Posted on 06/30/2024 2:33:30 AM PDT by RoosterRedux
When management consulting firm McKinsey declared in 2015 that it had found a link between profits and executive racial and gender diversity, it was a breakthrough. The research was used by investors, lobbyists and regulators to push for more women and minority groups on boards, and to justify investing in companies that appointed them.
Unfortunately, the research doesn’t show what everyone thought it showed.
...
Since 2015, the approach has been tested in the fire of the marketplace and failed. Academics have tried to repeat McKinsey’s findings and failed, concluding that there is in fact no link between profitability and executive diversity. And the methodology of McKinsey’s early studies, which helped create the widespread belief that diversity is good for profits, is being questioned.
...
The trouble is that McKinsey behaves as though the studies do show causation, constantly talking of the corporate benefits of diversity.
Even the correlation is in doubt. Academics can’t replicate McKinsey’s study precisely, because it keeps secret the names of the companies it used. But a paper published this year finds that McKinsey’s methodology doesn’t show benefits from diversity for S&P 500 companies for a range of profitability metrics. It isn’t that a lack of diversity is good for profits either, it’s just there’s no link.
...
Finally, correlation is not causation! McKinsey repeatedly says in its study that it only found a correlation. The Aztecs mistook correlation for causation with tragic results, cutting out the heart of a victim to rekindle fire every 52 years in order to ensure the world’s survival. There was a strong correlation between the human sacrifice and the world not ending—but no causation.
Investors don’t risk having vital organs removed, but they should pay more attention to the studies they rely on.
(Excerpt) Read more at wsj.com ...
Not included in the excerpt however was one paragraph about how Blackrock developed an ETF that they believed would demonstrate the power of "diversity" and its effect on profitability. When that ETF lagged the market greatly, Blackrock demonstrated the opposite (and proved the point of this article).
The solution to diversity was to build up other countries where they were and not allow them to use the US as a release valve for their problems.
Well. duh! The WSJ has concluded that racism (hiring unqualified corporate officers and employees because of their skin color) isn’t profitable.
What’s odd is that it took them more than a decade to discover this.
The studies were already performed repeatedly and reliably over the past 50 years: the NBA and the NFL.
There is nothing so powerful in the minds of men than a bad idea that is popular because it must be true.
Even their research is deeply flawed, demonstrating that they don't even know how to conduct studies that aren't flawed by bias.
It reminds one of Jonathan Gruber of MIT who designed Obamacare. He had no experience in healthcare. He just dreamed up this great idea (says he) and insisted it would work.
Once again, another ridiculous idea of the Left has collapsed into a pile of burnt-out cinders.
So the ‘science’ of Diversity’, once the holy grail of woke MBAs and enlightened CEOs as a failsafe path to corporate profits, stockholder support, workplace happiness & customer satisfaction is not the magic elixir it was touted to be.
WHO KNEW? Certainly not the white, English speaking, over-40 managers who were displaced.
Someone forgot to tell Japan, China, and South Korea about this miraculous “diversity.” If only they had known about it, maybe they could have made something of themselves.
Part B to the above: Funny how the Left worships “diversity” but never proposes it as a solution for the crushing poverty of non-white third world nations. Hmm….
Every company needs an 80 IQ in management.
When his department head advised him of the publish or perish mandate, he realized that he didn't know a damned thing about business...so why not write about something related to affirmative action (like how diversity is actually profitable).
It sounded good on paper (he thought) so he sold it to McKinsey and Co.
Comments BUMP!
I don’t suppose they’ll be any study of the relationship between hiring competent people and profitability?
Do the opposite what these highfalutin phony management consulting firms recommend.
Yet the imposition of diversity on many African nations and India through colonialism lifted those nations out of dire poverty and backwardness. They never view that diversity as beneficial. Instead, they excoriate that diversity.
Gee, it has only taken the WSJ Financial Experts NINE years to figure out the DEI is a loser.
Now, how many years will it take the WSJ to figure out the Biden sponsored INVASION of our country is also a loser.
“””Funny how the Left worships “diversity” but never proposes it as a solution for the crushing poverty of non-white third world nations. Hmm….”””
Very good. I will remember and use it.
“”””If I had to guess, I would say that this wacky diversity idea was dreamt up by an affirmative action professor of business at Harvard.
When his department head advised him of the publish or perish mandate, he realized that he didn’t know a damned thing about business...so why not write about something related to affirmative action (like how diversity is actually profitable).
It sounded good on paper (he thought) so he sold it to McKinsey and Co.””””
Or it could have happened like this:
1. McKinsey came up with the DEI idea.
2. Gave the DEI idea to the Harvard Professor who wrote a dissertation.
3. McKinsey sells the DEI idea to the corporations based upon the Professor’s dissertation.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.