Paradigm, Joelle Emerson's DEI consultancy, works with over 500 companies. The growing backlash against DEI, she said, “is typically the first item on the agenda on every call.”
Critics of DEI, or diversity, equity and inclusion initiatives, have tried to scapegoat it for everything from regional bank failures to a panel's theft of a Boeing plane in flight last week. That debate accelerated this month when three famous billionaires clashed over the merits of DEI on social media: Elon Musk and Pershing Square CEO Bill Ackman attacked DEI efforts as “racist,” while investor Mark Cuban argued that they were “good for business.”
The economy and political landscape have changed since 2020, when companies hired DEI officers en masse amid a racial reckoning following the killing of George Floyd. Recently, DEI programs have become less visible. Over the past two years, hiring for DEI positions has plummeted and the number of investor calls mentioning DEI has decreased.
This raises the question: have companies withdrawn DEI? Or have they simply changed the way they approach the topic and talk about it?
DEI is operating in a new environment. Last year, the Supreme Court struck down affirmative action in college admissions, setting off a wave of similar lawsuits and legal threats against companies' diversity programs. And while polls indicate that most Americans believe it's a good thing for companies to focus on diversity, equity and inclusion, there is a wide partisan divide: In a Pew survey last year, 78 percent of workers who identified as Democrats agreed with this sentiment, while only 30 percent of workers who identified as Democrats agreed with this sentiment. 100% of Republican workers thought the same.
The rejection may have caused a brand change, according to DEI professionals. At some companies, what used to be called a DEI survey may now be advertised as a cultural survey, Emerson said. Or, management training, once framed as part of DEI efforts, can be discussed as a course to help managers conduct performance reviews more effectively. “This term seems to be very misunderstood in ways that I don't think any of us realized until the last few months,” Emerson said of DEI. He added that it might make sense for companies to “be much more specific about exactly what it is we're talking about.”
Some corporate DEI programs now include a broader range of groups, said Porter Braswell, co-founder and CEO of Jopwell, a career advancement platform for Black, Latino and Native American professionals. “I think instead of saying this is a program for black employees,” he said, “it would be more like, 'This is a program to increase the equity of promotion rates across the company, and everyone is included to apply for be part of this program, but they will play different roles.”
Some companies now talk about “FDI” instead of “DEI”, putting an emphasis on inclusion.
But a drop in DEI job postings could signal a retreat. After an increase in 2020 and 2021, job postings for DEI positions on job websites ZipRecruiter and Indeed decreased in 2022 and 2023, the companies said. On ZipRecruiter, the number fell 63 percent in 2023. On Indeed, the number fell 18 percent from December 2022 to January 2023.
Slow job turnover in DEI (employers who hired in 2021 may not have needed to hire again in 2022) and a cooling labor market, especially in industries, such as technology and finance, that are more likely to have roles in DEI, probably contributed to the decline. said Julia Pollak, chief economist at ZipRecruiter. But these factors do not fully explain the change.
Some see the decline in job openings as a sign that companies have backed away from their commitments to DEI. It shows that the increase in hiring for DEI positions after Floyd's killing “was performative at best,” said Misty Gaither, vice president of diversity, inclusion. equity and belonging on Indeed.
Jopwell's Braswell added that many companies tried to offload all the responsibility for changing company culture onto a couple of new hires, a strategy that predictably failed. “All those people are being laid off, all those people are quitting, all those people are feeling burned out,” he said, adding: “The only way these cultures will change to be more diverse, equitable and inclusive is if it's everyone's job.” Inside the company.”
There is also evidence that companies remain committed to DEI In a survey released this week by the employment law firm Littler, only 1 percent of 320 C-suite executives said they had significantly reduced their DEI commitments over the past year, and 57 percent said they had expanded those. efforts.
In a survey of 194 hiring managers released by the Conference Board last month, none of the respondents said they planned to scale back DEI initiatives. And while the number of times DEI is mentioned in investor conference calls has decreased, the number of mentions in annual presentations is high, according to AlphaSense.
