Think You’ve Got a Diverse Team? Think Again

Appearances can be deceiving, including when it comes to how managers view diversity.

Just because we may think we employ individuals from a rich mix of backgrounds, doesn’t necessarily mean that we do.

The danger is that executives could suffer from a common misperception that new Stanford research refers to as the “spillover effect”. Here, someone sees a form of diversity in a group, such as different types of clothing, then mistakenly assumes the group is more diverse in other ways.

It’s not because the subject is naive or ignorant. It’s just a matter of our brains making shortcuts to avoid having to conduct tedious and time-consuming analysis.

“Managers need to be much more intentional: Is my team diverse? On what dimension? Is that the dimension I care about?”

To test their proposition, the researchers showed subjects three faces with different racial characteristics. Although the gender composition in the pictures was always two men and one woman, subjects shown more racially diverse groups mistakenly recollected more gender equality.

A separate experiment had subjects observing groups that were given different colored t-shits to wear while working on a Lego challenge. All the groups had two men and two women, but those with a greater assortment of t-shirt colors were perceived to have more gender diversity.

Plenty is said about the value of diversity to a company’s prospects. Many studies have at least shown a correlation. A Credit Suisse study released in November, for example, found that companies with more female senior managers had better stock-price returns.

Of course, correlation doesn’t equal causation, though McKinsey argued in a 2015 report that correlation at least indicates that there’s a clear link between diversity and success.

“Perhaps some of the problems of whether diversity is good or bad is because people are making false assumptions about how diverse their teams really are,” said Stanford professor Margaret Neal, who led the new research.

“Managers need to be much more intentional: Is my team diverse? On what dimension? Is that the dimension I care about?” she said.

Ross Kelly
Ross Kelly is a London-based business journalist. He has been a staff correspondent or editor at The Wall Street Journal, Yahoo Finance and the Australian Associated Press.