Diversity of talent is the predicate to achievement, not diversity of critical theory identities

Over the past thirty years or so there has been a strong advocacy movement to place women and minorities on corporate boards and accelerate their promotion into senior management and CEO positions. Companies are routinely lambasted for failure to have diversity initiatives towards these ends and achievement of such diversity goals.

The logic is from critical theory and is simple and appealing - people from different identities have different life experiences which can add value to a homogeneous group. If you are a national or international organization, how can you adequately serve your customer base if you cannot understand their lived lives? This appealing logic has carried the diversity fad a long ways.

The counterargument is multi-pronged and therefore lacks the appeal of simplicity. One observation is that diversity initiatives are simply affirmative action under a different name and that affirmative action initiatives have a long track record of failure. A second element of the argument is simply a rejection of the premise of critical theory, a rejection of the supposition that a person from one group cannot understand the lived experience of a person from another group. A rejection of the idea that there is anything magical about identities. A third argument is that success outcomes are determined by other factors than greater or lesser homogeneity in the leadership group. Domain knowledge, track record of achievement, access to resources, proper attention to risk management, communication skills, life-cycle s-curve position of the corporation, etc. are some of the competencies and contingencies which influence outcomes and none of these are deterministically related to identities; identities are irrelevant to outcomes. A fourth argument is that diversity initiatives are effectively mechanisms to discriminate for some groups and against others and are therefore at least immoral, if not illegal, and potentially deleterious to employee morale.

While the proposition gets caught up in the culture wars and gramscian threats, it is essentially an empirical question. Does gender or race diversity improve at senior levels of an organization improve performance outcomes?

Katherine Klein is a professor at my alma mater and focuses her research on the slightly narrower question: Does Gender Diversity on Boards Really Boost Company Performance? by Katherine Klein.

Betteridge's Law dictates that the answer is no, and indeed the answer is no. Gender diversity of board and leadership has no impact on company performance.

Klein reports:

Commentators often suggest that corporate boards that include women will make better decisions than boards that include only men. The argument is that women differ from men in their knowledge, experiences, and values and thus bring novel information and perspectives to the board. They increase the board’s “cognitive variety.” The greater a board’s cognitive variety, the theory goes, the more options it is likely to consider and the more deeply it is likely to debate those options.

We don’t know exactly why this theoretical logic doesn’t hold among corporate boards. It is worth noting that gender diversity in other kinds of work teams is not significantly positively related to performance, either. Despite popular press accounts that suggest that teams high in gender diversity outperform those composed only of men or only of women, rigorous research does not support this conclusion. Meta-analyses linking team gender diversity to team performance (e.g., Bell et al., 2011) reach much the same conclusion as meta-analyses linking board gender diversity to firm performance — that is, the relationship between team gender diversity and team performance is tiny.

Perhaps the board is not really a determinant of outcomes and the real action is at the CEO or executive team level?

Given the findings of research on board gender diversity, one might wonder about the effects on company performance of CEO gender and top management team gender diversity.

Rigorous, academic studies of CEO gender and company performance tell much the same story as rigorous, academic studies of board gender diversity and company performance do. Ditto for studies of the gender diversity of the top management team.

Companies should focus on the capabilities and levels of achievement of their executives, CEOs and boards. Focusing on diversity is a distraction and adds no value to long-term outcomes.

This is consistent with my interpretation as noted in Diversity of opinion, independence, decentralization and aggregation and No correlation between this type of diversity and performance. My ordered ranking of major causes of organizational outcomes would be, in order of importance, 1) Where is the company on the life-cycle s-curve?, 2) What is the human capital quality of achievement of their leadership?, and 3) What is the diversity of achievement in different fields among their leadership team. Having the best people with achievements in multiple fields and being at the beginning of the s-curve are the three predicates to the best outcomes.

Postmodernist critical theory definitions of identity are irrelevant to outcomes. They have no explanatory value in forecasting outcomes.