Functional diversity encapsulates the cognitive resource diversity theory, which is the idea that diversity of cognitive resources promotes creativity and innovation, problem solving capacity, and organizational flexibility. Functionally diverse teams “consist of individuals with a variety of educational and training backgrounds working together." This differs from social diversity, which in accordance with the similarity attraction (homophily) paradigm, is the idea that individuals who are more similar together are able to work together more effectively. There is a degree of ambiguity in academic literature in the definition of functional and social diversity due to many studies in this matter either focusing on one or the other or mashing up the different characteristics. Psychologists, economists, sociologists have conducted numerous studies on diversity within groups to examine the effects on group performance. There are debates about benefits and costs of working in a functionally diverse groups. Milliken and Martins (1996) concluded that “diversity appears to be a double-edged sword”.
Benefits
According to Kent & McGrath (1969) diversity in the laboratory or classroom setting can improve “the quality of a given decision or the creativity of an idea”. Functionally diverse teams prevent excessive homogeneity, which has been found to be directly related to highly cohesive groups where groupthink, a phenomenon where there is an absence of critical thinking in a group partly caused by excessive preoccupation with maintaining cohesiveness, may occur. Most examples of groupthink in the literature have been negative and could potentially have disastrous consequences. There is also a higher level of critical analysis of decision issues and alternatives in diverse teams due to minority views. Regardless of whether the minority view prevailed, the presence of minority views encouraged consideration of alternative decisions and thorough examination of assumptions and implications of alternative scenarios. In dealing with cognitive or creative tasks, functional diversity proved to helpful. Diversity in educational backgrounds and level of knowledge can lead to an innovative idea. In a meta-analysis conducted by Bell, Villado, Lukasik, and Briggs (2011), the team found out that functional background variety diversity was positive for design and product development teams. A team composed of members from diverse functional backgrounds are exposed to broader range of perspectives and knowledge. Functionally diverse teams can spread its members across different functions, which could lead to positive team performance (Chattopadhyay, Glick, Miller & Huber, 1999). In addition, there is an argument that functional diversity in teams would make the system “less determinant, less standardized, and therefore more fluid,” which is likely to allow an organization to react to changing environments.
Creative tasks
IDEO, a design firm, successfully integrates engineering and design to produce creative innovation. Founder David Kelly on a 60 minutes segment mentioned the importance of diversity in tasks. Functional diversity allow fresh perspective, broader scope to tasks, and "obvious" questions to be asked. “IDEO’s success rests not just on the abilities of individual designers, but even more on an overall approach to design that emphasizes group work and cross-functional development.”
Costs
Although there has been much research on the benefits of functional diversity in groups, much of the early research was carried out in a laboratory or classroom setting as opposed to examining intact working groups within an organizational context. Contrary to the improved performance seen in laboratory settings, group diversity has seen substantially less benefits in intact working groups. Evidence from research on intact working groups has painted a less optimistic view of the benefits of diversity in groups due to possible dysfunctional elements such as increased stereotyping, in-group/out-group effects, dysfunctional conflict, and turnover. Studies suggest that diversity in attitudes and values may be associated with negative outcomes.