DEI initiatives are being attacked in the US. Liz Stanley and Grace Barnett Cox examine the reasons why evidence still supports gender diversity programs.
Recently, the news has been dominated with US companies scaling down their DEI initiatives (diversity equality and inclusion). DEI is clearly a target for the Trump administration. The US president blamed a plane crash that occurred in Washington DC on “diversity hirings” within air traffic control.
In response to increased political and social pressures, big names such as McDonald’s and Meta have rebranded or even dismantled their diversity programmes. The question is: Can businesses afford to rollback these efforts without risking future performance? Evidence suggests that there is no doubt about the answer.
Gender diversity does not mean being politically correct or being woke. It is critical for competitiveness, innovation and, ultimately, performance. Diverse talent pools that bring different perspectives to the table benefit companies in terms of creativity, problem solving, and decision making.
Research from Catalyst also shows that pipelines and inclusive cultures can boost a company’s reputation to almost 60%.
Lack of representation can alienate young consumers and employees, who prefer companies that reflect the values of their society and their own.
The rising controversy
Why are US companies abandoning DEI? There are several factors at play. These include the growing pressure of conservative segments in US society, and a number high-profile cases, such as the Supreme Court ruling of November 2023, which declared race-based admissions to universities unconstitutional.
DEI is now a subject of intense controversy in the US. As a result, companies have removed, revised, and rebranded their diversity policies.
McDonalds has, for instance, rebranded their DEI efforts to be an evolution. They have focused solely on inclusion and retired key diversity and equity objectives. Although the company calls this a step forward, many see it as a major rollback in its DEI commitments.
We at The Pipeline believe that gender diversity is a fact. This is more than just social responsibility. It’s a smart and vital business strategy.
Reversing commitment and investment would undermine years of progress, send the wrong message, and be detrimental to innovation, engagement and sustainability.
Cost-benefit analysis
Recent data from BlackRock demonstrates why DEI initiatives can be so beneficial for business success. BlackRock’s research shows that companies with the largest diversity of employees have a 29% greater annual return on their assets than those who are least diverse.
McKinsey 2023 reported that companies with the lowest diversity in their executive teams are 66% less likely than those in the top quartile to achieve financial success. This is a big jump from just 27% in 2020. has since questioned.
Evidently, the costs of ignoring DEI are increasing. Businesses cannot ignore initiatives that actively promote gender equality if they want to improve innovation and profitability.
Businesses must embrace gender diversity and make it a strategic, long-term priority if they want to reverse this trend. This requires a shift in the narrative from seeing DEI initiatives as burdensome and reactionary to recognizing them as integral for business resilience and growth.
Success Factors
We believe that based on our 12 years experience with over 130 organisations, and the research we have conducted continuously, there are four main success factors for gender-inclusive organizations:
Leadership from the top is key: Visible, committed leadership will help achieve gender parity. Leading companies in DEI are led by CEOs and senior executives who integrate diversity into their core strategies and hold themselves accountable to results.
Salesforce CEO Marc Benioff, for example, implemented company-wide salary audits to address the gender pay gap, reinforcing equality as a priority that is tied to business success. Leadership that champions gender equality sets the stage for lasting change.
Create inclusive cultures: Sustainable progress relies on workplaces that allow women to thrive at every level. Those who are successful in building inclusive cultures tackle systemic barriers to hiring, pay and development.
Spotify is an excellent example of a company that fosters inclusivity through flexible policies, mentorship programs and transparent promotions pathways. According to our research, such cultural shifts have a greater impact on innovation and growth over time than isolated initiatives.
Businesses can be held accountable and make better decisions by using benchmark data.
Measure and motivate accountability: The old saying ‘what is measured, gets done’ also applies to DEI. Successful companies have clear gender goals and link them to performance metrics.
Schneider Electric, for example, tracks publicly diversity targets, and ties them to executive performance evaluations, resulting in measurable improvements throughout its global operations. Businesses can be held accountable and make informed decisions by using benchmarking data.
Commit to the long-term: Gender parity requires sustained dedication. Without a consistent focus on progress, the situation can quickly deteriorate.
IBM, for example, has spent decades focusing on developing diverse leadership pipelines. This shows that long-term investments can yield transformative results. These companies are not quick to declare their victory and treat gender equality as a journey. They are a great example for others to follow.
The recent media coverage on US companies rebranding DEI initiatives shows the dangers of being short-sighted.
If organisations are faced with criticism or political pressure about their DEI strategy, they may feel tempted to revert to more traditional methods.
It is not only a risk to the cultural and organisational benefits, but also to profitability and performance. Companies that do not adapt to the changing world and are unwilling to commit to gender equality will be left behind.
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