The performance case for diversity is overstated, finds new research. Here’s how HR can frame diversity, equity and inclusion initiatives for success
The business case for diversity has become a popular refrain in boardrooms, HR strategies, and corporate mission statements. Advocates promise that a diverse team will supercharge creativity, solve problems more effectively and boost organisational performance. Yet a meta-analysis encompassing over 600 reports and 2,600 data points, led by Lukas Wallrich from Birkbeck Business School, University of London, finds the link is far weaker and more context-dependent than we’ve been led to believe.
The key takeaway? Diversity, in its many forms, does not universally lead to better performance. The correlation between team diversity and performance is consistently positive but insubstantial, explaining less than 1% of variance. This finding doesn’t mean diversity initiatives are unimportant; rather, it challenges the overly simplistic narratives we often hear. It’s time for HR leaders and organisational decision-makers to rethink how they frame diversity efforts or risk undermining their very legitimacy.
Here’s what you need to know from the study The Relationship Between Team Diversity and Team Performance: Reconciling Promise and Reality Through a Comprehensive Meta-Analysis Registered Report – and why the success of diversity initiatives hinges on it.
Does diversity improve performance? Only sometimes
The evidence is clear: diversity only boosts performance under specific circumstances. Diversity across demographics, skills and cognitive styles offers only modest performance benefits on average, explaining less than 1% of the variance in team performance. However, its impact grows significantly in specific settings. In teams that rely on innovative or divergent thinking, such as research and development or brainstorming new product ideas, the cognitive resources offered by a mix of perspectives become valuable.
In contrast, teams focused on routine or interdependent tasks may see few to no gains, or even setbacks. Crucially, demographic diversity (age, race and ethnicity) appears less consistently tied to performance than job-related or cognitive diversity.
So why does this matter? When diversity initiatives are justified solely on promises of improved performance organisations are set up for disappointment. Unrealistic expectations can lead to a backlash when the promised gains fail to materialise, weakening support for these initiatives and potentially exacerbating workplace divisions.
Culture and context shape diversity’s potential
Wallrich et al.’s analysis reinforces a long-held truth in organisational psychology: context shapes outcomes. The benefits of diversity are amplified in cultures that encourage openness and collaboration. The meta-analysis found that:
- Low power-distance cultures, where authority is evenly shared, enable diverse perspectives to emerge, boosting performance.
- In collectivist cultures, which prioritise cohesion over individuality, diversity’s benefits are often muted.
This underscores the need for HR leaders to look beyond surface-level diversity metrics and design organisational cultures that value individuality while maintaining team cohesion.
Psychological safety and remote work
Why do some diverse teams outperform others? The answer may lie in psychological safety – a team’s belief that members can speak up without fear of retribution. In previous research teams with high psychological safety were better equipped to harness the potential of diversity, transforming differences into meaningful contributions. However, due to limitations in the data, the researchers could not meaningfully include psychological safety, as these were very rarely reported, and if so, were always positive.
Likewise a small-scale meta-analysis found that team dispersion was associated with less conflict and greater social integration in diverse teams (Stahl et al., 2010). However, again due to the limited sample, they could not test for a link with performance, so further research is required here.
Why diversity still matters, just not for the reasons you think
What does this mean for HR leaders? It means crafting a more honest narrative about the value of diversity. The moral, legal and reputational imperatives for diversity, equity and inclusion (DEI) remain compelling. From building a fairer society to widening the talent pool, these reasons offer a sturdier foundation than vague promises of universal performance gains.
Moreover, diversity is about far more than the bottom line. It’s about creating spaces where all employees feel valued and empowered to contribute. This requires deliberate investment in psychological safety, team dynamics and leadership structures that support individuality. Instead of selling diversity as a cure-all for performance challenges, we should be asking: how can we design organisations where diversity can genuinely flourish?
Key insights
Teams working on innovation, complex or creative tasks demonstrated more benefit from diversity
Teams in countries where power is more equally shared had better results from diversity
Diverse degrees, functions and nationalities: These were more positively linked to performance than diversity in age or ethnicity
Subjective vs objective performance ratings: Subjective ratings of team performance (such as manager opinions) differ from objective measures like sales figures, underscoring potential biases in how people judge diverse teams' performance. Don’t rely on subjective ratings
Longevity doesn’t matter: One surprising revelation is that team longevity (how long teams have worked together) doesn’t substantially influence how well diversity works
Recommendations against over-promising: Performance improvements shouldn’t be the sole argument for diversity initiatives.
Citation: Wallrich, L., Opara, V., Wesołowska, M. et al. The Relationship Between Team Diversity and Team Performance: Reconciling Promise and Reality Through a Comprehensive Meta-Analysis Registered Report. J Bus Psychol 39, 1303–1354 (2024).