DEI is Not Dead: Diversity Is Going to Elevate Your Bottom Line

With the volume of news stories about DEI being rolled back by companies, state mandates, and even federal initiatives, it’s no wonder that people are uncertain about how to navigate diversity initiatives in today’s landscape.

Why is DEI under so much scrutiny?

Last year’s Supreme Court decision to limit the use of affirmative action in higher education has emboldened anti-DEI advocates across the country. While this ruling applied only to higher education institutions, the precedent has paved the way for anti-DEI legislation and litigation in the corporate world.

This year’s election cycle has politicized this issue and further fueled media coverage of DEI backlash. As political candidates vie for attention and support, DEI has become a central talking point, along with women’s reproductive rights. Those condemning DEI have suggested that it is vehicle for discrimination against white individuals. To boost ratings, the media has jumped at the opportunity to platform well-known politicians as they discuss their positions on the matter.

Meanwhile, politically motivated groups such as America First Legal have set to work filing heaps of corporate lawsuits – hitting major companies including Target, Kellogg's, Meta, Macy’s, McDonalds, IBM, and even NASCAR.

Why isn’t DEI going away any time soon?

While DEI is a matter of corporate values and leadership principles, its survival comes down to the bottom line. And the bottom line is that DEI drives profit.

The Harvard Business Review had this to say: “In a detailed study of 79 large companies, we found that every 0.1-point improvement in DEI ratings for a company (on a 5-point scale) was linked to a corresponding 13% increase in the absolute change-power score on average.” Change power is a measure of corporate adaptability, established in 2021, and metrics show that companies with higher change power scores have better financial performance and more engaged employees.

The link between diversity and profitability is further illustrated in this study by McKinsey and Company.

Ultimately, as more companies shy away from DEI, those that remain committed to it are going to become increasingly more competitive in terms of workforce recruitment and long-term profitability. Glassdoor reports that 76% of job seekers cite a diverse workforce as an important factor when evaluating a potential employer. This could be a massive opportunity for companies looking to get an edge on the market.

How can companies keep their DEI programming intact despite scrutiny?

Berkshire’s DEI services team have been carefully monitoring this changing dynamic, and we have developed a few key recommendations for companies looking to benefit from an ongoing investment in DEI.

1. Review your policies carefully with your legal team or a qualified DEI consultant.
   
   
2. Dive into your data. Thoroughly analyze your data to ensure the metrics back your DEI priorities – if your metrics are aligned with your business goals, it will be much easier to proactively preserve your investments in diversity.
   
   
3. Bring in an expert – Berkshire's DEI consulting team can review your company’s policies, practices, and communications around DEI and also perform an in-depth and intersectional analysis on your workforce.

Given the current landscape, it is paramount that your DEI programming is intentional and backed by data.

The Future of DEI in the United States

Moving forward, we expect to see changes in the way companies talk about diversity-forward programming. It will be particularly important for companies to lean into inclusive language and avoid policies that are worded in a way that might seem discriminatory toward a specific demographic. Naturally, companies will need to place more due diligence on reviewing policies and communications - both external and internal - around DEI initiatives.

Still, the benefits of investing in DEI are not going away. While some companies are taking a step back from DEI programming, this new landscape could position companies that remain committed to diversity as even more desirable to jobseekers, consumers, and investors.

This presents an opportunity for companies to take a stand and reap the benefits of diversity that have driven innovation and success since the very beginning of this country’s history.