The Project

When Workplace Diversity Enhances Performance, Innovation and Well-Being

Harnessing demographic differences in organizations: What moderates the effects of workplace diversity?
Y. R. F. Guillaume, J. F. Dawson, L. Otaye-Ebede, S. A. Woods, & M. A. West.
Journal of Organizational Behavior (2015)


The business case for workplace diversity is generally based on the idea that it improves organisational innovation, improves decision making, and widens the talent pool as well as the customer base. Whilst these outcomes are certainly possible in a diverse workplace, there are also environments where diversity can lead to negative effects; for example, lower employee morale, higher conflict or poorer job performance. However, different situations are likely to lead to different implications of workplace diversity – there is no ‘one size fits all’. As organisations and managers are increasingly faced with the challenge of managing diversity in a way which achieves desirable outcomes and avoids detrimental ones, it is useful to understand what effect diversity is likely to have across varying situations. Currently there are no clear guidelines on how different circumstances and situations change these relationships. In this article, the researchers set out to try to provide some clarity and examine which conditions give rise to both positive and negative outcomes by reviewing the existing research.

Why does diversity have different outcomes?

The researchers used a theory to frame the effects of diversity, called ‘The Categorization-Elaboration Model’. This was chosen as its predictions have been supported by comprehensive research and can incorporate a number of perspectives. Essentially this theory suggests that diversity can lead to negative effects as a result of people forming in-groups and out-groups based on how similar or different from oneself something is, and that people tend to be biased towards their own in-group. It is this bias which gives rise to the negative effects described before such as lower morale or an increase in conflict. The theory also states that diversity leads to positive outcomes by improving ‘information-elaboration’ which is a term used to describe the exchange and integration of information and perspectives. The increase in information exchange and formulation leads to the positive outcomes – e.g. improvements in decision making and (creative) performance. 

In addition to this, the theory says that differences in the work situation have an effect on how diversity will influence the workplace. This is done by providing environments which can enhance people’s perceptions of differences, enhance or inhibit in-group bias, and enhance or inhibit ‘information-elaboration’. 

The effects of diversity on outcomes are contingent on: 


The research on how strategy influences the effects of diversity is organised around strategy for growth, stability, and customer-orientation as well as environments which are characterised by change, instability, uncertainty, complexity, and customer diversity. Here, the researchers found that growth-oriented as well as diversity management strategies positively influence the effect diversity has on performance outcomes, while downsizing often leads to a decrease in performance as in-group biases are triggered as a result of the threat of losing one’s job or resources – resulting in lower social integration and the possibility of greater conflict. They also say that improvements in information processing and decision making as a result of diversity can help when the organisation faces environments characterised by change, uncertainty, instability and complexity but may only be able to do so when growth-oriented or diversity management strategies are in place. Additionally the researchers state that customer diversity may lead to positive performance outcomes when the organisation has a customer-oriented strategy which encourages people to see value in diversity. However, they note that a great deal of research is needed to examine the relationship between strategy and diversity.

Unit design

Unit characteristics which include (but not limited to) demographics, size, task complexity, team type, autonomy, group member tenure, and team longevity are also areas that can have effects on diversity and outcomes. Team composition is one way in which in-group bias can be prevented and social integration can be encouraged. Teams should be composed in ways that multiple diversity attributes cross-cut rather than align, e.g. a team of black and white doctor and a black and white nurse is preferable to a team with two white doctors and two black nurses. In teams, the type of task the team performs is also important. Any type of demographic diversity can improve team innovation so long as that diversity is relevant to the task. Additionally, there is some (limited) evidence that demographic diversity may help to enhance creativity which is interesting taken with the previous evidence that demographic diversity can benefit organisations which operate in growth-oriented strategic environments. 

It is also useful to consider that positive effects of diversity may only be apparent on innovation tasks or knowledge-based tasks when people are able and motivated to accomplish them. Dissimilar people may need more time to communicate and exchange ideas and information, particularly in order to combine their different knowledge, skills, and abilities (KSA). The greater the dissimilarity the harder it may be to coordinate their KSAs and self-regulate their behaviour. When positive contact occurs in diverse work-groups, there is some evidence to suggest that this only happens when there is equal sub-group status, cooperative independence, and/or regulations or customs that promote a positive view of diversity. Even with these in place, positive effects take time to appear. Interestingly, autonomy may aggravate negative diversity effects rather than alleviate but clear roles, shared objectives, and decision support systems may help to counter these negative effects. What seems important is to maintain a positive group identity, as well as to reduce uncertainty and provide clear roles. 

HR management practices

Here, diversity training for teams can enhance performance on creativity tasks. However, there were no clear messages about how HR can help or hinder the effects of diversity on social integration, well-being, and performance. This is highlighted as an area where more research is needed. There was some evidence for specific bundles of HR practices (staffing, appraisal, rewards, and promotions) which must be both synergistic and mutually reinforcing as well as being aligned with the organisation’s strategy in order to enhance performance, innovation, and well-being.

