DEI Can Be Justified, But Not by Better Profits
Preserving what is worthwhile about DEI requires an honest assessment of both its purpose and its results.
Working meeting.
Photographer: Michael Short/Bloomberg
The practical justification for corporate diversity, equity and inclusion programs — as opposed to the more idealistic one — has always been pretty straightforward: Hiring for diversity is just good business. It’s now clear, however, that this is not the case. DEI may not be bad for business, but it’s not good, either.
DEI can mean many different things, but the most controversial aspect of it entails companies going out of their way to hire women and members of ethnic and racial minorities for board positions and in senior roles. The rationale is that increasing gender and ethnic diversity brings in a wider range of points of view and personal experiences, which leads to better decision-making as more aspects of a problem are considered. More diverse hiring, therefore, increases profits and benefits shareholders. There is a small library of studies from consulting firms, the financial industry and academic centers showing that more diverse leadership improves performance and profitability.