When DEI Loses, Who Wins?

In January 2024, I attempted to demystify the DEI debate , seemingly endless national conversation about the ethical considerations of corporate diversity, equity, and inclusion initiatives. Since then, sensationalist discourse about and operational backlash against DEI have intensified. As misinformation spreads across social media, emotional appeals in either direction litter LinkedIn comment sections, and corporate influencers speak out for opposing sides (Billionaire entrepreneur Mark Cuban and JPMorgan CEO Jamie Dimon support DEI, Tesla CEO Elon Musk and billionaire Hedge Fund Manager Bill Ackman do not), what was once a debate is now a civil war.?

In the past few weeks, notable organizations have made headlines for distancing themselves from the principles of diversity, equity, and inclusion. Tech titan Microsoft came under fire for DEI-related layoffs, though the company still maintains a core central team. Farm equipment company John Deere announced it would “no longer participate in social or cultural awareness parades, festivals, or events,” also reaffirming that gender pronoun identification is not part of its policies. The Society of Human Resource Management (SHRM), the world’s largest HR networking group, earned the ire of its membership when it removed Equity from its approach to DEI, citing negative feedback about the polarizing nature of equity as a concept.?

Anti-DEI hysteria implies a haphazard, controversial execution of its goals. Opponents call it troublesome, an attempt to reverse historical discrimination against women and people of color with modern discrimination against men and white people, an accusatory, divisive, virtue-signaling affront to meritocracy that unfairly advantages underrepresented groups. Because of DEI, unqualified [insert minority here] are handed outsized salaries and prestigious positions that would have otherwise gone to their inherently superior counterparts. Simply put, DEI is bad for business .?

Many believe DEI exists as a response to the murder of George Floyd and subsequent resurgence of the Black Lives Matter movement in 2020. Open positions in the space did increase by 56% that year, but they started to take shape years earlier. In 2014, Google became the first major technology company to publish its internal diversity statistics. Pledging to reverse the effects of historically discriminatory hiring practices, and inviting the public to hold it accountable, Google again proved Silicon Valley’s ability to revolutionize corporate culture.

While Google was one of many companies that made cuts to DEI in 2023, the previous decade provides significant insight into who, if anyone, realistically benefits from corporate forays into social justice. In 2014, 70% of Google’s employees and 79% of its leadership identified as men, compared to 50% of the general population. This occurred either because Google’s hiring practices were biased in favor of men, as DEI suggests, or because men are 40% more competent and 58% better leaders than women. During the 10 years Google invested in DEI, female representation increased by just 4%, with an 11% increase at the leadership level.?

The racial data is similarly disparate. In 2014, 61% of Google’s employees and 72% of its leadership identified as white. Comparatively, 30% identified as Asian, 3% as Latin-American Hispanic, and 2% as Black. Since then, Asian-American representation has increased by 14%, with a 9% increase in leadership. Latin-American Hispanic representation increased by 6.3%, with a 3.3% increase in leadership. Black representation increased by 3.6%, with a 3.7% increase in leadership.?

While DEI may not actually be flooding organizations with diverse talent, its positive effects on business are well-documented. Companies that invest in DEI are 70% more likely to successfully target new consumer markets, 50% less likely to experience employee turnover, 39% more likely to financially outperform competitors, and 1.7x more innovative . 61% of Americans believe corporate DEI initiatives are a good thing, including 83% of Gen Z, 76% of Millennials, 78% of Black Americans, 72% of Asian-Americans, 65% of Latin-American Hispanics, and 61% of women, respectively .?

How did something with such broad support become so contentious? The answer lies in the all-encompassing tribalism of modern American politics. In an era where the US government is more polarized than ever , unnecessary politicization threatens social progress. When it comes to DEI, the largest ideological gap exists between Democrats (78% in favor) and Republicans (30% in favor). Consequently, DEI has become a political football , rather than a bipartisan public good. Last month, United States Senator and vice presidential nominee J.D. Vance introduced the Dismantle DEI Act , a bill that would ban DEI programs “to restore merit and equality” in American government institutions. Ironically, merit cannot exist without equity, and American government institutions have never actually been meritocratic. Unless, of course, you believe that men are 100% better leaders than women.

Is DEI dead? Maybe. Long live DEI? Ideally, at least until its job is done, and society evolves beyond its need. Perhaps, in the meantime, we could change the acronym to better reflect its purpose? I suggest GBS: Good Business Sense.?