The Uncertain Future of Diversity and Hiring

A Supreme Court ruling and legal threats from some states’ attorneys general have companies reviewing ways to revive the momentum for diversity, according to a report from Korn Ferry. The firm also looks at DEI’s delicate balance and what actually works.

October 20, 2023 – Diversity has had it rough lately. First, there were cutbacks due to the economy and then came the Supreme Court’s ruling against affirmative action. That was followed by a cohort of Republican attorneys general issuing a letter to Fortune 100 CEOs questioning the legality of some DEI efforts. The main issue for the moment centers on quotas, a topic which was at the heart of the recent Supreme Court ruling banning affirmative action at universities, according to a recent report from Korn Ferry. Though the ruling doesn’t apply to the private sector, the attorneys general are raising questions.

For his part, Korn Ferry chief diversity officer JT Saunders says that no laws exist yet to address issues like this, but some form of legislation is likely down the road. “While quotas may have been useful as a safety net to encourage equitable opportunity, they are not the most effective instrument in the DEI toolkit,” he said. “If you’re only relying on quotas from a compliance-driven perspective, you’re likely not getting the best results from DEI. You’re creating an opportunity for it to be challenged quite easily. It can’t be about checking boxes. It must be about business outcomes.”

“Still, this latest wave of discontent directed at DEI is indeed worrying,” said Andrés Tapia, a senior client partner in Korn Ferry’s DE&I practice. “Especially given that firms’ enthusiasm has shown signs of waning.” At the end of 2022, the reported attrition rate for DEI professionals was 33 percent, compared to 21 percent for those in other roles. “Those who believe in inclusivity not to stay on the defensive but instead to bring the argument of diversity forward in a way that business can’t deny,” Mr. Tapia said. “These reactionary forces should be asked to make the argument against the innovation, marketplace growth, and talent optimization that comes from diversity. Let’s have that debate.”

Related: What CHROs Need to Know About DEI Moving Forward

Given that mandated quotas may have unclear implications, Mr. Tapia suggests that targets set by companies to achieve a level of diversity reflective of their consumer base should be seen instead as a strategic aspiration. The 2020 census marked the first time America’s white population was in decline; it’s currently at 57 percent and projected to be less than 50 percent by 2045. This has a clear impact on company profits, say experts. Hispanic consumers, for example, comprise over 18 percent of the total U.S. population, according to the U.S. Census Bureau American Community Survey. Indeed, Latinx people in the US would reportedly have the fifth-biggest GDP in the world if they were their own country.

The Evolving Role of Chief Diversity Officers in Shaping DEI
In a new report, JM Search says diversity leaders have an opportunity to drive widespread change for organizations as well as help define their own profession. Unfortunately, a lack of clarity around the position—along with inadequate resources for some CDOs— contributes to higher turnover rates for the job.

“Whether you like it or not, half of this country may be people not like you,” said Mr. Tapia. “Do you know how to sell, design, and do customer service to people not like you?”

“The consequences of getting diversity wrong can have a big impact on an organization,” said Alina Polonskaia, global leader of Korn Ferry’s DE&I consulting practice. “At the height of the pandemic, pulse oximeters were the main tool used to determine whether or not one’s blood-oxygen levels were healthy.”

Related: How DEI is Impacting How We Recruit and Retain Talent

However, one study by scientists at Johns Hopkins University found that inaccurate readings from pulse oximeters led to a failure to identify Black and Hispanic patients with low blood oxygen. Ms. Polonskaia wonders whether the reason the devices only worked on white patients was because the people who developed the technology were primarily white themselves—though this part isn’t known for sure. “What is known is that the pulse oximeter promised to effectively serve people without regard for their race,” she said. “But we now know that its promise was only fulfilled for white patients, not people with darker skin.”

DEI Efforts Decreasing?

According to a recent survey of more than 1,000 firms, leadership support for DEI initiatives has fallen by 18 percent in two years. Today, one-fifth of companies offer no diversity programming at all. Some are actually being sued by activists to stop DEI efforts. At least 30 states are considering legislation to defund DEI measures in public institutions.

Yet Korn Ferry says that inequality remains glaring in many organizations. For example, white men are 33 percent more likely than white women—and 300 percent more likely than Black men or women—to have a management role. In a slow-growth economy that’s now three summers removed from the murder of George Floyd, Korn Ferry notes that organizations are questioning whether DEI is worth the effort.

DEI experts acknowledge that critics have a point, to some degree: a lot of programs haven’t worked. Many organizations need to change their approach, the experts say; too many rely on awareness training and good intentions. “Diversity is a lot more complex,” said Mr. Tapia.

One reason that programs don’t work: Some training methods shame participants for feeling biases that are biologically innate, according to the Korn Ferry report. “Almost everyone shows a preference, explicit or otherwise, for someone who looks like them and has a similar background,” it said. “Unconscious-bias training is a good step, but if all it does is label people as racist, experts say, it’s being executed poorly.”

“To have a chance at sustainable success,” said Ms. Polonskaia. “DEI efforts need to be structural in nature. That involves multiple steps, including retooling job roles and requirements so they’re accessible to more people, continuously building teams whose members have diverse backgrounds, and holding managers accountable for finding and developing talent from underrepresented groups. Running unconscious-bias training is easy, but transformations aren’t.”

The Korn Ferry report also explains that it’s also important that DEI initiatives encompass all levels of an organization. Flo Falayi, a Korn Ferry associate client partner in leadership development, recently helped one client open up their narrowly focused programming, which targeted just a few segments of the employee population, to incorporate everyone. “You have to be intentional with these programs for them to have a chance of succeeding,” Ms. Falayi said.

DEI-focused leaders also need to continually make the business case for diversity and inclusion, according to the Korn Ferry report. The firm notes that too often, advocates rely on the argument that DEI is the so-called right thing to do—when plenty of research shows that diverse, inclusive organizations outshine their less inclusive peers in terms of attracting talent, retaining it, and making money. “Businesses make decisions based on their currency, which is profit,” Mr. Tapia said. “You have to position a DEI effort as an enabler.”

Related: Navigating the Road to Diversity

Contributed by Scott A. Scanlon, Editor-in-Chief; and Dale M. Zupsansky, Managing Editor – Hunt Scanlon Media

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