Original article can be found on LinkedIn.

Times Are Changing: Moving from Rhetoric to Action

I wake up most mornings to at least one article in my in-box about a company rebranding or “refocusing” their diversity programs. Since the beginning of this year there has also been a flurry of government activity eliminating or pausing initiatives that have any type of diversity, equity or inclusion aspect to them. While these have been long awaited developments for some, for others it has caused alarm, dismay and anger.

In recent years, many organizations have made significant strides in their diversity, equity, and inclusion (DEI) efforts, recognizing the various benefits of a diverse workforce. However, with a growing political and legal backlash against DEI initiatives, many business leaders worry about navigating compliance risk along with potential scrutiny by political action groups. Despite these challenges, through an informed and strategic approach organizations can remain committed to their DEI goals while mitigating legal exposure and achieving long-term success.

For leaders of businesses and other organizations, now is a pivotal time to decide whether to “ride the wave” and determine that the risks are too high and that the anti-DEI momentum is too strong, or to be strategic about navigating this challenge to your organizational values and objectives. That decision could have implications for recruiting, employee engagement & retention, as well as your organization’s ability to compete effectively.

Why a Diverse Workforce is Critical for Maximizing Organizational Success

Research consistently shows that diverse organizations outperform their less diverse counterparts. In most cases, that diversity won’t happen without intentionality. Here are some benefits of being intentional about achieving diversity and inclusion:

1. Innovation and Problem-Solving – Diverse teams bring varied perspectives, leading to more creative problem-solving and innovation. According to an often cited study by McKinsey, companies with higher diversity levels are more likely to outperform industry peers in profitability.

2. Better Market Understanding – A diverse workforce enables businesses to better understand and connect with a broad customer base. In a country as diverse as the United States, companies that fail to reflect their customer demographics risk losing market relevance.

3. Talent Attraction and Retention – The current generation of employee values inclusivity. Companies that maintain strong DEI initiatives are more attractive to top talent and experience lower turnover rates.

4. Economic Growth – Diversity and Inclusion contribute to a stronger national economy. By leveraging the full potential of the population, including underrepresented groups, the workforce can drive economic growth and innovation.

5. Global Expansion and Cultural Competence – Businesses operating in international markets need employees who can navigate different cultural norms and expectations. Even companies who focus domestically in industries like retail and hospitality often find that existing and potential customers come from a variety of backgrounds.

The Legal Landscape of DEI

The rolling back or dismantling of DEI programs in some states, coupled with the 2023 Supreme Court decision regarding affirmative action in higher education has placed many corporate DEI initiatives under the microscope. Companies should be diligent in aligning their efforts with existing employment and civil rights laws which starts with obtaining factual information before dismantling or altering programs. It's important to understand which laws and regulations are relevant to your organization and to do a thoughtful risk assessment.

Important best practices for organizations to embrace include:

1. Focus on Inclusive Culture, Not Just Quotas – While numerical representation can be important, avoid rigid quota systems that could be legally problematic. Broader initiatives such as mentorship, leadership development, and bias training can all be beneficial if implemented thoughtfully and with expert guidance.

2. Align DEI Policies with Business Goals – Demonstrating how DEI efforts contribute to company performance can help with claims of unfair advantage or reverse discrimination and mitigate internal or external opposition.

3. Use Race-Neutral and Legally Sound Language – Reframe DEI programs to focus on equal opportunity, fairness, and inclusivity. However, be aware of “watering down” programs to the point that they are ineffective. If it seems that could be the case, consider a new approach to achieving your objective.

4. Conduct Legal Audits – Work with legal, HR and diversity experts to review hiring, promotion, and training policies to ensure effectiveness and compliance with changing regulations.

5. Commit to Transparency and Data-Driven Decision Making – Establish clear, measurable goals that connect to broader business priorities, such as workforce engagement, retention, innovation and market competitiveness.

6. Ensure that Important Information is Exchanged Internally – For instance, communicating a change in your DEI approach could trigger negative PR or customer reaction and should be shared with your marketing communications experts beforehand.

Moving Forward: A Strategic Approach

In summary, organizations should refine their DEI strategies as needed to emphasize fairness, opportunity, and business goals. Rather than retreating from DEI, they should reframe their efforts in ways that demonstrate value to all key stakeholders.

For some leaders, the rationale for this refined approach will be business driven. Others will see it as a moral imperative. Regardless of the impetus, it’s critical that those in leadership positions at all levels avoid both over-reaction and inaction. The path forward requires adaptability & creativity, and those who navigate it successfully will reap the rewards that will enable your organization to excel.