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with diversity issues

A study on demographic diversity, process conflict, and

participative leadership

Master Thesis, Human Resource Management

University of Groningen

Faculty of Economics and Businesses

August, 2010

Tim van Vilsteren Van Heemskerckstraat 1 H8

9726 GB Groningen (06) 11640062

h.a.van.vilsteren@student.rug.nl

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A participative approach in dealing with

diversity issues

A study on demographic diversity, process conflict, and participative leadership

TABLE OF CONTENTS

1. INTRODUCTION……….. 3

1.1 Demographic Diversity and Process Conflict……… 4

1.2 Participative Leadership and Process Conflict……… 7

1.3 Participative Leadership as Moderator………... 8

2. METHODS………. 10

2.1 Procedure and respondents……….. 10

2.2 Measurement instruments……… 11 2.3 Data analysis……… 12 3. RESULTS………..………. 12 3.1 Hypothesis testing……… 13 4. DISCUSSION………. 15 4.1 Findings……… 15 4.2 Theoretical implications……….. 18 4.3 Practical implications ………. 19

4.4 Strong and weak points……… 19

ABSTRACT

In this study the author examines the relationship between demographic diversity and process conflict. Demographic aspects like gender, age and education are linked to the occurrence of process conflict within teams. Also the role of participative leadership in order to prevent process conflict is included within this research. It is not found that demographic diverse teams suffer more from process conflict than non-diverse teams, but a strong direct relationship is discovered between a participative leader and the avoidance of process conflict. This is even more the case for educational diverse teams, but no additional effect of a participative leader on process conflict was found for gender and age diverse teams compared to non-diverse teams.

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1. INTRODUCTION

The success of teams within professional organizations relies on several factors. Probably the most important factors are the knowledge and abilities of its members. Teams nowadays are getting more diverse, due to trends like globalization and the increased accessibility of education on different levels. Also, the increasing participation of women in the labour market leads to more gender diversity on the work floor. These developments have lead to an increase in the level of demographic diversity within teams in professional organizations. This particular kind of diversity refers to the concept of teams with members differing from each other on basis of several kinds of demographic attributes (Webber & Donahue, 2001), like age, race, gender, tenure, education and functional background. Demographic diversity is subject of research in many studies due to its upcoming existence. It has been shown that this type of diversity can have different effects on team outcomes. In the first place it can increase the number of ideas, based on the different backgrounds of its members, and the level of experiences, knowledge, and expertise within teams (Jehn, Northcraft & Neale, 1999). This can ultimately lead to an increase in the level of innovation within the teams. Nevertheless on many occasions it has led to a disturbance of the team processes (Milliken & Martins, 1996). Different status levels, behaviour patterns, personal goals, and the unwillingness to share and adopt all present information can result in an overall drop in performance. Demographic diversity therefore should be handled in the right way or else the negative impact will be much larger than the possible gains. In this research the avoidance of negative consequences of demographic diversity will be subject of research, because it has been proven that it destroys much potential within teams nowadays (Jehn, Northcraft & Neale, 1999).

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This effect of demographic diversity on (process) conflict should be prevented when possible. In general, many studies have investigated the possible drivers of process conflict and ways of avoiding it (Jackson et al., 1992). Focus in this area has been on rebuilding social and interpersonal relations that are (partly) destroyed by the occurrence of process conflict (Passos & Caetano, 2005). To increase cohesion between the subgroups and individuals within diverse teams, members of teams should be giving the possibility to use their strengths and skills and combine them with that of other members (Spreitzer, 2007). By giving employees the freedom and encourage them to make decisions themselves about responsibilities and the way tasks are delegated, they will experience much less distance between the diverse members of the team. Involvement and respect are key-aspects in achieving high levels of cohesion. For that reason participative leadership, which is build around involvement and participation, will be examined in this paper as the factor that can avoid process conflict within diverse teams.

