Potential benefits and problems of homogeneity
In an early study Richard Hoffman(1959) examined the degree of similarity or homogeneity in the personalities of two problem solving groups, made up of university students, and how this affected the quality and acceptance of solutions to two different problems. He concluded that the degree of homogeneity of personality of the members of the groups had a direct bearing on the effectiveness of the groups in producing solutions to problems. His results suggested distinctions could be drawn in the quality of decision making, problem solving and creativity of solutions found between Homogeneous and Nonhomogeneous groups.
Since Hoffman’s study there has been a substantial amount of research undertaken into the structure and composition of different types of teams and how this relates to performance. In this assignment we will focus on two team types, the ordinary work team and the top management team in organisations and assess what effect homogeneity has in terms of potential benefits and problems. In addition, we will examine what is meant by homogeneity in relation to team membership, in particular homogeneity in terms of the demographic characteristics of team members, and homogeneity in terms of the personality characteristics or cognitive thinking styles of team members.
We will take into account the environmental and organisational context in which teams operate and how this may impact team composition in terms of greater or lesser homogeneity. Finally the nature of the organisation itself, in terms of the degree of diversification in its business structure will be considered and how this may influence the extent of top management team homogeneity, and how, in turn, this may lead to differing degrees of preference for certain types of business strategy.
2.1 Clint Bowers(2000) at the University of Central Florida conducted a study to determine if homogeneous teams, in terms of gender, ability level and personality achieved higher levels of performance than teams which were heterogeneous on these attributes. His article refers to two theories of homogeneous effects. Similarity theory argues that homogeneous groups are likely to be more productive because of the mutual attraction shared by team members of similar demographics. Heterogeneous groups, on the other hand, are predicted to be less productive because of inherent tensions between team members. The second theory, Equity theory opposes this however, and predicts that team performance is enhanced by the competing tensions that arise between dissimilar individuals within a group. Bowers argued, however, that predictors of the effects of homogeneity were related more to the nature of the team task. Tasks which require higher levels of coordination and teamwork were better handled by homogeneous teams, whilst tasks which required the diffusion of a broad range of information were more suited to heterogeneous teams.
2.2 Corfman(1995) debated the importance of member homogeneity to the quality of output of focus groups. Focus groups have been increasingly used in organisations as a marketing tool. His study focused on two types of homogeneity which were seen to be important factors in the extent of self-disclosure exhibited by focus groups, which in turn, determined their quality of output. Corfman first considered Exogenous homogeneity where similarity in such characteristics as gender, ethnicity, social class, religion, personality, attitudes, values and age were thought to affect group cohesiveness and enhance several aspects of group interaction. The evidence indicated that group members are more attracted to each other and, thus, become more cohesive when they agree in their attitudes, have similar values, abilities and opinions. Corfman also considered Issue homogeneity which implied similarity in response to the topic which was the focus of the group, e.g., product usage, preference, attitude. Corfman concluded that the benefits of greater cohesiveness that result from homogeneity in attitudes, opinions and values, together with moderate levels of issue homogeneity, would improve the quality of member interaction and encourage self disclosure. However, Corfman also concluded that when the topic was sensitive, it was important to have high levels of issue homogeneity. Sensitive issue related factors affected willingness to discuss a particular issue openly. However, his results also suggested that homogeneity may not be so important when the topic under consideration by a focus group was of sufficient interest to the group, even when the topic was potentially sensitive.
2.3 During the last two decades the homogeneity or heterogeneity of top executive teams have been of great interest to both academic researchers and practising managers. Questions such as, “What does the decision-making process look like in homogeneous teams and heterogeneous teams? What influences the nature of conflict and debate in the strategic decision making process? What leads to “better” decisions, and potentially better organisational performance-homogeneity or heterogeneity?”
2.4 Schneider(1983) described the Attraction-Selection-Attrition(ASA) framework in top management teams (TMT). This argues that different kinds of organisations attract, select and retain different kinds of people. The ASA framework is based on the premise that people who are of a similar type will be attracted not only to jobs, but also to organisations of a particular sort. Over time, organisations attract, select and retain an increasingly homogeneous group of employees who share common backgrounds, characteristics and orientations. The similarity- attraction principle asserts that similarity in attitudes and characteristics enhances interpersonal attraction and desire to work together. These dynamics are therefore also likely to affect the selection and retention of TMT members. To the extent that organisations employ increasingly similar people , the resulting homogeneity is argued by Schneider to limit the organisational capacity to deal with complex and heterogeneous environments and prevent organisational change and adaptation. This may help to explain the example of IBM who were well known for a predominance of marketing backgrounds in their TMT and became hugely successful in manufacturing and selling large mainframe computers, but who were later unable to see the potential in the desktop personal computer.
