Value-In-Diversity Hypothesis: Definition & Overview

Instructor: Daniel Murdock

Daniel has taught Public Health at the graduate level and has a Ph.D. in Behavioral Sciences & Health Education.

How does workplace diversity impact organizational functioning? How does diversity impact business performance? In this lesson, we examine the value-in-diversity hypothesis in order to answer these questions.

Diversity in the Workplace

Linda is the hiring manager for MegaCorp. She is concerned about a lack of diversity among MegaCorp's workforce. She wonders how it might be affecting organizational functioning and business performance.

Workplace diversity refers to the distribution of differences among the members of a team with respect to a common attribute. We can make distinctions between two different kinds of workplace diversity:

  • Demographic diversity refers to diversity in 'surface-level' characteristics, such as age, race, gender, and nationality.
  • Task-related diversity refers to diversity in educational or functional background.

Linda can use diversity psychology research to help her understand how workplace diversity impacts organizational functioning and business performance.

Value in Diversity

The value-in-diversity hypothesis (or informational-diversity hypothesis) is a common view in diversity psychology research, which suggests that diversity in work groups enhances the effectiveness of workers. Proponents of this view argue that contact between workers from diverse backgrounds leads to the development of novel solutions to workplace tasks. These novel solutions, in turn, enable diverse work groups to outperform groups that share similar backgrounds.

Workplace diversity encourages novel solutions to workplace tasks.
Workers brainstorming

In other words, this hypothesis suggests that if two workers on a team come from different backgrounds, there is a greater chance of one of them coming up with a unique idea or an efficient solution to a problem than if they both came from similar backgrounds.

Diversity & Organizational Functioning

According to the value-in-diversity hypothesis, diversity offers a great opportunity for organizations like MegaCorp. Diverse work groups are more likely to consider a wide range of perspectives and come up with high-quality solutions to problems. However, workplace diversity can also pose significant challenges for organizations like MegaCorp. More diverse work groups are often less integrated than homogenous work groups, which can lead to high levels of dissatisfaction and turnover.

So, when it comes to organizational functioning, workplace diversity can be a double-edged sword. Diversity can increase opportunities for creativity, but it can also reduce the likelihood that workers will feel a strong sense of identification with the organization. There is an ongoing debate among researchers about the exact relationship between diversity and organizational functioning. However, current research suggests that diversity is at least as likely to improve organizational functioning as it is to impair it.

Diversity & Business Performance

Now let's move on to the second part of Linda's question: how does workplace diversity affect business performance?

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