September 23, 2022

The DEI Downsize Amid a Recession 

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Economists continue to vacillate as to whether the US is currently amid a recession, or if it is on the  horizon. No matter the response, a large portion of people are feeling the sting of the economic downturn. As businesses look for ways to downsize, it seems like roles in the category of support  function become considered non-essential and are quickly eliminated. Diversity, Equity, and Inclusion (DEI) roles and entire departments within organizations are prime examples.  

The topic of DEI has long been associated with discordant topics e.g., Affirmative Action, politics, race, ageism and pay equity just to name a few. However, the topic is (naively and simply) about  understanding yourself as well as others. As we transfer that understanding into professional spaces it is referred to as soft skills, which are needed to build cultures of belonging. They are also directly correlated to increased engagement, productivity, and retention. Unfortunately, there are companies who have minimal resources dedicated to executing DEI programs for hundreds and in some cases  thousands of people. One reason is that organizations with resources dedicated to these programs are considered “nice to haves”, with employees serving as figure heads and who are not supported in furthering the proverbial DEI journey.  

The Talent Struggle 

DEI in the workplace is a more than a nice to have response to the murder of George Floyd. It is a  necessity with staying power. Many organizations, communities, military sectors, and higher education  institutions have been conducting some form of diversity education since the 1960s in the United States. Businesses used diversity training in the late 1980s and throughout the 90s to protect against and settle  civil rights suits. 1As time progressed, companies realized devoting resources to recruit and retain underrepresented groups is good for business. Doing so aids in positive branding, while aligning businesses for success by encouraging innovative ideas for growth. Working with homogenous groups tends to render average performance. However, the potential to better solve complex problems and produce long-term success, happens when environments are not only diverse, but have processes and  programs that acknowledge and support cultural differences.  

Investors Expect More from Companies 

Current and prospective employees are not the only people interested in a company’s commitment to DEI. Potential Investors also observe corporate policies while encouraging them to act responsibly. This is known as Environmental, Social and Governance criteria, and is comprised of three primary components:
Environmental- which usually includes sustainability initiatives such as carbon metrics, water metrics and alternative energy metrics;
Social- usually includes community outreach and assistance initiatives, employee benefits, diversity and inclusion efforts;
Governance- includes doing business well initiatives such as prohibitions on unfair labor practices, conflict mineral policies, foreign corrupt trade practices and anti-bribery initiatives.  

Consumers use them (ESG) to decide which businesses they want to patronize and which products they  want to buy and support. Socially conscious investors use them as criteria for gauging the viability of a  potential investment; many are reluctant to go into business with a company that will end up in the  news as a violator of one of these three key areas of social responsibility. 2As companies tout a  commitment to investing in the health and well-being of their teams, consumers, and communities, making a knee jerk decision to eliminate DEI programming because of a recession is dichotomous. There  are companies who get it. Those who don’t will likely pay for their decision once the economy is stable again.  

It Is the Right Thing to Do 

Yes, referring to DEI as the right thing to do can be polarizing. When working in the DEI space, the desired result should be behavioral changes, whether you feel it’s the right thing to do or not. The objective is to supply the tools that enable employees to acknowledge and respect the differences and experiences we all show up to work with every day. Another important aspect is creating an environment that is psychologically safe for everyone in the workplace, regardless of title, education, or socioeconomic status.  

When companies make the decision to downsize, having the right people at the table allows leaders to  make ingenious decisions concerning the matter. This includes weighing ALL options by evaluating every  area of the business objectively. Unfortunately, this is not always the case, and there are leaders who make decisions that do not factor the effect it has on the culture of the organization. Removing areas that focus on best practices for working with most anyone is not wise. For example, during times of  economic tumult, understanding how it impacts different communities both personally and within the  workplace by directly impacting productivity is key. These are tools DEI programs provide.  

During the 2008 recession, although most people were affected, communities of color were affected the hardest and have yet to bounce back. According to the Atlantic, a report from the ACLU says that black  families will continue to suffer the effects of this disproportionately for decades to come: By 2031, white household wealth will be 31 percent below what it would’ve been had the recession never happened, according to the report. For black households, wealth will be 40 percent lower, which will leave black  families about $98,000 poorer than if the recession hadn’t taken place. 3Now, more than a decade later, we are faced with the same plight. Underrepresented groups continue to suffer, at increased rates, from  mental health issues, financial woes and working in environments where they juggle performing at high  levels versus fear and sadness for their personal situations or those close to them. When leaders and colleagues with different lenses cannot relate or lack empathy, workplace belonging, happiness and ultimately retention decreases. All of which inevitably increases the financial and cultural cost for the  organization.  

The crux of the problem may be that companies do not see the Return on Investment for DEI programs. The business case is there. However, when it is not woven into the fabric of the organization, DEI activities become more of a check the box activity rather than authentic immersive opportunities that  make sustainable organizational changes. Managing differences requires intentionality and more work  than a lot of organizations are willing to budget for. However, removing DEI programs during times  where a sense of belonging is an essential part of employees’ work experience will most likely be perceived as failing to consider talent and clearly shows the character of the business.