A 2015 McKinsey report promised real growth and opportunity for corporations that embraced Diversity, Equity, and inclusion (DEI), but in the nine years since, no one has been able to duplicate those results – not on paper or in practice, because it wasn’t true.
The [2015] study gave corporations air cover to promote ideologically motivated diversity programs while saying that it was simply “good for business.” It wasn’t. What it was good for was transforming the world of Big Business into an outpost of academia.
In that sense, it worked.
But the original pro-business justification has turned out to be a scam.
According to The Wall Street Journal, “academics have tried to repeat McKinsey’s findings and failed, concluding that there is in fact no link between profitability and executive diversity.”
There is not, however, a missing link between DEI and a loss of sales or brand value. Companies suffering from Diversity dysphoria can speak to this truth. Go woke, go broke is a common refrain following the diversification of executives, including activists interested in political agendas and not profits (despite the enormous salaries they often command to do their dirty work). Disney, Bud Light, Target, and others have felt the sting of business decisions that undermined corporate success and their brands.
But not all of them got mugged. Tractor Supply put its toes on the ledge earlier this year only to quickly take the hint as customers informed them that this wasn’t the way to gain custom or continued loyalty.
You’d think titans of industry or at least competent boards of directors would know from essential business school texts that the demographics of leadership matter less as your reach gets broader. A local business might benefit from looking like the neighborhood, but does anyone know or care if the people in charge of making sure the product pages at Amazon work (or the planes at Boeing stay in the air) represent the local, regional, or national racial or sexual demographics?
If 2% of the population is Wiccan, does P&G have an obligation to their shareholders to ensure they are seen? The entire idea is ludicrous, but after McKinsey released its “study” …
BlackRock, according to the Journal, cited the study as evidence that diversity created financial benefits when it created an exchange-traded fund that tracked a diversity index. That index has done quite poorly, “returning about 55% against more than 70% for the global index without diversity conditions.”
BlackRock has gotten into hot water over its corporate practices and has announced that it is stepping away from environmental, social, and governance investing.
The not-so-amusing reality is that DEI and ESG are academic partisan political world views that discriminate by design. You can’t embrace them and anything else, which is probably why the wheel has been coming off the bus. If you run your business like some intractable bureaucracy, even the best intentions will bloat your non-productive expenses and slowly sink your ship. It will impact the culture and the customer base, which affects actual diversity and the revenue stream you need to pay to pander to it.
Besides, no one wants to work in that environment for long except those who poisoned it. All that constant tension is bad for your bottom line. The fact that smart business people bought it tells you something about how smart they are—DEI and ESG are just social taxes paid by investors and consumers on top of all the others that produce nothing of value. But it’s not a total loss. DEI may not be proven to create growth, but like rising CO2 follows warming, it appears that diversity follows business growth and success.
The only thing that the study found was that profitable companies ended up with more diversity—after they had succeeded, not before.
If this does not sound familiar, it should. Almost everything the left espouses does the opposite of what it advertises, and DEI is no different.
You’d have thought all these “experts” would have figured that out by now.
