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‘Incentives influence research findings,’ business scholar says

A new paper questions McKinsey & Company research purporting to find workforce diversity boosts a company’s bottom line.

The paper examines claims that the racial diversity of company leadership is linked to better financial performance. The authors found “no statistically significant” relationship between the two and said McKinsey used a “flawed” interpretation of data that biased the results.

The consulting firm’s research does not “support the argument that large US public firms can expect on average to deliver improved financial performance if they increase the racial/ethnic diversity of their executives,” the scholars wrote in Econ Journal Watch.

Two of the four papers have garnered 1,800 citations.

“In terms of observable influence, on [G]oogle [S]cholar, ‘Diversity Matters’ has been cited 1,214 times and ‘Delivering through diversity’ has been cited 594 times,” Jeremiah Green, an accounting professor at Texas A&M University, said in an email to The College Fix.

Green told The Fix that McKinsey “presumably” conducts the research to potentially find justification for its “diversity practices.”

“Given that McKinsey is one of the most respected consulting firms, and that they touted these studies, it must have worked for them,” Green said.

The Fix asked McKinsey’s media team for a response to the authors’ findings but did not receive a response to two emails sent in the past week. McKinsey has not publicly commented on the studies since the paper came out.

Top McKinsey executive Dame Vivian Hunt, who co-authored the four studies, argued against a “meritocratic” system of hiring in a 2020 interview. She now works for healthcare company Optum.

A colorblind standard “isn’t good enough” because it “allows the bias that is in our systems, be they at work or in culture or in society … to perpetuate,” she said. “You have to proactively stand for an antiracism environment, an anti-bias environment, to positively include people who have been historically excluded.”

‘Incentives’ may ‘influence research findings’

The Fix asked Green if there is a conflict of interest when companies study their own diversity initiatives.

“I think there is plenty of evidence that incentives influence research findings,” Green said.

“However, our main point is really that McKinsey could and should do better and that people reading the McKinsey studies can make conclusions for themselves if they understand how they did their research,” Green said.

“In peer reviewed research, I’m pretty sure most peers would have pushed back on how the conclusions and the research design don’t match,” Green told The Fix. “In journals I typically review for[,] they often have a statement related to this, something like ‘are the conclusions accurate and justified by the findings?’”

“In terms of a possible conflict of interest here, that seems obvious,” Green said.

Green and his co-author, accounting Professor John Hand of the University of North Carolina Chapel-Hill, have followed McKinsey’s work for years. Their latest paper expands on a 2021 review of three studies, which similarly found that “caution is warranted in relying on their findings.”

The discredited research as a whole has appeared in mainstream media reporting and prestigious publications such as Harvard Business Review. Corporate leaders and federal agencies have cited the studies as a basis for decision-making.

In a 2017 report, the Office of the Director of National Intelligence argued for diversifying intelligence agencies while referencing McKinsey’s “Why Diversity Matters” study.

“Committing to diversity and inclusion isn’t just the right thing to do; it is linked to measurable improvements in business performance,” the document says.

The Biden administration also used McKinsey studies to push for “diversity, equity, and inclusion” efforts in the United States military, The Daily Wire reported.

UPDATE: The article has been updated to clarify that two of the four studies have garnered 1,800 citations.

MORE: Disputed race research totals more than 3,000 citations

IMAGE: McKinsey & Company; Bezruk; College Fix edits

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