“We need more diversity – it’s good for business” is a line you’ve probably heard a thousand times. Perhaps you’ve even said it yourself. It sounds compelling – we have all seen how a diverse team can be more creative, for instance. It feels progressive. And it seems like a win-win: companies do good, and they do well – a narrative so often repeated that it’s become dogma.
But what if everything you’ve heard about the “business case” for diversity is not just wrong, but counterproductive? And could it be actively harmful to the cause it claims to support?
I’ve spent my career speaking to corporate leaders – in the classroom, in boardrooms, and on the pages of my six books. The intention behind companies’ diversity, equity, and inclusion (DEI) efforts is usually good. But the implementation? Often misdiagnosed, based on outdated assumptions, and – let’s be honest – full of claims that are simply not supported by the data.
From the University to Big Business
Let’s start with these data. A lot of serious academic research has explored the link between demographic diversity and business performance. The evidence is mixed, context-dependent, and often inconclusive. Evidently, diversity is not bad for business. But claiming it is inherently good, without qualification, simply isn’t right.
Despite this, the business case is treated as gospel. In boardrooms and LinkedIn posts alike, executives proclaim diversity as “good for business.” The World Economic Forum even titled one of its reports The Business Case for Diversity Is Now Overwhelming. In a 2023 research paper, Oriane Georgeac and Aneeta Rattan, two professors, analyzed how Fortune 500 companies present their diversity policies. They found that 410 of them gave an explanation, which, 99% of the time, was based on business arguments. Only six companies appealed to ethics.
Why this focus on the utilitarian benefits of diversity? Historically, it originated as a legal workaround. In the 1970s, when affirmative action faced backlash in U.S. courts, diversity was reframed as an educational benefit. That argument stuck, because it made sense. Universities embraced it. Corporations followed suit.
But companies aren’t in the business of educating young people. They can’t claim that diversity inherently helps them deliver on their mission. They must prove it improves the bottom line. It is that proof that researchers have looked for – and it has been elusive.
The Business Case That Was Never There
Here’s the trap: defending a moral imperative using a weak economic argument sets you up for backlash. When results don’t show up on the bottom line, critics can – and will – accuse DEI leaders of peddling empty promises. That’s exactly what’s happening today in the United States, where DEI efforts are under political siege.
It’s time to reframe the conversation.
First, and most importantly, you don’t need to make a “business case” to create an environment in which opportunities are truly equal for all. Think of a different issue: undoubtedly, it is good business to avoid workplace injuries; but invoking the bottom line to push for safety measures would be callous. “We strive for safety,” one CEO told me, “because we don’t want our people to get hurt.” Diversity should be no different.
Second, if business faces such a persistent diversity challenge, it may be the symptom of a deeper issue. Why does the needle barely move, despite decades of investment in DEI? Because companies are trying to solve the wrong problem.
Gender Diversity Works In Law, Health And Politics – But Not In The C-Suite
It is impossible not to notice the gender inequalities in the upper echelons of the business world. What’s striking is that this inequality does not mirror other sectors like politics, justice, and medicine. There, women have made remarkable inroads. In France, for instance, over 50% of appellate court judges are women; the majority of doctors are women; and nearly half of cabinet ministers are female. Yet, only about 10% of CEOs are female, and executive teams are still hovering at around 25%. This difference in gender equality between the business world and the rest of society can be observed in many other countries.
This tells us something important. Society-wide gender bias is real, and stereotypes are surprisingly persistent. But biases and stereotypes that pervade society cannot explain why gender parity seems much harder to achieve in the business world. That is especially surprising when business leaders keep touting their efforts to promote diversity and the benefits they expect to reap from it.
If business has a problem that the rest of society does not have, its root cause must be specific to the business world and the way its leaders are selected. And that’s where we need to look.
Leadership’s Dirty Little Secret: The Mirror Test
Ask HR executives about the “leadership model” of their company, and many will list such qualities as humility, listening skills, and collaborative instincts. They are right: these traits make leaders more effective.
But they don’t walk the talk. Too often, what they reward instead is ambition, extraversion, self-promotion and aggressiveness. In short, they are looking for a stereotype of leadership.
One reason is that evaluations leave a lot of room for judgment. It is not enough to determine whether someone has performed well in their current job or meets objective criteria for promotion. We must assess their “potential” and decide whether they are “leadership material.” When we ask such vague, judgmental questions, we do not reward merit, but familiarity. We should be asking “can Jane do the next job?” Instead, the question we answer is “does she look like John, who currently holds that job?”
