Are Boeing’s Failures Linked to Embracing Diversity Benefit Myths?

The nose of a Boeing commercial airliner is seen in Sydney on March 14, 2019. (Cameron Spencer/Getty Images)

Commentary

Boeing has not let fatal accidents and years of quality-control issues described by the Federal Aviation Administration (FAA) as systemic derail its aggressive pursuit of diversity, equity, and inclusion (DEI) goals. To wit, starting in 2022, Boeing tied executive compensation to inclusion and diversity to ensure that suitably diverse candidates were included in interviews for at least 90 percent of manager and executive openings.

Boeing made this move even as it was still recovering from the massive financial consequences of the fatal 737 Max crashes of 2018 and 2019 and the subsequent grounding of the 737 Max fleet. And Boeing’s focus on DEI seems even more problematic given that China’s state-owned COMAC commercial airline manufacturer is chomping at the bit to capitalize on Boeing’s largely self-inflicted troubles to seize international market share.

But despite facing major crises, Boeing is still plunging forward with its DEI initiatives. And with these initiatives being compensation-driven, it is no surprise that they have yielded impressive results.

In Boeing’s 2023 report on “Global Equity, Diversity & Inclusion,” Sara Bowen, vice president of global equity, diversity, and inclusion, proudly reported that Boeing’s racial and ethnic minority representation had reached 35.3 percent, four points higher than in 2020 and three points higher than the industry average.

“Our goal was to achieve diverse interview slates for at least 90% of manager and executive openings,” she said. “We exceeded that target with 92% of interview slates being diverse, resulting in 47% diverse hires at the management and executive levels.”

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Beyond reporting on Boeing’s efforts to aggressively promote racial and ethnic minorities to executive and managerial positions, Boeing’s 2023 report highlights the percentage of employees self-identifying with a gender identity or sexual orientation as being 14 percent and 12 percent, respectively. Boeing’s hiring and promotion of LGBT-identified people, along with financial support of LGBT causes and issues, garnered it a 100 percent rating by the Human Rights Campaign’s 2023–24 report.

So there is no doubt that Boeing’s increased focus on DEI hiring and metrics has yielded results in terms of having more executives and managers who fit approved DEI criteria. Accordingly, it has received much-cherished recognition from the DEI movement. But has Boeing’s increased focus on DEI helped it address its alleged systemic quality-control issues? Given the recent FAA audit and highly publicized quality-control-related issues such as doors falling off in midflight, the answer would appear to be no.

Yet to justify continuing its focus on diversity hiring and promotions, senior Boeing management can point to the McKinsey & Co. studies, published in 2015, 2018, 2020, and 2023, that have provided justification for diversity initiatives in academia, industry, and the military.

This justification, as given by the lead author of these oft-cited, influential studies, states: “What our data shows is that companies that have more diverse leadership teams are more successful. And so, the leading companies in our datasets are pursuing diversity because it’s a business imperative and driving real business results.”

In other words, more diversity equals more profits. This, along with all the opportunities for virtue signaling that such Marxist-inspired programs are guaranteed to provide, made rolling out such programs an apparent no-brainer.

However, there is now a fly in the DEI-equals-financial-success ointment in the form of a recent study published in Econ Journal Watch by university professors Jeremiah Green and John R. M. Hand of Texas A&M University and the University of North Carolina–Chapel Hill, respectively.

Their study, “McKinsey’s Diversity Matters/Delivers/Wins Results Revisited,” attempted to replicate the results of the McKinsey studies and found that there is no statistically significant benefit to companies that focus on diversity. Further, they pointed out that the McKinsey studies themselves, despite bearing titles suggesting that causality is demonstrated, do not claim causality within the body of the studies. Hence, the popular narrative that diversity inevitably leads to profitability is a myth.

Still, even if diversity does not necessarily lead to improved performance, does that mean focusing on diversity necessarily leads to poorer performance? The answer is maybe, maybe not.

The maybe comes from the fact that DEI and de-facto affirmative action often go hand in hand and can lead to less qualified, less capable people being hired and promoted because they fit a diversity metric. And given that quality-control lapses can lead to dead passengers and aircrew, Boeing should be 100 percent focused on putting the best people in place to improve quality—period!

On the other hand, if Boeing had systematic robust quality-control systems and measures firmly in place and functioning properly, devoting some resources to improving diversity would not necessarily lead to inadequate or poor performance. That this is true is demonstrated by Airbus, which, while not perfect, does not appear to have the same systemic quality problems as Boeing, even while sporting comprehensive DEI initiatives.

Nevertheless, when your company is in the middle of a quality-control crisis, diluting the focus on quality control by changing management and executive compensation to include aggressive DEI-based goals is irresponsible. And doing so when China is chomping at the bit to eat your lunch seems particularly foolish.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.