Drop in diversity hires reflects the weak societal IQ of business leaders and puts companies at risk

Of note. Wonder whether same trend present in Canada:

We would like to think that as business gets more complex, that as new forces influence decision-making and the pace of change accelerates, leadership teams are evolving and getting smarter. And then we see this: U.S. corporations are quietly eliminating diversity, equity and inclusion roles faster than any other positions.

DEI positions declined 33 per cent at the end of 2022 from their peak after the George Floyd killing in 2020, according to Revelio Labs, a New York work force research firm. That compares with a decline of 21 per cent for non-DEI roles.

Among the companies that have cut deepest into the DEI muscle are Amazon, Applebee’s and Twitter, which has reduced its team to two people from 30.

Beyond the complicated politics around diversity, the business implications of this decline are significant – and material. It is one more metric reflecting the widening gulf between the societal IQ of modern leadership teams – their knowledge of how they are affected by wider social and cultural contexts – and the changing expectations of stakeholders. What we end up with is a valley of death for leaders who can’t or won’t evolve.

It goes well beyond diversity. Internal and external constituencies are demanding that company leaders incorporate into their strategies the social trends that are influencing their decisions, from DEI to ESG to political interference in the markets they serve. Increasingly, a company’s societal IQ has an impact on the choices made by customers, investors and employees – and ultimately the company’s bottom line.

Many leaders are ill-prepared for the change, since this impact often has little or nothing to do with the products or services they sell. The traditional expertise they learned in business school – finance, operations, valuation, market forces, competitive analysis and the like – is no longer enough to succeed.

The decline in diversity roles is a stark example. Too many companies saw diversity as an issue to be dealt with rather than a strategic imperative for success, despite all sorts of data showing successful companies look like the customers and communities they serve.

They rushed into a hiring spree they believed sent a clear message: We get it. In the three months following Mr. Floyd’s death, DEI roles rose 55 per cent, according to the Society for Human Resource Management.

Clearly, many didn’t get it at all. Now that the noise around the issue has subsided somewhat, companies are cutting the positions they created – and publicized – to demonstrate their commitment to change without having made meaningful improvements within their organizations. Many are using broad layoffs to cover their tracks; newly minted DEI jobs are often the first to go in the “last in, first out” formula for work force reductions.

Critics such as the National Urban League are rightly calling out companies for being disingenuous, suggesting they created dead-end jobs as part of a check-all-the-boxes exercise to appear responsive to the social justice movement.

Many point to DEI programs as window dressing, tucked under human resources for a degree of separation from the C-suites. While many companies adopted recruitment mandates requiring slates of racialized candidates for all jobs, many did not change the internal mechanisms that drive the success of new hires – training, development and cultural immersion.

To be sure, there are plenty of examples of the need for higher societal IQ that predate Mr. Floyd’s death. And it is an imperative that affects not just a company’s reputation.

To protest U.S. immigration policy, workers at Wayfair.com, the online home décor company, staged a walkout in the summer of 2019 because the company was selling goods to a government contractor hired to furnish detention centres along the U.S.-Mexico border.

Chick-fil-A, the U.S. fast-food chain, saw its U.K. expansion plans stymied in 2019 when LGBTQ+ groups protested what they saw as the intolerant Christian conservative views of the company’s owners. Its first foreign store closed after just six weeks.

Institutional investors pulled billions of dollars from Fisher Investments after its founder, Ken Fisher, allegedly made sexist comments at a 2019 conference. And Goya Foods and MyPillow faced boycotts for openly supporting President Donald Trump’s re-election bid in 2020.

Ask the leaders of any of these companies and they will probably tell you they were blindsided by the power of what they considered to be non-business influences.

There’s one more remarkable finding in new research from online recruiting firm Zippia: Only 3.8 per cent of chief diversity officers at U.S. companies are Black. More than 76 per cent are white, 7.8 per cent are Hispanic/Latino, and 7.7 per cent are Asian.

You don’t need an MBA to know that doesn’t add up.

Source: Drop in diversity hires reflects the weak societal IQ of business leaders and puts companies at risk

About Andrew
Andrew blogs and tweets public policy issues, particularly the relationship between the political and bureaucratic levels, citizenship and multiculturalism. His latest book, Policy Arrogance or Innocent Bias, recounts his experience as a senior public servant in this area.

One Response to Drop in diversity hires reflects the weak societal IQ of business leaders and puts companies at risk

  1. gjreid says:

    This article assumes that DEI positions and the people that hold them add to a company’s “societal IQ” – ain’t necessarily so; many of the people who got those positions were ideological zealots, at least so it seems to me, people dogmatic in their beliefs, self-righteous, self-interested, and sometimes, racist, and encouraging racism and paranoia in others. The whole exercise could turn out to be largely counter-productive if one wishes to move towards real equity and inclusion.

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