This paper will research the relationship between different attributes of demographic diversity (age, gender and level of education) and process conflict. Extant research will be reviewed and used to build hypothesis which can define these relationships thoroughly. Also the moderating role of participative leadership on this relationship will be addressed. After carrying out a statistical research among 36 teams within professional organizations the results and underlying relations will be presented and discussed.

1.1 Demographic Diversity and Process Conflict

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identification. Having subgroups within one team can result in a drop of identification within the team as a whole. That existence of subgroups is the basis for stereotypes, status expectancies and individual differences in cognition, values and behavior (Brown et al., 2009). Members of diverse groups therefore in general have more difficulties in finding commonalities in order to build a group identity and increase cohesion between the diverse team members (Cox, 1993).

Another explanation why visible diversity leads to negative outcomes is provided by similarity attraction theory. This theory states that most people prefer to interact with people who are similar on a physical basis (McElwee et al., 2001). People are more burdened to cooperate with dissimilar members. They are more inclined to share all the information they possess with their similar members to which they feel attracted. An inappropriate system of communication and information sharing could evolve. This argumentation has shown to be especially in place for members who differ from each other on the level of age and gender (McElwee et al., 2001). People who differ on those visible attributes will evaluate demographic similar individuals more positively than people who are differing significantly on age and gender.

Ultimately, these negative effects of diversity in age and gender can lead to the occurrence of process conflict. Process conflict is defined as a situation in which there is disagreement about how tasks should be accomplished and how these tasks in combination with responsibilities should be delegated among team members (Jehn, 1997). In reality this means that a situation occurs where team members do not agree about who should do what and who is responsible for certain activities. As a reaction to such a situation, team members in general tend to become more emotional and the ability to focus just rational on task related issues will drop, which is the main trigger for process conflict (Greer & Jehn, 2007). This emotionality is mostly stirred up when members are challenged in process issues and their personal worth and respect is violated (Bendersky, 2003). Process conflict therefore will, in all situations, have a negative impact on team outcomes (Vodosek, 2007).

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competent than people who are similar on these attributes contributes to this division within teams (Heilman & Welle, 2006). Because synergy and cohesion will be extensively lower and team members are acting more individually, there will be less clarity about individual contributions of team members towards teams targets and the feelings of responsibility toward team outcomes will drop (Bayazit & Mannix, 2003). The fact that formed subgroups are based on person related factors results in more emotional distance with other team members. That is the reason that there will be often disagreements about the execution of tasks that both subgroups dislike, thus process conflict will increase.

Hypothesis 1a: Diversity in gender is positively related to the level of process conflict

Hypothesis 1b: Diversity in age is positively related to the level of process conflict

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conflict (Greer, Jehn & Mannix, 2008). Again, subgroups will evolve and lower educated team members will be less open to new ideas and suggestions of fellow team members because of feelings of disqualification (Pelled, 1996).

Hypothesis 1c: Diversity in the level of education is positively related to the level of process conflict

1.2 Participative Leadership and Process Conflict

Participation has been proven a quite effective tool in resolving situations of conflict within professional organizations (Spreitzer, 2007). Whether teams can benefit from such a participative approach is mostly dependent on the way the team is lead. Participative leadership can be defined as the leadership style that builds around involving employees across levels of the organization in decision making (Schipani & Fort, 2003). In reality it comes down to a leader who encourages team members to express their ideas and suggestions. Also, people are stimulated to voice their opinion and these opinions are used by the team leader in making decisions (Arnold et al., 2000). The team leader does not make decisions that are only based on his own ideas, but always involves others. Participative leaders are trying to train people in order to develop their individual democratic skills (De Jong & Witteloostuijn, 2004). By giving members the opportunity and even encourage them to voice their opinions, people can discover themselves and develop their competencies to work as valuable members of the team. Important within this context is that those employees develop their ‘issue-selling’ skills (Dutton et al., 2001). These are the skills to communicate their wishes to other team members and the abilities to argue convincingly.

