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In todays ever changing and competitive business environment every operating organization are always on their toes to solve multiple complex tasks. For example: ever increasing customer satisfaction, economic or political problems, how to become more efficient and effective and stay ahead of competition. Taking all these tasks and problems cannot be managed by individuals alone. Therefore many organizations today took advantage of using teams to solve these complex tasks. Teams are putted together because they have higher amount of knowledge and skill required to perform wide array of complex tasks, which would be beyond the capabilities of individual alone (Eduardo Salas, Nancy J. Cooke and Michael A. Rosen 2008).
In present day many organizations learned how to use team-based structures. Hence understanding what increases team performance is more and more important. Team can be defined as a group of people with a set of complementary skills, which are required to perform a task. Individuals in the team operate with a high degree of interdependence. They share authority and responsibility for self-management and are accountable for team overall performance. When a strong sense of individual commitment to the team and work towards common goals creates synergy, a team becomes more than just a random group of people, therefore showing performance which becomes greater than each individual performance of the team members added together.
A great amount of research has revealed important insights on team functioning over the past decades, but still much needs to be done (Mathieu, Maynard, Rapp, & Gilson, 2008). Even though we know quite a lot about individual motivation and performance, how these findings extrapolate to a team context remains largely unclear. Since every team is made up from different group of people with different backgrounds there is always a possibility that they will not be able to work together (Bushra Akbar Khan, Khadija 2011).
Diversity in workplace
Diversity can be defined as differences among the team members with respect to a common attribute (Harrison & Klein, 2007). Commonly, a distinction is made between not directly task-related differences such as gender, age, race and nationality on the one hand and on the other hand a more directly task-related differences as informational or cognitive diversity (for example, educational or functional background). It is important to keep in mind the distinction between the sources of diversity and the diversity itself. Without this distinction, stereotyping tends to occur. Essentially, stereotyping is assuming that group averages or tendencies are true for each and every member of that group.
Neither highly nor less strongly task-related diversity has been systematically linked to team performance. Therefore, researchers have set out to identify the conditions under which different types of diversity have mainly beneficial or detrimental effects.
Although definitions vary, diversity simply refers to human characteristics that make people different from one another. The sources of individual variation are complex, but they can generally be grouped into two categories: those over which people have little or no control and those over which they have some control.
Individual characteristics over which a person has little or no control include biologically determined characteristics such as race, sex, age, and certain physical attributes, as well as the family and society into which he or she is born. These factors exert a powerful influence on individual identity and directly affect how a person relates to others.
In the second category are characteristics that people can adopt, drop, or modify during their lives through conscious choice and deliberate efforts. These include work background, income, marital status, military experience, political beliefs, geographic location, and education.
Diversity and Team Performance
In recent years with growing globalisation workforce in companies is becoming more and more diverse, making it relevant to companies to understand how differences between team members relate to team performance. Indeed, team diversity is one of the main areas in team performance research at present day. Nonetheless the theme is very important and popular research has not produced valuable conclusions (van Knippenberg & Schippers, 2008). Findings are very different in their findings: some studies found positive effects of diversity on teams whereas other found negative results. Studies were conducted on demographic diversity as well as for diversity in individual differences variables.
Many managers and scholars agree that increasing diversity in the workplace brings positive influence on company's performance and leads to competitive advantage. However this link between diversity as performance enhancer is largely untested. With increasing globalization most large organization have embraced diversity to a certain degree. Although there is broadly assumed that diversity has positive effects it is largely untested. In other words does increased workforce diversity brings positive, negative or no effect at all. Therefore there is more and more research done in this field in recent years.
Some scholars claim that even though diversity has effect on team performance it has far greater effect in certain context (Bushra Akbar Khan 2011). He also states that relation oriented diversity in short term teams has influenced performance positively where as long term team showed negative influence and became more debilitating on team performance. However study, conducted by Susan Mohammed and Sucheta Nadkarni (2011), shows that one of the main factors of temporal or short term teams influencing team performance were leaders emerging in those teams rather than diversified team on its own.
Leadership is very important for the teams, but having a leader in the team is not enough. Leaders have to be able to reduce the problems of individual differences and exploit the possible benefits of team diversity. However, researches showed that leaders, who exhibit high levels of visionary behaviour and tend to categorize team members, negatively effects team communication and therefore team performance overall (Lindred L. Greer, Astrid C. Homan, Annebel H. B. De Hoogh and Deanne N. Den Hartog 2011).
In academic world there are two different approaches concerning team diversity: relation-oriented diversity (age, gender, race etc.) and task-oriented diversity (function, education, tenure etc.). Research conducted by Aparna Joshi and Hyuntak Roh (2009) show that relation-oriented diversity has weak, but significant negative effect on team performance with age diversity being biggest influencer, whereas task-oriented diversity has weak, but significant positive effect with functional background diversity showing highest relation to team performance. Interesting finding of this study was that of all task-oriented sub-background diversities education was the only one showing negative influence on team performance. However, Van Ginkel & van Knippenberg (2008) claim that teams with higher need for information educational diversity was more advantageous. This is supported by Eric Kearney, Diether Gebert, Sven C. Voelpel (2009) findings that performance in certain teams with high need for cognition related to both educational and age diversity positively. However same studies also showed that teams with low need for cognition had negative association with age and educational diversity. In addition Anne Nederveen Pieterse (2009) claims that teams are affected negatively by ethnic diversity than there is low learning approach and positively when teams needed to master the task.
