Business DEI Policies Get Debunked

What happened: Research used to promote diversity, equity, and inclusion (DEI) initiatives was debunked in a new academic paper published in Econ Journal Watch.

• The claim: Starting in 2015, the major consulting firm McKinsey and Company released four studies claiming that racially/ethnically diverse staff leads to better profits for corporations — a common talking point for supporters of discriminatory hiring policies.

• The rebuttal: Two business professors found that McKinsey distorted its own findings in the research. They were unable to replicate McKinsey’s results and saw “no evidence of any statistically significant” correlation between diverse executives and financial performance.

Why it matters: McKinsey’s is not the only research touted by DEI advocates, but it’s among the most influential. Numerous academics, corporations, business leaders, legacy media outlets, and government agencies have cited McKinsey’s faulty studies to argue in favor of DEI practices.

• For example: The Office of the Director of National Intelligence used the research to support “the case for diversity” in U.S. intelligence agencies in 2017. “Committing to diversity and inclusion isn’t just the right thing to do; it is linked to measurable improvements in business performance,” the office declared.

Zoom out: McKinsey’s ideological biases have long been clear. An employee who co-authored the studies claimed in 2020 that merit-based hiring is unfair for minority groups due to “bias that is in our systems.”

• DEI golden calf: Progressives in the public and private spheres view DEI practices as a moral duty. The lack of solid data proving their success will unlikely slow efforts to implement such policies in American life.