Despite recent deadly accidents and the United States Federal Aviation Administration (FAA) pointing out years of “systemic quality control issues,” these have not stopped Boeing’s passionate pursuit of diversity, equity, and inclusion (DEI). Since 2022, Boeing has tied executive compensation to DEI to ensure diverse candidates have the opportunity to interview for at least 90% of manager and executive positions.
Boeing took this initiative amid its recovery from the substantial financial losses resulting from the 2018 and 2019 737 Max crashes and subsequent grounding. With China’s state-owned commercial aircraft manufacturer COMAC on the rise, seeking to capitalize on Boeing’s existing issues to gain international market share, Boeing’s continued focus on DEI amidst this situation seems challenging.
Despite facing significant crises, Boeing continues to push forward with its DEI initiatives. As the initiatives are driven by compensation, significant progress in this area is not surprising.
Sara Bowen, Boeing’s Vice President of Global Equity, Diversity, and Inclusion, proudly announced in the 2023 report on “Global Equity, Diversity, and Inclusion” that Boeing’s minority representation reached 35.3%, up 4 percentage points from 2020 and 3 points higher than the industry average.
She said, “Our goal is to provide diverse interview opportunities for at least 90% of manager and executive positions.” “We’ve exceeded this goal, with 92% of interviewees being diverse, and ultimately, diversity in the management and executive ranks stands at 47%.”
In addition to highlighting the efforts in promoting minorities to executive and management positions, Boeing’s 2023 report emphasized employee self-identified gender and sexual orientation proportions at 14% and 12%, respectively. Boeing’s hiring, promotion, and financial support for the LGBT community received a perfect 100% rating in the 2023-24 annual report by the Human Rights Campaign.
Undoubtedly, Boeing has made strides in setting DEI recruitment standards, with more executives and managers meeting DEI criteria. As a result, Boeing has gained high recognition in the DEI movement. However, will Boeing’s increasing focus on DEI help resolve its alleged systemic quality control issues? Given recent audits by the FAA and widely known quality control issues (such as cabin doors detaching mid-flight), the answer seems negative.
Nevertheless, to demonstrate that continued focus on diverse recruitment and promotion is justified, Boeing’s leadership can refer to studies released by McKinsey & Co in 2015, 2018, 2020, and 2023, supporting diversity initiatives in academia, industry, and the military.
Authors of these influential studies argue, “Our data shows that companies with more diverse leadership teams are more successful. Therefore, leading companies in our database are pursuing diversity because it’s a business necessity and drives real performance.”
In other words, diversity translates to more profits, and combined with the virtuous allure that this Marxist-inspired initiative naturally provides, launching such programs seems warranted.
However, a recent study published on Econ Journal Watch by professors Jeremiah Green from Texas A&M University and John R. M. Hand from the University of North Carolina-Chapel Hill casts doubt on the idea that “DEI equals financial success.”
Their study aimed to replicate McKinsey’s findings on the importance/outcomes/effects of diversity, revealing statistically insignificant benefits in companies emphasizing diversity. They also noted that although McKinsey’s reports suggest causation, the texts do not clarify causation. Therefore, the notion that “diversity inevitably leads to profit” is a fallacy.
Nevertheless, even if diversity does not necessarily improve performance, does focusing on diversity inevitably lead to a decline in performance? The answer may be yes or no.
One possible reason is that DEI and actual equality actions often co-occur, potentially resulting in lower-qualified individuals being hired or promoted based on diversity metrics. Given that quality control errors can lead to loss of life, Boeing must focus entirely on hiring the best talent to improve quality, without a doubt!
On the other hand, if Boeing establishes a robust quality control system that operates effectively, diverting resources to enhance diversity may not necessarily lead to underperformance.
Airbus exemplifies this, as while not without flaws, the company does not face the systemic quality issues Boeing does, despite implementing broad DEI programs in Europe.
However, at a time when Boeing is in a quality control crisis, linking management and executive compensation to radical, DEI-based goals while diminishing the focus on quality control is irresponsible.