The Effect of Team Diversity in the Workplace

15 Dec, 2022 | Read in 5 minutes

Diversity in the workplace has been proven to be beneficial for the team. This article explores diversity in teams and the positive effects that come along with it.


The high-performing team doesn't just happen. They require recruitment strategies, training, productive space and proper staffing.

Gartner mentions that inclusive teams perform 30% better in high-diversity environments. McKinsey also reported that 35% of 366 publicly traded companies with ethnic and racial diversity had above-average financial returns.

These two studies prove that a diverse and inclusive team increases productivity, performance and finances. They bring a wider perspective and fresh ideas to the table. Simply, diversity and inclusion are pillars in the workplace. Now, companies are racing to build diverse teams. They do it not only for social responsibility but also because diversity plays a role in team collaboration.

Before exploring, it is important to understand what diversity and inclusion in the workplace are.

The definition of a diverse team

A diverse team is a group of people with different backgrounds and skills on a team. They may differ in age, ethnicity, religion, gender and political preferences. This difference is what the company hopes to find innovative solutions and achieve operational goals.

According to SHRM, inclusiveness is achieving a work environment where all individuals are treated fairly and respectfully. They have equal access to opportunities and resources. Inclusion will not exist without diversity.

Diversity refers to the characteristics and traits of people personally, while inclusion refers to social norms. The company will only achieve these points if they build a culture that embraces every perspective.

How does a diverse team impact the workplace?

Building diverse teams helps a company improve operations and performance. It's not just about productivity; it's more than that. They are even able to increase the company's revenue. Here are more great effects of diversity:

1. More mature decision making

A culture of diversity and inclusion fosters employee trust and involvement in decision-making. They bring many new solutions, perspectives and facts to the table. Diverse teams change the way teams digest information and process facts more carefully.

Sage Journals published a study about decision-making. There are two groups: parents (student associations with the same origin) and newcomers (student associations with different members). The result was that the newcomer group makes more accurate decisions than the other.

2. Increased innovation and creativity

The diversity of backgrounds and thoughts helps the team with unique creative ideas. Heterogeneous groups have diverse views and perspectives. This is the reason why heterogeneous teams are better than homogeneous ones.

According to a study that is published by Economic Geography, team diversity is a boon to innovation. They asked several questions about the company's performance to 7615 companies in London. The results reveal that culturally diverse teams are more likely to develop new products. These ideas and creativity result in better innovation.

3. Increase company profits and revenue

Unique solutions, innovation and creative ideas are the main elements to enhance a company's competitiveness. The company will gain more sales and revenue. What's more, effective teams can complete projects faster.

4. Increased employee engagement

There is a direct relationship between team diversity and employee engagement. When employees feel valued and engaged, they enjoy being involved in the company. High engagement will grow productivity by 20% compared to their competitors.

Employee involvement also has the effect of boosting trust. Gartner mentioned that companies with trust could increase employee engagement by 76%. And as we understand that trust is the main pillar in remote work.

Companies can involve employees in KPIs sessions. Invite them to form goals together. It will be easier to measure employee abilities and make more targeted goals.

5. Companies have access to the best talent

By opening access to diversity and inclusion, companies may get the best talent in return. As we know that diversity and inclusion provide greater access to employee talent pools.

Diversity Challenges

There are always challenges in every corporate culture, including team diversity. Companies need to be aware of team challenges to create more effective ones.

1. Communication barrier

Communication is the main enemy of teams with members of different backgrounds, minds, and languages. For example, when there are boomers who are used to being polite and detailed in emails, they meet Gen Z, who are used to being short and to the point. Even the same language can convey many different meanings because there are many accents, idioms, expressions, etc.

In order to solve this challenge, companies must provide insight to employees so that they understand each other. Leaders or PMs will have to encourage convenient communication. So that, workers will have a supportive environment to talk to when there is a problem.

2. Too many opinions

Each team member has a different way of expressing ideas, feelings, and thoughts. This is further complicated when in an environment of diversity. Diverse groups will continue to come up with innovative ideas to overcome problems. However, the large number of opinions sometimes leads to consensus failure.

To overcome this problem, the company needs a leader or a PM (Project Manager) who can mediate any opinion. The leader also plays a role in determining the final decision of a discussion.

3. Prejudice, Discrimination, Bias and Stereotypes

Prejudice, discrimination, bias and stereotypes are always ingrained and inherent in us. It takes humility, openness and mutual understanding to change. No wonder it feels so hard to let go. Unfortunately, some companies ignore this problem and make the situation worse.

In a diverse and inclusive team, these problems are also unavoidable. The following is a definition of each of these terms:

  • Prejudice: a feeling of liking or disliking something or someone
  • Discrimination: treating a person or group of people unfairly
  • Bias: unwarranted personal judgement
  • Stereotype: an incorrect belief about a particular person or thing

When these four situations arise, it is crucial to deal with them quickly so that the company's goals are not compromised. Create a feedback forum between the team and HRD to express discomfort in the company. Leaders must also be open to eradicating all forms of discrimination and racism in the office environment.

Final Thought

Implementing diversity in the team does not only aim at finding the best talent. A diversity team proves that a company does not only have a social responsibility but also a chance to grow bigger. Diverse teams may face many challenges but can help companies develop strong teams. Well-built teams affect productivity in the workplace. Productivity, collaboration and innovation will give a high opportunity for a company to thrive.

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