The election of Donald Trump has, as expected, put diversity, equity and inclusion (DEI) in the crosshairs. By executive order, signed the day of his inauguration, Trump has mandated the “termination” of “diversity, equity, inclusion, and accessibility (DEIA) mandates, policies, programs, preferences and activities in the Federal Government.”
Many businesses have already capitulated by scrubbing their websites, stopping programs, and gutting budgets. Some companies have scrubbed the word diversity from their public filings regardless of the context. But some companies are coming out strong and seeing the benefit from it. Costco pushed back on some of its activist shareholders demanding an end to DEI. JP Morgan CEO Jamie Diamon has also come out publicly to support DEI, telling CNBC “Bring them on, we are going to continue to reach out to the Black community, the Hispanic community, the LGBT community, the veterans community.”
Despite Trump’s threat to overturn decades of progress in establishing and sustaining diverse and inclusive workplaces and cultures, DEI is not dead, as civil rights movements remind us, you can’t stop a people’s desire for justice. Nor does it need to be watered down with euphemisms that dilute its impact. The fact of the matter is DEI is good for business and the economy, just ask the business community.
McKinsey & Company, a renowned business consulting company, has been tracking the effectiveness of DEI in business for ten years, and in each report, the data speaks for itself. Their last report, “Diversity Matters Even More,” is the fourth report in the McKinsey series investigating the business case for diversity, following “Why Diversity Matters” (2015), “Delivering Through Diversity” (2018), and “Diversity Wins” (2020). For almost a decade through its “Diversity Matters” series of reports, McKinsey has delivered a comprehensive global perspective on the relationship between leadership diversity and company performance. “This year, the business case is the strongest it has been since we’ve been tracking and, for the first time in some areas, equitable representation is in sight.”
Citigroup estimates bias costs the economy $14 trillion. According to the study:
• Black workers have lost $113 billion in potential wages over the past two decades because they couldn’t get a college degree.
• The housing market lost $218 billion in sales because Black applicants couldn’t get home loans.
• About $13 trillion in business revenue never flowed into the economy because Black entrepreneurs couldn’t access bank loans.
Through bold and informed action, Massachusetts Attorney General Andrea Joy Campbell led 15 other states to issue guidance to businesses, nonprofits and other organizations operating in their states. The goal is to help these organizations with “creating and maintaining legally compliant and thriving workplaces,” while also continuing their DEI/DEIA policies and programs.
The AGs do not mince words: “Importantly, diversity, equity, and inclusion best practices are not illegal, and the federal government does not have the legal authority to issue an executive order that prohibits otherwise lawful activities in the private sector or mandates the removal of these policies and practices within organizations, including those that receive federal contracts and grants” (emphasis mine).
The AGs further clarify that the executive order actually affirms what is already law: that discrimination is illegal. Where the order goes awry is by conflating unlawful preferences in hiring and promotion with sound and lawful best practices for promoting DEIA in the workforce.
The multistate guidance, available publicly here, is a welcome breath of fresh air and a dose of sanity amid nonstop vitriol and divisive rhetoric coming from the White House. It provides assurance that organizations can, indeed, continue their DEI and DEIA initiatives, while remaining compliant with state and federal laws. Highlights of the guidance include:
• Sound DEI/DEIA practices prevent unlawful discrimination.
Organizations that have such policies and initiatives in place are viewed as being proactive in preventing unlawful discrimination and, therefore, reduce their litigation risk. Moreover, such best practices also help attract and retain diverse talent, which benefits an organization’s culture and performance. As the AGs state in the guidance, “Promoting a diverse and inclusive workforce isn’t just the right thing to do — it’s also more profitable.”
• DEI/DEIA is not the same as “Affirmative Action.”
Best practices in DEI/DEIA do not give preference to certain individuals, such as in hiring or promotion. Rather, the AGs explain, these best practices support the recruiting, hiring and retaining of “the most qualified employees” from a broad pool of candidates.
• Broadly offering professional development and retention supports organizational success.
Such programs include mentorship for career growth, as well as employee resource groups (ERGs) that support an inclusive and supportive culture in which people feel it is safe to be themselves. In addition, training on unconscious bias, inclusive leadership, disability awareness and similar topics “improve employee confidence and create a shared understanding around cultural norms.”
• Assessing and integrating DEI/DEIA practices help ensure objectives are being met.
As with any program or initiative, DEI and DEIA policies need to be integrated and assessed in ways that help ensure they are supporting the attraction and retention of qualified talent. This is further enhanced as organizations establish policies and procedures for employees to report incidents of harassment or discrimination.
For organizations that have well-established track records for their DEI and DEIA initiatives, the multistate guidance from the AGs should feel like business as usual. However, we are in unusual times. Through their bold action, the AGs of Massachusetts, Illinois, Arizona, California, Connecticut, Delaware, Hawaii, Maine, Maryland, Minnesota, Nevada, New Jersey, New York, Rhode Island, Oregon and Vermont are providing a guiding light to organizations as they navigate these uncertain times.
Malia C. Lazu is an award-winning, tenured strategist in diversity and inclusion and a lecturer at the MIT Sloan School of Management.
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