There are lies of commission and lies of omission. This blog post is about lies of omission from the World Economic Forum and McKinsey, the global management consultancy firm, in relation to ‘women on boards’.
Followers of this blog and that of Campaign for Merit in Business will need no reminding of the substantial evidence of a causal link between increasing gender diversity on boards and corporate financial decline.
Claims of a ‘business case’ for more women on boards have generally relied on misrepresenting correlation as causation. Historically, reports from organizations such as McKinsey, Credit Suisse and many others, whilst supporting the drive for more women on boards, have at least conceded that no evidence of a causal link with improved financial performance exists (they have, of course, been silent on the evidence showing the causal link with performance decline).
In recent years organizations have become more guilty of lies of omission, in failing to mention causal links at all. Sterling examples are provided by the World Economic Forum report More than DEI: Why it pays to get women in the boardroom and the McKinsey report referenced in that report. From the WEF report:
The slow progress of women in board roles seems counterintuitive when you consider that there is a wealth of research about the benefits of having women board directors.
A McKinsey report from 2020 revealed that companies in the top quartile for gender diversity on their boards were 25% more likely to deliver above-average profitability than companies in the bottom quartile.
The McKinsey report was published in 2020, titled
Diversity wins: How inclusion matters. Also in the WEF report:
This link between women board directors and profitability was corroborated by Women Count 2022, a study of FTSE350 companies by diversity consultancy, The Pipeline. It showed that corporates with more than a quarter of women on their executive committees realized a profit margin of 16% – more than 10 times higher than those with no female board members. [J4MB emphasis] The authors say that if the latter were to perform with the same profit margin as companies with more than a quarter women board members, this would result in an additional $67 billion (£54 billion) income to the UK economy. It would also mean an extra $1.1 billion (£900 million) in pre-tax profit on average for each of these businesses.
The claim in bold text is so
mind-numbingly ridiculous that I invite followers of this blog to check out the report and send their conclusions about the claim to me (mike@j4mb.org.uk). Thank you.
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