How a Diverse Team Drives Better Decision-Making

Diversity matters when it comes to your company’s bottom line. Companies that prioritize ethnic, cultural, and gender diversity are seeing positive results—that outpace their less diverse peers. Do groups with diverse members make better decisions? According to research by Cloverpop, companies with diverse and inclusive teams “lead to better business decisions up to 87% of the time.” Diversity plays an active role in better inclusive decision making, not just from a team perspective, but from an overall organization standpoint. A focus and genuine commitment to workplace diversity additionally helps companies build loyal relationships with their employees, customers, and community.

Diversity isn’t one-size fits all—it comes in many forms and can be achieved in a variety of ways. Two significant ways diversity results in better decision making are a diverse executive team and cognitive diversity.

diverse team drives better decision-making. Do groups with diverse members make better decisions?

Diverse executive teams lead to better financial performance

Positive change in an organization always begins at the top. Promoting ethnically and gender diverse leadership teams create significant value in an organization. When companies address ethnic and cultural diversity at the executive level, employees know that the organization genuinely understands and values the customers and community that they serve.

Bringing a Different Perspective Microlesson

Gender diversity in executive or management positions increases profitability as well. In a 2018 Mckinsey report, “Companies in the top-quartile for gender diversity on their executive teams were 21% more likely to have above-average profitability than companies in the fourth quartile. For ethnic/cultural diversity, top-quartile companies were 33% more likely to outperform on profitability.”

Sodexo, a global hospitality service, wanted to achieve gender balance as the starting point for diversity. After internal research, the company realized that greater representation of women in management positions (between 40% and 60%) correlated with superior performance on measures such as customer satisfaction and employee engagement. Since then, the company has pledged to increase the number of senior female executives to 40% by 2025.

For companies that have overcome the challenge of retaining a diverse organization, they’re one step ahead to build a diverse executive team. Ensure the promotion of top talents while keeping diversity in mind will also attract new talent.

Cognitively diverse teams accelerate decision making

Cognitive diversity is defined as the inclusion of different styles of problem-solving and perspectives and how individuals think about and engage with new, complex situations, according to Harvard Business Review. Unlike ethnic or gender diversity, cognitive diversity is not predicted by factors such as gender, ethnicity, or age. It’s also not easily detectable from the outside. Therefore, it requires us to work harder to recognize these internal differences and surface them. For example, Harvard Business Review measured cognitive diversity with a strategy execution task among different teams in a recent research study. They found that groups of the same skillsets, but the difference in age and gender, failed in cognitive diversity. On the other hand, teams with the same gender, generation, and education, “demonstrate[d] a high degree of cognitive diversity and solve[d] the task at speed.”

In addition to better decision making, cognitive diversity accelerates the decision-making process. Fresh perspectives, new ways of thinking, and a variety of skillsets naturally help teams make decisions faster. Cognitively diverse teams bring in fresh perspectives from each other to department level or project level decisions. According to Cloverpop, “highly diverse teams were twice as more likely to both make better choices and also deliver results that met or exceeded expectations.”

Like any new approach, cognitive diversity has its challenges, but, if done right, it can bring positive change. Cognitively diverse teams reinforce collaboration, think outside of the box, and challenge each other to not fit into what everyone else is thinking or doing or how they’d approach a situation or make a decision. If your organization is continuing to hire the same “Ted” because he is good at his job, the effectiveness of the same “Ted” on the organization will subside over time. Individuals who are different from your original workforce will see things differently and bring fresh ideas based on their distinctive experiences and backgrounds. This isn’t to say you shouldn’t hire or promote people who are not good at their job just for the sake of diversity. Rather, it’s important to commit to building and growing team diversity.

Do groups with diverse members make better decisions?

Having a diverse team allows for a wide range in experiences and backgrounds and allows for a broader set of ideas. Each person comes with a different way of thinking that widens the scope of what a company is able to do. When making decisions, each person is able to contribute different approaches, ideas, and thoughts, all coming together to reach a more educated and thoughtful decision.

Gender, ethnic and cultural, age, and even cognitive diversity is all around us outside of our organizations. In addition to diversity and inclusion training, organizations must go beyond traditional approaches to truly make a difference in the workplace. It’s time to elevate the awareness of the importance of diversity as more than a feel-good initiative.

There are many other ways to make your workplace more diverse and inclusive. For more thoughts, diversity and inclusion, learn how you can use the most recent California gender identity regulation to make your workplace more inclusive.

diversityinclusionWorkplace Culture
Hassina Obaidy
Product Marketing Manager | Emtrain

Stay up to date with our blog posts!