Simply put, when we think we evaluate merit, we are really looking for familiarity. The result is what Mitch Kapor, the founder of Lotus, once called a mirror-tocracy: promoting those who look like those who have led before.
This, of course, perpetuates a stereotypical profile. Who comes to mind first when you think “business leader?” Even if it is not Elon Musk or the late Steve Jobs, chances are that the first image in your mind is not only of a man, but of a particular type: one who embodies extroversion, charisma, competitive spirit, risk-taking, even bravado.
When Systems Reinforce Stereotypes
There is another, more insidious reason for the success of stereotypical leaders: corporate systems are built to reward the traits they possess.
Take internal job postings. When a position becomes available, most companies ask people to raise their hands to apply. But research shows that men are more likely than women to overestimate their qualifications and jump at opportunities – even when underprepared. Women, meanwhile, often do not apply, even when they meet 100% of the criteria. This gender imbalance is an issue in itself. But it reveals a deeper problem: asking applicants to apply selects for ambitious, self-promoting, overconfident, competitive individuals. Not only do these tend to be male – they are also not necessarily the best candidates.
So why not flip the script? Instead of asking people to opt in, use your HR systems to identify qualified candidates; or even ask colleagues to nominate their peers and bosses. Then inform all the people on the list that they will be considered for a promotion and of course let them opt out if they are not interested. It’s a subtle tweak that rewards actual performance rather than self-promotion.
Even if you don’t believe this solution can apply to you (and there may be good reasons for that), think of your current procedure to identify internal and external candidates. Does it really select because of the qualities you are seeking? Often you will find unchallenged routines that inadvertently reward unwanted attitudes and behaviors.
To Change Mindsets, Work On Systems
This example illustrates a general principle: to make change happen, it is more effective to work on systems than to try to change mindsets directly.
American companies spend an estimated $8 billion annually on implicit bias training. But study after study shows these interventions don’t meaningfully change behavior. That’s not because bias isn’t real. It is. But trying to “de-bias” thousands of employees through one-off training is like trying to empty the ocean with a spoon. There’s a reason stereotypes are so persistent: they’re hard to change.
Instead, design your processes to be bias-resistant. Think of it like seatbelts in a car: it would be nice to get all drivers to be more relaxed and prudent, but that takes time. Meanwhile, building safety into the structure is a powerful approach.
Research suggests many process changes that can help combat stereotypes. Setting non-negotiable hiring salaries eliminates the advantage of candidates who don’t hesitate to drive a hard bargain. Making hiring and promotion decisions in “batches,” rather than individually, makes disparities more visible – and therefore less acceptable. Testing candidates on hard, measurable skills, in addition to evaluating their soft skills and “cultural fit,” levels the playing field for those, like first-generation college graduates, who may not yet be as comfortable in a corporate environment.
These aren’t glamorous solutions, but they can work. And when they do, they scale.
No One-Size-Fits-All
Two questions I often hear are “Which of these solutions will work for me?” and “Which companies have implemented them?” These are important questions, of course. But looking for a silver bullet, or pointing to model companies, often does more harm than good.
Why? Because practices that work in one context may fail in another. What worked at a Bay Area tech firm may flop in a family-run logistics company in the Midwest.
Take job ad language. One software company found that replacing “highly driven” with “passionate about impact” attracted significantly more female candidates. Should every company do the same? Not necessarily. The lesson isn’t in the wording – it’s in the willingness to test and learn.
There is no substitute for rigorous experimentation – and for its prerequisite: being prepared to fail, and start over, until you figure out what works for you.
What We Forgot To Say
In the U.S., DEI is now politically polarizing. But diversity isn’t just box you checked, and are now under pressure to uncheck. It’s a commitment to fairness, to a real meritocracy that isn’t a “mirrortocracy.”
We don’t need better DEI slogans. We need a leadership model that rewards the skills and traits we need, not conformity to the stereotypes of the past. We need better decision-making processes to select, evaluate and promote our leaders. We need less faith in training workshops and more faith in process design.
Most of all, we need the courage to say: yes, diversity matters, not because it boosts the bottom line, but because it’s the right thing to do. And when we do it right it, when we focus on fixing our systems to make them truly fair, it can make our leadership better, our organizations smarter, stronger, and more resilient.
But only if we stop barking up the wrong tree.
Olivier Sibony is the author of La diversité n’est pas ce que vous croyez (“Diversity Is Not What You Think It Is”). He is Professor (Education Track) in the Strategy and Business Policy department at HEC Paris.
Daniel Brown is Head of HEC Research Communication