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Hypothesis 2: Participative leadership is negatively related to the level of process conflict.

1.3 Participative Leadership as Moderator

Leadership is considered as a very important attribute in heterogeneous teams in order to assure performance and cohesion within team processes (Shin & Zhou, 2003). This enables the team members to learn, to share and to interact with each other in a highly diverse environment (West, 2002). Studies have shown that participative leadership in particular reduces barriers between team members to enable the open exchange of ideas by encouraging them to participate in decision making and voice opinions (Somech, 2002). This leads ultimately to an environment in which ideas are shared between people with different backgrounds and demographic attributes. Participative leadership might thus be an important mechanism to prevent process conflict in diverse teams.

Specifically, research found that man and woman destroy trust in each other by using different sources of information on which they base their decisions (Johnson & Swap, 1982). By using those different sources, the content of the information and knowledge men and women possess can contradict each other to a great extent. To overcome this, team leaders have to encourage the degree to which team members are participating in team processes. Team members will become more eager to share and adopt all present information and dissimilarities can be decreased. Man and woman can develop trust and understanding without conflicting opinions and misunderstandings (Epitropaki & Martin, 1999). In that sense, interpersonal attraction will rise and understanding and commitment about delegation of tasks and responsibilities will increase, which was the foundation of the occurrence of process conflict. This results in less process conflict in teams with high gender diversity when having a participative leader.

Hypothesis 3a: Participative leadership moderates the relationship between diversity in gender and the level of process conflict. The higher the degree of participative leadership, the less strong the positive relationship between diversity and process conflict will be.

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this situation in which closed subgroups base their opinions mostly on prejudices and expected unfairness (Snap & Redman, 2003). To avoid prejudices and feelings of unfairness, it is very important that all employees are given the space to share thoughts and values in order to improve team identification of all members within the team (Van der Vegt & Bunderson, 2005). When both groups are involved in decision making to the same extent and both are able to express new ideas, but also their concerns, distance between age-groups can be lessened. This is also an opportunity for the participative leader to show that he does not value the contribution of a certain age-group less than the contribution of employees from the different age-group (Avery et al., 2007). When the different age-groups feel not threatened by the other age-group, it becomes easier to share ideas and thoughts and combine qualities in order to achieve team outcomes. Together with the participative leader they can come to agreements about delegation of tasks and responsibilities, which implies reduction of process conflict. In this situation all members are given the opportunities they prefer. In that sense, present knowledge is restored and new talent is encouraged to develop.

Hypothesis 3b: Participative leadership moderates the relationship between diversity in age and the level of process conflict. The higher the degree of participative leadership , the less strong the positive relationship between diversity in age and process conflict will be.

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avoided. This is also because lower educated employees will feel more appreciated and accept their position within the team.

Hypothesis 3c: Participative leadership moderates the relationship between diversity in level of education and the level of process conflict. The higher the degree of participative leadership, the less strong the positive relationship between diversity in educational level and process conflict will be.

Figure 1 Research model

2. METHODS

2.1 Procedure and respondents

To carry out the research and test the hypotheses, valid data was obtained out of the work field. Teams were approached to fill in a questionnaire with regard to team work, incorporating questions about the used variables within this research. The teams had to consist out of minimally one team leader and three employees and its members needed to have a minimum level of education. This resulted in a diverse data set with 34 teams from different sectors like the healthcare sector, the financial sector et cetera.

The questionnaire was specifically designed to provide information about the variables used in the research model of this paper. Out of the 34 teams 183 people were handed over the

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questionnaire. After an agreed period of time, 168 people returned a filled in questionnaire. This resulted in a response rate of 91,8%.

The mean age of the respondents was 37.63 years (SD= 11.99). Excluding missing values 37% of the total respondents were female and 63% of them were male. The mean time that the respondents have been working in these teams was 4 years and 11 months (SD= 6.22). Finally the average team size was 5.94 persons (SD= 1.94).

