Nov 02, 2012

Diverse Benefits

In his memoir Adventures of a BystanderPeter Drucker made clear that diversity was a concept close to his heart.

For a good part of his life, Drucker had battled authoritarian tendencies toward conformity. “The totalitarian regimes in which everybody was to conform, to think, write and paint the same, to be centrally controlled—the Nazis called it ‘switched to the right track’ (gleichgeschaltet)—were but the head of a universal current,” Drucker wrote. “But every one of my books and essays . . . has stressed pluralism and diversity.”

Nowadays, the pendulum has swung, and “diversity” is celebrated, even if definitions of it differ. A case in point can be found in the latest McKinsey Quarterly, in which authors Thomas BartaMarkus Kleiner and Tilo Neumann share some research findings into the benefits of diversity based on a study of 180 companies in Europe and the United States. The authors focused on two groups that, they said, “can be measured objectively from company data: women and foreign nationals on senior teams (the latter being a proxy for cultural diversity).” And the findings were “startlingly consistent: For companies ranking in the top quartile of executive-board diversity, ROEs (returns on equity) were 53% higher, on average, than they were for those in the bottom quartile.”

Drucker would have enthusiastically endorsed the notion that diversity pays. In fact, he wrote, “management must . . . become the instrument through which cultural diversity can be made to serve the common purposes of mankind.”

The trick for management, in Drucker’s eyes, is to resist conformity but stress unity. That means getting everyone behind the same goals and keeping them focused on the job at hand—rather than on people’s individual differences. In order “to provide the organization with the human diversity it needs,” Drucker wrote in The Effective Executive, relationships should be task-focused, not personality-focused.  “It is the only way to tolerate—indeed to encourage—differences in temperament and personality in an organization,” he explained.

Where Drucker drew the line was when diversity degenerated into tribalism, which threatened to displace unity of purpose. Precisely because we’re diverse, he advised, we must work harder to stay aligned. “In the United States, tribalism manifests itself in the growing emphasis on diversity rather than on unity,” Drucker warned in Post-Capitalist Society, saying that such a mindset “saps that nation-state’s integrating power.”

What sort of diversity in staffing do you think most benefits—or least benefits—an organization?

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