https://www.wsj.com/finance/investing/diversity-was-supposed-to-make-us-rich-not-so-much-39da6a23

Sorry, paywall.

Quote:

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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.

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So basically, corporate America took this study showing companies with diverse boards were more profitable and ran with it. Now everybody has a diverse board. But wouldn't you know, business principles are more important than the gender and skin color of board members. Shocker.

Correlation does not equal causation.

Quote:

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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.

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Sigh. Article ends by suggesting companies be careful with the studies they choose to adhere to. But we know it's difficult to buck the prevailing political headwinds. Even when quarterly profits are on the line.

Stop using these dummies in your business.

Eta, by dummies I mean McKinsey and the "didn't earn its"

What? Leftists lie? No way!!

Why would someone study an old wooden ship?

It's nonsense on its face. Diversity of ideas is good. Diversity of race and gender means nothing

McKinsey: You will never find a more wretched hive of villainy and scum.

CDUB98 said:

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What? Leftists lie? No way!!

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Everything the left says is a lie. Everything.

Capitalism requires results, which is why it's so successful.

Government, socialism, communism and Marxism requires only allegiance to the party. Thats why they are all catastrophes.

Just saw recently some research showing investing based in social causes results in lower risk adjusted returns.

YouBet said:

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McKinsey: You will never find a more wretched hive of villainy and scum.

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This may be one of the most accurate posts in TexAgs history.

Preaching to the choir here, but of course the point is that they didn't care if it was accurate as long as it gave them plausible cover to implement the desired outcome. They are willing to put progressive orthodoxy above fiduciary duties. I hope each and every F500 CEO gets asked about this until the Tractor Supply response is status quo.

techno-ag said:

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https://www.wsj.com/finance/investing/diversity-was-supposed-to-make-us-rich-not-so-much-39da6a23

Sorry, paywall.

Quote:

---

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.

---

So basically, corporate America took this study showing companies with diverse boards were more profitable and ran with it. Now everybody has a diverse board. But wouldn't you know, business principles are more important than the gender and skin color of board members. Shocker.

Correlation does not equal causation.

Quote:

---

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.

---

Sigh. Article ends by suggesting companies be careful with the studies they choose to adhere to. But we know it's difficult to buck the prevailing political headwinds. Even when quarterly profits are on the line.

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McKinsey has been stealing from corporations and the Ivy League execs just keep signing up for their BS - they aren't quite at SAP levels but they are close

Maybe this fraud is what finally takes the shine off of McKinsey. The conclusion required a suspense of disbelief to believe it was a real result. What that fraudulent 'study' did was give a lot of management teams and boards of directors cover to buy into the EGS and DEI crap.

Too bad they were not exposed a long time ago. The only thing McKinsey is useful for is occasionally stealing some of the better associates.

AgDad121619 said:

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McKinseys have been stealing from corporations and the Ivy League execs just keep signing up for their BS - they aren't quite at SAP levels but they are close

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AMEN!

They told political ideologues what they wanted to believe, and then took their money by the truckload. Stockholders everywhere got screwed by billions and billions in wasted expense dollars and misallocated investment. Boards snd executives got to feel sanctimonious.

MouthBQ98 said:

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They told political ideologues what they wanted to believe, and then took their money by the truckload. Stockholders everywhere got screwed by billions and billions in wasted expense dollars and misallocated investment. Boards snd executives got to feel sanctimonious.

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Class action lawsuit possible against those responsible for McKinsey?

If it has no impact either way then the left will take that to mean it should be kept (if a black person can do the same just as a white person then give them the opportunity). Not sure this is the W everyone thinks it is.

captkirk said:

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It's nonsense on its face. Diversity of ideas is good. Diversity of race and gender means nothing

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Simple thought. What is the correlation between competent leadership and racial diversity ?

Business leadership must be competent above all else, right ? Very simple right !? Then why are the Ivies and modern corporate America so stupid ?

Any case study at any level would prove there is no positive correlation between competence and so called diversity. DEI, in and of itself is racist and sexist basing competence and leadership on WHAT a person is VS WHO a person is.

Competence is defined within the personality, experience, and intelligence of a given individual. Why is this hard ?

If you put your life into someone else's hands, would you trust a DEI hire?

For example:



Would you follow Rachel into battle?

MaxPower said:

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If it has no impact either way then the left will take that to mean it should be kept (if a black person can do the same just as a white person then give them the opportunity). Not sure this is the W everyone thinks it is.

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It's pretty significant. People are going back now and looking at the numbers. Diversity was pitched as a panacea for profitability and the numbers do not bear that out.

From further in the article:

Quote:

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A similar fund was created earlier by State Street Global Advisors with the ticker SHE. It was promoted through the "Fearless Girl" statue-briefly installed opposite Wall Street's bronze bull and now opposite the New York Stock Exchange-and backed by research from MSCI, which claimed a 36% higher return on equity for firms with at least three women on the board, or "strong female leadership."

A moment's thought would suggest this was far too high a figure to be explained by the presence of a handful of women, and subsequent deep underperformance shows skepticism was the right response. Since its 2016 launch the fund's return has lagged more than 70 percentage points behind that of the top 1,000 companies, from which it selected before switching to an MSCI gauge two years ago. It has shrunk from a peak of $400 million to $245 million.

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Glad to know others have experienced the incompetence of McKinsey. Our CEO was from McKinsey and she was a dolt. She had zero feel for business. She was smart but not intelligent, like most corporate "leaders."

As I understand it, a major flaw of the study, besides the secretive nature and lack of data to defend, is that it measured results from years prior to the implementation of DEI programs today. All it proved with whatever data it had, is that companies with higher profits had more money to invest in DEI programs.

SwigAg11 said:

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Class action lawsuit possible against those responsible for McKinsey?

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Although class action attorneys in general seem to be scum, class action cases where shareholders of major corporations sue top executives and board members for negligence of fiduciary duties by wasting resources on DEI and ESG would be the fastest way to eliminate this crap and let companies get back to focusing on their products and services to earn profits for shareholders.


Granted the lawyers would get rich and shareholders would only get a pen or other token payment. The big win for shareholders would be future returns from their investments.