2.2 Measurement instruments

Every variable was covered in the questionnaire by several questions. These questions had different scales and were measured on the team level. For every variable the reliability was tested by calculating the Cronbach’s alpha.

Demographic Diversity. In the database that was derived from the collected questionnaires, there were three questions that measured the diversity aspects age, gender and level of education. Respondents were asked whether they were male or female and to fill in their age in years. The standard deviation of the level of age and gender was used as an indicator of diversity. The level of education was measured by giving the respondents the option to select their highest completed education. Starting with only finishing primary school and ending with a university degree. To measure diversity, the formula of Blau (1977) was used, , where p is the proportion of a group in the ith category. A higher index score indicated greater expertise diversity among team members (Van der Vegt & Bunderson, 2005).

Process Conflict. Three items were used to measure the degree of process conflict within the participating teams (Jehn & Mannix, 2001). An example item for this variable is the frequency of occurred disagreements about who should do what within the team. The used scale for these items was 1 (‘never’) to 5 (‘very often’). Conducting a reliability analysis on these items resulted in a Cronbach’s alpha of 0.88.

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Control Variable. Team size was chosen to be used in the analysis as control variable to control for all the outcomes. Team size is expected to influence process conflict, because larger teams involve more opinions and make it more difficult to come to agreements about work delegation. Also letting all people participate in decision making is more complex when there are more people involved in team processes.

2.3 Data analysis

For analyzing the data a multiple regression analysis was carried out. The independent variable, the moderator and control variable were standardized into Z-values. All individual perceptions were aggregated to the team level and an interaction term was created by multiplying the standardized independent variable with the standardized moderator.

3. RESULTS

Table 1 Correlation table

Means, standard deviations and intercorrelations of all variables (N=34)

Variable Mean SD 1 2 3 4 5 1 Team Size 4.91 1.91 2 Gender Diversity 0.37 0.23 0.14 3 Age Diversity 7.07 3.94 0.13 0.04 4 Educational Diversity 0.75 0.46 0.31 -0.04 0.02 5 Participative Leadership 3.82 0.59 -0.03 -0.05 0.16 0.28 6 Process Conflict 2.01 0.56 -0.30 0.20 -0.16 0.15 -0.40 * p < 0.05

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3.1 Hypothesis testing

In this paragraph the testing of the designed hypothesis is reported. For this testing, hierarchical multiple regression analysis was used. In this analysis the dependent variable was process conflict. The regression analysis can be divided into three different steps. In the first step, the control variable was selected. In the second step the independent variable and the moderator were added to the model. These were gender diversity, age diversity, educational diversity and participative leadership. During the last step, the interaction variables were entered into the analysis. In table 2 the outcomes of the regression analyses are presented. For every form of diversity a separate regression analysis was carried out to test all relations apart in order to achieve the most reliable results. The three different columns within this table represent the different regression analyses.

The first hypothesis stated that different forms of visible (age and gender) and invisible (educational) diversity result in higher levels of process conflict within teams. The second hypothesis stated that participative leadership leads to lower levels of process conflict within teams. The third hypothesis is about the expectation that participative leadership moderates the effect of the different forms of demographic diversity on process conflict and reduces the occurrence of process conflict within those teams.

The first step of the separate regression analyses showed that some part of the variation of the dependent variable was explained by the control variable (R² = 0.09, F= 3.88, p= 0.08) . Much more variance was explained in the second step of all three analyses, for gender diversity (R² = 0.31 F= 4.45, p= 0.01) as well as age diversity (R² = 0.26, F= 3.55, p= 0.03) and educational diversity (R² = 0.28, F= 3.88, p= 0.08). In the third step no additional variation was explained for gender diversity (R² = 0.31 F= 3.23, p= 0.03) and age diversity (R² = 0.26, F= 2.57, p= 0.06). Only for educational diversity an additional 6% of the variation was explained by the last step (R² = 0.34, F= 3.74, p= 0.02).