Does it matter how companies talk about DEI? Executives have stopped discussing their sustainability efforts and using the term ESG for environmental, social and governance issues, as the issue has become more politicized. (BlackRock's Larry Fink recently described “ESG” as “fully armed.”) When it comes to DEI, some professionals don't mind changes in branding as long as the work continues. “The ultimate goals of these diversity initiatives and programs will not change,” Braswell said.
For others, changing words is itself a retreat. “We need to call it what it is,” Indeed's Gaither said. “The data says that all these positive things happen when there is diversity, equity and inclusion. So we are not going to mask it or call it something else.”
—Sarah Kessler
IN CASE YOU HAVE MISSED IT
Citi will eliminate 20,000 jobs. The Wall Street giant announced the layoffs by reporting a fourth-quarter loss of $1.8 billion, the bank's worst results in 14 years. Citi CEO Jane Fraser admitted the bank had performed poorly but said 2024 would be “a turning point.”
BlackRock is betting heavily on infrastructure. The asset manager agreed to buy Global Infrastructure Partners for about $12.5 billion, in a deal that would create the world's second-largest infrastructure business. BlackRock also announced a major reorganization, with Global Infrastructure CEO Bayo Ogunlesi joining BlackRock's global executive committee and board of directors.
The SEC approved the first Bitcoin ETF The regulator authorized 11 fund managers to create a new product that would make it easier for retail investors to buy and sell cryptocurrencies. But SEC Chairman Gary Gensler issued a cautionary statement after the decision, making clear that Bitcoin was a “speculative and volatile asset” that was being used for illicit activities.
The World Bank warns of a “wasted” decade. The institution predicted that global growth would slow to 2.4 percent this year from 2.6 percent in 2023. The forecast put the world economy on track for its weakest five-year period in 30 years. Two wars, a slowdown in the Chinese economy and increased risks of natural disasters caused by global warming have increased uncertainty.
The geek style
Andrew McAfee's books, including “The Second Machine Age,” have focused on how technology is changing work. In his latest book, “The Geek Way,” McAfee, a professor at the MIT Sloan School of Management, describes a shift from industrial-age management philosophy to a new era of constant change.
McAfee talked about the book with DealBook. The conversation has been edited for length and clarity.
You recommend that companies adopt “geek norms” that the most successful modern companies excel at. What do you mean by that?
Norms are expected behaviors at the group level. I say there are four big geek norms.
The first is science, which is a constant argument that is resolved over time by evidence.
The second is ownership. It is about assigning responsibility to an autonomous group and then ensuring that it remains an autonomous group.
The third is speed. How quickly are you iterating, doing something, getting meaningful feedback on it, incorporating it, and getting something else? You need a plan, but the key is a minimum viable plan.
And finally, openness, which is very close to psychological safety (which my former colleague Amy Edmondson talks a lot about). It's the opposite of being defensive. We are inherently defensive creatures. We don't love being challenged, and geeks have realized that we have to get over that if we really want to progress together.
You write that a key to the ownership norm is keeping bureaucracy under control. Why does bureaucracy tend to skyrocket?
Human beings have this deep-rooted desire to want status. And one way to gain status in a large, complicated organization is to be a gatekeeper or a person in the decision-making loop.
Hitting your numbers helps the organization as a whole, if you've done the alignment process correctly. But becoming the 20th firm on the approval path to get a certain amount of spending through the system? No, let's try not to have that.
Which of the geek norms is most difficult for leaders?
Probably opening. Like the rest of us, our leaders are inherently defensive creatures. Saying, “Oh yeah, I hadn't thought of that, good idea” is not what the Jack Welch-style leader of the industrial age was supposed to do. Maintaining that lack of defensiveness, creating an environment of psychological safety, and arguing in a way that doesn't shut things down are difficult things to do and continue to do as a leader.
Was there a time when this was not the best way? What has changed in the world that makes it more important?
It has always been better to be open than defensive. In a slowly changing environment, where the landscape is static, being closed or not welcoming debate is not that big of a problem. It's when competition is global, when things improve twice as much every 18 months, and when your environment is periodically shaken up by something like generative AI.
When the world changes very quickly, all these old industrial habits become even worse.
Thank you for reading! See you on Tuesday.
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