Are Organizations Measuring Diversity the Right Way?

Vital differences in hidden characteristics are downplayed, but they matter.

Posted Apr 20, 2020

“The next time some academics tell you how important diversity is, ask how many Republicans there are in their sociology department.” – Thomas Sowell.

Imagine you are the customer of a large, well-known technology company. A group of this company’s senior executives is meeting to debate and decide how to set and enforce privacy policies for their customers. Consider these two groups of executives, then answer two questions about them.

  • Group 1: Everyone has an MBA degree from an elite business school. There are men and women, and the executives identify with different races and ethnicities (African American, Asian, Hispanic, and White). There are several Americans in the group; others are German, Malaysian, Egyptian and South African. All have upper-middle-class backgrounds, similar political views (moderate liberal), and none of them identifies as being religious.
  • Group 2: This group is all-male, all white, and all American. They all have graduate degrees, but in different fields, including chemical engineering, psychology, mathematics, and theology. They grew up in different social classes in rural, inner-city, and suburban America. They hold vastly different political views, ranging from staunchly conservative to progressive. Some are centrists. Religion-wise, some are devout, of different faiths, one is an atheist, and others are not religious.

Now consider these two questions: 

  1. Which of these two groups of managers is more diverse?
  2. Which group do you believe will consider more variables and perspectives, and make a more balanced and thoughtful decision about safeguarding their customers’ privacy?
Mario Gogh/ Unsplash/ Licensed under CC BY 2.0
Source: Mario Gogh/ Unsplash/ Licensed under CC BY 2.0

If you are like me, you had little trouble with the first question. The first group clearly appears to be more diverse because of its demographic range. I have to admit I found the second question far more difficult to answer. Will a group that includes women, minorities, and internationals make a more considered and thoughtful decision even when their backgrounds, education, and outlooks are homogeneous than a group that is demographically similar but has very different backgrounds, political and religious viewpoints, and values? Just how diverse should we consider this second group to be vis-à-vis the first one? And which differences really matter when it comes to managers making decisions about their customers' welfare?

How organizations define diversity

Virtually every organization today cares about its workforce’s diversity for obvious and mostly the right reasons. Other considerations aside, providing opportunities to marginalized groups through hiring and employee retention policies to level the playing field is the moral thing to do. To give one example, Google describes its position on diversity this way:

“Google is committed to creating a diverse and inclusive workforce. Our employees thrive when we get this right. We aim to create a workplace that celebrates the diversity of our employees, customers, and users. We endeavor to build products that work for everyone by including perspectives from backgrounds that vary by race, ethnicity, social background, religion, gender, age, disability, sexual orientation, veteran status, and national origin.”

Most organizations today adopt a variant of this perspective. In practical terms, however, some variables listed in Google’s manifesto, such as gender, ethnicity, and race, tend to receive far more attention. (see video below). These variables are what organizational psychologists call as observable or surface-level diversity variables because they are easier to ascertain than, say, a person’s sexual orientation, religiosity or political orientation.

The link between demographic diversity and work performance

While organizations often tout the performance benefits of having a diverse workforce, the reality is more nuanced. Here’s how management scholars Frances Milliken and Luis Martins describe their findings in a well-cited 1996 review paper:

“Diversity thus appears to be a double-edged sword, increasing the opportunity for creativity as well as the likelihood that group members will be dissatisfied and fail to identify with the group.”

The research conducted over the past quarter-century since then essentially supports this assertion. While demographically diverse teams and workgroups tend to come up with creative ideas, they do not necessarily perform better. A meta-analysis concluded that “bio-demographic diversity was not significantly related to team performance. Similarly, no discernible effect of team diversity was found on social integration.”

Even more telling is the fact that psychological variables like political and religious values, and social class, tend to be excluded by organizational psychologists when defining a work team’s diversity or considering its performance. Findings from industry surveys suggest the opposite: many companies actively discourage employee differences in variables such as political and religious viewpoints and are intolerant of employees who vary from the majority on these factors.

This begs the question: Are organizations just paying lip service to diversity, defining it too narrowly, and bypassing the really difficult aspects of workplace diversity that have the potential to affect work performance? Instead of building corporate environments where anything to do with politics or religion is taboo, and diversity is defined only based on surface-level characteristics like skin color and gender, understanding where employees stand on their core values of religion, politics, and even money management seems to be a missing piece. Encouraging diversity in these perspectives within work-teams will, at the least, create a more inclusive environment in the real sense of the concept.

Several years ago, one of my ex-MBA-students who worked in the corporate head office of a large tobacco company told me this story. If a young manager wanted to be perceived as loyal and capable in this company and wished to get ahead, they had to do one thing without question: smoke the company’s brand of cigarettes at work and make sure their coworkers and supervisors saw them smoking frequently. It didn’t matter what gender or race you identified with; as long as you puffed away enthusiastically and your office was foggy and reeked of cigarette smoke, you were part of the in-group.  

On the other hand, if you didn’t smoke frequently enough for whatever reason, your work performance didn’t matter. You wouldn’t last very long in the company. On paper, this tobacco company’s track record on diversity and inclusion issues was very strong. It had received many awards for hiring and promoting women and underrepresented minorities (all smokers no doubt) and paying everyone equitably. But was it really diverse and inclusive?