Demographic faultlines: be very careful!

Faultine strength captures how many demographic attributes align within a group or, in other words, how cleanly a group may split into two homogeneous subgroups (emphasis on similarities).

We can have a high diversity in a team and a very weak faultline strength.

Faultlines affect team functioning depending on the type:

• Demographic faultlines have a negative effect: reduce cohesion and increase conflict
• Ability and personality faultlines have a lesser effect

Source: Molleman, Group Decision and Negotiation, 2005

Even in Top Management Teams (TMT), faultlines has impacts, impacting the firm expansion:

• The more international experience in the TMT, the more likely to invest in novel foreign territories.
• The stronger the demographic faultline in the TMT, the less likely to invest in novel foreign territories

Source: Barkema and Shyrkov, Strategic Management Journal, 2006

Strong TMT faultline has a negative effect on firm profitability.

Source: Van Knippenberg et al., Human Relations, 2010

To compensate that negative faultline, you must develop shared vision: shared vision, shared goal, shared objectives.

Conclusion:
Demographic diversity enables diverse backgrounds and inputs but increases conflict.

The stronger the faultline, the greater likelihood of teamwork breaking down and falling trap to diversity rejection.