Demographic Faultlines: The Moderating Effects of Time & Collaboration On Team Task Performance

Can Workplace Diversity Problems Be Solved With Exposure?

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Evidence from organizational and business consulting psychology seem to indicate that demographic diversity adversely affects team task performance in the workplace. This piece begins by breaking down Michel and Hambrick’s seminal (1992 Academy of Management Journal) paper on differences in the demographic composition of top management teams, and then demonstrates how incipient levels of diversity-contingent task disintegration can be curtailed by working to change group members’ expectations about collaboration.

The “Horizontal” Corporation

John A. Byrne once surmised that the traditional hierarchical structure of corporate America would have to be upturned if modern organizations were to address the demands of an increasingly complex and interdependent global economy. The “wave of the future,” he said, is with the horizontal corporation, one where the requirements of both consumers and employees hold precedence over the concerns of even well-meaning departmental managers, where austere organizational boundaries are abandoned in the hope that diversity and collaboration might trounce the inevitable indolence of outgrown bureaucracy (Byrne, 1993).

That was the dream; but, with every new venture come obvious limitations, perhaps sooner than later.

Increasing acceptance of flatter organizational models over the past decade meant that for the first time, individuals from diametrically dissimilar backgrounds would be thrust together in the workplace and everywhere else. However, the upshot was not, as sanguinely prophesied, a largely positive affair. Ensuing literature in the fields of organizational and business consulting psychology would indicate that on the contrary, diversity in a team setting could at very best be described as ambiguous with respect to measures of performance in the workplace (Wiersema & Bantel, 1992); and, at the very most, this same relationship might hold only in the negative (Michel & Hambrick, 1992). Reductions in employee satisfaction, conflict, turnover, and absenteeism were all furthermore identified as bearing no positive relationship to the demographic diversity of an organization (O’Reilly et al., 1989).

This lack of effect, then, in contrast to preliminary expectations (Nemeth, 1986; Watson et al., 1993), indicates an important turning point in our understanding of group and organizational dynamics. Is intragroup conflict, as incessant it is, truly written to our shared fate? I would dare to disagree. “Nothing,” as Charlie Chaplin, in his most famous speech once declared, “is permanent in this wicked world, not even our troubles.”

A more recent study by Harrison et al. (2002), which focused on the demographic and psychological characteristics of approximately 500 business students, demonstrated that the accustomed negative implications of demographic diversity on team social integration tend to be moderated significantly by opportunities for collaboration, and hence, over time, their positive effects can be achieved (pp. 1033–1034). This is the ideal upon which the present essay aspires to build.

The Diversification Posture of Firms

Michel and Hambrick (1992) examined the relative preponderance of various demographic characteristics within top management teams in relation to the distribution of those firms’ functional business units. In their study, they hypothesized that firms with high levels of interdependence between executive function and daily business operations (vertically-integrated firms) would have consistently high average rates of tenure within its top management teams (pp. 17). Their conclusion rested on the idea that convergence of common values (homogeneity) due to long-term social integration should yield higher average levels of firm productivity in the case that top teams are expected to respond unanimously to complex market conditions (O’Reilly et al., 1989).

They discovered, however, that the reverse was actually true. Highly interdependent firms, in fact, exhibited a more expansive range of tenure variability than was initially expected (Michel & Hambrick, 1992, pp. 26). To this they attributed the role of “clan” culture, a sort of functional reproductive strategy that works to ensure the propagation of established belief systems into the indefinite future (Ouchi, 1980). A clan corporation can be achieved by staggering the introduction of new executives so that they might be nurtured in a manner that is categorically consistent with current leadership’s prevailing orientation (Michel & Hambrick, 1992, pp. 29–30).

As a direct consequence, then, top level teams tend to exhibit not only tenure heterogeneity, but extensive diversity in terms of their levels of functional expertise, or the general knowledge they possess regarding their firms’ core competencies. New executives, then, are plucked not only from different eras, but from tremendously different functional business units on the premise that its upper echelons should intimately reflect the composition of the organization as a whole.

In the sample analyzed, however, it appears that just such a system ultimately overreaches its intended ideal. Data therein suggest that a strong negative correlation obtains between the range of functional expertise (diversity) within top level management and their firms’ profitabilities (pp. 29). This may result from an inappropriate extension of managerial duties by executives where they are not needed (Rumelt, 1974, pp. 137).

