Diversity, the Learning Culture, and the Bottom Line

As the makeup of organizations and the workforce continues to change, it has become more and more apparent that an organization’s capacity for change and innovation, and ultimately its bottom-line performance, is what allows it to survive in the long-term. This capacity is greatly impacted by all types of diversity and inclusion and the learning culture, and is further mediated by psychological safety and transformational leadership, creating an even stronger link between the elements.

It is not enough to simply appreciate these competencies at a superficial level; organizations must take the time to ensure their members understand each component and apply them with purpose. In doing so, organizations demonstrate their attentiveness to their members and customers while simultaneously illustrating their flexibility and safeguarding their future.

It is no secret that organizations and the workforce landscape are changing. In fact, the past several decades have seen more women and minorities entering the workforce, continuing migrations, generational turnover, globalization, technological advances, and the like than ever before.

Additionally, the recent COVID-19 pandemic has both led to a large increase in remote work, from roughly five percent of full-time employees with office jobs working from home to 20 to 30 percent, and shown the importance of a resilient learning culture in both professional and educational settings (Levanon, 2020).

With this information in mind, it is evident that diversity and inclusion and the development of a psychologically safe environment and learning culture under transformational leadership are important elements to fostering stronger organizational capacity for change and innovation and bottom-line performance.

Organizational Capacity for Change

According to Judge (2012), organizational capacity for change is “the overall capability of an organization to either effectively prepare for or respond to an increasingly unpredictable and volatile environmental context” (p. 18). Klarner et al. (2007) defined it as 

the organization’s ability to develop and implement (change process perspective) appropriate organizational changes (change content perspective) to constantly adapt to environmental evolutions (external content) and/or organizational evolutions (internal content) in either a reactive way (adaptation) or by initiating it (pro-action). (pp. 14-15)

This capability not only includes formal systems and procedures, but human skill sets and resources and organizational culture, values, and norms (Nu’Man et al., 2007). It is the “multidimensional comprising [of] different aspects of leadership, culture, employee behavior, and an organizational infrastructure supporting organizational change” (Heckmann et al., 2015, p. 3)

In order to understand the link between these different components, organizations must first determine certain key principles, such as what diversity means to them and what kind of learning culture they want to promote. 


While “diversity” may have originally referred simply to ethnicity and race-based differences, it has also come to include “other markers of identity such as sexual orientation, gender, age and disability” (Doyle & George, 2008, p. 98).


Even still, some researchers define diversity according to categorical values (such as race, gender, and functional background) and continuous variables (such as age, level of education, and tenure) (Jehn & Bezrukova, 2004) or along bio-demographic (i.e., gender and race) and job-related (i.e., functional background and tenure status) diversities (Moon, 2016).

It is within this ambiguous context that organizations are striving to become multicultural, to be characterized “by the same or similar treatment of everyone; the consideration of majority group norms as neutral and value-free; knowledge of non-dominant cultures through cultural contact/celebrations; and issues related to diversity viewed as separate from the everyday activities of the organization” (Doyle & George, 2008, p. 101). 

However, continued efforts to understand diversity, to specifically seek to be anti-racist in today’s climate, and to be inclusive of all types of people are necessary to create a beneficial learning culture and positive change. Indeed,

Diversity and inclusion cannot be a one-time campaign or a one-off initiative. Promoting them in the workplace is a constant work-in-progress, and should be maintained and nurtured to guarantee effectiveness…For real change to happen, every individual leader needs to buy into the value of belonging – both intellectually and emotionally. (ESWARAN, 2019) 

Interestingly, while literature on diversity in the workplace is “decidedly mixed,” there are a number of major studies that have had positive findings.

Rynes & Rosen (1995) concluded that the adoption of diversity training was strongly associated with positive top management beliefs about diversity and support, organizational size, presence of diversity staff, and diversity-based objectives.

Jehn et al. (1999) found that though value diversity somewhat expectedly decreased satisfaction, intent to remain, and commitment among workgroups, informational diversity and social category diversity positively influenced performance and morale, respectively.

Bunderson & Sutcliffe’s 2002 work surmised that intrapersonal functional diversity, or the “aggregate functional breadth of team members,” also had a positive effect on information sharing and unit performance (p. 875).

Finally, Gonzales & DeNisi (2009) established that diversity climate is essential to building positive organizational identification. 


Regarding the effects of diversity on performance, two chief perspectives exist: the social organization perspective and the information/decision-making perspective.

The former is based on the theory that individuals similar to each other work together more effectively (McPherson et al., 2001); however, it also “recognizes a significant source of conflict and loss of efficiency within organizations related to the alignment of individuals along social identity lines” (Simons & Rowland, 2011, p. 174).

That is, this perspective could easily create discord within an organization as it may replicate social tensions felt between diverse groups.

On the other hand, the information/decision-making perspective “posits that the cognitive resources of each team member contribute to the overall success of the team; therefore, a diversity of the cognitive resources promotes creativity and decision making capacity” (Simons & Rowland, 2011, p. 173; Horwitz, 2005).

