7 ms·

Has there been any studies to determine that a diverse board is actually valuable? I'm genuinely asking, because I subscribe to the "get the best people for th

by nscalf 7y ago

Has there been any studies to determine that a diverse board is actually valuable? I'm genuinely asking, because I subscribe to the "get the best people for the job" theory of doing things. I find it to be racist/sexist/whatever discriminatory word applies to have a hard line in the opposite. In my experience, forced diversity is a good way to shoe horn people into roles they won't be successful in. None of that is to say that there isn't discrimination, but there is not an equal distribution of individuals in each field.

JumpCrisscross 7y ago
> any studies to determine that a diverse board is actually valuable? At least for gender, the evidence is mixed [1]. It’s a complicated question. For example, the evidence is compelling for French companies [2]. [1] https://hbr.org/2019/03/when-and-why-diversity-improves-your-boards-performance https://hbr.org/2019/03/when-and-why-diversity-improves-your... [2] https://www.sciencedirect.com/science/article/abs/pii/S0378426617302972 https://www.sciencedirect.com/science/article/abs/pii/S03784...
- nscalf 7y ago
  Ahh that's really interesting, thanks for sharing!
- notacoward 7y ago
  Also... https://www.forbes.com/sites/karstenstrauss/2018/01/25/more-evidence-that-company-diversity-leads-to-better-profits https://www.forbes.com/sites/karstenstrauss/2018/01/25/more-... https://www.fcltglobal.org/news/blog/article/2019/05/28/data-shows-that-diverse-boards-create-more-value https://www.fcltglobal.org/news/blog/article/2019/05/28/data...
- thu2111 7y ago
  The PDF for the second paper can be found here: http://iranarze.ir/wp-content/uploads/2018/08/E8806-IranArze.pdf http://iranarze.ir/wp-content/uploads/2018/08/E8806-IranArze... There are quite a few problems with this sort of social science study that make it hard to draw any conclusions. You can't simply see mixed answers and say there's mixed evidence, because such answers aren't evidence to begin with. A first problem is the standard correlation/causation fallacy. If a company that appoints women to the board is doing better is that because of the benign influence of the woman, or is it the inverse, that companies doing well feel they can appoint a token woman without running much risk? Or alternatively that women are only attracted to the sorts of low-risk companies that already do well, and thus success breeds women rather than vice-versa? Or much more likely still that it's irrelevant and there's something else at work? A second problem is confounding factors. Many studies don't even acknowledge them, let alone control for them. This paper does better than most: it recognises that some studies are confounded because they compare companies across countries that vary in mandatory-women-on-boards-laws, which is a variant of the above problem. It selects a single country and a timeframe when (they assert) there was no social pressure to appoint women to boards. But this paper is nonetheless still ultimately a pure correlation = causation argument. A third problem is small sample sizes. This paper claims to use a "large" sample but it's only a little under 400 firms. This is far too small to draw meaningful conclusions from, partly because (again) it's too small a set to control for confounding factors. Yet they claim it's statistically significant. A fourth problem is social scientists are very bad at stopping when they seem to be measuring noise. The paper says: For the various attributes, we find female directors who are foreigners, have business training, and with longer tenure significantly negatively correlate with all performance measures. However, female directors’ reputation measured by their media coverage is positively perceived by market investors and is associated with an improvement of ROA and ROE. (ROA is return on assets, ROE is return on equity). These sentences make a highly implausible claim, namely, the study authors are able to explain movements of the stock market by measuring "reputation" via "media coverage". Moreover that women with more experience and business training are seen as less capable by investors. But in any other context I think most people would agree that reliably explaining the movement of stocks is extremely difficult, especially for something as abstract and long term as a change of board members. Has a major stock ever had a large movement because a non-chairperson role on a corporate board changed? I'm struggling to think of one. If these authors were really capable of analysing corporate performance in such detailed ways, surely they'd choose to become very successful investors instead of writing gender studies papers? This sort of study is pretty common and these days I just write it off. It's not so much a problem with this specific subject but more that there is far too much research being done on a dodgy basis. Vast numbers of pseudo-scientists aren't able to step back and say "we aren't able to model this, we don't know the answer to that question". You get studies that sound clever but are just reporting random results.
- DuskStar 7y ago
