Summarised by Centrist
A recent study has cast doubt on a series of influential reports, endorsed by the WEF, making the “business case for diversity.” The researchers say cringeworthy claims that racially diverse teams are more successful, because employees feel greater belonging, are simply not credible.
For example, management consulting firm McKinsey’s report, , “Diversity Wins” states that “companies in the top quartile outperformed those in the fourth by 36 percent in terms of profitability in 2019, slightly up from 33 percent in 2017 and 35 percent in 2014.”
However, economists Jeremiah Green and John Hand’s quasi-replication study, focusing on public US companies in the S&P 500, found no statistically significant difference in financial outperformance between firms with more executive “diversity” and those with less.
“Quasi-replication” because McKinsey refused to make available their data (and wouldn’t even disclose the names of these outperforming firms).
Green and Hand note that even if there was an association between company performance and executive diversity, it doesn’t prove causation.
They also say that it could be the reverse: successful companies may have the resources to invest in diverse executive teams. In any event, the evidence of the “business case for diversity” doesn’t stack up.
