A recent analysis of the composition of top management teams by the Centre for Effective Organizations (part of the Marshall School of Business at the University of Southern California) has confirmed the obvious:
- Diverse management teams give organizations an edge, enhances their ability to manage globalization and strengthens financial performance.
- But without the right mix of incentives and the appropriate leadership style, diversity can hinder performance.
The study found that although most companies profit from having a diverse management team, others did not. The reason? Diverse teams are harder to manage and motivate.
“Heterogeneity decreases loyalty and increases the probability of conflict,” according to the findings.
No surprise there. As Geert Hofstede aptly points out: ” Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster.”
Not everyone is the same, and cultural differences need must be understood and navigated if the benefits of this mixture of diversity will be gained. It should not only be about “representation” of difference around the boardroom table; effective teams capitalize on the differences at the table to drive innovation.
The study found that the top diverse management teams have four things in common: they promote openness; focus on goals; have a fair compensation structure and emphasize training. Two guidelines in particular relate directly to diversity and inclusion within organizations.
Promote Openness: Diversity and inclusion must be openly discussed by team members. Too often it is the elephant in the room. People walk on egg shells and are afraid to “say the wrong thing.”
Training: Organizations that understand the benefits of diversity, must treat it like any other business process and aim for constant improvement. That means measuring the impact of diversity and inclusion programs. Among other things, this will include personal and organizational assessments to identify gaps and implementing learning and development programs to address those gaps.
Having diverse teams can reap rewards but getting there takes strategic thinking and implementation. The added benefit is that once the team is functioning well, results are more sustainable over time.