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DE&I initiatives are in the firing line for budget cuts and scrutiny in 2024.
HR Grapevine has previously discussed comments from Society for Human Resource Management CEO, Johnny C Taylor Jr, with Taylor Jr citing that “different experiences, perspectives, and people” will deliver better outcomes for DE&I teams.
DE&I clearly needs a rethink if it is to secure continued investment in 2024 and beyond. Progress on inclusion initiatives feels increasingly slow at many large organizations with DE&I leaders showing signs of burnout.
Moreover, with widespread public scrutiny over the role of DE&I within organizations, 2023 has left many HR leaders with no option but to spend their time arguing for its existence rather than placing their full attention on delivering meaningful change.
HR must act to protect DE&I’s future.
2023: A sign of tough times to come for DE&I
2023 was a tough year for DE&I. On 29 June 2023, the Supreme Court ruled that admissions policies at two colleges aimed at maintaining racially diverse student bodies – otherwise known as reverse discrimination cases - violated the Equal Protection Clause of the Fourteenth Amendment.
Shortly after the Supreme Court ruling, attorney generals from thirteen states contacted the largest companies in the United States warning them that race-based preferences may violate federal and state antidiscrimination laws.
Already in 2024, although Harvard President Claudine Gay was officially ousted for alleged plagiarism, many have been quick to frame the debate around DE&I failure.
Elsewhere, the issue has drawn attention from the likes of Elon Musk, CEO, X, who tweeted that “DEI must die” on 15 December 2023. Bud Light, Target, and Disney all faced boycotts from anti-LGBTQ+ protestors spilling out from U.S. Pride month marketing.
In short, DE&I is now an inescapably political issue.
This signals difficult times ahead for DE&I leaders. But it’s not all doom and gloom…
A Capterra survey of 445 HR leaders at for-profit U.S businesses in August 2023 found that only 8% of HR leaders with a dedicated DE&I budget say they faced budget cuts in 2023. Moreover, 69% say their company is investing more money in DE&I training and software in 2023 than 2022.
That said, 86% agree that the Supreme Court's decision to ban affirmative action in college admission and puts more pressure on employers to re-think and improve DE&I.
HR leaders must make what Taylor describes as “certain adjustments” to both secure continued investment in their teams, and ensure the money is well spent.
Creating a business case for DE&I
A 2018 BCG study that drew on findings from 1,700 companies across the globe found that diversity leads to better financial performance by increasing the capacity for innovation. A 2017 Forbes study found that ‘inclusive’ companies make better decisions up to 87% of the time.
McKinsey and Company found that organizations in the top quartile for racial and ethnic diversity are 36% more likely to have above-average financial returns than those in the bottom quartile. For gender diversity, the figure is 25% more likely.
There is a clear business case for diversity and inclusion. And yet, many DE&I leaders are dragged into culture wars rather than focusing on where they can be most useful to the organization.
All too often, given the complex and sensitive nature of DE&I work, it can become siloed and self-serving.
At best, this can mean too heavy a focus on DE&I jargon. For example, even HR leaders struggle to keep up with the latest acronym for diversity, equity, and inclusion, whether it’s DE&I, DEI&B, ID&E, or another variation. Of course, prioritizing inclusion and belonging is important, but becoming wrapped up in semantics can be a costly endeavor.
At worst are examples of lip service or diversity washing, where organizations are too focused on appearing inclusive, including cases of reverse discrimination, rather than delivering meaningful work that benefits people and businesses alike.
This occurs when DE&I teams do not understand the deeper strategic issues within their business and attempt to paper over the cracks with surface-level platitudes.
For example, if you feel you must release a statement or advert to show your customers where you stand on an issue, then perhaps your values are not clear enough. The issue is may be with the way your company operates, not the way it communicates. Solve this through policy, not PR.
Kimberly Shariff, EVP, Diversity, Equity, & Inclusion, Penguin Random House, believes that greater buy-in can be achieved by re-focusing on the essence of what DE&I efforts are meant to achieve instead of focusing on the acronym itself as a stand-alone effort.
“DE&I efforts, when integrated into the DNA of organizations, are more readily understood for what they are,” she says. “Good business practices that drive financial success, innovation, productivity and strong corporate cultures that attracts top candidates and helps retain top performers."
Shariff goes on to share clear business cases for integrating DE&I into the DNA of organization.
“Diversity is simply assuring that your workforce is representative of the society you serve positioning businesses to better connect with, produce for and support a larger audience of consumers and constituents.
“Equity is ensuring that each employee is provided with what they need to succeed. I argue that there isn’t a business out there that doesn’t want to optimize each employee’s capacity for optimal productivity, exceptional innovation and consistent collaboration.
“Inclusion encompasses all efforts by a business to show their employees they are valued members of the workforce. It provides greater security which, in turn, allows employees to focus more of their time and talent on the core business elements lending to greater success and efficacy.”
To fix this, HR and DE&I leaders must build closer relationships across the C-Suite or with fellow leaders in each department.
What are the core KPIs that each leader must report on in the next quarter or financial year? What is blocking their progress that DE&I strategy could resolve? And how can DE&I leaders co-create a path to improvement alongside division leaders whilst speaking their language rather than the latest DE&I trend, acronym, or metric?
Building a close relationship with other business leaders and understanding their language means DE&I leaders can re-frame the debate around inclusion in businesses, increasing their business impact. It also places them in much closer proximity to budget holders who can better understand the return on investment for DE&I spend.
Shariff shares her advice for building close relationships and demonstrating the value of DE&I. “The more input I can lend, the more my colleagues acknowledge the ways that my strategic perspective can help build cohesion amongst their teams, help expand thinking about growth opportunities and, thus, strengthen their business lines,” she explains.
“Once people see that their profitability and ability to innovate and maximize operation efficiency increase as a result, the more they have begun to seek out my partnership at increasingly earlier stages in the corporate life cycle,” she adds.
When the going gets tough...
The landscape for DE&I is changing. It’s naïve to expect that budgets will be safe forever, and as many organizations battle tough economic headwinds, it’s somewhat inevitable that funds for DE&I will dwindle in many companies.
There is also a widespread issue with burnout amongst DE&I professionals and leaders, as well as with employees who volunteer for employee resource groups (ERGs). Whilst the changes above are longer-term solutions to re-imagining DE&I, what can HR and DE&I leaders do to protect themselves and their teams when resources are stretched?
Shariff uses the same DE&I-in-the-DNA approach when it comes to the application of funds toward various initiatives that ultimately advance DE&I-related aspects.
“For instance, if having an on-site DE&I practitioner at one of our fulfillment centers advances and lends to both the Human Resources and Learning and Development goals, then I work with these two departments to see if they might apply some funds to an effort initiated by my team,” explains Shariff. “These could result in an exponential increase in the money technically put toward DE&I-related corporate efforts even if the DE&I-specific budget might be quite limited.”
2024 looks set to be another tough year for DE&I teams and leaders. How are you re-imagining your approach to DE&I in 2024?