  There's also these [0] two [1] on Norway's 2003 requirement for 40% of boards to be women and the 2018 California requirement, which both found that mandating gender diversity on boards had a negative impact on the companies. (This has very little to do with whether a 'naturally' acquired diverse board would be valuable, though) 0: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1364470 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1364470 1: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3265783 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3265783
egdod 7y ago
There are real benefits, but they’re not direct. Basically some companies and government agencies won’t do business with you if your management is insufficiently diverse.
- nscalf 7y ago
  You could measure that. As far as I can tell, this whole movement of gender and sexual diversity being a key indicator of success in a workplace is entirely devoid of evidence. When did we stop caring about who was good at their job? It is just plainly discrimination against straight white males, isn't that illegal?
  - notacoward 7y ago
    > entirely devoid of evidence. I know you saw this because you responded to it. https://news.ycombinator.com/item?id=22137885 https://news.ycombinator.com/item?id=22137885 How can you now pretend the exchange never happened?
VBprogrammer 7y ago
As a white-cis-straight-male I think my opinion on the matter carries little weight. However, the downsides seem pretty minor compared to the opportunities it might open up for the members of those groups. That said, if I was to put myself in the shoes of an entitled white male CEO I suspect it would take me about 5 minutes to realise that installing a puppet female, gay or minority member of the board would cause almost no real change. I might even make them Chief Diversity Officer or something.
- nscalf 7y ago
  First off, there is this stupid narrative going around where people of certain groups cannot have opinions on topics involved people of other groups. This is utter nonsense. Everyone is entitled to any opinion they have, and they can talk about it as much as they want. Second, the downside in the situation you described is having less meaningful insights from your advisors. The impact that good advice could have is enormous, and as far as advisors go, second best advice could be disastrous. We should be making these decisions entirely devoid of what your gender, ethnicity, or sexuality is. Why is everyone talking about making the outcome more equal instead of making the decision entirely uncoupled from the non-relevant aspects of the individual?
  - notacoward 7y ago
    > Why is everyone talking about making the outcome more equal Because unconscious bias is a thing. So is systemic discrimination. Without recognizing that, railing about "equal outcomes" is no more than a dogwhistle. > We should be making these decisions entirely devoid of what your gender, ethnicity, or sexuality is. That would be true in a world where opportunity is already evenly distributed. I look forward to living in that world, but it's not the world any of us live in today. As long as that's the case, requiring "color blindness" (or similar) at each separate point in the process only perpetuates the results of previous discrimination.
    - nscalf 7y ago
      > Without recognizing that, railing about "equal outcomes" is no more than a dogwhistle. This is entirely untrue. There is a push to make sure everyone is hired at the same rates in the same fields, regardless of the ratio of people in those fields, the ratio of people qualified to take certain roles, etc. This is absurd, and clearly cannot succeed. The easiest example is software engineering, where a massive majority of the people in the field are men. You can't hire people who are not qualified or interested in the role just because they're women. A real solution to these issues is to determine why the fields skew to certain demographics, look for and discrimination in that process, and make a change there. This is equality of opportunity, not equality of outcome. Equality of outcome is telling people what they have to do so that things are equal. Equality of opportunity is giving people the choice to follow whatever path they would like to. Equality of outcome is inherently racist/sexist/etc as you bias towards minorities in the sliver of whatever you're looking at.
TotempaaltJ 7y ago
> In my experience, forced diversity is a good way to shoe horn people into roles they won't be successful in. Ideally, this forces people to expand their search/search harder for qualified people. Simply "ticking the boxes" would probably be risky for the company, as you have no idea on if they're the right person. Right now though, it's too easy to say "we found the most qualified person" while not putting in any significant effort to look outside of the easiest pool of candidates. The easiest pool of candidates isn't distributed equally over several axes (like race and gender), so you're less likely to find candidates from marginalized groups there. To fix that distribution issue, there has to be a forcing power that requires people to look outside of that easy pool of candidates.
- nscalf 7y ago
  I'm not sure what you're referring to by "easy pool of candidates". If you post a job listing online and people apply, is that an easy pool? In that situation, is it the responsibility of the company to find more people to apply if they found someone good who could do the job? It sounds like the argument you're making is referring to more diversity earlier in the process, which makes sense to me. Assuming there is no racial bias in the selection process, if the pool of people you're choosing from is more diverse and you still end up with a board of white straight males because they were the most qualified in that pool, is that a problem?
