Cancelling DEI: Why Removing Inclusion is Bad for Business in a Multicultural World
As an attorney focusing on the subtle yet pervasive impact of microaggressions in the workplace, I’m of the opinion that the recent uptick in companies dismantling their DEI teams and trainings are not only steps back in inclusion and fairness but are also missteps as it relates to an organization’s reputation and profits.
The Supreme Court Case, Students for Fair Admissions, Inc. v. President and Fellows of Harvard College (SFFA), has had a notable impact on how organizations view and manage their DEI initiatives. The case, which challenges the legality of race-conscious admissions processes in educational institutions, has reverberated beyond academia into the corporate world—prompting some organizations to reconsider the structure and visibility of their DEI teams out of caution and uncertainty about legal implications.
Yet, closing or downsizing DEI teams in response to this legal landscape is short-sighted and a mistake. Supreme Court Justice Sonia Sotomayor said it best during her dissent, “a superficial rule of colorblindness as a constitutional principle in an endemically segregated society.” Meaning ignoring race doesn’t mean racism magically disappears. Also inclusion isn’t just about race. Opponents often forget that DEI teams/trainings also ensure that ALL marginalized folks are included. Older workers, women and employees with disabilities are just a few of the groups that benefit from inclusion efforts.
In our increasingly global economy, multicultural workplaces are not just inevitable; they are essential for companies that want to maintain relevance and competitive advantage. The demographic shifts towards more diverse populations in many parts of the world, coupled with the growing purchasing power of underrepresented groups and consumers increasing interest in corporate stances on social justice issues, signify that businesses simply cannot afford to ignore or scale back on DEI. There are multiple examples of moral or social justice movements changing how companies or organizations operate. The Civil Rights Movement, Environmental Activism, and the Corporate Social Responsibility Movement are just a few examples. Moreover, without a DEI team, companies risk missteps in handling sensitive issues within the company and externally, which can lead to legal challenges and damage to the company's reputation.
Eliminating DEI work would exacerbate systemic issues rather than solving them. Rather than stepping back, companies should view the evolving legal discussions as a catalyst to innovate and strengthen their DEI initiatives, ensuring they are grounded in inclusivity and equity, and driving meaningful participation and belonging for all employees. This approach will serve not only to fortify their legal standing but also to enhance their market positioning.
Cutting equity teams can lead to a significant reduction in employee satisfaction and retention. Employees who feel undervalued or marginalized are unlikely to maintain long-term employment, leading to increased turnover rates, which subsequently results in higher costs related to hiring and training new staff. Eliminating diversity, equity and inclusion training and teams actually sets up an organization to have more discrimination and bias complaints from underrepresented groups. Furthermore, DEI teams play a critical role in spurring innovation by ensuring a diversity of thought within the workplace. A variation in background and perspective breeds creativity, a resource indispensable in today’s competitive market landscape. Companies that lack this diversity in their brainstorming sessions may find themselves outpaced by competitors that leverage a broader spectrum of ideas and viewpoints.
From a financial perspective, the business case for maintaining DEI teams is compelling. Various studies have shown that companies with diverse workforces perform better financially. McKinsey & Company 2023 report titled "Diversity Matters Even More," used the following data set: 1,265 companies, 23 countries, six global regions, and multiple company interviews. According to the 2023 report, companies in the top quartile for gender diversity on executive teams were 39% more likely to experience above-average profitability than companies in the fourth quartile—up from 25% in 2020.
“Both forms of diversity in executive teams appear to show an increased likelihood of above-average profitability. Companies in the top quartile for both gender and ethnic diversity in executive teams are on average 9 percent more likely to outperform their peers. Meanwhile, those in the bottom quartile for both are 66 percent less likely to outperform financially on average, up from 27 percent in 2020, indicating that lack of diversity may be getting more expensive.” - McKinsey & Company 2023 Report.
Diversity is a fact and inclusion is a choice. We are going to continue to work in more diverse work environments. Companies who close their eyes and their wallets to this fact are not going make the challenges go away nor reap the benefits that come with not only accepting what is, but embracing it.
Resources for Further Reading
If you are interested in tracking the various lawsuits about DEI please see.