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MIT: Diversity Pays, Even if Unpopular

Friday, October 17, 2014

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Like it or not—and some workers do not—a workplace with gender equality will benefit the organization most in the long run, a new MIT study concludes.

Individual employees may favor more the comfort of homogenous settings, preferring the "idea" of diversity over "actual" diversity, the researchers say.

But homogeneity is not healthy for the bottom line, according to “Diversity, Social Goods Provision, and Performance in the Firm,” recently published in the Journal of Economics and Management Strategy.

©iStock / skynesher

Diversity among employees elicits more skills and perspectives that yield better performance.

Why? Well, the study notes, would you want a baseball team of all catchers?

'Social Capital' and Performance

“Having a more diverse set of employees means you have a more diverse set of skills,” which “could result in an office that functions better,” MIT economist and study co-author Sara Ellison said in a research announcement.

Still, despite the benefits, individual employees may prefer less diverse settings, she said.

The study focused on how much “social capital” offices build up in the form of cooperation, trust, and workplace enjoyment.

“The more homogeneous offices have higher levels of social capital,” said Ellison.

“But the interesting twist is that … higher levels of social capital are not important enough to cause those offices to perform better. The employees might be happier, they might be more comfortable, and these might be cooperative places, but they seem to perform less well.”

©iStock / tsz01

“A baseball team entirely composed of catchers could have high esprit de corps,” with everyone able to share experiences and tips, says economist Sara Ellison. “But it would not perform very well on the field.”

They researchers analyzed eight years of revenue data and survey results from a professional-services firm with more than 60 offices in the U.S. and abroad. The data included some all-male and all-female offices as well as mixed-gender offices, the researchers note.

Bottom-Line Boost

The researchers found that shifting from an all-male or all-female office to one split evenly along gender lines could increase revenue by roughly 41 percent.

In addition, greater social diversity invites a greater spread of experience, which could add to a work team's collective knowledge and increase its effectiveness, the researchers found.

Perception v Reality

The self-perception of diversity proved “sufficient to produce satisfaction among employees,” according to the study.

But the good feelings did nothing for the bottom line.

“In offices where people thought the firm was accepting of diversity, they were happier and more cooperative,” Ellison says.

“But that didn’t translate into any effect on office performance. People may like the idea of a diverse workplace more than they like actual diversity in the workplace.”

The study was funded in part by the National Science Foundation and co-authored by Wallace P. Mullin, an economist at George Washington University.


Tagged categories: Business conditions; Business matters; North America; Personnel; Program/Project Management; Research; Workers

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