In recent years there is more and more organizations who systematically increase their gender diversity. Would it be because cultural influence or in some countries legal necessity. Therefore there is on-going discussion about gender diversity in academic world about its influence on team performance.
Existing research conducted by Joshi Aparna and Hyuntak Roh (2009) shows that teams with high levels of gender diversity can have positive influence on team processes, while diversity effect on performance is fairly uncertain and is greatly dependant on context. In addition Woolley Anita W., Christopher F. Chabris, Alexander Pentland, Nada Hashmi, and Thomas W. Malone (2010) suggest that the group process and group collaboration is very much improved by women presence in the team. They also indicate that the measured collective team intelligence is highly related to proportion of women in the team. In addition they show that team with higher number women members also exhibited greater levels of equality, furthermore enabling the team members to be more responsive to each other and to make the best use of skills, knowledge and competencies as the members of the team. These findings concerning the relation between gender diversity and group process and team dynamics are also consistent with Carli (2010) and Jose Apesteguia, Ghazala Azmat and Nagore Iriberri (2009) past works examining the relation between gender and interpersonal communication in teams and their relation on team performance. However some studies showed negative effects on financial performance and stock value of the company after women were assigned to the board (Adams and Ferreira 2009).
Real life examples
Communication barriers may lead to serious problems in team performance and company plans to increase diversity. When Irish companies hires people from different cultural and ethnic backgrounds with English being second language, this may result in difficulties for managers and employees to communicate effectively with one another. This may lead to misunderstandings or increase time needed to explain certain tasks therefore this may result in decrease of performance and productivity. For example, when employee is given certain task from its manager, but does not fully comprehend the instructions, this may lead to two outcomes: one manager has to take extra time to explain task to employee or secondly the employee may make mistakes which will result in redoing the task again or even more serious problems like causing injuries etc. Real life example: Human resource directors of six Toronto hotels were interviewed about their diversity practises. One of the problems that all of the respondents identified that is related to communication problem is that it resulted to the fact that certain cultural groups would be formed in certain departments. Chinese were predominately in laundry, West Indian in cafeterias, black in housekeeping and white Canadian in reception. Reasons given for this is the fact that it was easier to train someone if people within the department speak their native language fluently. But such diversification results in negative overall company's performance, because it creates communication problems within departments.
It is broadly agreed that diversity in the workplace benefits organisation as a whole, but some employees and managers may not react to increased diversity positively. For example employees who oppose diversity in workforce usually tend to reject new ideas and make working environment more difficult. When companies fail to properly handle opposition, workforce initiatives may provide reverse effect on team performance and therefore company's performance as a whole. So it is vital for the companies who impose diversity programs to explain reasons and how workplace will benefit from that. Alleviating fears that some employees and managers possess about the diversity may greatly reduce the opposition. For example Timberland actively involves its own employees with City Year's team (City Year is non-profit group that involves more than 200 people from various backgrounds to serve the community for a year). The idea behind it to reduce opposition to diversity and change the way people feel about each other and see how diversity can work and how it gives advantage. The experiences that employees get from participating in such activities are then reflected in everyday teamwork in the company, which had seen rise in its profits since the start of the program.
Another example of how diversity in company benefits it. Tarmac Limited is building materials company based in Wolverhampton, United Kingdom. It produces road surfacing and building materials such as aggregates, concrete, cement and lime. It is largest querying company in the United Kingdom. With revenues approaching to £2 billion in 2010 Tarmac employs just over 5,000 people. As many other companies involved in building material industry, the company is predominantly has strong male bias in the workforce, but in recent years company has taken steps to change that.
Diversity became a key dimension to HR management overall business strategy in Tarmac. This strategy is mainly driven by a goal: 'Achieve the Exceptional'. This is being achieved through diverse talent and leadership within Tarmac. Tarmac is mainly recruiting in UK, which has a highly diverse labour market. This helps Tarmac to achieve corresponding diversity in the workforce.
In order to achieve the stated goal Tarmac motivates this diverse talent through appropriate training and development strategies which reflect their needs. As any other organisation Tarmac is in the need that their customers would trust them. Therefore promoting diverse workforce they can build the necessary relationships with increasingly diverse customer base in both developing and existing markets. This approach creates sustainable competitive advantage that will become hard for competitors to copy.
Tarmac implemented procedures and processes which allowed to value their employees for whom they are and what they bring to the company these new approaches resulted in increased motivation and decreased attrition rate throughout the company. Therefore resulting in high cost reduction in HR department and raised company's product quality. Since Tarmac is often in process of finding best solutions for their customers, differences in employee backgrounds opened new perspectives and promoted creative culture within company, which became vital part of it.
Diversity also resulted in building new networks of communications. For example, Tarmac's quarries, processing plants and highway contracts often are seen as high profile within local communities. A diverse workforce was able to represent the company and gained new contracts and local community approval. Tarmac owns a large cement kiln at Tunstead near Buxton in Derbyshire. In 2009 the company decided for a major expansion that would bring new jobs. Tarmac ran an extensive program with the local communities, which explained plans and benefits to community, before even applying for the planning permission.