Maryland Smith Research / July 2, 2024

When Groups Lack Diversity, Size Matters for Whether People Notice

Research Suggests Diversifying Small Teams Before It’s Too Late

Larger homogeneous groups tend to diversify more, underscoring the need for inclusive practices even in small teams, according to Aneesh Rai's research, which emphasizes the importance of addressing diversity gaps at all organizational levels.

In the past decade, diversity has become a big emphasis in business. Organizations tout their work to increase the representation of women and racial minorities. Research has confirmed that having people from a mix of demographic backgrounds brings different perspectives and increases creativity, innovation and team performance. And it’s something that consumers, potential workers and investors care about.

“However, there are still demographically homogeneous groups within a lot of organizational settings, particularly if you’re looking at the top levels,” says Aneesh Rai, assistant professor of management and organization at the University of Maryland’s Robert H. Smith School of Business. That spurred his latest research, forthcoming in Organization Science, with co-authors Edward Chang from Harvard Business School, Erika Kirgios from the University of Chicago, and Katherine Milkman of the University of Pennsylvania’s Wharton School.

“We were interested in what could be causing this difference between what organizations claim they want to be doing and what we actually see when we’re looking at their representation levels,” Rai says. “At the highest echelons of organizational power, women and people of color often don’t even get a seat in the room.”

Their work sheds light on when and why decision-makers do notice a lack of diversity in groups, and take efforts to correct it. They find consistent evidence that the size of the group is an important factor.

The researchers looked at the demographic composition of S&P 1500 corporate boards and found that the larger an all-male (or all-White) board, the more likely that board was to add a woman (or person of color) to their ranks in the following year.

“We found that each additional director on a corporate board completely lacking gender or racial diversity translated to a 1-2 percentage point increase in that board’s likelihood to diversify by adding at least one underrepresented member in the year ahead,” Rai says. “As corporate boards got bigger, we found that all-male and all-white boards became surprisingly rare, relative to expectations.”

This suggests organizations work harder to avoid homogeneity in larger groups than smaller ones, he says.

To back up that finding, Rai and his co-authors ran three controlled experiments. In each study, participants were shown all-white, all-male organizational groups of varying sizes and asked to make decisions about whom to add to the group.

All the studies confirmed that people are more likely to notice when everyone looks the same in a large group than a small one and flag it as a problem, prompting them to take action to diversify it, he says.

“Bigger groups that lack diversity raise more speculation,” he says. “People assume they are more likely to have resulted from an unfair selection process, see them as less diverse and more likely to face diversity-related reputational concerns.”

But even when large homogeneous groups want to add more diverse members, it can be a challenge.

“There is work which suggests that a large homogeneous team might struggle to find women or people of color who are willing to join those teams because they might worry about how they’ll be treated, if they’ll be tokenized, and whether they’ll face discrimination,” Rai says.

For managers and decision makers, the key takeaway from the research is to not ignore smaller teams that lack diversity, he says.

Those are the teams where diversity it more likely to be neglected, and that’s why these findings are so important to get out there – so managers can recognized that potential blind spot and take action accordingly.

“If you fix it now, you’re less likely to face reputational consequences later,” says Rai. “We’re highlighting this problem for small teams so organizations can nip it in the bud, so to speak, and they don’t run into issues down the line when those groups grow.”

Read the research, “Group Size and Its Impact on Diversity-Related Perceptions andHiring Decisions in Homogeneous Groups,” in Organization Science.

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