Does Diversity in Leadership Matter?

When Mark Zuckerberg, CEO of Facebook, testified in front of the US Congress earlier this April, he had a number of tough questions to answer.

Not only did he come under fire for his company’s approach to handling user data in the realm of the Cambridge Analytica data scandal, but more specifically, in how far the lack of ethnic diversity in corporate leadership may affect Facebook’s ability and motivation to make decisions from a culturally competent standpoint. Should their employees, especially at leadership levels, not represent the wide range of ethnic groups whom Facebook works for as their users?

Just like Zuckerberg, more executives face the question, “Does diversity in leadership matter?”, and it does not look like they have a good answer to that question yet.

Diversity can mean many things. From an organisational standpoint, it is often described as the degree to which there are differences between members of an organisation. These differences can be based on so-called surface-level attributes, such as gender, age, ethnicity or deep-level attributes (e.g. educational backgrounds, values and attitudes). One is not more important than the other – deep-level diversity can simply be harder to recognise than surface-level differences between employees.

Why should businesses care about diversity, especially in leadership?

Both surface-level and deep-level diversity can affect how people work together in teams and organisations as well as the outputs that they generate. Seminal reviews of the literature conducted over more than half a century of diversity research, point in this direction. More specifically, diverse groups have the potential to generate creative and innovative output – if they can manage to integrate and reconcile the different opinions and perspectives that their members typically generate. Diverse teams are less likely to think alike. However, in order to perform successfully, teams and organisations are challenged to ‘make diversity work’ for them. And this is where leadership comes into play. Having a diverse leadership team can generate competitive advantages – especially when leaders take on role modelling functions for employees, foster positive diversity beliefs and send positive signals to external stakeholders.

Role modelling

Despite the best intentions, many businesses struggle to make their workforce more diverse, for example in terms of ethnic and gender diversity. To achieve better recruitment results, they can think along the lines of role modelling and mentoring for early career professionals. Benefits occur even in initial stages of the recruitment process where it has been shown that advertisements with images representing both genders attract more women to apply. Employees from historically under-represented groups (e.g. women at executive levels) can also find role models from similar backgrounds and with similar demography in a diverse leadership team and learn from them for their own career development. Benefits can be achieved in formal mentoring programmes but also through informal networking and events.

Positive diversity beliefs

A diverse leadership team can spread the word about the benefits of diversity. Diversity at the executive level will make this message more credible for others in the organisation. Research shows that employees’ positive beliefs about diversity increase the actual impact of team diversity on team’s performance. Diversity beliefs are also part of a wider organisational culture. A diverse leadership team provides opportunities to shape an organisational culture of inclusion as culture is created through bottom-up influence from employees but also trickle-down processes from the executive level.

Signalling openness and innovation

Just like the questions that US Congress had for Zuckerberg regarding Facebook’s leadership diversity, customers and other external stakeholders are paying increasing attention to the leadership setup of companies they buy from or invest in. A diverse leadership team does not only represent different social groups within the organisation, they can also be better attuned to their customers’ needs and interests. Having individuals from different backgrounds, ages, genders and ethnicities on board signals openness and innovation – attributes that many external stakeholders look for in profitable businesses.

Professor Susanne Braun