Guest post from William McNally:
McKinsey has four studies that are used by DEI advocates to argue that diversity “is a powerful enabler of business performance.”
Here’s the 2020 study. McKinsey measure diversity as the racial variety of a company’s executive team.
A new paper by Green and Hand delivers a pretty thorough debunking. Here’s a synopsis of the criticism.
Here’s the journal article by Green and Hand.
McKinsey wouldn’t share its data (very suspicious) and Green and Hand couldn’t replicate the McKinsey results with a large sample of S&P firms.
Worse, McKinsey’s study design measures a reverse causality: that increased performance causes more diverse hiring.
That makes more sense to me, as I think that diversity is a luxury belief: https://www.robkhenderson.com/p/status-symbols-and-the-struggle-for
This fits into the Scott Adams category of “Backwards Science”.
To give an example, McKinsey’s 2015 study measures diversity in 2014 but looks at financial performance in the years 2010-2013.
Thus, the McKinsey results don’t provide evidence for the conclusion they are making. The results show that companies with high EBIT margins tend to hire more diverse executives.