After George Floyd’s murder in 2020, there was a renewed feeling throughout America that we were moving backward on the racial front and that it was time to address America’s long history of discrimination and inequality once and for all.

​

In corporate America, the answer for many was an increased focus on diversity, equity and inclusion (DEI). Within two years, three-quarters of S&P 500 companies had a Chief Diversity Officer, and most had created targets aimed at increasing the racial diversity among their employees.

​

There were many ways companies chose to tackle this, from having a more diverse pool of candidates to offering better executive incentives and perks. “Unconscious bias” training programs flourished and pronouns included on email signature lines became the norm. The federal government got in the game as well. In 2024 alone, $2.9 million was earmarked for diversity training in the U.S. State Department. Since 2020, the U.S. Department of Health and Human Services has paid Deloitte over $12 million in DEI-related consulting work.

​

From the jump, the backlash was fierce and lawsuits were filed. But, on the second day of his second term, Donald Trump sounded the death knell for DEI when he signed an executive order demanding all federal agencies end DEI programs. He even directed agencies to make lists of public companies that the federal government should investigate over their DEI policies. Claiming “radical DEI has dangerously tainted many of our critical businesses and influential institutions, including the federal government,” Trump’s directive reflected his campaign promise to embrace a “colorblind and competence-based workplace.”

​

As with most things in today’s contentious environment, DEI has become a full-on battle in Donald Trump’s culture war. As with most things in modern-day America, critics and proponents both have valid points but neither side will listen long enough to come up with something that could possibly work.

​

Critics on the right see DEI as liberalism and political correctness run wild. They don’t seem to see any value in workplace diversity at all and think many DEI programs are ineffective and racist in and of themselves. They have a point. Many DEI initiatives, while well-intentioned, have been shown to be largely unsuccessful in their effort to increase diversity in the workplace.

​

After analyzing 13 million workers at S&P 500 companies, The Wall Street Journal found that, while Asian and Hispanic employees have made modest gains in the workforces of the largest American companies, DEI initiatives haven’t significantly changed the profile of who advances to the upper ranks. In 2023, just one in twenty senior managers was black while, together, black and Hispanic workers still fill most of America’s hourly service and manual-labor jobs.

​

Research by professors Frank Dobbin (Harvard) and Alexandra Kalev (Tel Aviv University) found that “strategies for controlling bias – which drive most diversity efforts – have failed spectacularly since they were introduced to promote equal opportunity. Black men have barely gained ground in corporate management since 1985. White women haven’t progressed since 2000. It isn’t that there aren’t enough educated women and minorities out there – both groups have made huge educational gains over the past two generations. The problem is that we can’t motivate people by forcing them to get with the program and punishing them if they don’t.”

​

“It shouldn’t be surprising that most diversity programs aren’t increasing diversity,” they continue. “Despite a few new bells and whistles, courtesy of big data, companies are basically doubling down on the same approaches they’ve used since the 1960s – which often make things worse, not better. Firms have long relied on diversity training to reduce bias on the job, hiring tests and performance ratings to limit it in recruitment and promotions, and grievance systems to give employees a way to challenge managers. Those tools are designed to preempt lawsuits by policing managers’ thoughts and actions. Yet laboratory studies show that this kind of force-feeding can activate bias rather than stamp it out. As social scientists have found, people often rebel against rules to assert their autonomy. Try to coerce me to do X, Y, or Z, and I’ll do the opposite just to prove that I’m my own person.”

​

Okay, so critics of DEI have a point. Good for them. But, as always, the way Donald Trump has acted about all of this has unnecessarily thrown gas on an already roaring blaze. Honestly, his words make him look like a racist jerk and make the motivations behind his extreme position seem suspicious.

​

For example, Navy divers hadn’t even finished their search of the Potomac River for the 67 people killed by the worst air crash in America in twenty years before he blamed – with zero evidence – the tragedy on DEI hiring practices. His meaning was crystal clear: diversity equals incompetence. This is presidential behavior?

​

So, what’s the best approach? Professors Dobbin and Kalev offer this: “It’s more effective to engage managers in solving the problem, increase their on-the-job contact with female and minority workers, and promote social accountability – the desire to look fair-minded. That’s why interventions such as targeted college recruitment, mentoring programs, self-managed teams, and task forces have boosted diversity in businesses. Some of the most effective solutions aren’t even designed with diversity in mind.”

 

That’s solid advice. With or without executive orders and/or social pressure, diversity should remain a top priority for companies if they want to reach their full business potential. Diversity improves employee engagement, morale and performance; increases employee retention and reduces turnover; and attracts new talent – all so companies can remain competitive in a tight domestic labor market and an ever-expanding global market.

​

A study by McKinsey & Company found that “companies in the top quartile for gender or racial and ethnic diversity are more likely to have financial returns above their national industry medians. Companies in the bottom quartile in these dimensions are statistically less likely to achieve above-average returns. Diversity is probably a competitive differentiator that shifts market share toward more diverse companies over time.”

​

“While correlation does not equal causation (greater gender and ethnic diversity in corporate leadership doesn’t automatically translate into more profit), the correlation does indicate that when companies commit themselves to diverse leadership, they are more successful.”