This project studied the relationships between race and gender diversity and business performance in four large firms: two information processing companies, a financial services firm, and a large retail company. The researchers were asked by the BOLD Initiative to conduct this research to test arguments regarding the business case for diversity.

Due in part to the difficulty in studying this issue, researchers were unable to confirm a direct link between diversity and a company's bottom line. However, while there is no reason to believe diversity will naturally translate into better or worse results, diversity is both a labor market imperative and a societal expectation and value. Therefore managers should focus on building the organizational culture, human resource practices, and managerial and group process skills needed to translate diversity into positive organizational, group, and individual results.

Key Findings

• There are few direct effects of diversity alone on performance-either positive or negative. The findings suggest that this is likely because context is crucial in determining the nature of diversity's impact on performance.
• To gain a true picture of the effects of diversity programs, organizations must do a better job of tracking and evaluating the impact of their strategies for managing a diverse workforce.
• Diverse teams performed better if they were part of a larger organizational unit that was itself diverse. In other words, diverse teams within diverse organizations performed better than diverse teams within homogeneous organizations.
• When HR practices support the creation of a workforce that has the skills needed to turn diversity into an advantage, diversity is more likely to lead to positive performance outcomes.

Based on these results, the authors suggest a new perspective on diversity:

Diversity is a reality in labor markets and customer markets today. To be successful in working with and gaining value from this diversity requires a sustained, systemic approach and long-term commitment. Success is facilitated by a perspective that considers diversity to be an opportunity for everyone in an organization to learn from each other how better to accomplish their work and an occasion that requires a supportive and cooperative organizational culture as well as group leadership and process skills that can facilitate effective group functioning. Organizations that invest their resources in taking advantage of the opportunities that diversity offers should outperform those that fail to make such investments.

Tips for managing diversity:

• Foster a culture that views diversity as a resource for learning, change, and renewal.

• Train for group process skills. Training programs must help managers to develop the leadership and group process skills needed to facilitate constructive conflict and effective communication.

• Adopt a more analytical approach. Despite the use of HRIS systems, basic HR data about individuals and groups is often difficult to link to business-level performance data. Better metrics are needed to monitor an organization's progress in managing diversity.

• Support experimentation and evaluation. Be open to exploring and learning about the effects of diversity in your own organization.

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