Can DEI survive an anti-woke backlash?

Corporate diversity efforts might be in trouble in 2024. Axios reported that companies "are backing away from 'DEI'" — shorthand for "diversity, equity and inclusion" efforts — in the wake of the Supreme Court's ruling against affirmative action and the resignation of Harvard President Claudine Gay, who had been targeted by conservative activists because of her commitment to DEI. Said Axios: "The year ahead will be pivotal for corporate diversity efforts."

"DEI detractors are feeling emboldened," The New York Times reported. The issue, oddly, has turned into a fight between billionaires. Bill Ackman — the Harvard donor who pushed for Gay's ouster — and Elon Musk say that diversity practices are actually racist. But Mark Cuban, the Shark Tank celebrity, says that DEI practices enable businesses to "look where others don't, to find the employees that will put your business in the best possible position to succeed."

The backtracking is clear, however. The New York Post reported that tech giants like Google and Meta slashed DEI-related jobs as part of broader layoffs in 2023. "Our commitment to DEI remains at the center of who we are as a company," said a Meta spokesperson. But The Wall Street Journal says more challenges are coming for corporate diversity programs. "I do expect we'll see activists targeting companies and leaders who have been outspoken on the importance of diversity and inclusion," said one expert.

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What the commentators said

DEI "is inherently inconsistent with basic American values," Bill Ackman argued at The Free Press. America was built on the idea of "equality of opportunity for all." But DEI focuses more on equality of outcomes, ignoring merit. "DEI is racist because reverse racism is racism, even if it is against white people," the billionaire investor wrote. That makes diversity programs "likely illegal" in business, even if the Supreme Court hasn't yet ruled on that topic. "DEI is inherently a racist and illegal movement in its implementation even if it purports to work on behalf of the so-called oppressed."

After Gay's resignation, Ackman and his allies "now have a blueprint to work toward dismantling DEI efforts inside corporate America," Bloomberg columnist Beth Kowitt wrote. Those programs are already under threat: Diversity officers have been laid off and corporations have slowed their pace of putting new faces on boards traditionally dominated by white men. That's a problem for those businesses. "DEI is about social justice, but it's also about attracting and retaining top talent."

"Research from McKinsey, for example, shows diverse and inclusive companies tend to be more profitable," Tim Paradis and Josée Rose add in an analysis for Business Insider. DEI efforts will probably shift to the background in the immediate future — a third of workers hired for DEI posts following George Floyd's death in 2020 have already left the field  — but it's unlikely that CEOs will totally retreat from diversity efforts. They may have to justify it in purely capitalistic terms, however. "It is not simply DEI for DEI's sake," said one expert. "It's really about how ... we drive impact as companies."

What next?

Fortune reported that a poll of corporate human resources officers found most expect to expand their efforts to attract a diverse workforce in 2024, but "it's unclear whether HR leaders are engaging in wishful thinking." One firm determined that companies investing in DEI dropped from 33% to 27% in 2023, and could fall to 20% this year. There is evidence, though, that workers want DEI programs in their companies: One poll found that 73% of Gen Z and 68% of millennial respondents "said they prioritize DEI programs when it comes to choosing which company to work for."

Perhaps, but lawsuits alleging reverse discrimination are also on the rise, USA Today reported. About two dozen complaints have been brought by a conservative advocacy organization led by Stephen Miller, the anti-immigrant former adviser to Donald Trump. Miller's group takes the position "that all DEI programs are illegal." Whether those efforts succeed, big corporations are bracing for more such challenges. The past year "has undeniably shifted the DEI landscape for years to come."