Diversity in Teams: A Powerful Tool, But Only When Used Effectively

Recent research reveals that team diversity can be a double-edged sword, offering both significant advantages and potential challenges. However, with the right evidence-backed strategies, HR leaders and managers can mitigate the downsides while maximizing the benefits, turning diversity into a powerful asset rather than a source of friction. Through intentional management and tailored interventions, the positive impacts of diverse teams can be fully realized.

Diversity, equity, and inclusion (DEI) is one of the hottest topics in HR and people management at the moment, based partly on the widely held assumption that greater organizational and team diversity leads to better organizational outcomes. But what if I told you that diversity isn’t a magic bullet? If you're operating under the assumption that diversity necessarily leads to positive organizational outcomes, then new research by Dr. Allison Traylor and colleagues (Traylor et al., 2024), published in the most recent edition of Organizational Psychology Review, might make you pause and think. Their findings challenge the assumption that simply having a diverse team guarantees better outcomes. Instead, the authors suggest that diversity can actually be a hindrance if not properly managed and leveraged.

In their study, Traylor et al. (2024) conducted a meta-analysis of 406 studies involving over 38,000 teams to investigate how demographic diversity—age, gender, race/ethnicity, and nationality—affects team processes. They focused on two key dynamics: information elaboration (defined as the sharing and integrating of diverse ideas) and social categorization (the in-group/out-group mentalities that can arise from differences). The data used for this study was collected from studies conducted between 1980 and 2023.

The results? While diversity had little impact on improving teams’ ability to share information effectively, it did lead to higher levels of social categorization. This effect was especially strong in teams with high nationality diversity. Essentially, diversity can foster division when not properly managed—but with the right leadership, it also has the potential to enhance creativity and innovation.

What This Means for HR Managers and People Leaders

So, what does this mean for you if you're managing people or working in HR? First off, it’s a reality check: diversity alone won’t magically improve team performance, and if you’re not careful, it might even introduce new tensions. The rise of social categorization means that people may default to “us vs. them” thinking, leading to cliques or relational conflict. For example, in a gender-diverse team, employees may form groups based on gender lines, sharing information within their group but not across the team as a whole. In age-diverse teams, stereotypes about older or younger workers may lead to miscommunications or missed opportunities for collaboration.

But it’s not all doom and gloom! This research also underscores the idea that well-managed diversity can unlock the doors to creativity and problem-solving. To achieve that, the emphasis should be on how such diversity within teams is facilitated and structured. Without clear strategies in place to encourage inclusive collaboration, organizations and leaders risk missing out on the benefits diversity can bring.

Fostering a Culture of Psychological Safety

So, how do you minimize the risks and maximize the rewards? The key starts with psychological safety—a team environment where everyone feels safe to speak up without fear of judgment, rejection, or repercussions. This doesn’t happen by accident; it needs to be cultivated. A psychologically safe environment encourages open communication, where team members feel that their contributions are valued, no matter their background.

For instance, a manager could foster this culture by actively soliciting input from quieter team members or those from underrepresented groups. During meetings, the leader might use techniques like round-robin sharing, where each team member has an equal opportunity to contribute, preventing dominant voices from monopolizing the discussion. Another method is to normalize mistake-sharing—encouraging employees to talk about what they’ve learned from their failures can reduce the fear of speaking up and show that everyone’s input, regardless of success or failure, is valued. Leaders who model vulnerability and show that it’s okay to take risks encourage others to do the same.

This type of environment can significantly reduce the harmful effects of social categorization by creating a space where people feel they belong, despite their demographic differences. As a result, diverse teams can focus more on collaboration and idea-sharing, moving past potential in-group/out-group dynamics.

Implementing Structured Collaboration Processes

Another crucial strategy is developing structured collaboration processes to ensure that diversity translates into action. These processes ensure that everyone has a seat at the table and that their ideas are heard, discussed, and integrated into the team’s work. Without such structures, diverse voices can easily be overlooked, and teams may fall back on more familiar (and less inclusive) ways of working.

One effective approach is to use cross-functional brainstorming sessions, where employees from different departments or demographic backgrounds come together to solve specific problems. By design, this forces different perspectives to the forefront and encourages the cross-pollination of ideas. Another process is to establish role rotation, where team members regularly switch responsibilities or leadership roles within projects. This helps ensure that power doesn’t concentrate in any one group and that everyone gains a well-rounded perspective on the team’s work.

For remote or hybrid teams, structured collaboration might involve agenda-driven meetings where time is allocated for input from each participant, or virtual brainstorming platforms that allow asynchronous contributions. For example, tools like Miro or Trello can encourage everyone to contribute ideas before a formal meeting, ensuring that all voices are represented.

In both cases, the goal is to build processes that reduce the chance of any one group dominating discussions and instead maximize the potential for diverse ideas to shine. By putting clear structures in place, leaders can create an environment where diversity is a strength, not a barrier.

More Answers Leads to More Questions

Like all social research, it's fair to say that this study likely raises as many questions as it provides answers. For example, we still need to understand more about how to reduce social categorization when it does occur. What specific team-building exercises or leadership approaches work best for breaking down these in-group/out-group dynamics? Additionally, how do individual leadership styles influence the ability of diverse teams to thrive? Some leaders may be naturally adept at fostering inclusive environments, while others may need specific training to develop these skills.

Lastly, the study doesn't deeply explore the role of personality traits or individual team member dynamics. Could highly collaborative personalities, for instance, mitigate the negative effects of social categorization in diverse teams? And how might virtual or remote work environments alter these findings, especially as more teams shift to flexible working arrangements?

There’s no one-size-fits-all approach to leveraging diversity in teams, but this research makes one thing clear: diversity is powerful, but only if we manage it wisely. HR leaders and organizations must take a critical, thoughtful approach to managing diversity, understanding that simply creating diversity doesn’t automatically lead to positive outcomes. Instead, success depends on how effectively it’s nurtured and integrated into team dynamics.

References

Traylor, A. M., Dinh, J. V., Ng, L. C., Reyes, D. L., Cheng, S. K., Croitoru, N. C., & Salas, E. (2024). It’s about the process, not the product: A meta-analytic investigation of team demographic diversity and processes. Organizational Psychology Review, 14(3), 478–516. https://doi.org/10.1177/20413866241245312