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Where the DEI pushback leaves employers, HR

Peter Cappelli, Wharton
Peter Cappelli
Peter Cappelli is HRE’s Talent Management columnist and a fellow of the National Academy of Human Resources. He is the George W. Taylor Professor of Management and director of the Center for Human Resources at The Wharton School of the University of Pennsylvania in Philadelphia. He can be emailed at [email protected]

Our Center for Human Resources at Wharton recently had a discussion with HR people trying to get a sense of where diversity, equity and inclusion policies are headed. Here’s what I concluded from it. But first, some background.

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It’s the “D” in DEI that gets all the attention. The “equity and inclusion” goals are very much on the sideline, in part because they don’t bring to mind any particular practice or change; diversity focuses attention on hiring as a means of change.

It is a hot-button issue because of the perception that diversity programs are about giving preference in hiring and promotions to people other than white men. The widespread belief that DEI is another word for hiring preferences is unfortunate, given that—except in very limited situations—any such practice violates the law. Affirmative action is also assumed to be a synonym for preferential hiring, but again, except in very unusual circumstances, it is limited to reducing bias and shaping the applicant pool.

In fairness, the legal line is blurry, especially when we don’t articulate it. You can have a policy and even a goal to increase the diversity of your organization; you can act to secure more diverse applicant pools; you can even have programs to help specific groups advance in the organization. But you cannot give preference in actual hiring decisions.

The blurring and confusion are because of the long-running battle between Democrats, who have pushed for greater diversity as a goal through legislation, and Republicans, who have pushed back, largely through the courts. While the U.S. Supreme Court’s ruling against using race as a criterion in college admission decisions last year does not literally apply to employment, the underlying rationale seemed to apply to jobs as well—and gave the opposition to DEI programs greater legitimacy.

The backlash against DEI has come mainly in the form of complaints by Attorneys General in conservative states and private legal groups telling employers that such policies should be dropped because, in their view, they violate the law. CEOs and their boards certainly noticed the conservative attacks on Budweiser and Target’s marketing approaches to diverse audiences and also how those two companies quickly backtracked.

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While many business leaders—perhaps most—are personally committed to their DEI goals, there are also limits as to how much energy and effort they want to put into defending themselves against attacks. They also don’t want to be out of step with where their leaders are—and it is not a super-liberal bunch, despite what the “anti-woke” warriors seem to think. So, how far will the backlash take us?

A changing landscape for DEI

Lots of HR initiatives seem to be under cost pressure now, including DEI initiatives—independent of any political pushback. LinkedIn data shows that DEI job postings have been dropping for the past two years. As all observers of corporate behavior know, there is also an attention issue with company policies, as other issues steal the attention away. There are a lot of other challenges competing for that attention now.

The surprising thing is that the pandemic and all the distractions of remote working did not push DEI to the sidelines. One important reason why is because there are countervailing pressures on companies to pursue diversity issues, the most important of which is pressure from organizational customers who want to know what the demographics of a potential supplier look like. Nothing prevents clients and customers from making buying decisions based on that information.

Unless anti-DEI forces persuade those customers to change their practices, and there is no legal threat there, DEI goals are likely to stay put. An extensive survey of DEI activity by Littler Mendelson, P.C. found a large majority of responding companies this year intend to keep going on their current DEI path, something we heard in our meeting at Wharton as well.

However, there is already some retreat on practices that were probably risky, given the concern that outside organizations opposed to DEI will sue them. In pursuit of diversity goals, many employers pursued programs that walk right up to hiring preferences for protected groups. PwC has pulled its internships directed at African-Americans, for example, as have many big law firms. Those programs are the least likely of 11 DEI practices to be used now, according to the Littler survey.

The No. 1 practice employers are committed to is providing developmental opportunities for diverse employees, and that is also a risky practice where tangible opportunities target protected groups.

Corporate counsel offices are already busy auditing their DEI practices, and my bet is that we will see more pullback of practices directed specifically at hiring, as well as those with a demographic attribute in the title (e.g., internships for women or Black engineering students). I don’t think the underlying practices will shift from race-based to socioeconomic-based, as preferences in college admissions appear to be moving unless clients and customers want that. So far, they don’t.

See also: Will corporate DEI survive a growing ‘anti-woke’ movement?

The pushback could be useful, though, to get some clarity on DEI practices. Employers should do a much better job making the public case as to why they are promoting DEI goals. Just saying, “It’s the right thing to do,” is not helpful unless the listener already understands and shares those DEI goals—if not, it’s easy to attack just by saying, “Well, those aren’t my goals.” The business case that customers demand DEI, on the other hand, stymies most extreme critics.

Internally, employers could also do a better job looking at their practices. The least helpful is still diversity training designed to get employees to see their own biases. This actually gets in the way of improving diversity outcomes, yet such training is still used more often than results-oriented approaches like recruiting diverse candidates, mentorship programs and especially goal-setting that holds leaders accountable.

It’s still true that we manage what we measure.

Learn how to leverage DEI in a people-centric culture at HRE’s upcoming EPIC Conference, April 24-26 in Las Vegas. Click here to register.