







































Abstract: Diversity is the growing trend in countless societies, as the world seeks to expand in its quest towards 
globalization. Past research has shown support for adding ethnic diversity into the workplace, as well as addressing 
the arguments that are against it. Before understanding the need for diversity, this paper reviews how diverse groups 
come to form. Previous research has shown there are both benefits and challenges associated with increasing ethnic 
diversity in the workplace; however, research fails to come to a consensus on how to remedy the negative effects 
that exist. By analyzing the negatives specifically, this paper posits that the negatives effects of diversity are more 
perceived than actual. The findings suggest that remedying negatives means working on reducing perceived bias. 
Several interventions have been suggested to reduce bias, real or imagined, to promote multiculturalism and foster 
inclusion in the workplace. 

Aisthesis      Volume 10,  201910

The Good, the Bad, and the Ugly: Implications of Ethnic 
Diversity in the Workplace

by Madiha Ahmed

 Companies are on a hunt, scouting regionally 
and globally for the best and brightest talent in the 
market in hopes to capitalize on human potential. 
Recruiters look for everything from soft skills to years 
of experience. However, in recent decades, a matter 
of contention has been whether or not diversity is a 
worthwhile characteristic, and what implications it 
has within a group and on an organizational level.
 This paper seeks to examine the effects of 
racial and ethnic diversity, specifically within the 
workplace. Literature over the years has indicated 
positive qualities and outcomes as a result of a more 
diverse group. At the same time, it also suggests that 
there are drawbacks to ethnic diversity. The gap in 
the literature involves the lack of consensus on how 
to address the drawbacks and remedy these negative 
effects that seem to arise from ethnic diversity. As 
diversity continues to grow in the United States, this 
paper aims to shed light on an overlooked area of 
research: perception of threat versus the reality. 
 Recent work seems to suggest that it may be the 
idea of diversity in a group that is actually threatening 
to the group’s effectiveness rather than the group 
composition itself (Lount, Sheldon, Rink, & Phillips, 
2015). Organizations must do more than merely 
state the need for diversity; they must demonstrate 
they are willing to implement practices to tackle the 
biased perceptions of threat and foster inclusivity in 
order to recruit and retain its employees and build a 
positive work environment.

Group Formation
 In a multifaceted, multicultural world, groups 
form all around us—in neighborhoods, schools, and 
of course, the workplace. To explain this behavior, 
Tajfel and Turner (1986) proposed the social identity 
theory, which seeks to explain that individuals 
develop their sense of identity based on their group 
membership. This often becomes a large part of 
an individual’s being, as they become encouraged 
to preserve or better their social interactions after 
identifying positively with individuals within a 
group (Tajfel & Turner, 1986). 
 These positive interactions within the group 
would therefore lead to positive group performance. 
Many organizations take this to mean that a positive 
work environment that fosters a sense of identity is 
good enough to create efficient groups, regardless 
of diversity. But as economies are advancing and 
becoming more ethnically diverse, it is important to 
first understand the role of diversity in groups before 
promoting or vilifying it.

Diversity in Groups
 The landscape of organization behavior in the 
United States is slowly shifting to accommodate 
diversity. While diversity in terms of gender, for 
example, is commonly discussed, this paper seeks to 
shed light on a more complex type of diversity—race 
and ethnicity. For the purposes of this paper, the two 



The Good, the Bad, and the Ugly: Implications of Ethnic Diversity in the Workplace

Aisthesis      Volume 10,  201911

words will be used interchangeably. Ethnicity will 
primarily be defined by race, culture, nationality or 
geographic location. It is acknowledged that other 
psychological and cultural variables, such as values, 
attitudes, and the wider social context of experiences, 
are inherent in this definition as well. 
 While other forms of diversity are equally 
important, race and ethnicity are the focus of this 
paper because of how prevalent the topic has become, 
specifically when considering tensions in the United 
States in terms of racism and immigration on both 
a societal and political level. Diversity affects every 
level of social behavior, from how we interact with 
others to how we view the idea of the “other” as a 
whole.  
 Before discussing the positives and negatives 
associated with ethnic diversity in the workplace, it 
is imperative to understand why any group generally 
should strive towards increasing diversity. After all, if 
the group is functioning well enough without actively 
seeking out diversity, what is the harm? In reality, 
groups lessen their own potential by choosing not 
to engage with innate or acquired diversity, stifling 
innovation and leaving themselves with fewer ideas 
(Hewlett, 2013).  Not only that, but in the United 
States alone, “half of all infants under the age of 1 
in 2010 were members of a racial or ethnic minority 
group” (Hunt, Layton & Prince, 2015). Thus, it will 
soon be impossible to avoid diversity in society, so 
the goal must be to learn to adapt and hopefully 
appreciate it.

