DEI Could Profit From A Proven Study

New research questions the methodology of a McKinsey study that underpinned the DEI movement for executives on ground it was “proven” to be “good for profits.”  But unlike Ragu, the proof’s “not in there,” say follow up researchers.

As the WSJ article by James Mackintosh explained, “When management consulting firm McKinsey declared in 2015 that it had found a link between profits & executive racial & gender diversity, it [was hailed as] a breakthrough. The research was used by investors, lobbyists & regulators [as well as activists] to push for more women & minority groups on boards & to justify investing in companies that appointed them. Unfortunately, the research doesn’t show what everyone thought it showed.” While there are obvious societal benefits of diversity in corporate leadership … “doing it because it is the right thing is not the same as doing it because it makes more money.”

The problem, Mackintosh says, is that since 2015, numerous academics have tried to repeat McKinsey’s findings and failed to prove any link between profitability & executive diversity. Now, the McKinsey’s original study methodology is being questioned. McKinsey doubles down on its original & follow up studies, but curiously qualifies itself by saying its studies never were said to have “showed causation, just correlation.” As MacKintosh noted, “The trouble is that McKinsey behaves as though the studies do show causation, constantly talking of the corporate benefits of diversity. [But] even that correlation is in doubt because McKinsey “keeps secret the names of the companies” it has studied, ergo the results haven’t been replicated elsewhere. Researchers have put together their own models using S&P companies in various combination and come up with bupkis. Not a good look for DEI and you wonder why the movement is showing signs of caving at the executive level.

Davd Soul