  - notacoward 7y ago
    > If you post a job listing online and people apply, is that an easy pool? Posted where? In what publications, at what position, for how long? "Token posting" to comply with the letter of open-posting requirements while defying their intent is already a thing.
  - TotempaaltJ 7y ago
    > If you post a job listing online and people apply, is that an easy pool? I doubt most directors at companies going to IPO with Goldman Sachs are chosen from applicants to an online job listing. If 90% of the total pool has a largely similar background, and you find 20 candidates without controlling for diversity (my "easy pool"), you'll have 2 candidates with a diverse background. Now even if you could do a merit based selection on that, you'll most likely hire from the 18. If you put more effort into sourcing from the 10% you should be able to get, for example, 10 candidates from the 90% and 10 from the 10%. > if the pool of people you're choosing from is more diverse and you still end up with a board of white straight males because they were the most qualified in that pool, is that a problem? Not necessarily. I don't entirely believe people can pick purely on merit, but assuming you could, that would be a reasonable result to end up with. Though there is an argument to be made that a more diverse board could lead to more inclusive decision making. That in turn could lead to your company being appealing to both more diverse candidates and more diverse customers. More customers is more money. Not sure that I believe that should be the only goal, but it's.
notacoward 7y ago
> Has there been any studies to determine that a diverse board is actually valuable? Define "valuable" please. Do you mean increasing monetary value for one company in the short term? As it turns out, even that answer seems to be that yes, more diverse boards are valuable. Even more importantly, they're likely to be valuable across all measures (e.g. including worker satisfaction) and all companies in the longer term. Diversity brings perspective, which means better understanding of product opportunities and limitations. It improves connection with equally diverse customers and lower-level employees too. Over time it expands the pool of people who already have the experience and connections to succeed at their next job, and the top N% of a larger pool will outperform the top N% of a smaller one. There are all sorts of reasons why a "diversity hire" might still be better for a company despite having infinitesimally lower grades at an infinitesimally less prestigious school, so "the best people for the job" probably doesn't quite mean what you think.
- VBprogrammer 7y ago
  Having a single woman on the board to remind you that having tampons in the woman's bathroom is probably more important than making sure the developers have the exact kind of mechanical switch keyboard and the right variety of arabica beans. Having a single homosexual person to remind you that having the picture postcard white hetro couple in all of your adverts isn't very inclusive. Heck, some of these things might even cost you money but they are the right thing to do and requiring one person on the board to have some kind of diversity is an incredibly low bar.
keanzu 7y ago
> "get the best people for the job" Absolutely I want the best person for the job. How do you measure that? What's the metric? Years of experience, years of relevant experience, whether or not it says "Google" somewhere on their resume, height, attractiveness? Sure some of my examples seem crazy but studies show that taller, attractive people are generally more successful. There's no accurate measure you can use to assess "best" reliably. A lot of hiring is rather a lot more subjective than anyone admits. Not my employer though, we only hire "the best".
- TheAdamAndChe 7y ago
  Height may be genetic, but attractiveness is associated with discipline. You've got to have the discipline to diet, exercise, and consistently ignore marketing that makes you want to eat more.
  - notacoward 7y ago
    Wrong on both counts. A significant factor for height is nutrition, which is why average/median height increases often accompany increases in prosperity. It's only among the already-prosperous that genetic factors come to the fore. Let's look at attractiveness. Of course diet and exercise help Does everyone have the same dietary freedom or metabolism? Does everyone have the same capacity for exercise? Of course not. There are literally thousands of medical conditions that can have an effect here, as well as social factors. Is a particular color/texture of hair or skin more attractive? Both genetics (including race) and medical conditions can render someone "less attractive" by those measures. Then there's makeup, clothing, social norms (of which "thin is in" is a particularly pernicious example), etc. Implying that attractiveness can be a proxy for discipline is absurd. Why would anyone try to excuse "pretty people" bias?
    - SamReidHughes 7y ago
      If you compare across, say, Google employees in their 20's, the difference between fat people and healthy people is 99% discipline.
Brian_K_White 7y ago
There is a fair bit to unpack or interpret in the phrase "be successful in".