Theoretical Framework on Diversity in the 
Workplace
 Ortlieb and Sieben (2013) worked to create a 
theoretically grounded framework to understand 
why companies choose to employ ethnic minorities. 
They based their framework on the resource 
dependence theory (Pfeffer & Salancik, 1978), which 
explains how organizational behavior is influenced 
by external resources the organization utilizes. It 
proposes that there must be some transactional 
value when acquiring said resources, whatever they 
may be. In the case of Ortlieb and Sieben (2013), 
they argue that an organization’s dependency on 
minorities is what leads companies to hire them, and 
that these minorities possess value that they would 
then share with the organization they work for.

 This theoretical framework supports much 
evidence that indicates that ethnic diversity is of 
value. To converge the theory with practice, we should 
look no further than data promoting heterogeneous 
groups in general. In the past decade, evidence has 
shown that that ideas from heterogeneous groups 
were both more effective and more feasible than 
those of homogenous groups, with the latter group 
lacking in perspective and diversity in thought 
(Mcleod, Lobel & Cox, 1996). 
 Understanding how any level of heterogeneity in 
a group makes them better and builds the credibility 
of ethnic diversity to yield positive results as well. In 
fact, Cox and Blake (1991) found that ethnic diversity, 
when properly managed, yields noticeable positive 
effects on organizational outcomes and serves as 
a source of competitive advantage. More recently, 
work has shown that more diverse organizations 
have broader talent pools from which to recruit and 
compete in the changing world (Hunt et al., 2015). 
Therefore, it befits organizations to discover ways to 
capitalize on the benefits of ethnic diversity. 

Positives in the Workplace
 Ethnic diversity positively contributes to the 
workplace in many ways, three of which will be 
discussed in this review: higher job satisfaction, 
increased financial performance, and better decision-
making. 
 Paletz, Peng, and Maslach (2004) found that 
teams mostly comprised of ethnic minorities rated 
the group they worked with to be more pleasurable 
and reported experiencing more positive emotions 
towards group members. It is hardly surprising that 
workers from ethnic minority backgrounds report 
higher job and life satisfaction in more diverse 
workplaces, as Hunt et al. (2015) explain that simply 
the presence of minority group members in a larger 
group boosts a minority member’s confidence and 
self-esteem, breaking down the feelings that would 
normally lead to exclusion. Additionally, when 
groups are not as ethnically diverse, employees 
still identify positively in those teams when group 
members hold beliefs that are pro-diversity (Dick, 
Knippenberg, Hägele, Guillaume, & Brodbeck, 
2008). As understood by the similarity attraction 
effect, similar individuals find social reinforcement 
in those relationships because they possess opinions 



The Good, the Bad, and the Ugly: Implications of Ethnic Diversity in the Workplace

Aisthesis      Volume 10,  201912

and worldviews that validate each other (Reis, 
Baumeister, & Vohs, 2007). This social reinforcement 
would therefore lead to workers feeling higher job 
satisfaction. 
 Secondly, ethnically diverse groups have been 
found to be a great asset financially. Research by 
Hunt and her colleagues confirmed that companies 
in the top quartile for racial/ethnic diversity were 
35 percent more likely to attain financial yields 
above their national industry median. Not only that, 
but ethnic diversity in teams, particularly on the 
executive level, was seen to positively correlate with 
financial performance in countries worldwide (Hunt 
et al., 2015). However, some research suggests there is 
a greater reason to this financial prosperity in diverse 
spaces. In one study, researchers surveyed executives 
at 177 national banks in the U.S., putting together 
a database comparing financial performance, racial 
diversity, and the emphasis the bank presidents 
put on innovation (Richard, McMillan, Chadwick 
& Dwyer, 2003). For innovation-focused banks, 
increases in racial diversity were distinctly related to 
elevated financial performance. 
 Finally, there has been work done to support how 
ethnic diversity enhances decision-making in work 
groups. In a stock-trading simulation, one study 
found that if the traders were ethnically diverse, 
they made better decisions (Levine et al., 2014). 
Furthermore, published research from academia, 
corporations, and other organizations supports 
that diverse and inclusive groups have an enhanced 
quality of decisions and are often faster and accurate, 
with less instances of groupthink or cognitive bias 
(Hunt et al., 2015).  

