Workplace diversity can help the bottom line

http://www.eurekalert.org/pub_releases/2014-10/miot-swd100614.php

PUBLIC RELEASE DATE: 6-Oct-2014

Contact: Abby Abazorius
Massachusetts Institute of Technology
Study: Workplace diversity can help the bottom line
MIT economist scrutinizes firm data suggesting diverse offices function more effectively.
Gender diversity in the workplace helps firms be more productive, according to a new study co-authored by an MIT researcher — but it may also reduce satisfaction among employees.

"Having a more diverse set of employees means you have a more diverse set of skills," says Sara Ellison, an MIT economist, which "could result in an office that functions better."

At the same time, individual employees may prefer less diverse settings. The study, analyzing a large white-collar U.S. firm, examined how much "social capital" offices build up in the form of things like cooperation, trust, and enjoyment of the workplace.

"The more homogeneous offices have higher levels of social capital," Ellison observes. "But the interesting twist is that ... higher levels of social capital are not important enough to cause those offices to perform better. The employees might be happier, they might be more comfortable, and these might be cooperative places, but they seem to perform less well."

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Among other results, the economists found that shifting from an all-male or all-female office to one split evenly along gender lines could increase revenue by roughly 41 percent. To see how this could happen, Ellison suggests an analogy with a baseball team.

"A baseball team entirely composed of catchers could have high esprit de corps," Ellison says, noting that a band of catchers could share experiences, equipment, or tips for handling knuckleballs. "But it would not perform very well on the field."

Similarly, greater social diversity implies a greater spread of experience, which could add to the collective knowledge of a group of office workers and make the unit perform more effectively.

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