LEADERSHIP “You can hire for merit or you can hire for diversity” the most damaging business myth of our time.

“You can hire for merit or you can hire for diversity” might be the most damaging business myth of our time.

In my recent conversation with Sarena Lin, we cut straight to this dangerous fallacy. Drawing from her time as Chief Transformation Officer at Bayer and in her role as Senior Advisor at McKinsey, Lin made it clear: top-performing companies don’t see this as an either/or choice.

To be clear: this article is not advocating for rigid diversity quotas or preferential treatment. Rather, it points out that genuine merit-based hiring—when free from unconscious bias—naturally creates diverse teams. The most successful businesses understand that merit and diversity aren't opposing forces but complementary strengths that, when combined properly, deliver superior business outcomes.

Merit and Diversity Go Hand in Hand

Companies in the top quartile of ethnic and gender representation are 39% more likely to outperform those in the bottom quartile. On the flip side, companies lacking diverse representation typically perform 30% lower than their industry peers.

“In my experience, the leaders who deliver a strong performance are the ones that understand how to best leverage their team,” says Lin, who also serves on multiple advisory and supervisory boards. “The best leaders go a step further. They build a diverse team so that they can have the most original voices around them, and generate the kind of brainstorming that evokes debate and generates the best solutions.”

Companies prioritizing diversity and inclusion are twelve times more likely to engage and retain employees, 8.4 times more likely to inspire belonging, and 8.5 times more likely to satisfy and retain customers.

The companies that really excel don’t treat diversity as a separate program but integrate inclusive practices throughout their business operations. By making diversity considerations part of everyday business decisions—from product development to marketing and operations—organizations create lasting inclusive environments that persist regardless of political climate changes.

More Than Just Numbers on a Chart

The problem with many DEI efforts has been their focus on hitting demographic targets rather than tapping into the actual benefits diverse perspectives bring to a business. As organizations move away from quota-based approaches, they have an opportunity to focus on what actually matters—the range of viewpoints and experiences that make a team perform better.

Lin explains this common misunderstanding: “I think the misconception comes from the misunderstanding that managing diversity is about managing numbers—managing the percentage of female employees, counting the number of minority leaders, etc. This masks the much bigger purpose and value of why diversity is important in today’s environment. We should not do diversity just for the sake of having different faces around the management table. Rather, diversity is a means to finding answers to how corporations can best address the ever challenging and uncertain world, where past experiences are no longer adequate to finding solutions.”

Lin’s perspective aligns with a 2015 study, which found that teams with varied backgrounds produce more innovative solutions to difficult problems than similar groups of people. However, this naturally means that success doesn’t come from just collecting a cast of diverse people, but from ensuring their different viewpoints actually factor into decisions and shape outcomes.

Diverse Leadership Without Mandates

Though representation has improved at various company levels, barriers to advancement persist for many groups. However, scrapping DEI quotas doesn’t mean giving up on developing diverse leadership—it simply moves the focus to creating fair opportunities based on performance and ability.

“To be clear, there is nothing wrong with merit-based hiring!” Lin emphasizes. “It is important that any talent, diverse or not, have the performance and the skill sets to be qualified for the role. Any diverse candidate wants to succeed because of merit and not based on other measures.”

The real challenge, as Lin points out, is addressing the subtle biases that can affect hiring and promotion decisions: “I think the underlying question is how to address potential biases during the hiring and promotion process. As human beings, we are unconsciously drawn to people who have similar life experiences to us. It is therefore more difficult to connect, and demonstrate fit, when a candidate is different from us.”

This observation supports findings from a 2022 study that showed that hiring biases affect decisions even when managers think they’re being completely objective. The solution isn’t throwing out merit-based systems, however, but rather improving those systems to make sure they actually measure merit accurately for everyone, regardless of background.

This natural tendency towards unconscious bias explains why deliberate hiring practices matter. While recent policy changes might reject rigid quotas, this shouldn't mean overcorrecting in the opposite direction. If a woman or person of color truly is the most qualified candidate, they should never be passed over just so a company can avoid appearing to make "diversity hires." That would simply replace one form of discrimination with another. The goal is straightforward: hire the best person for the job while ensuring biases don't cloud judgment. When companies create fair processes that evaluate all candidates on their merits, they naturally build stronger, more diverse teams without needing quotas. And the evidence clearly shows these teams deliver better business results.