by nscalf 7y ago

JumpCrisscross 7y ago

> any studies to determine that a diverse board is actually valuable? At least for gender, the evidence is mixed [1]. It’s a complicated question. For example, the evidence is compelling for French companies [2]. [1] https://hbr.org/2019/03/when-and-why-diversity-improves-your-boards-performance https://hbr.org/2019/03/when-and-why-diversity-improves-your... [2] https://www.sciencedirect.com/science/article/abs/pii/S0378426617302972 https://www.sciencedirect.com/science/article/abs/pii/S03784...

nscalf 7y ago
Ahh that's really interesting, thanks for sharing!
notacoward 7y ago
Also... https://www.forbes.com/sites/karstenstrauss/2018/01/25/more-evidence-that-company-diversity-leads-to-better-profits https://www.forbes.com/sites/karstenstrauss/2018/01/25/more-... https://www.fcltglobal.org/news/blog/article/2019/05/28/data-shows-that-diverse-boards-create-more-value https://www.fcltglobal.org/news/blog/article/2019/05/28/data...
thu2111 7y ago
The PDF for the second paper can be found here: http://iranarze.ir/wp-content/uploads/2018/08/E8806-IranArze.pdf http://iranarze.ir/wp-content/uploads/2018/08/E8806-IranArze... There are quite a few problems with this sort of social science study that make it hard to draw any conclusions. You can't simply see mixed answers and say there's mixed evidence, because such answers aren't evidence to begin with. A first problem is the standard correlation/causation fallacy. If a company that appoints women to the board is doing better is that because of the benign influence of the woman, or is it the inverse, that companies doing well feel they can appoint a token woman without running much risk? Or alternatively that women are only attracted to the sorts of low-risk companies that already do well, and thus success breeds women rather than vice-versa? Or much more likely still that it's irrelevant and there's something else at work? A second problem is confounding factors. Many studies don't even acknowledge them, let alone control for them. This paper does better than most: it recognises that some studies are confounded because they compare companies across countries that vary in mandatory-women-on-boards-laws, which is a variant of the above problem. It selects a single country and a timeframe when (they assert) there was no social pressure to appoint women to boards. But this paper is nonetheless still ultimately a pure correlation = causation argument. A third problem is small sample sizes. This paper claims to use a "large" sample but it's only a little under 400 firms. This is far too small to draw meaningful conclusions from, partly because (again) it's too small a set to control for confounding factors. Yet they claim it's statistically significant. A fourth problem is social scientists are very bad at stopping when they seem to be measuring noise. The paper says: For the various attributes, we find female directors who are foreigners, have business training, and with longer tenure significantly negatively correlate with all performance measures. However, female directors’ reputation measured by their media coverage is positively perceived by market investors and is associated with an improvement of ROA and ROE. (ROA is return on assets, ROE is return on equity). These sentences make a highly implausible claim, namely, the study authors are able to explain movements of the stock market by measuring "reputation" via "media coverage". Moreover that women with more experience and business training are seen as less capable by investors. But in any other context I think most people would agree that reliably explaining the movement of stocks is extremely difficult, especially for something as abstract and long term as a change of board members. Has a major stock ever had a large movement because a non-chairperson role on a corporate board changed? I'm struggling to think of one. If these authors were really capable of analysing corporate performance in such detailed ways, surely they'd choose to become very successful investors instead of writing gender studies papers? This sort of study is pretty common and these days I just write it off. It's not so much a problem with this specific subject but more that there is far too much research being done on a dodgy basis. Vast numbers of pseudo-scientists aren't able to step back and say "we aren't able to model this, we don't know the answer to that question". You get studies that sound clever but are just reporting random results.
DuskStar 7y ago
There's also these [0] two [1] on Norway's 2003 requirement for 40% of boards to be women and the 2018 California requirement, which both found that mandating gender diversity on boards had a negative impact on the companies. (This has very little to do with whether a 'naturally' acquired diverse board would be valuable, though) 0: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1364470 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1364470 1: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3265783 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3265783

egdod 7y ago

There are real benefits, but they’re not direct. Basically some companies and government agencies won’t do business with you if your management is insufficiently diverse.

