The Case for Group Heterogeneity

Introduction

The last two decades of international business have seen pervasive, ubiquitous and dramatic change. Organisational top management teams (TMTs) and boards have never been under so much pressure to drive growth within their respective firms. The pressure that unrelenting change can bring has ensured that two areas have emerged as particularly important for today’s organisational leaders – their ability to make quality decisions that support the growth and strategy of the firm, and their ability to support and drive innovation. However, it is in these very areas that TMTs and boards may be failing, and one of the reasons posited for this is their lack of diversity; especially from a gender perspective. Despite the fact that most westernised countries legalised equal opportunities years ago, female representation in TMTs and boards, and in particular, equitable gender diversity in top leadership teams, has not been achieved (Davidson & Burke, 2012). Instead, organisational leadership teams continue to be dominated by homogeneous ‘bastions of aging white males’ (Ramirez, 2003, p. 838). Homogenous groups pose a particular risk to organisations from a decision-making perspective. They face a much greater risk of experiencing faulty decision-making phenomena, such as groupthink, polarisation, and cascades (O’Connor, 2002). The primary cause of these phenomena within a group of individuals is cohesiveness, where a group of individuals are too cohesive or similar in their background, attitudes and values, and hence cannot bring important, different, or dissenting views (Hogg & Hains, 1998). Decision processes and outcomes under these phenomena are typically poor, but more alarmingly, can also be unethical or illegal (Janis, 1972). As such, the homogeneity of TMTs and boards may be affecting their ability to make the quality decisions necessary to ensure their organisation’s existence and growth.

In addition to flawed decision-making, homogeneous groups may also be limited in their ability to support, and drive, innovation (Danilda & Thorslund, 2011). In today’s change-centric environment, the ability of a firm to innovate is integral to their continued success (Gopalakrishnan, 2000; McLeod, Lobel, & Cox,1996). Evidence suggests, however, that heterogeneous groups far outperform homogenous groups in their ability to support and drive innovation (Chrobot-Mason & Aramovich, 2013; Rogelberg & Rummery, 1996). Heterogeneous groups enjoy their highest level of advantage at the ideas-generation stage of innovation, where more, and better quality ideas are generated within groups that are composed of diverse members, however, they also demonstrate advantages across the latter stages of innovation (Nathan & Lee, 2013). Therefore, a twofold benefit could arise from having more heterogeneous leadership teams within more organisations: they could ensure they protect themselves against faulty decision phenomena, ensuring better decisions, and they could also enhance their ability to drive and support innovation.