We’re in a difficult environment for what is known as “DEI.”
The attack on DEI leverages perceived discrimination against white people. Many companies are running away from DEI. Other companies, like Costco (who have never done business with us), are leveraging being for DEI, which makes sense when you consider that 39% of Costco customers are not white. More than half are women and approximately half of Costco’s new customers last year were under 40. These are all demographics where DEI’s perceived extremely favorable.
I don’t recommend most companies publicly push back against the anti-DEI movement. Companies in red states certainly cannot, nor can companies that are federal contractors. Repercussions are real, even if the legal arguments are not robust. For example, Target must defend itself against the state’s charges of damages to the shareholders for not disclosing the “risk” of DEI programs.
We tried several times to link our Top 50 list to superior stock performance. Overall, our list tracked very closely to the S&P 500, demonstrating that one facet (DEI) of a complex system (a corporation) does not tie back to stock price. If DEI did not correlate in a meaningfully positive manner for stock price across 50 companies, it’s doubtful it would be working in a negative manner in just one.
Lower Voluntary Turnover
What our data does show is that companies that execute well on five key initiatives (Employee Resource Groups (ERGs), mentorship, sponsorship, high potentials and executive HR councils) have much lower management voluntary turnover, up to a factor of four within the same industry. This saves the average company tens of millions of dollars a year in replacement costs alone.
But does that come at the expense of white people?
Inclusion Efforts Benefit Everyone
Our data says inclusion efforts do not negatively impact white people. Companies with the most robust inclusion efforts have better retention of white people. Recruitment and promotion rates are representative. It sounds counterintuitive given how popular DEI was, but the facts are clear. In the hundreds of companies we have data on, in over 20 years, no white people have been systematically harmed by DEI efforts. You know this is true because there are no class action suits alleging systemic discrimination against white people (that I can find). Lawyers love class action suits because they get a percentage of the same judgment times the number of people in the class. This is far more profitable than suing a company for just one person.
I’m sure that individual white people have been harmed by poor DEI practices or individual malignant or malfeasant managers, just as individual people of any other demographic have been—for decades. I’m also sure there are thousands of people who were told that they didn’t get the promotion, or their son didn’t get into Yale because of “DEI,“ when the real reason was that the person wasn’t good enough, or the manager did not want to confront them directly about performance (or wanted to start trouble).
Given labor participation rates, the aging of our population and the demographics of young people, there is no mathematical way that white people can disproportionately continue to fill every position of power without diminishing overall quality. This means that companies must make an extra effort to keep people who are not represented in top management, and that effort is necessary to continue to retain and develop the best and brightest. It’s just math. No judgment. Just math.
How to Protect Your Efforts
So how do you protect yourself? How do you continue programs that are beneficial to all employees and make your company competitive without attracting unwanted attention?”
1. Get rid of DEI and diversity language. Now. Scrub your website. Your CEO should reiterate company values—especially on how we treat each other. Your CEO should speak about wanting the best possible talent to work at the company, which requires a greater effort to make sure you’re selecting the best from every possible demographic out there. It should be emphasized that this does not mean we advantage one group over another. That’s bad business. It’s good business to seek the top people from every possible aspect of American demographics—to teach them the rules equally, to help them equally and enforce the rules equally.
2. Understand the business benefits of your inclusion efforts. In every industry we measure, there is a positive association between the five key initiatives I mentioned earlier and voluntary turnover. Companies that executed well on the five initiatives, had up to 1/4 the voluntary turnover in management than lesser managed companies in the same industry. This is tens of millions of dollars in bottom line annual savings, which is an enormous competitive advantage. Note that this lower voluntary turnover includes white people. Worded differently, inclusion efforts have helped white people too.
3. Mind your corporate communications. Several companies, including Boeing, were unjustly criticized due to poorly designed communications. Should Boeing stick to building aircrafts? Absolutely! However, 48% of aircraft mechanics are not white. If an aircraft manufacturer doesn’t make an effort to attract people who might otherwise feel that they are not invited, they can’t possibly get the best quality aircraft mechanics. However, that communication effort cannot appear to exclude white people!
4. Build community. Everyone, including white people, must be overtly invited. Resource groups for veterans, People with Disabilities and caregivers are a great way to include more people. Communications must include invitations for all to every resource group. Our country is very diverse: 14% of working age people have a disability. Five percent of working age people are veterans. Women make up 47% of the workforce. Forty percent of the workforce is not white. Seventy-four percent of Fortune 500 CEOs are white, 10% are women. Almost all of the rest are white men.
5. Measure and track everything. For example, make sure your mentoring programs are representative of the total population. If there are disparities in promotion rates, find out why. Either you made a big mistake in recruiting, developing or relationship building. It has to be one of the three. Know your numbers.
The facts covered in No. 2 (above), tell me that more people don’t feel community in the high voluntary turnover companies, compared to those in the low turnover companies. Less competitive recruitment, retention and development makes a company less competitive. It’s that simple.
In this environment, business imperative demands that we keep doing the work while not attracting negative publicity. The good news is that the inclusion initiatives benefit everyone, and this can be measured, and my company has comparative data for performance evaluation. My advice is to start taking the subject seriously. Stop treating it like it was a self-evident benefit. Define your business case and communicate it effectively and inclusively.