Diversity has become a bit of a dirty word recently, but economic and management research suggests there are benefits to diversity in team settings. True diversity, which goes beyond race or gender, and includes diversity of skills, experience, abilities, and thought, may increase team performance. However, diversity may result in lower group cohesion and increased conflict. These conflicting benefits and costs of diversity mean that the overall relationship of diversity on team performance may be positive or negative.
In a recently published paper, I and Dinesh Hasija from the Hull College at Augusta University, along with colleagues at Penn State University and Syracuse University, find some evidence of a positive relationship.
Our context is the Indian Premier League (IPL) played each year in March/April. It’s been a while since I wrote about cricket in this column, and I know loyal readers have been clamoring for more! The IPL is the world’s richest cricket franchise league with annual revenues of over $7 billion. Players receive the highest per-game average salary of all professional sports leagues and attract players from all over the world, including the USA.
We measure IPL team diversity in several ways, including demographic, cultural, experience, and pay diversity.
We find a positive relationship between demographic diversity and team performance. The magnitude of the effect is large and can mean up to 2 more wins per season for a more diversified team. In a playoff situation, team performance is better for demographic and culturally diverse teams.
Our interpretation of these results is that physical attributes and appearances, along with unseen and unspoken differences, play a big role within the group dynamics of teams. It is not obvious that the results from a highly competitive, well-compensated context apply in other circumstances. However, true diversity in all teams should consider deep-level aspects of diversity, such as diversity of thought. You don’t want a team of “Yes men or women.”