Negatives in the Workplace
 Though there is a consensus on the value ethnic 
diversity has the potential to bring, some research 
indicates some negative effects of diversity in the 
workplace. These effects are categorized into three 
types: individual performance, cohesion, and 
turnover. After explaining the arguments made 
against ethnic diversity, the paper aims to shift the 
perspective from which these negatives are perceived. 
 Impact on performance. Chatman and Flynn 
(2001) studied the influence of demographic 
heterogeneity to gain insight on team performance. 
Five-person groups were created to take part in 

this study. Controlling for the demographics (race, 
gender and citizenship status) and contact among 
groups, Chatman and Flynn (2001) examined team 
performance, among other variables. They found 
that at the individual level, culturally dissimilar work 
group members were less socially integrated, which 
ultimately led to lower individual performance 
(Chatman and Flynn, 2001). This can occur because 
deep-level, psychological differences become more 
evident as groups with surface-level or demographic 
differences work together (Harrison, Price, Gavin, & 
Florey, 2002).
      Feeling less social integration can lead to worries 
which limit ethnically different group members’ 
desire to engage in learning behaviors, such as asking 
for help or publicly experimenting. As a result, their 
learning outcome potential, or how likely they are to 
learn, rapidly shrinks. Studies indicate that the more 
diverse the group, the lower a minority member’s 
learning outcome potential becomes (Brodbeck, 
Guillaume, & Lee, 2010).
 Another finding by Richard, Murthi and Ismail 
(2007) indicates that in a stable environment 
where there is a low rate of unpredictable change 
within the organization, there is a negative impact 
on intermediate performance as racial diversity 
increases. They found a U-shaped relationship 
between racial diversity and productivity most 
prominently in service-oriented firms.
 Impact on cohesion. A more contemporary study 
took a close look at the impact of cohesion in diverse 
groups. It anticipated that ethnic diversity is likely 
to constrain work unit cohesion, which in turn leads 
to lower work unit performance, specifically when 
the work unit is comprised of two ethnic subgroups 
separated by a large status difference (Leslie, 2016). 
The research measured performance and cohesion 
by surveying 743 bank employees. They looked at 
both ethnic status and ethnic status subgroup (ESS) 
within their work groups. ESS categorized minorities 
based on their perceived societal status, assigning the 
top tier to Asians, then Blacks, and then Hispanics. 
Survey results indicated work unit performance is 
negatively related to cohesion when there are large 
differences in status among the ethnic subgroups 
(Leslie, 2016). Essentially, large status differences 
lead to more negativity, implying that diversity may 
just bring more issues into a room.



The Good, the Bad, and the Ugly: Implications of Ethnic Diversity in the Workplace

Aisthesis      Volume 10,  201913

 Impact on turnover. Diverse groups have been 
found to have more difficulty communicating, and 
communication difficulties can increase turnover 
(Price & Mueller, 1981). Even among native English 
speakers, racial and gender diversity often make 
communication difficult. A report from 2015 
showed that Black and Latino workers in tech 
were 3.5 times more likely to quit than their White 
or Asian colleagues (Scott, Klein, & Onovakpuri, 
2017). Leonard and Levine (2006) looked for the 
relationship between ethnic diversity and turnover 
rates but found no strong association between the 
two. Instead, their findings suggest that the harmful 
outcomes of diversity, such as negative affect (e.g. 
lower personal attraction) and communication 
difficulties, lead to a higher turnover of ethnic 
minorities.

Perceiving the Bias
 Rather than take the aforementioned negatives at 
face value, it is necessary to step back and be critical of 
all the data that leads researchers to their conclusions. 
What hurts ethnic groups both in research and society 
is the idea of perceived bias, in which individuals 
implicitly believe that increased  diversity will lead 
to increased ingroup conflict. Oftentimes diverse or 
minority individuals are socialized to feel that they 
may fall under a negative cultural stereotype, which 
may lead to conflicts in groups due to their constant 
vigilance. Therefore, having that bias, conscious 
or unconscious, leads to a self-fulfilling prophecy, 
especially when the research is based on a self-report 
measure.  
 The reality is that while yes, diversity can increase 
conflict, it is more nuanced than most would believe. 
Lount, Sheldon, Rink and Phillips (2015) suggest 
that people overestimate the amount of conflict 
that truly exists on diverse teams. They tested this 
by asking MBA students to imagine that they were 
co-managing several four-person teams of interns, 
with one team asking for additional resources. After 
seeing photos of the team members—all Black men, 
all White men, or two of each—the MBA students 
read a transcript of discussions from each group and 
then rated the teams on various items. Surprisingly, 
though every group read the same transcript, the 
teams of four White men and four Black men were 
seen as having equal levels of relationship conflict, 

