Top Management Team Diversity Can Work If Group Consensus Is Allowed To Develop Over Time

December 12, 2000

University Park, Pa. -- Diverse management teams can perform well if teamwork is allowed to develop naturally among members and if there is no push to achieve immediate consensus of ideas, a Penn State management expert says.

"People often assume that bringing together individuals diverse in ethnicity, age and job specialization will help assure diverse thinking, which in turn will contribute to increased team performance," says Dr. Martin J. Kilduff, professor of management in the University's Smeal College of Business Administration.

"In a direct test of these ideas, we examined data from 35 simulated firms run by a total of 159 managers attending executive education programs. Our data revealed that the only background diversity variable to affect firm performance was age. Paradoxically, the greater the age diversity among team members, the better the team performed. Surprisingly, we found that more diverse teams did not demonstrate diverse thinking except in a group with age diversity."

Kilduff and fellow researchers published their findings in the paper, "Top Management-Team Diversity and Firm Performance: Examining the Role of Cognition," which appeared earlier this year in Organizational Science. His co-authors were Dr. Reinhard Angelmar, professor of marketing at the European Institute of Business Administration at Fontainebleau, France, and Dr. Ajay Mehra, assistant professor of management at the University of Cincinnati.

"Teams that guided their firms to high performance tended over time to show higher levels of shared understandings and perceptions among members, even though they generally began with low levels of shared understandings," Kilduff notes. "Further, there was a dynamic interplay between high performance and shared understandings: The better the firm performed, the higher the subsequent shared understanding of the top management team members.

"In the beginning, members of top management teams should realize that agreements and disagreements among members concerning the market environment are simultaneously possible, allowing the same reality to be perceived by team members in different but complimentary ways," Kilduff says. "High-performing teams tend to start out with tolerance for divergent views concerning what actions might be possible, whereas low-performing teams tend to have much less tolerance for creative interpretations."

Researchers observed that successful teams move in the direction of more consensus among members while unsuccessful teams moved in the opposite direction. To some extent, teams that narrowed their range of possible strategies at the beginning of the launch of new products in dynamic markets tended to suffer a downward spiral as market share was lost and as disagreements among team members increased. Teams that kept alive competing interpretations of market environments at the beginning were able to move toward consensus as market share was gained.

In other words, successful teams used market results to help resolve potential disagreements, whereas unsuccessful teams may have neglected the importance of market information, Kilduff adds.

Fourteen countries were represented in the study, with 30 or more managers from each of the following countries: France, Germany and Switzerland. The managers occupied a variety of functions in European firms, including over 20 persons in marketing, research and development, manufacturing and general management.

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Contacts:

Paul Blaum (814) 865-9481 (o)

Vicki Fong (814) 865-9481 (o)/ (814) 238-1221 (h)

EDITORS: Dr. Kilduff is at (814) 865-9822 or by email.