2.5 Nielsen(2009) describes demographic characteristics of educational background, prior industry experience, nationality and international experience as having the potential to significantly influence executive cognitions and mindsets and serve as a basis for social identification and categorisation. She advances several hypotheses to explain why TMT’s look the way they do. One hypothesis states that the higher the degree of homogeneity in the TMT, the greater the similarity between a newly selected member and the rest of the TMT in nationality, international experience, educational background and industry experience. She further argues that if firms are facing low strategic complexity, they are also more likely to sustain homogeneous TMT’s. In such situations, there is no conflict between the internal social psychological processes and the external organisational strategic requirements. However, because of increasing globalisation faced by firms, and the opening of turbulent emergent markets, the degree of strategic complexity is increasing, which arguably calls for greater heterogeneity in the composition of the TMT. Two further hypotheses state that the level of international diversification in a firm is likely to reduce the tendency of TMT’s to select new members who are similar in terms of nationality and international experience. Industry dynamism is likely to reduce the tendency of TMT’s to select new members who are similar in terms of educational background and industrial experience. On the other hand Nielsen argues that industry munificence is likely to promote homogeneity in TMT’s. Munificence is defined as the extent to which a firm’s environment supports sustained growth. Industry environments that permit organisational growth help buffer firms from external threats and allow them to generate slack resources. In such environments, TMT’s operate with less constraint and, as a result, are exposed to less pressure to make radical strategic changes. As a result, homogeneity in TMT’s in such an environment may be preferred.
2.6 Gallen(2009) examines TMT composition by reference to cognitive thinking styles and proposes this as a more promising way of explaining team homogeneity or heterogeneity than the demographic characteristics of Nielsen above. Gallen in a study of ten TMT’s in the spa industry, analysed the cognitive style of 58 executives using the Myers Briggs Type Indicator (MBTI) and suggested that certain groupings of cognitive styles led to preferences for different types of generic business strategy, defender, prospector and analyser. Gallen proposes that TMT’s made up, for example, of detailed and factual sensing-thinking types, under the MBTI categorisation, will adopt a logical, practical, analytical approach and are more likely to view a defender strategy as more viable more often than other managers. Such types would typically be attracted to production or finance areas, and defender organisations would typically be centralised with well defined authority, a stable set of products or services, competing primarily on the basis of price, quality, service and delivery. Sensing-thinking types are usually risk averse. On the other hand, Gallen proposes that TMT’s made up of intuitive-thinking type managers are more likely to view analyser strategy as a more viable strategy more often than other managers. Such types are able to handle broad, ill-defined macro-economic issues and seek a balance between stable and changing environments. New product development will be an important part of the strategy. Intuitive-feeling type managers are more likely to prefer flexible organisations which concentrate on the most general personal and human goals. The prospector strategy with an emphasis on new product development and decentralisation is more likely to be preferred by TMT’s made up of intuitive-feeling type managers. Gallen proposes therefore that the cognitive composition of TMT’s is particularly important. Strategic decision making can be improved by increasing self-understanding and taking into account the degree of homogeneity in the team around particular thinking styles. Gallen identifies, for example, that in problem solving situations all four of the Myers Briggs functions of sensing, intuition, thinking and feeling, are needed. If there are no feeling members in the TMT, for example, the team should pay special attention to that element of decision making and remember to discuss, e.g. the HR consequences of their decisions. Constructive use of differences, heterogeneity rather than homogeneity in TMT’s may therefore help companies to find new ways of doing business to survive, or excel in difficult market situations.
2.7 A further perspective on the preferred styles of team members, whether ordinary work teams or top management teams, can be drawn from the work of Meredith Belbin. Belbin identified nine roles that team members need to fulfil if the team is to be successful. These are the roles of; Co-ordinator, Shaper, Plant, Technical Specialist, Completer Finisher, Monitor Evaluator, Resource Investigator, Team Worker and Implementer. Of course, not all teams are composed of exactly nine people with each member taking one role. Usually it is necessary for each member to fill more than one role, although not everyone will be able to play all the nine Belbin roles. The conclusion to be drawn from Belbin is that teams need to find a balance amongst the different types of roles to be played. Therefore, if there is too much homogeneity in the team around a small number of role types, this is likely to result in problems in how the team functions. If a team is over-supplied for example, with Shapers and Implementers, but lacking in Plants and Team-workers, it may mean that plans are formulated and fleshed out quite quickly , but may be insufficiently creative or fully discussed leaving some team members feeling left out or uninvolved. Belbin is therefore someone who stresses the importance of diversity rather than similarity or homogeneity for the successful functioning of different work teams.
2.8 The work of Sara Keck and Michael Tushman(1993) looks at the structure of top management teams within their environmental and organisational context. They argue that the longer the period of stability in a team’s environment, the less change in members, the greater the mean tenure of its members, the greater is the resulting homogeneity. Restructurings, environmental jolts, technological discontinuities, and CEO successions are each associated with increased team change and heterogeneity. Whereas periods of equilibrium are associated with low change and high homogeneity, organisations that survive dramatic environmental shifts have heterogeneous executive teams that display both stability and the capacity for change. When environments shift existing competencies and decision making processes may no longer match the new environmental conditions. TMT’s have to move from routinised problem solving to more vigilant environmental scanning and problem solving to deal with altered environmental constraints. Environmental jolts may be associated with changes in TMT structure and processes. These reconfigured executive teams may be lower in mean tenure and more heterogeneous than prior teams.
