Is diversity our strength? Our leaders certainly seem to think so. And many multinational corporations are of the same mind. In a series of influential reports with cringeworthy titles like ‘Diversity Wins’, researchers at McKinsey have put forward the officious-sounding “business case for diversity”. In short, they claim that more ‘diverse’ management leads to better company performance.
As for proposed mechanisms, they list several: ‘diverse’ teams are more innovative, ‘diverse’ companies have a more positive global image, and employees in ‘diverse’ companies feel a greater sense of belonging.
The image below details some of their findings. Each chart is a comparison between firms in the bottom 25% and top 25% for executive ‘diversity’, with the outcome being the likelihood of financial outperformance (a measure of company performance). So for example, the 2014 report ‘Diversity Matters’ found that firms in the top 25% for executive ‘diversity’ were 35% more likely to achieve financial outperformance than those in the bottom 25%.
The McKinsey researchers measured ‘diversity’ using something called the Herfindahl–Hirschman index. This sounds very complicated, but it just means squaring the proportions of different racial groups in the company’s management, and then adding up the results. For example, if a company’s management was 70% white and 30% black, the index would be (0.7*0.7) + (0.3*0.3) = 0.58.
Enter Jeremiah Green and John Hand – two U.S. economists who tried to replicate McKinsey’s findings. In a new paper published in Econ Journal Watch, they summarise what they found.
To begin with, McKinsey would not provide Green and Hand with their data. Nor would they even share the names of the relevant firms. (This is obviously bad scientific practice on McKinsey’s part.) Hence the authors decided to focus on public U.S. companies in the S&P 500 – a sample that likely overlaps substantially with the one used by McKinsey. They also used data from the same pre-Covid time window.
What did the authors find? McKinsey’s “business case for diversity” is built on sand.
Their main finding is shown below. Each chart plots company performance from 2015–2019 on the y-axis against executive ‘diversity’ in 2020 on the x-axis. The left-hand chart uses eight racial categories to calculate diversity, while the right-hand chart uses five. In both cases, there is zero association between the two variables: companies with more executive ‘diversity’ do not perform better than those with less.
And as Green and Hand point out, there’s an additional problem with McKinsey’s argument. Even if company performance was associated with executive ‘diversity’, that wouldn’t prove the latter causes the former. After all, it could be the other around: perhaps companies that perform better can afford the luxury of greater executive diversity.
In a separate paper co-authored with Sekou Bermiss, the economists show that nine measures of executive ‘diversity’ do not predict any of six measures of company performance in the next financial year. So their null result appears to be very consistent.
Green and Hand have not conclusively falsified the claim that more ‘diverse’ management leads to better company performance; that would require studies that can get around the problem of reverse-causality mentioned above. Nonetheless, they have shown that evidence supporting the “business case for diversity” in fact does no such thing.
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Sounds like a load of commercial tosh and gibberish to me! Go to an interview, take your cv, most suitable person gets the job!
Simples
Recruiting only on the basis of ability to do the job? The world needs to be PURGED of people like you!
And how are you going to appoint people able to do the job of purging?
Only Black and Asian purgers need apply
Or indeed how will you appoint the appointers? It’s a vicious circle…
That system worked so well, didn’t it, Dings?
Too right it did
Uber globalist McKinsey could not be expected to come up with anything else. They know its findings don’t hold water but they are the key researchers, facilitators and propagandists of corporations and governments globalist agenda. Their fingerprints are everywhere!
“Is diversity our strength? Our leaders certainly seem to think so. ”
I strongly doubt that they really think that. Hard to know what all of their reasons are, but I expect it’s partly political.
When it comes to politicians their beliefs are always amenable to the contents of a brown envelope or its equivalent.
Indeed. As Frank Herbert (author of Dune) put it:
“All governments suffer a recurring problem: Power attracts pathological personalities. It is not that power corrupts but that it is magnetic to the corruptible. Such people have a tendency to become drunk on violence, a condition to which they are quickly addicted.”
Does Herbert have experience with any other form of government than those based on periodic politalker popularity contests?
Not sure what those are but he was from the US, think he lived there all his life, died a few years ago.
“Diversity” would help companies if the companies were actively discriminating against certain types of people, rather than trying to get the best people for each job.
But as it happens, they weren’t. They were recruiting by talent.
But now they are discriminating, against white men and so not getting the best person for the job.
That’s what DEI has achieved.
Diversity is just another name for racism.
There is “no business case for diversity” because diversity is not “business” it is politics. Just as there is “no business case for Net Zero” because that is politics as well. —–So nonsense like “Diversity is our strength” is a political statement which implies that if you don’t have diversity you cannot have strength. Which is patently absurd. Companies in 1950 1960 and 1970 never had much “diversity” so did they not have any “strength? How about companies in Japan where there isn’t much in the way of “diversity”? Do they have no strength? ——But notice how diversity only works in one direction —–Less white people.
Yes, quite. And as I’ve said before, would you rather fly in a plane with a pilot* who was chosen because of their ability, or have a surgeon perform your operation because you trust them to be sufficiently skilled, than have your life put in the hands of people who were basically a tick box exercise, a sub-standard ‘DEI plant’, because TPTB had targets to meet? It’s insane really that such basic things even need pointed out.
