In David Epstein's 2019 book, Range (which I reviewed here), he outlines a positive case in favour of diversity in teams. Epstein noted that bringing a variety of viewpoints to a problem enhances the chance of a creative and positive solution. However, there is a trade-off. Greater diversity increases the costs of agreeing on a decision. Different viewpoints create conflict, and increase the costs of communication between team members. Epstein doesn't outline that counter-argument at all, or that a balance must be drawn between the benefits of diverse viewpoints and costs of more challenging communication.
The research literature isn't much help either. Almost all of the research is based on observational studies that suffer from problems of establishing causality (as was the case with the two studies I discussed in my most recent posts, here and here). It is difficult to generate a randomised experiment that would allow researchers to attribute causality to the differences in diversity in teams. Difficult, but not impossible. In a recent article published in the Journal of Public Economics (ungated earlier version here, and a non-technical summary by Richard Holden of University of New South Wales was published in The Conversation back in April), Benjamin Marx (Sciences Po), Vincent Pons (Harvard), and Tavneet Suri (MIT) report on a randomised experiment they conducted in Kenya. As they explain:
The context of this study was a door-to-door canvassing campaign conducted in collaboration with the Independent Electoral and Boundaries Commission of Kenya (IEBC) in 2012. The canvassing experiment aimed to increase voter registration in Nairobi’s largest informal settlement, called Kibera...
Subsumed within this registration experiment, we designed a field experiment to study how diversity within teams and along the organizational hierarchy affects effort and performance. This involved three levels of randomization. First, we randomly allocated the canvassers to teams of two. Second, we randomly allocated each team to a supervisor responsible for monitoring them in the field. This created variation in vertical homogeneity, i.e., in the degree of heterogeneity between managers and the workers they supervised. Third, each team was randomly allocated a set of enumeration areas (EAs) to visit in a mandatory random order. This introduced variation in the degree of similarity between canvassers and the residents which staff members were expected to canvass.
This ingenious research design allows Marx et al. to capture three dimensions of diversity: (1) horizontal diversity (between team members); (2) vertical diversity (between teams and supervisors); and (3) external diversity (between teams and the residents they are canvassing). The randomisation was successful in generating horizontal and vertical diversity:
23% of the canvassing pairs (7 teams out of 30) were ethnically homogeneous on the horizontal dimension. The ethnicity of the manager matches that of one of the team members in 23% of cases, and there is no instance where the ethnicity of the manager matches that of the two team members.
They then compare horizontally diverse teams with horizontally homogeneous teams in terms of the number of completed visits conducted by the team, and the duration of visits. They also compare those outcomes for teams that are vertically homogeneous (where the supervisor shares an ethnicity with one of the team members) and teams that are vertically diverse. Marx et al. find that:
...ethnically homogeneous teams on the horizontal dimension are approximately 8 percentage points more likely to complete a canvassing visit - about a 20% effect size. Such teams also conduct visits that are 0.8 to 1.3 min longer on average... Overall, a team conducts more and longer visits if it is composed of two co-ethnic canvassers...
...we find some evidence that the effects of vertical homogeneity are opposite in sign to those of horizontal homogeneity. If a manager and any one team member belong to the same ethnicity, the probability that the canvassing visit is completed decreases by about 3 percentage points, but this estimate is not statistically significant... The duration of visits decreases by 1.4 min...
In contrast to horizontal and vertical diversity, there are no statistically significant effects of external diversity. The results also contrast with gender diversity, where:
The results we find are much more nuanced than those we find for horizontal and vertical ethnic homogeneity. The effect of gender horizontal homogeneity is positive in all specifications, but is relatively small in magnitude and significant in only three out of eight specifications. We also show that gender vertical homogeneity does not significantly affect either measure of performance.
What could be driving the ethnic diversity results? Looking at time use data, as well as data from a staff survey conducted after the experiment, Marx et al. conclude that:
Overall, we interpret these results as evidence that the horizontal homogeneity acted as a monitoring and disciplining device, and improved work organization within the team, which facilitated learning and possibly led to increased socialization after the experiment. Meanwhile, vertical homogeneity led to less stringent norms and discipline and hence, lower effort and performance.
Marx et al. conclude that:
Our findings suggest much of the trade-off between diversity and homogeneity in organizations may come from the different effects diversity has along different dimensions of organizational structure. On the one hand, diversity may reduce efficiency within teams of workers, by creating communication costs or other frictions, leading to a worse division of tasks and lower performance. On the other hand, diversity along the organization’s hierarchy has the opposite effect in our context, since it improves both effort and performance.
Overall, in this experiment horizontally homogeneous teams were good, but in the vertical dimension diversity was better than homogeneity. The gains from vertical diversity are intuitive though, as is the mechanism. You don't want supervisors giving some teams, with which they share characteristics, an easier ride.
The negative impact of horizontal ethnic diversity suggests that the negative communication effects of diversity dominate within teams in this context. However, it would be easy to over-generalise these results, especially because we generally see randomised experiments as a 'gold standard' for research in identifying causal effects. We should recognise that the teams in this experiment consisted of only two members. I would hesitate to extrapolate to larger teams. We shouldn't rush off and immediately reconstitute organisations into teams that are ethnically homogeneous. Benefiting from diverse viewpoints is likely to be more of a factor when the teams are larger. And the context was very specific. This wasn't the case of a team brought together to solve a problem, design a solution, etc.
The takeaway message from this paper is that diversity within organisations is a complex mix of horizontal and vertical diversity, and the effects across those two dimensions may differ in important ways. Organisations need to recognise that there is a balance to be achieved in operating with the optimal mix of diversity within and between teams.
[HT: Richard Holden on The Conversation, although I swear I had read about this research somewhere earlier]
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