2.9 The work of Michel and Hambrick(1992) adds the dimension of the nature of a firm’s activities, how diversified it is in its business structure, to how this, in turn, impacts the homogeneity of the TMT in terms of age, tenure and background. The extent of diversification determines the degree of integration needed across various business units, which in turn, influences the ideal composition of its TMT. Michel and Hambrick suggest that a high level of interdependence tends to be accompanied by two important qualities in a top team, namely social cohesion, and a corporate wide operating knowledge base. Michel and Hambrick argue that greater social cohesion can be expected when there is homogeneity in top team members around age, tenure and functional backgrounds. Homogeneity of functional backgrounds also contributes to cohesion by endowing team members with similar frames of reference for problem solving. Average team tenure and common functional backgrounds contribute to the development of “common schemata” among team members and increase cohesion by providing a common premise for decision making. Michel and Hambrick further argue that interdependence between a firm’s various business units increase its information processing requirements. A way of managing these requirements is through the knowledge base of the executives. In situations of high corporate interdependence, firms are more likely to emphasise processes which encourage synergy and cooperation among divisions. Top management, therefore, must possess knowledge of corporate-wide operating activities to exploit potential opportunities and a way of obtaining this is to ensure executives are developed through experience gained in several business units. Team homogeneity, measured by the number of executives with a firm-wide perspective, imbues them with the ability to minimise parochialism and provide the knowledge base for negotiating, arbitrating and coordinating inter unit relationships.
2.10 In an article by Smith et al(1994), the authors draw together a number of areas of research which suggest that the composition of TMT’s is related to organisational outcomes. They refer to the upper echelons theory developed by Hambrick and Mason(1984) which states that upper-level managers have an important impact on organisational outcomes because of the decisions they are empowered to make for the organisation. Since these managers make decisions consistent with their cognitive base, which is in part a function of their personal values and experiences, their experiences and values can be linked to organisational outcomes. This has implications for the homogeneity or otherwise of the top team. Smith et al emphasise that the team’s demography in terms of length of tenure and years of experience is likely to influence team cohesion, and that cohesion in turn affects performance. Increasingly the overall team tenure produced stability and with increased stability there would be reduced goal conflict. On the other hand, team heterogeneity in, for example, stable environments may lower performance because the team would be less cohesive and require more formal communication. They further argue the potentially beneficial effect of increased homogeneity, through increasing tenure, on team process. That is, the more the team develops shared history together, the better they communicate and the more trust is developed among team members.
3.1 In this assignment we have examined the nature of homogeneity in team membership and how this may result in both benefits and problems for the team. Teams are increasingly common in organisations; there is less emphasis on functional boundaries and more work is based on projects requiring input from people with different expertise and experience. Teams are often described differently as task forces, project groups, focus groups, top management and so on. They are often not constant. As well as changes in members, they change over time in terms of how they approach their tasks and how team members relate to each other. It is clear therefore that in deciding on the makeup of a team, considerations of team homogeneity or otherwise can be significant for team performance.
3.2 However, we have seen by reference to the research undertaken that team homogeneity can be assessed or measured in different ways. Demographic characteristics are often chosen as a means of identifying similarities among team members. However, the potential benefits of selecting members based on their demographic homogeneity may not accrue if there is not homogeneity along other dimensions such as personality or thinking style.
3.3 Potential benefits which may accrue from homogeneity in team membership can be summarised as greater productivity stemming from group cohesion, interaction, mutual attraction, reduced goal conflict, and the desire to work together. In the case of top management, homogeneity is relevant to decision making and organisational outcomes. However, the environmental and organisational context in which a top team operates will be a significant factor. The potential benefits of top team homogeneity may be felt more where there is a stable external environment and low strategic complexity. Internally, a diversified but interdependent firm may benefit more from top team homogeneity in terms of cohesion and corporate knowledge base.
3.4 Potential problems arising from team homogeneity may relate to problem solving abilities, dissemination of a broad range of information, generation of new ideas, creative solutions or innovative thinking. Top management homogeneous teams may deal less well with sudden environmental or industry shifts, instability or increasing strategic complexity. Too much similarity in thinking styles may result in a preference for certain types of business strategy which may not be as appropriate as other strategy choices.
3.5 My overall conclusion is that the research undertaken to date suggests that there is not a clear advantage or benefit accruing to homogeneous or heterogeneous team composition. There are problems and benefits which can be identified for both, and membership selection should be determined by reference to the task to be performed, the environmental and organisational context, and potential strategic impact.