The regression analysis about gender diversity showed a positive relationship between gender diversity and process conflict (b = 0.13, t = 1.45, p= 0.16), but this relationship was not significant. Thus, hypothesis 1a will be rejected. Furthermore the separate age diversity analysis showed no relationship between the level of age diversity and process conflict

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The relationship between participative leadership and process conflict was negative as expected (b= -0.23, t= 1.96, p= 0.02). Hypothesis 2 will for that reason be accepted. The interaction effect of participating leadership and gender diversity on process conflict was not confirmed (b= 0.00, t=-0.01, p= n.s.). Hypothesis 3a therefore will be rejected. The same holds for the interaction effect of participative leadership and age diversity on process conflict (b= 0.00, t= 0.01, p= n.s.). Hypothesis 3b therefore also will be rejected. Finally the interaction effect of participative leadership and educational diversity confirmed the expectation that there is a relationship between those variables, but relationship is not completely significant (b= -0.12, t= -1.64, p= 0.11). Hypothesis 3c will for that reason be partly confirmed. In figure 2 the plotted interaction is displayed. This dotted line in this figure shows that, as expected, educational diversity leads to more process conflict when the extent of participative leadership is low. When participative leadership is high, the influence of educational diversity is lessened and has nearly no influence on process conflict, because the bold line is completely flat.

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Table 2 Regression outcomes of separate diversity analyses

Outcomes regression analysis

Variable 1 2 3

Step 1 (control variable)

R² Team Size 0.09* -0.17* 0.09* -0.17* 0.09* -0.17*

Step 2 (main effects)

R² Team Size Gender Diversity Age Diversity Educational Diversity Participative Leadership 0.31** -0.19* 0.13 -0.22** 0.26** -0.17* -0.03 -0.23** 0.28** -0.17* -0.09 -0.21**

Step 3 (interaction effect)

R² Team Size Gender Diversity Age Diversity Educational Diversity Participative Leadership Interaction Variable 1 (G.D. * P.L.) Interaction Variable 2 (A.D. * P.L.) Interaction Variable 3 (E.D. * P.L.)

0.31** -0.19* 0.13 -0.22** 0.01 0.26** -0.17* -0.03 -0.23** 0.00 0.34** -0.17* 0.10 -0.23** -0.12 * p<0.1, ** p<0.05 4. DISCUSSION 4.1 Findings

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seems that diverse teams do not suffer more from process conflict than other non-diverse teams. An explanation for the fact that this relationship is not confirmed within the analysis can be found in existing literature where demographic diversity is characterized as a ‘double-edged sword’ (Horwitz & Horwitz, 2007). At the one hand demographic diversity can have negative effects on the outcomes but on the other hand teams can benefit even more from heterogeneous team members. Demographic diverse team members tend to more make use of each other capabilities and bind together on basis of respect and a fair and respect distribution of tasks and responsibilities (Cox & Blake, 1991). From that perspective process conflict will be enclosed instead of stirred up. Possible gains that demographic diverse teams encounter are mostly focusing on diversity on the level of education. Those educational diverse teams can have a positive influence on team performance because its members bring unique cognitive attributes (Cox & Blake, 1991). This diversity in cognitive abilities can lead, on many occasions, to more innovation, creativity and problem solving (Hembrick, Cho & Chen, 1996). There are no consistent conclusions found whether the effects of diversity are more beneficial or conflict is more a factor to consider (Williams & O’Reilly, 1998). But when team members accept the fact that some of their shortcomings can be compensated by other team members abilities and combining each other strengths leads to more effectiveness, demographic diversity should not lead to more process conflict. Therefore this research gives reason to expect that diverse teams can benefit over non-diverse teams by making use of its potential (Jackson, May & Whitney, 1995).

