Recap: Report on the Risks of Retreating from DEI
The NYU School of Law Meltzer Center for Diversity, Inclusion, and Belonging and Catalyst, an organization that seeks to improve workplace inclusion by focusing on creating workplaces that better support women, have released a new report, Risks of retreat: The enduring inclusion imperative, which dives into how organizations are approaching Diversity, Equity, and Inclusion (DEI) efforts in the face of ongoing legal and social threats. Much of the focus in current discourse has centered around the risks of continuing DEI efforts, but the Meltzer Center and Catalyst report shows that there are also significant risks to retreating from DEI.
While much has been shared about organizations that have taken the Fight approach (maintain DEI programs with minimal or no adjustments) and the Flight approach (scale back DEI efforts significantly or abandon DEI entirely), the Risks of retreat report found that a large majority of leaders (78% of C-suite leaders and 83% of legal leaders) reported that their organization have landed somewhere in the middle and have taken the Finesse approach, remaining committed to DEI and making strategic adjustments to avoid external legal and reputational risks.
The data shows that the trend of organizations taking the Finesse approach and choosing not to retreat from DEI is driven by four primary risk areas:
Talent Risks. Organizations that retreat from DEI will face talent shortages, now and in the future. 76% of all employees reported that they are more likely to stay with an employer long-term if that employer continues to support DEI, including 86% of Gen Z employees. And 61% of Gen Z employees reported that they would never apply for a job with an organization that does not support DEI.
Financial Risks. Internally, leaders reported that DEI programs have driven financial performance in the past and will drive it in the present and future. Leaders and employees also reported that diverse executive and senior leadership roles improve innovation, creativity, and financial performance. Externally, consumers are aligning their spending habits with their values: commitments to DEI have helped bring customers in, and retreating from DEI has led to boycotts and losing customers.
Legal Risks. Over half of C-suite and legal leaders reported that their organization has experienced social media attacks, threats from advocacy groups, complaints from the EEOC, demonstrations and protests, or other actions within the last year. But a larger percentage of C-suite and legal leaders reported that moving away from DEI would actually create more legal risk for their organization, specifically in opening up the organization to allegations of discrimination. One note: federal contractors reported more external threats and legal actions than organizations that are not federal contractors.
Reputational Risks. Any decision an organization makes can open it up to vocal criticisms from internal and external audiences, so leaders must consider how their words, actions, and inactions will be viewed by diverse stakeholder groups. A majority of leaders reported that they are firmly committed to DEI while also taking steps to rebrand their DEI efforts, which might help avoid external reputational harm; at the same time, employees reported that they view rebranding efforts as unnecessary or as a threat to the organization’s overall DEI work.
The Meltzer Center and Catalyst report articulates what many in the DEI space have been sharing: retreating from DEI might feel expedient and prudent given the current political and regulatory landscape, but that retreat carries significant risks that will harm the organization both now and over the long term.
The best path forward is to remain committed to DEI as a business imperative and review your DEI strategy and programming and identify initiatives that might need to be adjusted in the current environment. Once you identify what might need to be altered and how you plan to modify it, remember to communicate, communicate, communicate about what is happening, with a significant focus on employees who will be impacted by the changes.
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