The DEI Backlash in the United States: Lessons for UK Businesses

By Nice Media

The landscape of Diversity, Equity, and Inclusion (DEI) in the United States is experiencing a significant shift. A series of campaigns led by right-wing activists have prompted several major companies to roll back their DEI initiatives. As UK businesses observe these developments, it's crucial to understand the underlying factors and potential consequences to make informed decisions about their own DEI commitments.

The Rise of Robby Starbuck

Robby Starbuck, a former Hollywood music video director turned conservative activist, has emerged as a central figure in the anti-DEI movement in the US. With a substantial social media following, Starbuck has targeted companies he perceives as promoting "woke" policies, arguing that DEI initiatives are divisive and detrimental to business.

Companies Yielding to Pressure

Starbuck's campaigns have led several high-profile companies to scale back or abandon their DEI efforts:

• Harley-Davidson ended its DEI department and halted goals for diverse supplier spending.
• Lowe's ceased participation in the Human Rights Campaign's Corporate Equality Index and is reportedly restructuring its employee resource groups.
• Ford announced it would no longer use hiring quotas or participate in external culture surveys related to DEI.
• Jack Daniel's (Brown-Forman Corporation) removed diversity goals and ended its involvement with DEI-focused organisations.

These companies cited various reasons, including legal compliance and a desire to avoid engaging in polarising social issues.

Retreat on Climate Change Initiatives

In addition to DEI, some companies have retracted their commitments to environmental initiatives under activist pressure:

• Tractor Supply Company withdrew its carbon emission reduction goals after Starbuck's campaign highlighted their DEI and environmental strategies.
• John Deere announced it would no longer sponsor social or cultural awareness events, which included certain environmental initiatives.

The Impact of the Supreme Court Ruling

The U.S. Supreme Court's 2023 decision in Students for Fair Admissions, Inc. v. Harvard has significantly influenced corporate approaches to DEI. The ruling declared affirmative action in college admissions unconstitutional, criticising practices that consider race as a factor. Although the decision directly affects educational institutions, its implications have extended to the corporate sector.

Justice Neil Gorsuch's concurrence drew parallels between Title VI (which applies to schools) and Title VII (which applies to employers) of the Civil Rights Act, emphasising a "categorical rule of individual equality, without regard to race." This interpretation has prompted companies to reassess their DEI policies to mitigate legal risks associated with potential claims of reverse discrimination.

Questioning DEI's Effectiveness

A scholarly report published in 2024 in Econ Journal Watch challenged the assumption that DEI policies lead to positive business outcomes. Researchers Jeremiah Green and John R. M. Hand revisited influential studies by McKinsey & Company, which had previously suggested a positive correlation between executive diversity and financial performance.

Green and Hand's analysis of S&P 500 companies found no statistically significant relationship between racial and ethnic diversity in leadership and improved financial metrics. They cautioned against relying on McKinsey's studies to justify DEI initiatives purely on the basis of expected financial gains.

Historical Challenges with DEI

Historical data further complicates the narrative around DEI effectiveness. Alexandra Kalev's extensive study from the University of Arizona examined 31 years of data from 830 companies. The findings revealed that mandatory diversity training often led to a decrease in workplace diversity:

• 7.5% drop in the number of female managers.
• 10% drop in the number of Black female managers.
• 12% drop in the number of Black male managers.

Kalev suggested that compulsory training could provoke backlash among employees, leading to negative outcomes contrary to the intentions of DEI programmes.

Reasons Behind Ineffectiveness

Historically, DEI initiatives have faced challenges due to:

• Mandatory Training Backlash: Employees may resist compulsory programmes, feeling they are being unfairly blamed or targeted.
• One-Size-Fits-All Approaches: Generic programmes fail to address specific organisational cultures and issues.
• Lack of Genuine Commitment: Superficial efforts or box-ticking exercises without leadership buy-in lead to minimal impact.

Recent Developments and Effective Strategies

Despite these challenges, recent studies highlight more effective DEI strategies:

• Voluntary Programmes: Initiatives that encourage participation rather than mandate it tend to foster genuine engagement.
• Inclusive Cultures: Focusing on building an inclusive environment where all employees feel valued improves retention and performance.
• Data-Driven Approaches: Utilising metrics to identify specific areas of need allows for targeted interventions.

The Political Divide and Cultural Tensions

In the US, DEI has become a politically charged topic. Many on the right view DEI initiatives as discriminatory against white people and believe they introduce unnecessary politics into the workplace. Conversely, those on the left see DEI as essential for combating systemic racism and fostering equality.

This divide highlights a broader discomfort with the overlap of personal identities and professional environments. However, ignoring these aspects can be detrimental. Studies by PwC and MIT Sloan have identified toxic workplace culture as a primary driver of employee attrition.

Demographic Realities and Business Implications

The demographics of the United States underscore the importance of DEI:

• Over 40% of the US population are people of colour.
• Approximately 20% are neurodiverse.
• More than 7% identify as LGBTQ+.

Adjusting for overlap, nearly half of the US population belongs to groups that DEI initiatives aim to support. Companies that remove DEI pledges risk alienating a significant portion of both their customer base and workforce.

Potential Consequences of Rolling Back DEI

• Talent Acquisition and Retention: Diverse talent may choose to work elsewhere, leading to a less innovative and adaptable workforce.
• Brand Reputation: Consumers increasingly favour companies that reflect their values. Companies perceived as non-inclusive may suffer reputational damage.
• Market Competitiveness: A homogeneous workforce may lack the diverse perspectives needed to compete in a global market.

Protecting Against Activist Pressure

Companies can take proactive steps to safeguard their DEI commitments:

1. Legal Compliance Review: Ensure DEI programmes align with current laws to minimise legal risks.
2. Transparent Communication: Clearly articulate the business rationale for DEI, focusing on inclusivity and equal opportunity for all.
3. Leadership Commitment: Demonstrate top-level support for DEI initiatives to embed them into the company culture.
4. Voluntary Participation: Encourage, rather than mandate, employee involvement in DEI programmes to foster genuine engagement.
5. Data-Driven Strategies: Use metrics to assess the impact of DEI efforts and adjust strategies accordingly.

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Conclusion

The backlash against DEI in the U.S. raises important questions for businesses globally, including those here in the UK. While the challenges are significant, the importance of fostering a diverse and inclusive workplace remains critical. Companies that remain committed to DEI, even in the face of external pressure, will likely be better positioned to thrive in an increasingly diverse and interconnected world.

What do you think? How are DEI initiatives playing out in your organisation?

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Tom Hickmore Creator of Drama for Change – hacking informal culture to change behaviour. Video-centred learning specialist. Author of Watch & Learn.