while the diverse teams were seen as having more 
relationship conflict. Furthermore, this perception 
of greater conflict made the participants less likely 
to provide the additional resources the more diverse 
group had requested. Hunt et al. (2010) suggest 
that participants may have assumed more conflict 
in diverse teams because of implicit stereotypes, 
ingroup favoritism, and outgroup homogeneity bias.
 Implicit stereotypes are sometimes referred to as 
subconscious bias. This is the tendency for humans 
to associate groups of people with certain traits, such 
as Black men and crime. Ingroup favoritism occurs 
when humans start to prefer people who look like 
themselves, which would innately influence Whites 
to work with Whites, and so on. And conversely, 
the outgroup homogeneity bias is the tendency for 
individuals to think their “ingroup” (the group they 
belong to) is more diverse, while their “outgroup” is 
more homogeneous, with members who appear alike 
or even interchangeable (Park & Rothbart, 1982; Park 
& Judd, 1990). So, for example, Whites may believe 
that all Mexicans must be good at landscaping, while 
believing that their own race or culture pursue many 
diverse careers.
 These three cognitive responses to diversity and 
difference account for the results from Lount et al.’s 
(2010) study, and similarly explains social behavior 
in the face of diversity. It is through studies like 
this that bring to light a very stark reality: nothing 
is always what it seems. Once our social identity is 
formed with a group (our ingroup), there will always 
automatically be an outgroup, who is typically looked 
down upon. The conjecture of this paper is therefore 
that in reality, it may be that the negative effects of 
ethnic diversity found by some researchers are due 
to some form of perceived bias and other external 
factors.

Reintroduction of the “Negatives”
 The findings below are not meant to be 
counterarguments to the previously stated negative 
effects but are merely meant to shift the perspective 
from which negative effects of ethnic diversity are 
seen. The impacts on performance, cohesion and 
turnover rates are reintroduced using a more positive 
approach. 
 Impact on performance. As described earlier, 
Brodbeck et al. (2010) found a negative correlation 
between an individual’s ethnic dissimilarity and 



The Good, the Bad, and the Ugly: Implications of Ethnic Diversity in the Workplace

Aisthesis      Volume 10,  201914

their individual learning outcome. They tested this 
by collecting data through two business simulation 
courses. In total, they consisted of ten ethnically 
homogenous work groups and 77 groups from 
which members were from two or more different 
ethnic backgrounds who worked together for two 
consecutive years. In addition, they also found that 
learning outcomes of ethnic minorities on a team 
decreased individually, but their work on the team 
positively contributed to the overall group’s learning 
outcomes. 
 Similarly, the same work that found lower 
productivity with higher racial diversity in the short 
term, concluded that racial diversity does have a 
positive linear effect on long-term performance, 
especially in resource-rich environments (Richard, 
Murthi, & Ismail, 2007). Productivity was 
hypothesized to be lower in the short term because 
varying levels of heterogeneity may affect association 
and interaction amongst organizational members; 
however, over time, that difference fades.
 Impact on cohesion.  Leslie’s (2016) study does not 
suggest that work unit ethnic diversity categorically 
lowers performance, as it’s important to consider 
the degree of dissimilarity within each group. For 
instance, while her findings suggest the lowest 
levels of cohesion occur in groups comprised of two 
ethnic subgroups with a very high-status distance 
(Whites and Blacks), more cohesion exists between 
two relatively low status ethnic subgroups (Hispanic 
Americans and Blacks), as the degree of dissimilarity 
is smaller.
 Impact on turnover rates. Historically, there has 
never been any proven causal relationship between 
the level of ethnic diversity in an organization and its 
turnover rate. Some studies interpret these turnover 
rates as the result of negative behavior experienced in 
the workplace, such as not being socially integrated 
within their group. It is this negative environment 
that actually leads ethnic minorities to leave, not their 
inability to function in a diverse setting. In reality, 
isolation from co-workers and from customers 
has been often associated with higher turnover 
(Leonard & Levine, 2006). Forty percent of African 
Americans, 16% of Hispanics, and 13% of Asians 
reported that they have experienced discrimination 
in the workplace due to their ethnicity, as compared 
to only five percent of Caucasians (Hunt, 2015). 

This reveals that the behavior of group members in 
a diverse setting is more important than simply the 
diverse group composition.