The researchers think that HR practices that build on relationships and communication are likely to promote social integration and well-being. Also, unsurprisingly they suggest that to improve the quality of information-processing and decision-making HR practices that focus on building these will help. However, these practices are likely to be of the most benefit when they are developed in the context in which they are applied. Therefore, collective or team-based trainings might be more effective than individual trainings. Of course, HR practices are only effective if employees accept them. This is a clearly an area where more research is needed. 


Leadership behaviours, particularly those which inspire, support and facilitate participation can help to lessen the negative effects of diversity on social integration as well as encourage better performance on innovation and knowledge-related tasks. Leaders must be aware that they are also susceptible to in-group bias, and should take steps to avoid doing so as they may only form positive relationships with in-group followers. Leader diversity beliefs, leader openness and leader empathy are all behaviours which may help to diminish this. Effective leadership for diversity is likely to have to create a ‘superordinate’ identity which promotes intergroup contact, and encourage a thorough consideration of all task-relevant resources to facilitate ‘information-elaboration’. By promoting diversity as a task-resource, leaders can encourage positive intergroup contact. It is important to understand the relationship between dissimilar leaders with their followers, and how this may affect diversity effectiveness. This is an area where more research is needed. 

Climate and culture

For climate and culture, the review found two things which consistently affected the effectiveness of diversity. The first was that shared perceptions of trust, justice, or psychological safety could promote positive intergroup contact and well-being. The second was that shared perceptions which promoted information sharing and integration could enhance information-elaboration and performance on complex tasks. There is a call to shift from looking at diversity climate to diversity mindsets which clarify diversity-related goals as well as how to achieve these goals. In general these goals are to reduce intergroup bias and increase information-elaboration (when the task requires it). The diversity mindsets may positively influence the effects of diversity when they are shared and accurate.

When considering norms and values which promote cooperativeness or collectivism, inconsistent results were found. This is possibly because simply encouraging these behaviours may supress differences in sub-groups and consequently hinder any attempts to resolve conflicts arising from these differences. However, politically correct norms which focus on clarifying interpersonal conduct between different sub-groups are shown to increase the positive effect of diversity on creativity task performance. Overall, it seems important to make sure all employees are able to have a positive and distinct social identity as well as clarifying interpersonal conduct norms.

Individual differences

Individual characteristics are important factors on the effects of diversity. Openness, need for cognition, learning goal orientation, and diversity beliefs can enhance social integration and positive intergroup contact, as well as improve performance by facilitating information-elaboration. This is particularly apparent for diverse teams with informational and decision making tasks. Other characteristics like extroversion and self-monitoring are able to prevent out-group (negative) bias and therefore prevent lower levels of social integration. Beyond this the researchers noted that this is again an area where much research is needed. It is likely that individual differences can play a big part in workplace diversity effectiveness, for example need for structure and tolerance of ambiguity may influence how people cope with uncertainty. 

Practical Takeaways

  • Diversity can have positive effects on performance, innovation and well-being when it is managed effectively. 
  • The benefits of diversity are more likely to accrue when diversity is relevant to achieving the outcome including complex tasks, customer satisfaction, and attracting a wider pool of talent. 
  • Strategy, HR practices, climate and culture, and leadership are key. When they facilitate positive relations between different demographic groups and advocate diversity as a resource positive outcomes are more likely to accrue. This is more likely to be the case when: 
    • Strategy emphasizes growth, customer orientation and that there is value in diversity
    • Where possible, tams should be composed in ways that multiple diversity attributes cross-cut rather than align, e.g. a team of black and white doctor and a black and white nurse is preferable to a team with two white doctors and two black nurses.
    • Evidence based diversity trainings are employed targeting teams as well as individuals
    • HR practices (such as recruitment, training, performance management, reward, and promotion) are aligned eliminating bias, promoting cooperation, and unlocking the potential of everyone in the workforce
    • There is an inclusive climate and culture where everyone feels valued and encouraged to contribute and promoting learning from each other. 
    • Leaders inspire, support and facilitate participation of everyone and encourage learning from each other. 
  • Individual differences are also important, diversity is more likely to lead to positive outcomes where the workforce that is open minded, motivated to learn, and holds the view that there is value in diversity.


Guillaume, Y. R., Dawson, J. F., Otaye‐Ebede, L., Woods, S. A., & West, M. A. (2017). Harnessing demographic differences in organizations: What moderates the effects of workplace diversity?
Journal of Organizational Behavior, 38, 276-303. [Open Access].

Further Reading

Van Dijk, H., Van Engen, M. L., & Van Knippenberg, D. (2012). Defying conventional wisdom: A meta-analytical examination of the differences between demographic and job-related diversity relationships with performance.
Organizational Behavior and Human Decision Processes, 119(1), 38-53.

Van Knippenberg, D., & Schippers, M. C. (2007). Work group diversity.
Annu. Rev. Psychol., 58, 515-541.

Van Knippenberg, D., De Dreu, C. K., & Homan, A. C. (2004). Work group diversity and group performance: an integrative model and research agenda.
Journal of applied psychology, 89(6), 1008-1022.

Van Knippenberg, D., van Ginkel, W. P., & Homan, A. C. (2013). Diversity mindsets and the performance of diverse teams.
Organizational Behavior and Human Decision Processes, 121(2), 183-193

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