What Companies Should Consider Before Dismantling DEI Programs

Before rushing to dismantle DEI initiatives in response to political changes, companies should consider what they might lose:

• Business Performance Risk: With a 39% performance gap between companies with strong diversity and those without, hastily cutting DEI efforts could directly impact the bottom line.
• Talent Acquisition and Retention: Companies without inclusive cultures face serious disadvantages in the race for talent. HR professionals report that inclusive environments are necessary for attracting top performers from all backgrounds.
• Innovation Capability: Research consistently shows that homogeneous teams produce fewer innovations and are more likely to suffer from groupthink, potentially missing market opportunities.
• Customer Connection: As markets become increasingly diverse, companies whose leadership reflects their customer base gain important insights into their customers’ needs and preference
• Legal and Reputation Exposure: Even without formal federal DEI requirements in the USA, companies must still comply with anti-discrimination laws. Poorly considered cuts to DEI programs could increase legal risk and damage brand reputation.

The current regulatory picture for DEI practices varies greatly by country and region. While the U.S. has seen policy shifts in early 2025, many other nations continue to encourage or require diversity initiatives. Multinational companies must deal with different requirements across their global operations.

Lin has specific recommendations for companies considering changes to their approach: "First of all, I think it's beneficial to seek broad candidate pools for every critical role, without lowering expectations. Companies should find qualified candidates with different backgrounds and experiences, while maintaining a focus on merit and qualifications throughout the selection process."

She further emphasizes the importance of addressing bias in the hiring process: “Secondly, it’s important that hiring managers are trained to acknowledge their own biases and therefore are given tools to address them. Develop objective hiring criteria that requires demonstration of evidence. Create interview guides that focus on gathering concrete examples rather than impressions.”

These approaches allow companies to maintain their commitment to diverse leadership while focusing squarely on talent and contribution—qualities that everyone can agree are necessary for business success.

Why This Matters Now

Many organizations have been stuck in what DEI experts call “one-and-done, check-the-box” diversity training—superficial efforts that fail to create real change. The current political climate could actually push companies to move beyond performative DEI toward approaches that deliver real business results by focusing on what really matters: creating teams that bring together different perspectives to solve business problems more effectively.

The reality is that diversity and merit work together. When companies commit to finding the best talent from all backgrounds, diversity happens naturally. The end of government-mandated DEI programs marks a change to a more performance-focused approach to building diverse leadership teams that improve business results.

But what does success look like when companies build inclusion into their business operations? Imagine a technology company that doesn’t have a separate diversity office but instead trains all product managers to include user testing with diverse populations as a standard step in development. Or a retail chain where store managers’ success metrics include how well they build and develop teams with varied backgrounds and perspectives. These companies don’t talk about “doing DEI” because inclusive thinking shapes everything from who they hire to how they design products and serve customers.

When inclusion becomes part of regular business thinking, we see different outcomes. A marketing team might naturally include various cultural perspectives in campaign planning, catching potential missteps before they happen. A manufacturing company might invite production line workers from different backgrounds to contribute ideas for process improvements, discovering efficiency gains that more homogeneous groups missed.

I envision a future where we don’t need special diversity programs because inclusive thinking simply becomes part of good management. Recruiters would naturally seek candidates from various backgrounds, recognizing the competitive advantage of different perspectives. Product teams would automatically consider diverse user needs. Leaders would routinely build varied teams because they’ve seen how diversity improves results. In this future, we wouldn’t need to measure diversity separately from other business metrics because—like quality, innovation, and customer satisfaction—it would be understood as a standard component of business success.

As Lin said, “Together we need to take action to build inclusive work environments, sustainable talent practices and psychologically safe environments where different skills and approaches are equally valued.”

For more information on how we integrate DEI into every step of our executive search process, please visit our DEI Policy.

About the Author

Eleri Dodsworth is a Partner at Stanton Chase London and serves as the Regional Leader for the Diversity, Equity, Inclusion, and Belonging practice group for the EMEA region. She also represents the firm on the AESC Diversity Leadership Council for Europe and Africa.

Eleri is a passionate advocate for equity, inclusion, diversity, and belonging. She strongly believes in helping her clients build diverse leadership teams, seeing diversity and inclusion as essential values that significantly impact business performance. Eleri specializes in placing leaders at the C-suite level, divisional directors, and non-executive directors in listed companies, as well as in private equity, family-owned, and privately owned businesses.

About Our Contributors

Sarena Lin is a Senior Advisor at McKinsey who serves on multiple advisory and supervisory boards. Previously, she held the position of Chief Transformation and Talent Officer at Bayer. With extensive experience working with diverse teams across global organizations, Sarena brings valuable insights on how diversity drives business performance and innovation.

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