Diversity, equity, and inclusion programs are evolving rapidly as companies pull programmes and change language in response to Donald Trump’s MAGA agenda. Daniel Snell gives some advice on how DEI will evolve in the future and why it is still a key driver for business success, despite the backlash.
Recent headlines about the DEI rollback show a shift in corporate priorities. Investors and executives have been deprioritising DEI for some time, even though it coincides President Trump’s Executive Order to drop DEI Policies. Alphasense data confirms this, showing a steady decline in the mentions of DEI on investor calls from 2021-2024, long before the current controversy.
Why have senior leaders stopped talking about DEI
Two main reasons are at play for why DEI has become less of a priority among many C-suite executives. First, they could not see a direct link between efforts and resources put into DEI and increased business productivity. Some leaders even perceived DEI as an obstacle to performance.
Second, the businesses were facing greater challenges in an uncertain economic climate, as investor expectations changed and competition intensified.
Leaders began to talk less about DEI as UK business productivity stagnated since the global financial crash of 2008.
DEI: a great idea, but flawed execution
DEI has become a major focus for UK businesses due to a variety of factors, including demographic shifts, Brexit and US influence, new market opportunities, social and work expectations, globalisation and a tighter job market.
The DEI concept was based on the idea that diverse teams could unlock new insights and create opportunities. It was believed that individuals with diverse knowledge and cultural backgrounds could better connect with new markets and customer groups, resulting in better insights.
A political dilemma
Although DEI began as a story about talent and performance, it became entangled in broader societal discussions, making it difficult for many leaders to navigate the politics.
It is possible that these broader societal narratives are what have made DEI a target for political backlash, fueling the idea that DEI is a costly distraction rather than a strategy advantage for companies.
Business leaders and HR professionals are faced with the difficult task of navigating in a political climate where doubling down or backing away from DEI commitments, quotas and targets has become an important political statement. How can companies go beyond performative initiatives without alienating employees, stakeholders or, crucially, missing out on the real value a diverse workforce in a multicultural world can bring?
Performance-based DEI is evolving
Building a workforce of diverse talent, with skills, knowledge, and experience that are able to understand different customer groups should be seen as an important component of the company’s talent strategy and performance, and not a moral or social obligation.
In almost all contexts and markets, we have seen that diverse teams, when managed well and included in the growth agenda, deliver clear business benefits. They bring a broader range of perspectives, a better understanding and appreciation of customer needs, as well as a deeper knowledge of market conditions. McKinsey’s research, which is often cited, shows that diverse teams are more likely to outperform other companies. A Boston Consulting Group report found that companies with diverse management teams had 19% more revenue due to their increased innovation.
“Businesses need to ensure that their culture and organisational behavior work in favor of productivity, not against it”
It is important to move beyond just hiring diverse teams for their own sake and focus on what makes them valuable: their unique perspectives, knowledge and skills.
Unlocking diversity dividend
DEI is most effective when it unlocks each individual’s unique contribution to an organisation in order to improve overall business performance. Leaders who are capable of creating an environment where people feel valued, wanted and appreciated.
To unlock the contributions of everyone, an organisation must:
- Assure that all activities, efforts, and focus of the organisation are in alignment with the success of the business strategy.
- Create an inclusive work environment where every employee at all levels understands their role in the implementation of this strategy.
- To achieve this, managers and leaders must have the right tools to create an environment of high performance that unleashes their employees’ contribution.
DEI becomes a real growth driver when this alignment is implemented. It goes from being a box-ticking, passive exercise to one that actually drives growth.
It is not a strategy to grow by doing nothing
It’s important to know what you will replace your diversity targets with if you are considering or have already dropped them. It’s also not going to produce better results to do nothing, and leave a gaping hole where the DEI culture agenda used to be.
Cost-cutting is a necessity for business but it cannot be the only way to grow. Leaders can only achieve the growth they desire by changing the way businesses are run and the culture that supports it. Businesses must ensure that their culture and organizational behaviour works for them, not against them.
DEI has failed to deliver in many organisations, mainly because it was perceived as a compliance tool that could be applied to any organisation, not as a strategic tool that is tailored and contextually relevant. If done correctly, diverse perspectives can fuel innovation and drive competitive advantage. They also have a measurable impact.
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