performance.

  1. Differences in Status

Lastly, diversity is also associated with status differentials. Organizational hierarchies inevitable give rise to disparities that can result in negative outcomes when not managed properly. This is particularly true in performing teams like aircrews, surgical teams, military units, and musicians. In teams like these, power tends to pool around one person (e.g. the pilot, the surgeon, the captain, or the conductor). Such status differentials may impair the flow of communication. For example, if a plane has technical problems that the flight attendants have noticed, but flight attendants consider that their assessment is not valid (self-censorship), or their concerns are actually disregarded by the pilots, the benefits of diversity cannot materialize because of status differences.

So, what can leaders do?

Simply focusing on diversity processes cannot alone help us determine why some diverse teams translate their differences into positive work group outcomes while others do not. The interplay among the positive and negative processes of diversity depends on leadership. Leaders are the catalysts that regulate diversity experiences.

Leaders can capitalize on the number and variety of perspectives available for problem solving and the external ties that a diverse set of individuals brings to the group. At the same time, leaders should minimize status-related conflicts and in-group/out-group dynamics. Here are four ways a leader of a diverse team can materialize the full potential of the group´s human and social capital:

  1. Expertise-based role assignment

Assigning roles on the basis of group members’ skills rather than stereotypes will strengthen the positive effects of diversity as variety of information because the knowledge pool will be better utilized. You need to conduct a careful fit analysis of the person and the job. Make sure that you have an exhaustive list of the requirements of the task as well as comprehensive profile of each member of the team.

  1. Common goals

Develop common goals and connected interests among group members. The realistic group conflict paradigm suggests that people can be different and still work together as long as they perceive that their “interests” are positively linked. Make sure that you set super-ordinate goals that bring the group together and avoid individual-based and competitive objectives within the team.

  1. Collective team identification

Symbolic management that makes people identify with organizational and work teams will decrease the likelihood of in-group/out-group categorizations based on social categories (such as functional expertise, sex, race, and age, etc.) You can provide a name for the team, organize social activities that cross social categories, and create a climate of inclusion.

  1. External communication

Increase the breadth and content of external networks. The benefits of the external ties of diverse teams is strongly realized when leaders manage across group boundaries, encourage team members to be informal leaders and ambassadors for the team, and encourage them to actively use their external networks to “sell” the team to higher-ups, develop partnerships, and gain political support. Using members’ external ties can build commitment to team products and decisions, and increase the group’s own credibility.

In conclusion, diversity is a “mixed blessing” because it has the potential for exceptional human and social capital to improve group productivity, problem-solving and innovation; however, this potential may not be realized when the group is ill with hot politics and divisions.

Margarita Mayo

I´m Margarita Mayo. I´ve been a Professor of Leadership and Psychology at IE Business School since 2000. Prior to that I was a Fulbright scholar at Harvard University and professor at Ivey Business School. I feel passionate about scientific dissemination, and I have more than 20 years of international experience teaching courses on soft skills, giving keynote conferences and coaching executives on leadership development and change management. Always eager to help develop the next generation of leaders.

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