Organizations that diversify the skill levels of their top leadership benefit more than those that try too hard for similar diversity in personality, according to the Management Insights feature in the current issue of Management Science , the flagship journal of the Institute for Operations Research and the Management Sciences (INFORMS®).
Management Insights, a regular feature of the journal, is a digest of important research in business, management, operations research, and management science. It appears in every issue of the monthly journal.
"Top Management Team Diversity and Firm Performance " is by Christophe Boone of the Faculty of Applied Economics, University of Antwerpen, 2000 Antwerpen, Belgium and Walter Hendriks of the Faculty of Economics and Business Administration, Maastricht University, 6200 MD, Maastricht, The Netherlands.
An empirical analysis of 33 medium-sized Dutch and Belgian information technology (IT) firms reveals that teams with diverse expertise and work experience tend to be more effective in managing organizations, particularly when these managers cooperate and share accurate information and decision-making power.
On the other hand, analysis shows that diversity in the personalities of members of the management team hampers firm performance.
The authors found that one means of avoiding the disruptive consequences of these personality differences is to concentrate authority in the office of the CEO. But centralization of power comes at a price, because organizations must decentralize decision making to reap the full benefits of diverse expertise and experience.
In the sample examined by the authors, the mean return on sales (ROS) of IT firms with the ideal team configuration (diverse expertise and work experience, similar personalities, and decentralized decision making) was 10%, whereas the mean ROS of IT firms with the worst possible team configuration (similar expertise and work experience, diverse personalities, and decentralized decision making) was −7%.
Based on these findings, the authors suggest that management team recruiters use carefully designed personnel selection techniques screening personality and knowledge experience.
The current issue of Management Insights is available at http://mansci.journal.informs.org/cgi/reprint/55/2/iv . The full papers associated with the Insights are available to Management Science subscribers. Individual papers can be purchased at http://institutions.informs.org . Additional issues of Management Insights can be accessed at http://www.informs.org/site/ManSci/index.php?c=11&kat=Management+Insights .
The other Insights in the current issue are:
INFORMS journals are strongly cited in Journal Citation Reports, an industry source. In the JCR subject category "operations research and management science," Management Science ranked in the top 10 along with two other INFORMS journals.
The special MBA issue published by BusinessWeek includes Management Science and three other INFORMS journals in its list of 20 top academic journals that are used to evaluate business school programs. Financial Times includes Management Science and four other INFORMS journals in its list of academic journals used to evaluate MBA programs.
About INFORMS
The Institute for Operations Research and the Management Sciences (INFORMS®) is an international scientific society with 10,000 members, including Nobel Prize laureates, dedicated to applying scientific methods to help improve decision-making, management, and operations. Members of INFORMS work in business, government, and academia. They are represented in fields as diverse as airlines, health care, law enforcement, the military, financial engineering, and telecommunications. The INFORMS website is www.informs.org . More information about operations research is at www.scienceofbetter.org .
Management Science