Interventions for the Perceived Bias
 Clearly, bias can have a significant impact not 
only on recruitment but also on the ways in which 
leaders create teams and encourage collaboration. 
Without realizing it, they may be reluctant to add 
diversity to a team or to assign colleagues with 
different backgrounds to work together, in response 
to an arguably overblown fear of potential tension and 
difficulty that could ensue. There are a couple ways 
in which organizations can begin to intervene before 
bias seeps in, specifically by priming and exposing 
groups to multiculturalism and by emphasizing the 
value of diversity.
 In a study conducted by Plaut, Thomas, and 
Goren (2009), pairs of students (one White and 
one Aboriginal Canadian) were teamed up for a 
conversation. Results established a few significant 
discoveries: the value of multiculturalism, the 
dangers of colorblindness, and the effect on minority 
engagement. Prefacing meetings with a message 
supporting multiculturalism (versus no message) 
made the meeting more positive, while one endorsing 
colorblindness led Whites to act negatively toward 
their minority partners. Plaut et al. (2009) therefore 
concluded that multiculturalism predicts decreased 
bias and thus contributes to a positive diversity 
climate, while color blindness predicts the opposite. 
Whites’ acceptance of multiculturalism was also 
associated with higher minority engagement with 
their White coworkers.
 To emphasize the value of diversity, this paper 
posits that organizations may want to avoid the 
common ingroup identity model (Gaetner & 
Dovidio, 2012). This model proposes that intergroup 
bias can be reduced by shifting the groups’ view from 
“us” and “them” to a more inclusive “we.” While this 
method has been shown to help intergroup conflict, 
it may drain the value that the ingroup itself brings 
to the table. Moreover, the minimization of group 
differences could reinforce majority dominance 
and minority marginalization. This behavior, 
especially when intergroup conflict is not prevalent, 
promotes colorblindness in a sense, as there would 
be the assumption that “we” all have similar values, 
thoughts, and ideas.



The Good, the Bad, and the Ugly: Implications of Ethnic Diversity in the Workplace

Aisthesis      Volume 10,  201915

 People of color too often feel that they have to 
hide their true identities, the discomfort of which 
only breeds distance and distrust on both ends. 
More than 35 percent of African Americans and 
Hispanics and 45 percent of Asians, for instance, 
say they must act differently (e.g., by not speaking 
their native language or not bringing ethnic food for 
lunch) to conform to their company’s standards of 
demeanor or style. An alarming fifth of Hispanics, 
third of African-Americans and 29 percent of Asians 
surveyed believe that at their companies, a person of 
color would not get an executive position and have 
their voice heard (Hewlett, 2012). Many studies, such 
as Brodbeck et. al (2010), have found that a biased 
assumption (based on faulty negative stereotypes) of 
minority groups makes them feel less able to speak 
up and feel heard. In other words, the opportunity 
to have their voices heard as part of organized, 
respectful, and informative discussions is valuable, 
as it may help address the issue of perceived bias.  

From Diversity to Inclusion
 In perceiving and acknowledging the bias 
present in research and society, organizations can 
get closer to eradicating bias and negative emotional 
response/affect before it begins. To do so, groups and 
organizations must foster inclusion. While diversity 
programs are a good first step, bias prevention and 
intervention trainings as well as integrative and 
inclusive practices must be emphasized if any true 
progress is to be made. In reality, the unfamiliarity 
that comes with diversity is a major catalyst for 
creativity and thinking. Once that is encouraged and 
appreciated, the organization—and everyone in it—
are bound to reap the rewards. 
 One tangible model that organizations can refer 
to as they work toward addressing perceived bias 
is a model of intercultural competence (Deardorff, 
2006). This framework illustrates that it is possible 
for an individual to have the requisite attitudes of 
respect, openness and curiosity, yet still be only 
marginally effective and appropriate in behavior and 
communication, without any further knowledge or 
skills. Adding knowledge through cultural awareness 
and skills (listening, observing and analyzing) 
ensures that an individual can be more effective 
and appropriate in their intercultural interactions. 

With added flexibility, adaptability, and empathy, 
one can be even more effective and appropriate in 
intercultural interactions. 
 This further illustrates that intercultural 
competence is a process—a lifelong process that 
has no level of perfection. Therefore, individuals 
and organizations following this framework must 
pay attention to the development process of how 
one acquires the necessary knowledge, skills, and 
attitudes. Through this process, groups can critically 
reflect on their ability to gain lifelong skills in the 
process of intercultural competence development.

Conclusion
 This review demonstrates that people simply 
do not experience diversity in a one- dimensional 
fashion. Given the changing demographics of the 
United States, it’s important for organizations to 
harness the potential of increasing diversity in the 
workplace instead of suppressing it. The findings 
suggest significant possibilities for meaningful 
change by incorporating inclusion into conversations 
on diversity and intervening before perceived bias 
creates conflict. Through inclusive practices and 
reducing perceived bias, we can restore balance in 
the conversation of diversity and inclusion.

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