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If we accept the suggestion of many headlines that diversity, equity, and inclusion (DEI) is at a crossroads, two ongoing lawsuits against major US retailers all but confirm it.
Recent suits filed by shareholders against Target and Lululemon show why the topic is drawing so much attention. One the one hand, we have Target, accused of pushing the envelope too far and misleading shareholders about the ‘risks’ associated with its DEI and environmental, social, and governance (ESG) policies.
On the other, we have Lululemon, similarly accused of misleading shareholders, but this time for failing to eliminate discrimination at the company, including allegations that Black employees were overlooked for promotions and even unfairly dismissed.
One might argue this mess of litigation puts businesses and boardrooms between a rock and a hard place. To double-down on diversity commitments or to roll back? To put employee and customer interests first or to pre-emptively take steps to avoid legal or commercial backlash? To DEI or not to DEI?
DEI: At a ‘lopsided crossroads’
We can’t deny that DEI is at a crossroads. Some businesses have doubled-down on DEI (Microsoft, McMain, Wells Fargo among others), while some have rolled back diversity measures (Harley-Davidson, Ford, Toyota, Jack Daniels, Walmart, and more).
But although there has been a spate of big-name US employers ditching DEI, in some cases cutting entire departments, research shows us this crossroads is lopsided. The overwhelming majority of Fortune 500 companies, for example, maintaining their commitment to diversity measures. 485 still actively promote DEI measures in their company documents.
Moreover, a soon-to-be released DEI snapshot report for 2024 and 2025 produced by HR Grapevine US (watch this space) confirms that a significant majority of HR professionals plan to maintain or increase the scale of their DEI programs in 2025.
The crossroads, then, has one well-trodden path particularly full of traffic, while the other looks rather bare and uninviting. Like it or not, DEI is not going to die anytime soon.
The path ahead is not a straight line – DEI must continue to evolve
I am not suggesting that DEI will continue in its “current state,” if that is something that can even be defined. As all people professional will tell you, like any other area HR, it is not a fixed set of policies or measures, but an ongoing approach that will change over time. “DEI is something that lives and breathes; it doesn’t go away,” Lisa M. Sánchez, VP of Employee Experience and Engagement (HR) at ArtCenter College of Design told HR Grapevine earlier in 2024.
The lawsuits filed against Target and Lululemon are certainly proof that evolution is needed. Just as HR has had to fight hard to become more valued as a strategic partner to the business, rather than seen as an administrative function or cost centre, so too must DEI evolve.
On the one hand, there is a need for DEI to align more closely with the needs of the business, as shown by the Target suit.
The plaintiff, a Target shareholder, claims the company’s Pride Month 2023 campaign led to a $25billion loss in market capitalization and argues shareholders were not made fully aware of such risks involved with its DEI and ESG strategy. In a recent ruling, a Judge ruled there was enough information for the case to continue.
As the case plays out, HR and DEI professionals are reminded of the need to be increasingly prepared to answer questions about whether DEI programs bring any legal or reputational risk, and to find ways to clearly demonstrate the value of DEI to the business. This has been a core focus for HR and DEI leaders in 2024 and will continue to be in 2025.
“HR teams need to help the boardroom rethink how they are viewing DEI. It’s a mindset shift,” said Sanchez.
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Melissa Donaldson, Global Head of DEI at Morningstar similarly suggested on a HR Grapevine Podcast episode that “The way to overcome the criticism, in my opinion, is to demonstrate that a commitment to DEI is, first of all, good for everybody. It's a business imperative.”
Kimberly Shariff, EVP of DEI at Penguin Random House said “DE&I efforts, when integrated into the DNA of organizations, are more readily understood for what they are: good business practices that drive financial success, innovation, productivity and strong corporate cultures that attract top candidates and help retain top performers.”
Meanwhile, Microsoft’s Chief Diversity Officer Lindsay-Rae McIntyre echoed that diversity and inclusion is central to the company’s objectives “It is the business of Microsoft to be more diverse and inclusive so that we can serve the world.”
Demonstrate DEI progress over time
And then, on the other hand, we have the Lululemon case, showing businesses the risks of failing to turn DEI aspiration into meaningful, tangible process that benefits all employees.
A shareholder derivative lawsuit includes an accusation that despite the launch of its DEI program – IDEA (Inclusion, Diversity, Equity and Action) in 2020, aimed to ensuring its workforce reflects the diversity of communities in serves by 2025 – the company is still home to discrimination.
Businesses and HR teams are overwhelmingly set on continuing their commitment to DEI but must find ways to deliver and demonstrate more impact.
Knee-jerk reactions are not the answer. McIntyre, for example, said the key to Microsoft’s success in impactful DEI practices – including achieving pay equity for women relative to men and racial and ethnic minority groups relative to white employees – is “intention over time.”
“I attribute [our progress] to a lot of hard work over a number of years… This work happens over time, not overnight. We've been at it for the better part of 40 years,” she explained.
DEI, like HR, must work to become more impactful across the business, rather than acting as a silo. It must be embedded across every aspect of the employee experience, if businesses are to achieve their goals of eliminating discrimination and establishing equity for all colleagues.
HR and DEI teams must also embrace a data-driven approach to monitor progress, identify precise areas for improvement, and ensure those areas are addressed over time.
DEI will not die; but it must find a new lease of life in 2025 and beyond to be as valuable as possible to employees and the business alike.