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The final expectation that was part of the research is that participative leadership will diminish or avoid process conflict within demographic diverse teams. The relationship between diversity and conflict was expected to be different for different levels of leadership. The results of this research show that invisible (educational) diverse teams will encounter a diminishing effect on process conflict when a participative leader is working with the team. Diversity in that sense will lead to different levels of process conflict when a participating management style is chosen. The reason for this outcome can be found in the fact that such a participative leader can bundle all the present strengths of a team. Educational diverse teams possess different knowledge structures and research has found that this has a positive influence on the absorptive ability and problem solving ability of all members (Cohen & Levinthal, 1990). But this can only succeed when members are triggered to share thoughts and participate all in decision making, which a participative leader encourages. Such a leader will always prevent dissimilarities in attitudes which decreases interactions among team members and negatively affects problem-solving processes (Tulsi & O’Reilly, 1998). Interaction and information sharing in that sense is the key to benefit from diversity instead of the possibility of conflict to evolve.

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4.2 Theoretical implications

The discussed outcomes have some theoretical implications when they are placed within the existing literature. Participative leadership has been proven a very important factor in reducing conflict within all sorts of teams. In recent literature this subject of a participative way of managing teams is not frequently and exhaustive discussed. Many decades ago it was first thoroughly explained that a participative style of management could enhance the performance of team members and increase cohesion (Barnard, 1938). After these conclusion, participative leadership has been subject of research in a fragmented and non-frequent manner. Research on this subject is especially based on the relation between the leader, the organization and the team members (Moorman, 1991). This so-called motivational model focuses on the effort team members are willing to put in their job as a reaction on the way they are treated by their supervisor and the organization. This way of looking at participative leadership doesn’t include interpersonal relations and conflict between team members within their argumentation (Zallars & Tepper, 2003). For this reason the results of this research can be of value for the other, very rarely discussed, movement within the participative leadership literature. These researches are based on the model of the exchange-based model which is based on feelings of fairness, respect and trust towards participative leaders and their team members (Bijlsma & Van der Bunt, 2003). The effects on process conflict aren’t discussed in literature yet and can be considered as an extension on existing literature which up till now only was focused on motivational consequences and not on the effects of interpersonal relations between team members.

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performance deficits due to process losses (Steiner, 1972). In that sense team members are more pushed in order to come to agreements about delegation of tasks and more control from the management on this can be expected. Subgroups are not given the space to influence team process to a great extent and are more easy to control when teams a management in a more strict and structured way. For that reason this possible interaction effect could be very interesting for diverse teams which are threatened by the forming of subgroups and performance deficits due to motivational drops and conflict.

4.3 Practical implications

Within this research no differences were found between the occurrence of process conflict within diverse and non-diverse teams. The evolvement of process conflict is most probably dependent on other factors than the visible characteristics of its members and their level of education. The fact that process conflict within the participating diverse teams can be considered equal to other teams provide opportunities for team leaders to just benefit from the potential that diverse teams have. By focusing on making use of all present knowledge and combining skills and abilities, team leaders will be able to be more innovative and even more effective.

Participative leadership has been proven a very important tool in reducing process conflict within teams. In reality this means that leaders who are encouraging their team members to interact more together and form opinions about group processes and discuss them together will create more agreement among team members. But an important finding of this research is that diversity can just be partly managed by a participative leader. Low levels of this particular leadership style are especially harmful to teams with invisible diversity. In such a case the participative leader creates the opportunity to make hidden feelings of discontent and concerns visible by encouraging the frequency and content of information sharing. In cases of visible diversity there is no relation to the level of conflict, independent of the level of participative leadership. In such a situation other factors may have more influence on the occurrence of conflict. Those factors should be part of future research in order to give more insight on an effective way of managing visible diversity.

4.4 Strong and weak points

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operating in different sectors. This means that they represent a broad spectrum of teams and therefore the results should be considered as a blueprint of reality.

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