Harry Geels: Especially diversity of opinion matters

November 5, 2024

^{This column was originally written in Dutch. This is an English translation.}

By Harry Geels, written in a personal capacity

A debate on the importance of diversity in organisations (more specifically DEI programmes) has been taking place on various social media for some time. Research shows that there is no relationship between DEI criteria and future profitability. Critical thinking matters more. But there is growing concern about the latter.

More and more companies, especially the larger ones, are embracing the DEI (Diversity, Equity, Inclusion) concept. When this acronym first came up, I had to ponder the meaning of Equity. Probably somewhat biased, I immediately thought of stocks or shareholders capital. But here it has a different connotation, namely providing people with equal opportunities, taking into account their background. Say, more tailor-made development paths, making the chances of success equal for all.

The terms Diversity and Inclusion are clearer. The aim here is for the workforce to become more diverse in ages, cultures and genders. In a series of influential reports, McKinsey (2015; 2018; 2020; 2023) indicated it had found statistically significant positive correlations between the industry-adjusted profit (margins) of large public companies and, for example, the ethnic diversity of their executives. After that, DEI's positive fate seemed completely sealed. But new studies show otherwise.

McKinsey studies nuanced

New studies have questioned McKinsey's research methods. Jeremiah Green and John Hand even showed that mistakes had been made. A blog by Professor Alex Edmans of the London Business School adds further clarification to this confusion. His conclusion is that while DEI programmes can have all sorts of positive effects, only diversity of opinion makes a truly significant positive contribution, for example, in objective criteria such as the number of patents filed.

Edmans ventures the conclusion that we should not expect objective studies from large consulting firms in this area either. They make a lot of money these days with ESG, DEI, et cetera. Then you shouldn't come out with studies questioning their effectiveness. But let's not focus on the objectivity of all kinds of studies. All things considered, we don't need to question the usefulness of diversity either, except perhaps if it is applied too dogmatically. The key question is: ‘What is the state of diversity of opinion?’

Concerns about being allowed to be critical

Recently, an employee of a fiduciary asset manager said to me that it is no longer appreciated to question the SDGs and climate targets. ECB governor Frank Elderson suggested a few months ago that ECB employees cannot be climate sceptics. His statement ‘Why would we want to hire people who we have to reprogram?’ caused quite a stir, after which President Christine Lagarde jumped on his behalf, but only by simultaneously pointing out the importance of diversity, including in opinions.

Another problem concerning diversity of opinion is ‘ageism’. Especially in technology, and to a slightly lesser extent in finance, the younger generations are overrepresented in the workplace and older people face difficulties in furthering their careers. However, studies show that teams with age diversity are more innovative and productive due to different opinions, experiences and expertise. Mutual mentorships and inclusive ERGs (Employee Resource Groups) improve collaboration.

Kant's enlightenment thinking

Immanuel Kant, perhaps the best-known Enlightenment philosopher, once said: ‘Enlightenment is man's exit from the incommunicado to which he himself is guilty.’ Man is often guilty of incommunicado himself, for example due to lack of courage, or an abundance of convenience (God or the government will know). Thanks to Kant, Horace's quote ‘Sapere Aude’ (dare to think) was also dusted off and used as a slogan of the Enlightenment. Thanks to social media, we would think that people are more opinionated. But is that really the case?

In terms of opinion formation, aren't people caught in the trap of social media's algorithms, or in Elderson's ‘corporate reprogramming’? Kant distinguished between the public and private domains. Working in the private domain of the army, for example, the soldier must follow orders. The minister or pastor has to explain the teachings of his church. But according to Kant, in the public (public) domain, everyone should be able to question everything, with reasons and justifications. To advance humanity. If only it were that simple!

Sapere Aude! In any case, I hope this is realised in the workplace as much as possible. Not only because research shows that this kind of diversity leads to improvements in all kinds of business processes and products and services, but also because for a person's own wellbeing, he should be free to think and to feel appreciated for his (verbal) contributions. And philosopher John Stuart Mill once said it so beautifully: ‘He who knows only his side of the matter actually knows very little.’

This article contains a personal opinion by Harry Geels

More columns by Harry Geels