Productivity through diversity

By Peter Walker for CNN

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(CNN) -- An increasing trend in business schools is the diversity of students they attract, something many MBA students see as a positive, giving them a chance to learn about a variety of work cultures.

But now a new study indicates there might be another benefit -- a diverse team, whether in the workplace or undertaking a business school problem-solving exercise, can actually be more effective than a homogenous group.

This is a pertinent issues for business schools given the era of ever-increasing globalization.

For example, a recently-released study by the Graduate Management Admission Council found that three-quarters of US MBA programs saw a rise in applications from abroad in 2006, with a figure of 62% for non-US schools.

Margaret A. Neale, professor of organization and dispute resolution at Stanford Graduate School of Business, examined 50 years of research about diversity in the workplace and uncovered some striking lessons.

Perhaps unsurprisingly, when a group with a wide range of expertise, education or personalities tackles a problem, this diversity helps them work better.

More visible diversity such as race, gender, or age, can have negative effects on a group -- but only initially. These demographic differences can actually help the group in the longer run, Neale argues.

"In fact, the worst kind of group for an organization that wants to be innovative and creative is one in which everyone is alike and gets along too well," she says.

When a group comprises people with clear differences, whether through age, gender or race, this "actually cues a team in that there's likely to be differences of opinion", Neale notes.

This can improve a team's ability to handle conflict as members expect it -- unlike in a more obviously homogenous group.

"The assumption is that people who look like us think like us, but that's usually just not the case," Neale says.

Mixing things up

Some group conflict can also make a team more innovative, she adds. "Of course, we're talking about intellectual conflict, debate, and controversy, not personality conflict," Neale explains. "A good manager wants to encourage the former but squash the latter."

Another finding indicates that managers, or business school professors, should change the composition of groups now and then to keep things fresh -- and also keep things diverse.

A study Neale conducted with a professor and student at Northwestern University found that when socially similar newcomers were introduced to an existing group, old team members reported high levels of subjective satisfaction with productivity. However, objective studies found these groups performed the worst on a group problem-solving task.

When the newcomers were different, the reverse was true -- old members expressed dissatisfaction but actual performance was better than that of the homogenous group.

"What feels good may not always reflect the performance of the team," Neale explains. "In fact, teams with a very stable membership deteriorate in performance over time because members become too similar in viewpoint to one another or get stuck in ruts."

Another perhaps surprising conclusion is that while a lot of diversity is good, the same cannot be said for a little.

In another study, three-person teams performed better when each person was a member of a different ethnic or racial group, as opposed to a two-versus-one mix.

However, there is one area where unanimity is vital -- the team's core values and goals.

"Conflicts and differences in this area will generally destroy a team," Neale says. "Managers simply must get team members to be in agreement about what the task is and the values that drive its pursuit."

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