Commons sense validated again - No, diversity on your board does not drive higher performance

Burgermeister

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Jan 23, 2021
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These McKinsey reports purporting to add statistical weight to the popular rant that companies with diverse boards perform better are all bullshit. Any normal person would have had their bullshit woke meters going off as soon as these studies came out. Corporate wokies used them to proclaim things like this,
“This decision is rooted first and foremost in our conviction that companies with diverse leadership perform better,” the Goldman CEO, David Solomon, declared. “Companies that have gone public with at least one female board director outperformed companies that do not.”

This seemingly ridiculous statement is based on these McKinsey reports,
But much of the authority for claims like his rest on three studies done between 2015 and 2020 by the consulting company McKinsey, which were trumpeted as proof that large companies can boost their profits significantly by adding women and people of color to their boards of directors. “Companies in the top quartile for gender diversity on executive teams were 25 percent more likely to have above average profitability than companies in the fourth quartile,” the 2020 report says, while those in the top quartile for ethnic diversity are 36 percent more profitable than those in the bottom quartile.

“What our data show is that companies that have more diverse leadership teams are more successful,” the 2020 report concludes, recalling the two-word phrase in the title of an earlier report: “Diversity Wins!”

Here's the problem -
“McKinsey’s studies are a little strange,” Hand said in a Zoom interview, “because they're not structured to detect any causal evidence [that diversity generates profits]. They're silent with regard to the fundamental causal question.”

The McKinsey study, written by four of the company's consultants in its London, Chicago and Atlanta offices -- gives each firm that it studied a “diversity score,” based largely on pictures and descriptions of executives on that company's website and reports. It then measures each company's economic performance. But as McKinsey acknowledges in the methodology section of its 2020 report, the financial data it collected on companies came from the period 2014 to 2018, while the data on diversity was compiled from Dec. 2018 to November 2019 -- showing that the diversity data comes after or at the same time as the financial data, not before.

So more garbage offered as science to support silly wokie things. A conclusion that actually could be drawn from this data is that successful companies are better positioned to take a risk on a non-white guy for PR purposes! LOL.

 
Lack of diversity certainly doesn't drive higher performance either.
 

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