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Why Corporate America Should Reconsider Scaling Back DEI
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Why Corporate America Should Reconsider
Scaling Back DEI
Liz Elting Contributor
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Liz Elting is a billion-dollar founder who covers
women and business.
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Nov 11, 2024, 07:45am EST
Updated Nov 13, 2024, 02:02pm EST
A diverse group of business professionals brainstorming at an office. GETTY
Diversity, equity and inclusion (DEI) has come a long way in the workplace
since its 2020 boom. As sociologist and professor Tsedale M. Melaku Ph.D.,
professor Angie Beeman Ph.D., professor David G. Smith Ph.D., and
professor W. Brad Johnson Ph.D. prompted in their 2020 piece “Be a Better
Ally” for Harvard Business Review, the pandemic alongside the #MeToo
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Why Corporate America Should Reconsider Scaling Back DEI
and Black Lives Matter movements brought long-existing systemic barriers
to the surface in the workplace and society more broadly.
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The authors wrote that business leaders could no longer ignore “that they
must step up if there is to be any hope of making organizations more
diverse, fair, and inclusive.” The article explains that organizations can
increase inclusivity and diversity on their teams by prioritizing investment
in DEI programs that encourage education and conversation, intentionally
hiring diverse job candidates, creating DEI-centered positions, and uplifting
those underrepresented in the workplace into executive leadership roles. In
the years since, companies and experts have evolved these ideas into
concrete ways to measure and promote real equity—even amidst pushback.
In response to the broad push for increased corporate DEI investment, over
80% of companies instituted these initiatives. According to data from
McKinsey’s report “Diversity Matters Even More”, the average
representation of women on executive teams increased by 20%, and ethnic
diversity increased by 15% in 2023 (three years following the 2020 corporate
DEI boom). Evaluating the increase in diversity among corporate leadership,
the report goes on to find that top-ranked companies for diversity are 39%
more likely to outperform companies in the bottom quartile for
representation.
New data also shows that increased investment in DEI has greatly benefited
workers. According to a recent study from social impact software provider
Benevity, about 90% of employees say they’ve personally benefited from
workplace DEI initiatives. DEI policies that increase employee wellbeing are
key to the success of today’s workforce. Not only because placing value on
worker wellbeing is simply the right thing to do, but because employee
satisfaction serves as a key driver for business success. After all, research has
shown that companies that prioritize benefits and employee-centric work
environments are more profitable.
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Yet despite its clear benefits, following the ripple effects of the Supreme
Court dismantling affirmative action, there have been considerable
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scalebacks of company DEI initiatives in 2024. New research from The
Conference Board indicates that over half of executives find the current
political and social climate for DEI extremely challenging and anticipate
continuing or escalating pushback of DEI initiatives because of it.
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A study conducted by executive search firm Bridge Partners found that
investment in DEI among U.S. companies dropped from 77% of companies
prioritizing DEI in 2023 to just 66% in 2024. Companies including Ford,
Toyota and Lowe’s were reported to have sent internal memos to employees
noting plans to scale back DEI initiatives. Tractor Supply Company went as
far as to issue a release laying out plans to “eliminate DEI roles and retire
[the company’s] current DEI goals.”
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In response to pushback, merit, excellence and intelligence (MEI) metrics
have been making the rounds as a touted replacement for DEI. In a viral X
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post that received support from X owner Elon Musk, Scale AI founder
Alexandr Wang laid out that his company will only hire people based on its
MEI metrics.
According to Wang’s post, the company’s MEI-based hiring means they
“hire only the best person for the job” and “do not unfairly stereotype,
tokenize, or otherwise treat anyone as a member of a demographic group
rather than as an individual.” As Wang notes in his post, MEI takes the
diversity piece out of hiring. Wang argues that considering someone’s
background when hiring perpetuates bias, and suggests that it's better to
cast “a wide net for talent and then objectively selecting the best, without
bias in any direction.”
Ignoring someone’s gender or race and focusing solely on work output and
ability when hiring or promoting talent sounds great on paper. However, it
ignores the explicit and implicit biases that already inherently exist in work
environments. And critically, MEI initiatives don’t account for the additional
hoops many women and Black and Brown employees have to jump through
in the workplace. Regardless of intent, research from the National Bureau of
Economic Research (NBER) has shown that bias often occurs as soon as a
hiring manager sees a name on a job application.
Studies have also shown that, whether intentionally or unintentionally,
leaders have given feedback to employees stemming from negative gender or
race stereotypes rather than basing it on their actual job performance. And
research has shown that ignoring bias in hiring leads to less workplace
diversity—and not necessarily because diverse employees aren’t the best
candidates for the job. In many instances ignoring bias within hiring can
create a less diverse candidate pool from the start. A whitepaper titled
“Meeting the Demands of an Evolving Workforce” from diversity, equity and
inclusion strategy firm Paradigm indicates that white candidates are 1.5
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times more likely to get hired, and referred candidates are more than 4.5
times as likely to get hired as candidates from other sources (candidates of
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color represent less than 50% of the referred candidate pool).
Rather than pulling back from DEI initiatives that increase organizational
diversity from top to bottom, address existing systemic barriers, improve
employee satisfaction, and contribute to better business outcomes,
companies should do more to measure the tangible benefits DEI has on
business. As The Conference Board notes in its report, companies should be
“integrating DEI into systems and strategy to more clearly demonstrate
business value and make initiatives more measurable and defensible in the
face of pushback.”
There are also ways for organizations to effectively evolve DEI initiatives
even amid pressures to scale back. In its whitepaper, Paradigm suggests that
using the same promotion criteria for every employee, instituting inclusive
leadership and hiring training, leveraging interview evaluation rubrics, and
administering candidate debriefs are measurable ways for organizations to
structure their performance management and hiring practices around DEI.
Paradigm also notes that exploring work norms and policies, like who
receives access to specific opportunities, can be a way for businesses to
better understand why certain groups may not be advancing at equal rates.
Nearly five years ago, the collision of Covid-19 and growing social
movements ignited a critical mass that brought long-standing injustices to
the fore and into mainstream discourse, including the stark reality that
people have been held back and stigmatized for their gender or race in the
workplace for far too long. When Corporate America finally took the leap
forward and began investing in DEI, it not only served those
underrepresented in the workforce, it showed promise for company
performance and profitability. That’s because DEI works for businesses—it
addresses inherent flaws in our systems to ensure that the best people really
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are hired for the job—and any corporate leader who chooses to ignore that
fact will only hurt themselves and their companies in the long run.
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Liz Elting
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Liz Elting is a billion-dollar founder, philanthropist, entrepreneur and bestselling author who
covers the dynamic intersections of women, business and the evolving... Read More
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