*Even more so if planes are going to start flying with only one pilot. I don’t want some crappy, sub-par ‘woman of colour’ flying my plane just because she’s got a penis!
Yep——I always used the example of “Your 3 year old child is in a burning building. Who do you want to climb the ladder and rescue her? The 6′ 4 14 stone guy or the 5′ 1 8 stone woman?
Diversity is our strength is obviously just an purposely constructed anti-version of Unity is our strength, ie, our ability to cooperate as team against our external opponents, as opposed to loads of infighting among different groups each seeking to outmanoeuver the others wrt access to positions of influence and income. The latter is only the strength of diversity-enablers like UNWEF which absolutely don’t want some kind of united front against their evil agenda.
Good article.
Re: causality. Correlation is a necessary (but not sufficient) condition for causality, is it not? So no correlation implies no causality. Or am I missing something?
Yes, another good, datacentric thread here which illustrates the con nicely;
”This plot presents a sad truth:
Media has failed it’s duty to inform the public
Instead, a business model of selling fear, stoking conflict, pandering, and pushing advertisers propaganda.
McKinsey-ification and it’s consequences has been a disaster for the human species.
It wasn’t always like this.
In the past newspapers made money by selling newspapers, and they competed on quality of research, clarity of insight, and reliability of sources.
Then newspapers started raking in massive sums in advertising revenue and things went sideways.
The issue is that the advertising revenue model fundamentally drives a race to the bottom in hacking dopamine, while favoring content that can be digestible to the largest number of people.
Clickbait for the lowest common denominator.
How’d we get here?
We unleashed an army of “Managerial Executives” on the economy who brought an industry-agnostic mindset of driving shareholder value by any means necessary.
Boeing used to be run by engineers. Newspapers by journalists. Hospitals by doctors.
Now’s its MBAs.
The net effect beyond destroying our institutions, democratic process, ability to innovate and govern effectively is this:
It drives a casino economy where returns concentrate to capital over labor.
It disincentivizes hard work.
And the media capitalizes on this collapse of civic society by selling more fear, more hysteria, inventing more wedge issues and clickbait outrage every day.
Gaslighting a generation into not having kids, opposing economic growths, and hating their own country..”
https://twitter.com/Andercot/status/1774175317294473539
If there was a compelling business case for diversity, why would would businesses need to be bullied or coerced into adopting it?
I think the argument goes like this.
People from minority groups (and women, who arent a minority, but anyway) are just as capable as those from majority groups (I.e. white.men, who don’t constitute a majority anymore, but anyway) but are held back by a lack of opportunities, which don’t come their way because of the prejudice and bigotry of, essentially, white men.
In all occupations. No nuance. No exceptions. Everyone can do everything equally well. (Actually, minorities and women can do things even better in some instances, but that can be put aside for now.)
And because the people making this argument are really good people, they are willing to concede that this prejudice isn’t conscious but subconscious.
Luckily, the proponents of this idea are here to set white men straight (and white women when it comes to matters of race) and by forcing them to hire “minorities” they will discover that minorities are just as capable as anyone else. And for reasons that are not entirely evident, a workforce that perfectly represents society in all the right proportions creates some sort of goldilocks conditions that unleashes potential and companies will prosper even more for it.
And white men are too bigoted and blinded by their own self interest (subconsciously, let’s be kind) to see this so they need to be forced to hire “diversely”.. For their own good. And the good of society. Mostly the good of society. After all who wants to fight against what is good for society, right? Only white male monsters (acting sunconsciously).
It seems like a lot of people are uncomfortable with the fact that success in life* is not evenly distributed among whatever grouping lines are in vogue (race, sex etc). Significantly, this includes a lot of successful people. I am not sure why, but it seems quite common.
* measured by what seems to be important to people – money, power, status, skills – not saying these are the most important or that they are the only things that make up “success in life”
On the one hand impostor syndrome,.on the other envy?
I mean, life is very complex and random and so equal efforts and abilities don’t produce similar results.
I think most people are able to accept and live with that, but there are enough who don’t who use it as a pretext to try to re engineer society
I think most are able to accept that on an individual level, life is chancy and unfair. But more than a few are unable to accept that this unfairness (or its opposite) can apply unevenly along the lines of race, sex etc.
Over time I would expect companies recruiting for diversity rather than ability will perform worse. In some industries the result could be fatal…
Can anyone point me to a charity that works to achieve gender diversity among construction workers?
I’d.like to contribute.
If you’re talking about well-paid white collar construction workers, there probably is one
I’d stump up a few quid for the group that is campaigning for gender diversity in the night-time office building security guard sector, and of course the one pushing for racial diversity in the NBA.
Since John Lewis went all woke and diverse their profits, takings and quality has taken a nose dive. They have a black woman chairman, an Asian CEO, more women and ethnics in senior positions than you can shake a stick at, and a smattering of gay and trans types to make up the DIE numbers.
They invest heavily in black history month, all the trans nonsense, ESG and DIE and the company is a dead man standing. All the woke DIE nonsense did them no good at all and the staff are suffering as a result.