nscalf 7y ago
You could measure that. As far as I can tell, this whole movement of gender and sexual diversity being a key indicator of success in a workplace is entirely devoid of evidence. When did we stop caring about who was good at their job? It is just plainly discrimination against straight white males, isn't that illegal?
- notacoward 7y ago
  > entirely devoid of evidence. I know you saw this because you responded to it. https://news.ycombinator.com/item?id=22137885 https://news.ycombinator.com/item?id=22137885 How can you now pretend the exchange never happened?

VBprogrammer 7y ago

As a white-cis-straight-male I think my opinion on the matter carries little weight. However, the downsides seem pretty minor compared to the opportunities it might open up for the members of those groups. That said, if I was to put myself in the shoes of an entitled white male CEO I suspect it would take me about 5 minutes to realise that installing a puppet female, gay or minority member of the board would cause almost no real change. I might even make them Chief Diversity Officer or something.

nscalf 7y ago
First off, there is this stupid narrative going around where people of certain groups cannot have opinions on topics involved people of other groups. This is utter nonsense. Everyone is entitled to any opinion they have, and they can talk about it as much as they want. Second, the downside in the situation you described is having less meaningful insights from your advisors. The impact that good advice could have is enormous, and as far as advisors go, second best advice could be disastrous. We should be making these decisions entirely devoid of what your gender, ethnicity, or sexuality is. Why is everyone talking about making the outcome more equal instead of making the decision entirely uncoupled from the non-relevant aspects of the individual?
- notacoward 7y ago
  > Why is everyone talking about making the outcome more equal Because unconscious bias is a thing. So is systemic discrimination. Without recognizing that, railing about "equal outcomes" is no more than a dogwhistle. > We should be making these decisions entirely devoid of what your gender, ethnicity, or sexuality is. That would be true in a world where opportunity is already evenly distributed. I look forward to living in that world, but it's not the world any of us live in today. As long as that's the case, requiring "color blindness" (or similar) at each separate point in the process only perpetuates the results of previous discrimination.
  - nscalf 7y ago
    > Without recognizing that, railing about "equal outcomes" is no more than a dogwhistle. This is entirely untrue. There is a push to make sure everyone is hired at the same rates in the same fields, regardless of the ratio of people in those fields, the ratio of people qualified to take certain roles, etc. This is absurd, and clearly cannot succeed. The easiest example is software engineering, where a massive majority of the people in the field are men. You can't hire people who are not qualified or interested in the role just because they're women. A real solution to these issues is to determine why the fields skew to certain demographics, look for and discrimination in that process, and make a change there. This is equality of opportunity, not equality of outcome. Equality of outcome is telling people what they have to do so that things are equal. Equality of opportunity is giving people the choice to follow whatever path they would like to. Equality of outcome is inherently racist/sexist/etc as you bias towards minorities in the sliver of whatever you're looking at.

TotempaaltJ 7y ago

> In my experience, forced diversity is a good way to shoe horn people into roles they won't be successful in. Ideally, this forces people to expand their search/search harder for qualified people. Simply "ticking the boxes" would probably be risky for the company, as you have no idea on if they're the right person. Right now though, it's too easy to say "we found the most qualified person" while not putting in any significant effort to look outside of the easiest pool of candidates. The easiest pool of candidates isn't distributed equally over several axes (like race and gender), so you're less likely to find candidates from marginalized groups there. To fix that distribution issue, there has to be a forcing power that requires people to look outside of that easy pool of candidates.

