In 2003, Bill Swann, a professor of psychology at the University of Texas at Austin, set out to discover how employee diversity within work groups affects the group's overall performance. Swann and his colleagues created a group of 400 MBA students for the purposes of the study, and split the students into groups of four to six members with diverse backgrounds. Over the course of their first semester, the students were required work together in these groups, and their effectiveness was measured by their performance at the end of the semester.

The working theory proposed that people from diverse backgrounds, be it race, age, gender, or geography, could approach a problem from different viewpoints, and, armed with a collective range of knowledge and experience, produce a better finished product. The theory also postulated that in order to overcome the differences in background, employees should downplay their personal identities in order to align themselves with the goals of the "team."

Swann found that only partly true.

According to Swann, groups with members who "externalized their personal identities" (i.e. students who expressed individuality) were more successful than groups with members who tended to downplay their personalities. In essence, Swann found that diversity did indeed foster innovation—but only if that diversity was embraced by the group.

"Our research indicates that expressing personal identities in groups seems to have beneficial effects because those who express themselves are more likely to feel known and understood, because they actually are better known and understood," Swann says. "Feeling known and understood causes people to open up, which can foster creative solutions to problems confronting the group."

Many companies recognize that diversity is an essential component of doing business, but diversity is more than just a representation in numbers. Research suggests that diverse work groups fosters innovation, so how do companies set up cultures that enable employees to feel valued and have their opinions heard? Here, a few experts weigh in on how diversity within a company can be used as a strategic advantage that creates better innovation, better products, and ultimately, a better company.

Fostering Diversity in the Workplace: A Culture that Embraces Diversity

Before an organization will reap the rewards of a diverse work environment, it's essential to have an infrastructure set up that not only supports diversity, but also celebrates it, according to Simma Lieberman, a diversity consultant and author based in Berkeley, California.

The company's culture needs to reflect an environment where all employees feel comfortable and valued, and where offering their opinions is encouraged. "You can't just have [diversity] training, and you can't just train one person," she says. "You need to have a whole culture that becomes part of the organization's DNA."

By setting up an organization that recognizes—and embraces—employee diversity, it creates opportunities for people to interact in meaningful ways within the organization. That diversity can be leveraged, too. For example, large companies like Coke have historically set up affinity groups, which are cross-organizational teams set up with members from a similar demographic or social background. Setting up these groups may benefit your organization for a variety of reasons, experts say.

First, such groups can teach new employees about the organizational culture, and educate them how to be successful within the company. Second, the group gives existing employees a way to develop relationships and connect with people across company groups. Perhaps most importantly, these groups can be used as resources for your company's marketing needs. By setting up mini-focus groups of an intended demographic, these affinity groups can gauge the effectiveness of a marketing campaign. "You're always able to use their knowledge to help you design the marketing campaign," says Lieberman.

Having a diverse workforce with a strong culture of individualism has profound effects on internal employee relations, but it can also assist in obtaining new clients. "Diversity gives you greater access because you're actually a building an environment where your potential customers recognize a different element within your organization and you're able to help them execute better," says Stephan Reeves, CEO of Montage Companies, a diversity consulting company based in Philadelphia.

According to Lieberman, it all comes down to creating a vibe, or a feeling, that helps employees love being there. It's like being "part of an exclusive club that everyone wants to belong to," she says. "The employees transfer that feeling to the customers and bring them into the club."

Dig Deeper: Managing Diversity

Fostering Diversity in the Workplace: A Broader Definition of Diversity

Diversity can be a loaded term, filled with connotation about race and gender, but that's not always the case. Personality, talent, and experience are also important traits to consider when creating a diverse work group.

Barbara Annis, who chairs the Women's Leadership Board at Harvard's Kennedy School of Government, says that using diversity as a competitive advantage starts with an understanding that a diverse way of thinking improves results. According to Annis, managers tend to value employees that think like them. But being a "team player" doesn't mean that your employee must agree with you.

"We can't afford to do that anymore," she says. "We really need to understand things from a much more diverse perspective, because that's the global world we live. For some managers that means shifting the gear in how they listen and how they treat diverse people."

Annis is also the president of Barbara Annis & Associates, a consulting company she founded to help organizations move beyond diversity issues that stymie a company's growth. Annis explains that the "sameness" value is an incredibly significant part of many organizations that needs to be overcome, especially surrounding issues of gender equality.

"What happens is that if the culture is based on sameness, women take more males characteristics on," she says.  "I call it the 'third sex:' they become the tough women when they don't need to do that."

In the 1980's, IBM had an ad that said that said "Great minds think alike," says Annis. Eventually, IBM changed the ad to read: "Great minds think unalike." The point is clear enough: a diversity of knowledge, talents, and experience helps companies grow.

Dig Deeper: Workers Question Diversity Efforts

Diversity in the Workplace: Hiring Practices

Ultimately, creating a successfully diverse work environment that fosters innovation comes down to one thing: hiring the right people—and, as a whole, the right group of people. Depending on the job function and industry, the "right" person for the job may not be who you expect.

It's important to find out what that person values, and how they, as an individual, can bring a specific skill set to the organization. A personality test, like Briggs Meyers, can be helpful, but should not to be overused. "It puts people in a box," Lieberman says.

On the other side of the coin, however, there will be employees whose opinions and approaches might not be the best for the company. While inviting a diverse array of opinions is crucial for success, it's just as important to watch out for people whose opinions work counter to the progress of a company's growth. Pravin Pillay, an organizational ecologist based in British Columbia says, that it's necessary to "continuously weed and seed" the right—and wrong—employees from the company.

"Compassionately exit those who are not engaging with the group or the mission or whose primary values do not enhance the drive towards deepening performance and group health," he says.

Fostering Diversity in the Workplace: Dealing With Challenges

The major challenge of achieving an effective diverse pool of employees is not filling quotas or hiring a certain amount of people from a specific demographic. The major challenge managers face is creating the environment where people feel comfortable expressing diverse opinions.

Lieberman says that onus falls on managers and CEOs. Organizational leadership must set the tone and implement actual processes where people with diverse talents, personalities, and backgrounds freely exhchange their ideas. There needs to be a recognition that there's not just one correct way of doing things, she says. "Being appreciated makes you want to be more creative willing to offer your ideas."

Ultimately, it's helpful to remember that your employees are probably smarter than you think. But it's giving them an outlet—and helping them use their strengths—that will lead to a more innovative environment. And in the end, it all comes down to good leadership. "In order to be able to leverage diversity of talent, a good leader knows how to uncover employee genius," Lieberman says.