Thus, an early interpretation suggests that diversity in the workplace, if only incidentally motivated, is essentially incompatible with the objective of a profit-maximizing firm. On the contrary, I would argue that because diversity here emerges from the very constraints imposed by the functional structure of the firm itself, as opposed to the demands of industry (pp. 32), it is not diversity per se, but the mechanism by which it is transmitted that undermines the growth and successful progression of firm through time. A firm in such a position, then, might benefit by attenuating the breadth of its top executives’ core functional expertise to a level consistent with long-term profit maximization. Therefore, it should become apparent to readers of this literature that to align oneself with the notion that the diversity posture of a firm is inversely related to workplace performance, as evidenced by a multiplicity of subsequent works (Smith et al., 1994; Earley and Mosakowski, 2000; Li & Hambrick, 2005), is to support the misconception that demographic diversity is an inherently bad thing.

Top Team Management

Whereupon first appearances diversity may seem to be a bad, pure homogeneity should by no means be interpreted as a good. In Michel and Hambrick’s (1992) study, firms whose functional business units were completely managerially unrelated tended to exhibit both higher tenure and functional homogeneity, as top level executives consisted mainly in short-lived and competitively-placed overseers specializing in finance and law (pp. 30, 32). In these firms, data indicate that profitability might actually benefit from an increase in the range of functional expertise of its top level management (pp. 29).

A showcase of extremes reveals that firms on either end of the spectrum stand to gain by moderating their diversification strategies, achievable perhaps by adopting a position in which a mixture of both horizontally and vertically-integrated management orientations cultivate teamwork more effectively and hence, lead to improvements in productivity overall. Interestingly, it is precisely these firms that show little to no dependence, in terms of profitability, on strategic variables, including the tenure and functional composition of top teams.

In addition, firms that were relatively more interdependent, and thus more diverse, were less vulnerable to these same functional attributes than were firms, which were relatively more homogeneous (pp. 29). Unfortunately, few studies have been conducted which explain the repercussions of collaboration on team social integration as a function of diversity-contingent performance. Although Harrison et. al (2002) explored the extensive, albeit variegated, relationship between perceived levels of surface and deep level diversity, team social integration, and work task performance, they did so only with students and for a relatively short period of time (“9–14 weeks”).

The experiment tracked 113 graduate and 449 undergraduate business students through to the completion of a group project assigned for between 10 and 75 percent of their grade. While they themselves caution the generalizability of their results due to those same parameters (pp. 1043), their study shows unequivocally, at least in the short term, that under conditions of elevated team reward contingency, or the extent to which a single team member’s actions translate to group outcomes, individuals are predisposed to dispense with demographic bias and consider, more acutely, the values, beliefs and attitudes of their team members (“deep level demographic characteristics”, pp. 1042).

Such a scenario parallels the case of the moderately heterogeneous, interdependent firms of Michel and Hambrick’s (1992) paper on diversification posture. It is within these firms that the tenure heterogeneity of top teams allows for sustained levels of collaboration between executives of seemingly incompatible functional backgrounds, while simultaneously avoiding the pitfalls of authoritarian over-extension.

Attitude and Expectation Ultimately Responsible for Team Outcomes

Despite all the downplay, diversity truly does constitute an important dynamic in the long-term realization of team social integration. Lau and Murnighan (1998) were the first to postulate the concept of demographic faultlines, which are the imagined dividing lines that can potentially segregate members of a group based on the alignment of their most salient demographic characteristics. Subsequent works have expounded upon these effects, but contemporary literature points markedly to a trend in regimenting the power of positive attitudes so that teams might prevail in the face of seemingly automatic and insurmountable bias.

Grow and Flache (2011) demonstrate that the strength of a demographic faultline can be influenced by the average value that a team assigns to the quality of its various members. In their (2011) study, they employ an agent-based computational model to determine the aggregate outcome of multiple interdependent individuals expressing different levels of attitude certainty simultaneously. At low levels of initial uncertainty, it is far less probable that members of a team might be influenced by those who stand in disagreement with a strong norm. By contrast, conditions in which initial levels of uncertainty are high prove positively related to the strengthening of demographic faultlines (pp. 216).

