Abstract

Research indicates that staffing project teams with employees having a diverse base of experiences fosters project performance, even though this benefit is subject to marginally decreasing returns. Yet this practice also helps team members acquire a broad knowledge base, increasing their value on the job market. Thus, while team experiential diversity may be desirable from a performance standpoint, it could be possibly problematic once its talent retention implications are considered. We investigate this potential side effect of team experiential diversity using a panel dataset of 810 project teams involving 3,139 employees from a multinational consulting and IT services firm that draws its workforce from a highly competitive job market. We focus our analyses on team diversity relative to experience working with the focal client (client experience diversity) and relative to familiarity among team members (co-worker experience diversity). We find that while clients and co-workers experience diversity increase performance, they have an inverted U-shaped relationship with voluntary turnover. These findings suggest that when firms staff project teams they should be cognizant that increasing experiential diversity can support project margins, but it may represent a liability for talent retention.