The problem with the business case for diversity
Before I begin, I want to make one thing clear. I am pro diversity in the workplace. If you know me, you’ll know this; I’ll have chewed your ear off about it on several occasions. I am not saying that diversity isn’t necessary, or that the dire lack of it in companies and boardrooms across the world isn’t a grave injustice, but I do think that the oft-quoted “business case for D&I” is, quite frankly, bollocks.
Firstly, can we stop using the acronym D&I? For those who don’t know, it stands for Diversity and Inclusion. It sounds like a corporate strategy, some poor HR person’s job, not everybody’s problem. Let’s stop talking about D&I and start talking about bias, discrimination, misogyny, racism, insensitivity and inequity. D&I is an attempt to make these uncomfortable things that everyone is complicit in all the time palatable, but if it’s easy to swallow then it’s easy to forget, so we do.
Onto the business case itself, the most commonly referenced studies are from McKinsey — here is their report from 2017. It is, as far as I can tell, just bad science. It finds a correlation between the diversity of teams (in particular executive and leadership teams) and profitability. It acknowledges that “correlation does not demonstrate causation”, but then goes on to conclude that “There is a penalty for opting out [of diversity]”.
They are correct; correlation does not imply causation. It may well be that greater profitability causes greater diversity, because it actually takes time and money to hire diverse candidates, to train staff in cooperating across different cultures and personality types, to offer decent maternity packages for women, to train managers to manage their biases, and to build support networks for minorities. This is why start ups struggle with diversity, they often have neither the time nor money to devote to long term solutions like these.
Furthermore, I don’t think this report even proves a correlation between diversity and profitability. For example, when looking at gender diversity, it seems to be just comparing teams of all/mostly men vs. teams with some women on them. That doesn’t suggest anything about diversity, it just suggests a positive correlation between women and profitability. Is this a linear correlation? If so, surely executive teams should just be all women for maximum profitability? Were McKinsey aware of this? Did they just blindly assume that the default of non-diversity is white men? Or did they recognise that they should have control groups of all kinds of homogeneity to actually draw conclusions about diversity, but couldn’t find any other than white men, because isn’t that kind of the problem?
But here’s my real point; I don’t think this bad science undermines the case for diversity. Because I don’t believe profitability is or should be a case for diversity. Imagine a report with sound science (wild, I know), that actually drew the opposite conclusion — one that demonstrates a negative correlation between diversity and margins, I’d still believe that companies should be more diverse. Because for me, diversity is a moral issue, it’s a way to address inequity in our workplace and, by extension, our society.
One final dig at the McKinsey’s report — it also acknowledges that there might be other reasons to care about diversity, like social justice, but bizarrely lumps that in with legal compliance, like they are somehow related. If social justice is on one end of a spectrum, and legal compliance on another, they are still different fucking spectra.
The real problem with the business case for diversity isn’t the shady statistics. It’s that CEOs still need it to justify diversity programs. It’s that the rich white men who run the world do not see that we live in a default state of inequity, that ought to be redressed, so they need to be persuaded with dollar signs. But shilling them bad science to get them to fake-care is a losing battle. They might give you budget for diversity initiatives, but are they going to lead by example in stamping out bias, discrimination and exclusion in your company? Probably not. And those are the real issues with diversity, not a false likelihood of 20% increased profit, so let’s stop hiding behind the business case and start talking about those.
