When It Comes to DEI, We’ve Entered the Era of Business Pragmatism

In the current political climate, there is a tremendous amount of uncertainty related to diversity, equity and inclusion (DEI) initiatives. Each week there seems to be another announcement by a major corporation either rolling back DEI programs or reaffirming its DEI commitment publicly. Programs that were seen as ushering in a new era over the past five years are now polarizing.  

What’s Causing This Shift?

A variety of factors have contributed to the rollback of DEI efforts by some organizations:

• Court rulings: Supreme Court rulings on affirmative action in higher education (Students for Fair Admissions v. Harvard and Students for Fair Admissions v. University of North Carolina) served as a precursor of things to come, prompting several organizations to examine their DEI initiatives.  

• Lawsuits: The prospect of protracted and public lawsuits filed by conservative groups ignited a slew of public DEI rollbacks.  

• Activist investors: Proposals to eliminate DEI initiatives by activist corporate investors either caused companies to curtail DEI programs or reaffirm their DEI commitments publicly. Some companies have even scrubbed DEI references from their annual investor reports.

• Social media: Callouts on social media by conservative activists and commentators contributed to DEI rollbacks. Although many corporate leaders contend that court rulings, lawsuits and activist investors played a greater role.  

• New administration: The Trump Administration ending DEI initiatives within the federal government precipitated the need for companies to examine DEI – particularly those with federal contracts or strong ties to federal agencies.  

We can expect to see more legal challenges on both sides of the political aisle related to DEI initiatives. Individual states could either align with new federal DEI mandates or balk at them – based along predictable party lines.  

Whether rolling back DEI initiatives or reaffirming them, this is more than just changing some words on a website or in a policy. There’s a domino effect. In some cases, executive compensation has been set based on achieving DEI objectives, and the shift impacts customer, supplier and employee agreements.  

Some companies that have rolled back DEI initiatives have already seen calls for boycotts. Employees who were attracted to DEI commitments by companies could now feel alienated. And political tension among employees, customers, investors and communities will likely continue. Organizations with operations across red and blue states also are grappling with how to message their DEI stance among customers and employees in different locations.  

The Era of Business Pragmatism

In the past few years, many organizations have structured their social impact, DEI, corporate social responsibility (CSR) and environmental, social and governance (ESG) commitments as the place where altruism meets pragmatism. For example, from an altruistic point of view, health care is a basic human right (health equity). From a pragmatic business perspective, preventative health measures across socio-economic levels and demographics help improve health outcomes and lower health care costs. Altruistically, many companies embraced DEI efforts in the workplace because everyone should have an opportunity to have a successful career. Pragmatically, businesses also have enacted some DEI initiatives to find and retain talent. In some cases, the lack of diversity – in all forms – can inhibit creativity and innovation, negatively impacting business goals.  

But we have entered a tipping point when organizations need to lead with the pragmatic business messaging for why some DEI initiatives are still necessary. This doesn’t mean abandoning altruistic aspirations. It does mean tying DEI programs directly to key organizational business objectives, company mission and core values. This isn’t a new concept. There already is a strong business case for DEI.  

How To Reframe the DEI Conversation in the Era of Business Pragmatism

There are several ways organizations can stay true to their DEI aspirations even in these changing times:  

• Reimagine or redefine how you position DEI initiatives by leaning into inclusion, belonging and workplace culture practices. Many companies are doing this quietly.  

• Review language and terminology on websites and in employment materials. Companies are making sure that the language, programs and policies – particularly related to hiring practices and advancement – are inclusive to all employees and can withstand legal scrutiny.

• Link DEI initiatives to business objectives, company mission and core values. Be sure to directly demonstrate and communicate the business objectives and metrics of those programs. Many talent-based organizations are still leaning into inclusive workplace initiatives because they can’t fill the employee pipeline without them. This is a pragmatic business need. Communicate that need.  

• Embed inclusive practices across the organization. There has been a move from a centralized DEI function to a structure where these initiatives are spread across various departments: HR/talent acquisition, CSR, employee engagement and others. Once again, tie these inclusive practices directly to organizational business objectives, mission and values.  

We are in a period of incredible uncertainty, polarization and change. For many organizations, their approach to DEI can best be described as a pendulum. Many companies swung hard in one direction following the murder of George Floyd in 2020, which was followed by increased calls for greater equity and social justice. Five years later, the pendulum has swung hard in the opposite direction for many companies because of concerns about lawsuits and court rulings, changes to federal government policies and other factors. Time will tell if we’ll reach a point of equilibrium related to diversity, equity, inclusion, belonging and workplace culture.  

For more best practices on how to navigate social impact strategies and messaging in these uncertain times, contact us.