Board Heterogeneity and Organizational Performance

Keeping up with the best practices of board governance is hard. If only you had a friendly neighborhood board portal to keep you apprised of the latest research. Well now, you do! Our series, Research Recap focuses on keeping you in the loop. Say goodbye to the pages of pretentious pedagogy. Everything you need is right here.

The Publication

Journal of Business Ethics

The Article

Board Heterogeneity and Organisational Performance: The Mediating Effects of Line Managers and Staff Satisfaction

(They use an “s” in “Organisational”, so you know it’s fancy.)

The Research

Empirical: Conclusions are supported by data gathered through structured experimentation.

Theoretical: No hard numbers. Conclusions are drawn using logic supported by existing research.

The Set-Up

Researchers pulled data from 102 boards of directors (from a study on hospital trusts in the United Kingdom). They ran that data through a bunch of equations we’re not going to get into here because, come on. Their goal was to determine two things:

  • Does TMT heterogeneity affect performance?
  • If so, in what ways?

A lack of heterogeneity, in this context, means lacking of diversity in a number of ways: gender, race/ethnicity, religion, professional background; the list goes on. Basically, we’re talking about the kind of board where everyone is there because they know someone. They look the same, they sound the same, and they agree with each other in one continuous feedback loop.

Note: while the title of the paper suggests that the study looks solely at heterogeneity amongst board members, the research broadens this to examine heterogeneity within a company’s top management team (or TMT). It can be inferred from the study that a firm’s TMT includes board members and executive-level employees.

The Takeaways

The results of this study indicate the following:

  • TMT heterogeneity positively affects a company’s performance.
  • The extent of this positive impact appears to be magnified by (a) the “mediating role” of line managers, and (b) the magnitude of employee satisfaction.
  • The styles and practices of line managers and employee satisfaction mutually reinforce each other.

So, why does heterogeneity at the top levels of management have this effect? The researchers suggest that it cultivates a climate of openness and “productive energy”. This climate improves the “perceptions of fairness, diversity and trust” amongst those on the lower rungs of the corporate ladder. The study also described the environment supported by maintaining diversity in the TMT as promoting “participation”, “responsiveness” and “engagement”.

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47 minutes, 35 seconds

Estimated reading time of our article = 1 minute, 59 seconds.

Estimated reading time of the research = 49 minutes, 24 seconds

In 47 minutes, 35 seconds you could…

  • Pick up a new hobby.
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And, obviously, 47 minutes, 35 seconds is more than enough time to schedule a demo of the Directorpoint Board Management Platform. Come learn what we’re doing to help businesses make better decisions… across the board!

The Source(s)

Blanco-Oliver, A. 1. ajpass:[_]blanco@us. e., Veronesi, G. ., & Kirkpatrick, I. . (2018). Board Heterogeneity and Organisational Performance: The Mediating Effects of Line Managers and Staff Satisfaction. Journal of Business Ethics, 152(2), 393–407. https://doi.org/10.1007/s10551-016-3290-8

Heterogeneity. (n.d.). Retrieved November 27, 2018, from https://www.merriam-webster.com/dictionary/heterogeneity

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