According to Cox & Blake (1991), this cultural diversity impacts six direct aspects of organizational effectiveness: cost, attraction of human resources, marketing success, creativity and innovation, problem-solving quality, and organizational flexibility. 

The Learning Culture

In addition to understanding diversity and promoting inclusion, organizations can also foster learning by effectively balancing exploration and exploitation.

According to Senge (2006), in order to survive in the long-term, organizations must become learning organizations where its members “continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning how to learn together” (p. 3).

Traditionally, organizations tend to focus on exploitation, doing what has been “proven” to work by repeating established processes. Yet, to truly excel in the long-term, a learning-focus “where you share information, actively develop individuals, and promote curiosity” (Smerek, 2018, p. 2) is necessary.

In short, an organizational learning culture provides a supportive social environment that influences members’ behaviors and attitudes and leads to desired outcomes (Marsick & Watkins, 2003). Other factors include nurturing leaders, a culture of continuous improvements, intuitive knowledge processes, and defined learning structures (Milway & Saxton, 2011).

These behaviors will lead to increased efficiency, productivity, and profit; increased employee satisfaction; decreased turnover; and a culture of inquiry and sharing (Nabong, 2015).

Some have also maintained that “cultural diversity is a competitive advantage and thus a ‘multicultural organization’ should be created. This…will encourage more creativity, better problem-solving and flexible adaptation to change, keeping the company ahead of the competition through mutual learning among organizational members” (Cao et al., 2003, p. 233).

Moreover, a number of studies have shown that an organizational learning culture has “significant, positive, direct, and indirect effects on an individual’s perception of performance, team performance, and organizational performance, including finance improvement and innovation” (Nam, 2019, p. 140; Shao et al., 2012; Yoon et al., 2010).

To read more about the the value of the learning culture, check out my other blog post here.

Transformational Leadership

Transformational leadership describes the “behaviors of leaders who motivate followers to perform and identify with organizational goals and interests and who have the capacity to motivate employees beyond expected levels of work performance” (Sarros et al., 2008, p. 146).

The learning culture has proven to have an impact on transforming leadership by “enhancing learning activities and nurturing the knowledge capital of the organization” (Nam, 2019, p. 141; Song & Kolb, 2013).

One such way in which this is done is by influencing the capabilities and roles of organizational leadership through flexible information acquisition and interpretation (Skerlavaj et al., 2007).

Curiously, traditionally those with high power are “more likely to validate their preexisting worldview and not be informed or transformed,” while those with less power may not speak up or give their opinion because of “not wanting to be viewed as a ‘complainer,’ fear of damaging relationships, fear of being retaliated against, and a sense of futility…” (Smerek, 2018, pp. 156-157).

Thus, transformational practices aim for and “show a shift from a type of leadership based on power and control to one centered on the capability to work with others and to facilitate others to act” (Arachchi, 2012, p. 73). A transformational leader is one who supports a learning culture; works well with others; enables interrelated, but independent, work; identifies dysfunctionality; and encourages diversity and change (Schein, 1992). 

Psychological Safety

A vital aspect of a successful learning culture is psychological safety, or the ability to admit mistakes, challenge the norm, and learn publicly without fear of reprimand, embarrassment, or ridicule.

Psychological Danger vs. Psychological Safety
Psychological Danger vs. Psychological Safety – Credit: unicorn labs

This notion “involves but goes beyond interpersonal trust; it describes a…climate characterized by… trust and mutual respect in which people are comfortable being themselves,” (Edmondson, 1999, p. 354) allowing for the exploration of creative ideas, the broadening of perspectives, and engagement in deeper discussions.

Additionally, according to Gerpott et al. (2015), knowledge sharing boosts psychological safety and lowers the perceived negative effects of age diversity. The authors also suggested that professionals learn better when engaging in knowledge sharing via activities through which they exchange information, skills, or expertise with others. This, in turn, makes them feel more competent, leading to increased performance.

Creating and cultivating a culture of innovation and learning can be a daunting task; however, if psychological safety is in place, it can be much easier to do.

Some additional ways to accomplish this are to build adaptability and resilience, rigorously experiment, and actively collaborate (Metcalf, 2017). If one learns to become resilient, they are more open to versatility and change. Finally, by learning and working together tasks are quickly achieved and mastered, and all members have the chance to contribute to outcomes. 


Organizations require a number of essential parts to align in order to survive in an increasingly dynamic world. Unfortunately, a recent study found that the average lifespan of an organization is a mere 18 years (Garelli, 2016).

By understanding diversity and embracing some heterogeneity, leaders ensure that various perspectives are taken into consideration while maintaining kindred perspectives on explicit topics. To endure in the long-term, a culture of learning and psychological safety must further be fostered and managed under the direction of transformational leadership. Likewise, a capacity to adapt, change, and innovate should also be emphasized to guarantee longevity.

With this kind of integrative system in place, organizations are sure to persevere.



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