Corporate Diversity Pledges Fizzle Amid Layoffs, GOP Backlash

Workplace diversity and inclusion efforts adopted in the wake of George Floyd’s murder and ensuing protests are fading as sweeping layoffs blunt companies’ bold commitments to boost underrepresented groups in their C-suites and ranks.

The global Black Lives Matter movement that followed Floyd’s death in Minneapolis police custody in 2020 prompted a hiring boom for diversity, equity, and inclusion professionals and pledges by major employers to address racial inequality in the workplace.

But many of those hired—largely people of color—to diversify the workplace have been let go over the past year amid ongoing layoffs as a cost-cutting measure. Employers have cut DEI roles at a higher rate than others, according to a February study from workforce analytics firm Revelio Labs.

More than 300 DEI professionals departed companies in the last six months, including Amazon.com Inc., Twitter Inc., and Nike Inc., the report found. These diminishing roles have left observers questioning whether the sense of urgency to increase workforce diversity that corporate leaders made almost three years ago was genuine or simply a reactionary business decision to mitigate reputational risk.

“They heard concerns about the need for diversity, equity, and inclusion. Fast forward to three years later, that push isn’t that much present in the media every day and prevalent on social media,” said Robert Baldwin III, founder and managing attorney at Virtue Law Group, a plaintiff-side labor and employment firm.

“Since that push isn’t that prevalent,” they don’t feel the pressure to prioritize racial diversity and inclusion, he said.

DEI U-Turn

The slashing of these roles indicates that some companies don’t see DEI as essential, said Jean Lee, president and CEO of the Minority Corporate Counsel Association, which advocates for diversity in C-suites.

“This is concerning,” because prospective workers from underrepresented backgrounds might get discouraged from seeking employment at companies that have taken a drastic U-turn with their diversity and inclusion efforts, Lee said.

It may also take a toll on the output and morale of remaining workers, who would question their employer’s commitment to diversity and be forced to take on the responsibility of reporting workplace issues to management and advocating for their needs.

“I think the most important thing employers must consider is the message they’re sending” if they’re cutting back DEI initiatives, Lee said. “That affects your brand and communication.”

Lee, who advises employers on DEI matters, said many companies are grappling with how to use layoffs to cut costs amid inflation and rumblings of a looming recession without undermining their diversity efforts.

Liability Potential

In addition to potentially harming employee morale and hiring efforts, employers risk exposing themselves to litigation because DEI leaders are often the ones who spot pitfalls and report unaddressed workplace issues that carry serious legal consequences, employment attorneys said.

Research by a US Equal Employment Opportunity Commission task force found that a lack of diversity and inclusion in the workplace can promote discriminatory behavior and allow such conduct to go unchecked.

“When you are gutting the roles of people tasked with holding you accountable and ensuring your workplace is diverse and inclusive, what follows is increases in instances of bias,” said Samone Ijoma, an employment attorney at Sanford Heisler Sharp LLP.

“I do think that getting rid of the people with that expertise, and who are working to change corporate culture, would likely lead to more lawsuits in that realm,” she added.

Diversity shouldn’t be treated as a project to fill a quota, but must be viewed as a business strategy that leads to better outcomes, she added.

Companies making deep cuts to DEI will eventually scramble to rebuild teams and catch up with their competitors, Lee said. As companies tighten their belts and eye a potential recession, they can still be strategic with their commitment to racial equity even if layoffs are seen as unavoidable, she said.

Partisan Response

Floyd’s murder pushed investors to pressure hundreds of public companies to reveal data about the diversity of their workforces.

But at least some of the affirmative steps companies took to increase racial equity were met with lawsuits from White workers against employers like Starbucks Corp., alleging reverse discrimination.

The dialing back of DEI initiatives can’t be “divorced” from the country’s sociopolitical history because there’s been “increased hostility against any practice that promotes diversity,” said Baldwin, pointing to efforts in Texas and Florida.

Texas Gov. Greg Abbot (R), for example, recently released a memo urging state agencies to stop considering diversity in hiring decisions.

Meanwhile, Florida Gov. Ron DeSantis (R) helped champion legislation that restricts private employers from holding mandatory workplace training on certain racial bias issues and another that blocks state colleges from having programs on diversity, equity, and inclusion.

Both are being challenged in court.

DEI programs being on the chopping block “is really a reflection of where society is at today,” Baldwin said.

“What companies do reflects the culture they are around,” he said. “So if the culture they are around is that we want to get rid of diversity, equity, and inclusion initiatives because we feel that is unfair to White people, then their hiring decisions and practices are going to reflect that.”