A Review of
Why Diverse Teams are Smarter
Diversity as a Tool in Enhancing Profitability, Efficiency, and Quality of Decision-Making
Greater diversity in an institution’s workforce can improve profitability, efficiency, and quality of decision-making.
Until recently, workplace diversity was primarily perceived as a tool for enhancing corporate profitability. It was understood that private corporations that excelled in enhancing diversity based on race, ethnicity, and gender generally had more significant financial outcomes, particularly in terms of net income growth and return on economic equity. Yet, recent research has explored the topic further and found that diversity not only improves an institution’s financial performance but also enhances innovation and decision-making within employee groups.
Methods and Findings
The authors indicate groups that are inclusive of individuals with diverse backgrounds generally have improved accuracy in their decision-making process. This finding builds on previous studies, which found diverse groups focus more closely on facts and are less likely to make errors when discussing them. Furthermore, diverse groups are unique in that they are more likely than homogenous groups to remain objective and challenge each other’s approaches to problem-solving. These benefits of diversity ultimately lead to improved decisions. Such groups are more likely to process information closely and arrive at conclusions that are generally more effective than homogenous peer groups.
Beyond these benefits, diverse groups are also more effective in promoting innovation in their respective organizations. Most private companies rely on their capacity to continuously evolve their products and processes in ways that meet the needs and demands of society. Competing in an increasingly globalized economy requires organizations to maintain a culturally diverse workplace that discourages conformity. In doing so, companies and other organizations can create diverse groups that introduce innovative products and services at a rate that often surpasses homogenous entities.
Enhancing the performance of organizations requires intentional efforts to promote greater diversity in their workforce. Inclusive groups are vital in improving the organization’s capacity to challenge existing norms and reject conformity. Thus, inclusivity must serve as a priority for all organizations that intend to remain competitive in an increasingly globalized economy. Failing to do so will only serve to their detriment.
These findings are provided by David Rock, the co-founder of the NeuroLeadership Institute, and Heidi Grant, the Chief Science Officer at the NeuroLeadership Institute.
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