Harrison et. al (2002) contend that the potential negative effects of perceived surface-level diversity can, in fact, be moderated by opportunities for collaboration given time, and that in the process, attributes of much less salience, yet far more worth, such as the value placed on one’s personal beliefs or attitudes–qualities that surely all people share–become much more important in determining the performance of a diverse group.

Considering the impact of attitude certainty on Harrison et. al (2002), the students observed had simply to think to themselves that the very presence of their peers in a University classroom must at the very least signal something positive about their prior accomplishments, the current state of their beliefs and values, and the future trajectory of their aspirations (“high initial attitude certainty”); that despite their apparent differences, it is what they possess deep within that truly matters. Ultimately, it appears that the hypothesized negative implications of diverse work groups are made less severe by attenuating the degree to which its members are, at the outset, given an opportunity to doubt each others’ capabilities.

References

Byrne, D. (1993, December 20). The Horizontal Corporation. Business Week, pp. 76–81. Retrieved from http://www.businessweek.com/archives/1993/b335157.arc.htm

Earley, P. C., & Mosakowski, E. (2000). Creating Hybrid Team Cultures: An Empirical Test of Transnational Team Functioning. The Academy of Management Journal, 43, pp. 26–49. Retrieved from http://www.jstor.org/stable/1556384

Grow, A., & Flache, A. (2011). How Attitude Certainty Tempers the Effects of Faultlines in Demographically Diverse Teams. Computational and Mathematical Organization Theory, 17, pp. 196–224. Retrieved from http://link.springer.com/article/10.1007%2Fs10588-011-9087-5?LI=tru

Harrison, D. A., Price, K. H., Gavin, J. H., & Florey, A. T. (2002). Time, Teams, and Task Performance: Changing Effects of Surface- and Deep-Level Diversity on Group Functioning. The Academy of Management Journal, 45, pp. 1029–1045. Retrieved from http://www.jstor.org/stable/3069328″>http://www.jstor.org/stable/3069328

Lau, D. C. and J. K. Murnighan. (1998). Demographic Diversity and Faultlines: The Compositional Dynamics of Organizational Groups. The Academy of Management Review, 23, pp. 325–340. Retrieved from http://www.jstor.org/stable/259377

Li, J., & Hambrick, D. C. (2005). Factional Groups: A New Vantage on Demographic Faultlines, Conflict, and Disintegration in Work Teams. The Academy of Management Journal, 48(5), pp.794–813. Retrieved from http://www.jstor.org/stable/20159698

Michel, J. and D. Hambrick (1992). Diversification Posture and Top Management Team Characteristics, The Academy of Management Journal, 35(1), pp. 9–37. Retrieved from http://www.jstor.org/stable/256471

Nemeth, C. (1986). Differential Contributions of Majority and Minority Influence. Psychological Review, 93, pp. 23–32. Retrieved from http://scholar.berkeley.edu/nemeth/files/differential_contributions_of_majority_and_minority_influence.pdf

O’Reilly, C. A., Caldwell, D. F., & Barnett, W. P. (1989). Workgroup Demography, Social Integration, and Turnover. Administrative Science Quarterly, 34(1), pp. 21–37. Retrieved from http://faculty-gsb.stanford.edu/barnett/documents/WorkGroupDemography.pdf

Ouchi, W. G. (1980). Markets, Bureaucracies, and Clans. Administrative Science Quarterly, 25, pp. 129–141. Retrieved from http://www.sagepub.com/upm-data/41372_3.pdf

Rumelt, R. P. (1974). Strategy, Structure, and Economic Performance. Boston: Harvard University Press.

Smith, K. G., Smith, K. A., Olian, J. D., Sims, H. P., O’Bannon, D. P., & Scully, J. A. (1994). Top Management Team Demography and Process: The Role of Social Integration and Communication. Administrative Science Quarterly, 39, pp. 412–438. Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1505921

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Wiersema, M., & K. Bantel. (1992). Top Management Team Demography and Corporate Strategic Change. The Academy of Management Journal, 35, pp. 91–122. Retrieved from http://www.jstor.org/stable/256474