nscalf 7y ago
I'm not sure what you're referring to by "easy pool of candidates". If you post a job listing online and people apply, is that an easy pool? In that situation, is it the responsibility of the company to find more people to apply if they found someone good who could do the job? It sounds like the argument you're making is referring to more diversity earlier in the process, which makes sense to me. Assuming there is no racial bias in the selection process, if the pool of people you're choosing from is more diverse and you still end up with a board of white straight males because they were the most qualified in that pool, is that a problem?
- notacoward 7y ago
  > If you post a job listing online and people apply, is that an easy pool? Posted where? In what publications, at what position, for how long? "Token posting" to comply with the letter of open-posting requirements while defying their intent is already a thing.
- TotempaaltJ 7y ago
  > If you post a job listing online and people apply, is that an easy pool? I doubt most directors at companies going to IPO with Goldman Sachs are chosen from applicants to an online job listing. If 90% of the total pool has a largely similar background, and you find 20 candidates without controlling for diversity (my "easy pool"), you'll have 2 candidates with a diverse background. Now even if you could do a merit based selection on that, you'll most likely hire from the 18. If you put more effort into sourcing from the 10% you should be able to get, for example, 10 candidates from the 90% and 10 from the 10%. > if the pool of people you're choosing from is more diverse and you still end up with a board of white straight males because they were the most qualified in that pool, is that a problem? Not necessarily. I don't entirely believe people can pick purely on merit, but assuming you could, that would be a reasonable result to end up with. Though there is an argument to be made that a more diverse board could lead to more inclusive decision making. That in turn could lead to your company being appealing to both more diverse candidates and more diverse customers. More customers is more money. Not sure that I believe that should be the only goal, but it's.

notacoward 7y ago

> Has there been any studies to determine that a diverse board is actually valuable? Define "valuable" please. Do you mean increasing monetary value for one company in the short term? As it turns out, even that answer seems to be that yes, more diverse boards are valuable. Even more importantly, they're likely to be valuable across all measures (e.g. including worker satisfaction) and all companies in the longer term. Diversity brings perspective, which means better understanding of product opportunities and limitations. It improves connection with equally diverse customers and lower-level employees too. Over time it expands the pool of people who already have the experience and connections to succeed at their next job, and the top N% of a larger pool will outperform the top N% of a smaller one. There are all sorts of reasons why a "diversity hire" might still be better for a company despite having infinitesimally lower grades at an infinitesimally less prestigious school, so "the best people for the job" probably doesn't quite mean what you think.

VBprogrammer 7y ago
Having a single woman on the board to remind you that having tampons in the woman's bathroom is probably more important than making sure the developers have the exact kind of mechanical switch keyboard and the right variety of arabica beans. Having a single homosexual person to remind you that having the picture postcard white hetro couple in all of your adverts isn't very inclusive. Heck, some of these things might even cost you money but they are the right thing to do and requiring one person on the board to have some kind of diversity is an incredibly low bar.

keanzu 7y ago

> "get the best people for the job" Absolutely I want the best person for the job. How do you measure that? What's the metric? Years of experience, years of relevant experience, whether or not it says "Google" somewhere on their resume, height, attractiveness? Sure some of my examples seem crazy but studies show that taller, attractive people are generally more successful. There's no accurate measure you can use to assess "best" reliably. A lot of hiring is rather a lot more subjective than anyone admits. Not my employer though, we only hire "the best".

TheAdamAndChe 7y ago
Height may be genetic, but attractiveness is associated with discipline. You've got to have the discipline to diet, exercise, and consistently ignore marketing that makes you want to eat more.
- notacoward 7y ago
  Wrong on both counts. A significant factor for height is nutrition, which is why average/median height increases often accompany increases in prosperity. It's only among the already-prosperous that genetic factors come to the fore. Let's look at attractiveness. Of course diet and exercise help Does everyone have the same dietary freedom or metabolism? Does everyone have the same capacity for exercise? Of course not. There are literally thousands of medical conditions that can have an effect here, as well as social factors. Is a particular color/texture of hair or skin more attractive? Both genetics (including race) and medical conditions can render someone "less attractive" by those measures. Then there's makeup, clothing, social norms (of which "thin is in" is a particularly pernicious example), etc. Implying that attractiveness can be a proxy for discipline is absurd. Why would anyone try to excuse "pretty people" bias?
  - SamReidHughes 7y ago
    If you compare across, say, Google employees in their 20's, the difference between fat people and healthy people is 99% discipline.

Brian_K_White 7y ago

There is a fair bit to unpack or interpret in the phrase "be successful in".