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Values Proposition

Diversity, equity and inclusion: Incremental reform or systemic change?

For many organizations, a direct DEI connection to their mission has not been made by leadership whose inattentiveness or nonreceptivity cascades downwards into the culture.



Unresolved debates about the past frame choices about who owns the future. America has arrived, once again, at another momentous inflection point to try and resolve some of the most contentious issues the nation has faced and largely failed to resolve — the narrative of American history and culture, the persistence of systemic racism, and continuing debates over women’s empowerment, personal freedom and sexual orientation.

The ability to reconcile these significant challenges into a workable and equitable societal consensus will require many additional decades, but many institutions and individuals are implementing partial solutions. Among the most prominent are initiatives to advance diversity, equity and inclusion (DEI) programs. Diversity is expressed through a variety of identities such as age, race, religion, sexual orientation and disability. Equity aims to provide everyone with access to opportunities and recognizes that advantages and barriers exist, while making commitments to address this imbalance. Inclusion results in individuals (and groups) with different identities feeling respected, accepted and valued.

For many organizations, a direct DEI connection to their mission has not been made by leadership whose inattentiveness or nonreceptivity cascades downwards into the culture.

In recent years, DEI has emerged as a distinctive field in governance and public policy that provides a key set of performance measures for economic and social progress. While originally separate from environmental sustainability, they now share common values to applying human capital towards resolving society’s most vexing inter-generational challenges, including access to health care, educational opportunities, and protection from toxic exposures and climate change.

Evaluating DEI practices and performance

Author Pamela Newkirk, in her comprehensive analysis “Diversity, Inc.,” has identified a core set of best practices within and beyond the workplace. They include: expanding recruitment through international outreach; identifying and removing hiring and promotion barriers; strengthening professional development opportunities; providing fair and equitable compensation; building an inclusive climate and culture; and applying business practices and accountability.

Many companies already have grasped the significance of integrating DEI within their business strategies, governance, employee relations, operations, customer relations and engagement with external stakeholders. The range of their programs and initiatives vary considerably, a reflection of their market sectors but also of variable leadership commitments and inconsistent performance metrics. Leaders (as measured by Forbes and other surveys) currently include BlackRock, Duke University, HP, L’Oreal, Novartis, SAP and a variety of banking and healthcare companies.

Even more striking than examples of corporate DEI leadership is information from lagging and failing companies and business sectors. The Wall Street Journal reviewed more than 160 annual reports filed by S&P companies for 2020. Only a third provided diversity disclosures. More specifically, GE reported that approximately 76 percent of its U.S. workforce was white as was 81 percent of its leadership. PwC declared that 60 percent of its employees were white. Sectors that are particular DEI laggards include academia, environmental organizations, fashion, journalism, museums, professional football and technology companies.

Why has so little progress been achieved despite decades of implementing civil rights legislation, philanthropic activities, and more than $20 billion spent each year on DEI programs, conferences, consultants, surveys and training sessions?

For many organizations, a direct DEI connection to their mission has not been made by leadership whose inattentiveness or nonreceptivity cascades downwards into the culture. Workforce composition may be insufficiently diverse to respond to DEI dynamics, thus limiting bottom-up pressures upon management (in contrast to much stronger employee engagement in environmental sustainability). Across many institutions, the motivation for maintaining even modest DEI activities stems from a desire to avoid legal risk from potential discrimination cases, or to communicate that “we care” about the issue.

Beyond the issue of leaders and laggards remains the question of whether DEI, as presently designed and implemented, significantly advances racial and social justice. Dennis Kennedy, founder and CEO of the National Diversity Council, argues that the current focus of many DEI initiatives is unlikely to yield comprehensive commitments to social justice. His argument is that:

  • DEI as presently constituted does not sufficiently explore the roots and explanations of systemic and institutional racism;
  • bias training, diversity consulting and other initiatives were purposely implemented to avoid legal risk and public scrutiny and not to achieve social change; and
  • DEI was introduced within public, private and non-profit institutions that provided limited authority, resources and power to effectuate change.

Expanding the boundaries

Through the political process, the marketplace and social dynamics, several factors have converged to motivate greater awareness and scope of DEI activities going forward. They include activities of:

Government. At the national level, the Biden administration has expanded the scope of DEI initiatives:

  • The Securities and Exchange Commission (SEC) announced on February 24 that it will review public companies’ disclosure requirements on race and gender diversity and strengthen guidance on boardroom diversity. The acting chair noted that the results of the SEC’s voluntary program for companies to submit diversity self-assessments were “disappointing.” This follows an August 2020 SEC mandate that requires companies to begin disclosing information about their “human capital resources” that includes employee turnover rates and training programs. Companies already privately report diversity data to the U.S. Equal Employment Opportunity Commission and are under increasing pressure to make such information public.
  • The White House has announced that disadvantaged communities will receive 40 percent of overall benefits from public investments in clean energy and infrastructure.
  • The U.S. Environmental Protection Agency is seeking added funding for environmental justice initiatives to reduce the high exposure to unsafe drinking water supplies, toxic air pollution and hazardous waste from industrial facilities to low income communities and indigenous peoples.

Investor community. Some trading houses and institutional investors are advocating that companies provide better information on workforce diversity, and they’re beginning to include such data in their assessments and rankings. Prominent examples include:

  • On December 1, Nasdaq filed a proposal with the SEC to implement new rules that would require all listed companies to publicly disclose consistent, transparent data that measure board gender and racial diversity. It would require companies to have two diverse directors (including a female or one who self-identifies as LGBTQ+), or explain why this rule is not attainable.
  • On December 20, BlackRock, the world’s largest asset management firm, announced that, beginning in 2021, it will seek expanded ethnic and gender diversity data for company boards and workforces. BlackRock stated that it will vote against company directors that fail to adequately respond to this expectation. State Street Global Advisors and Goldman Sachs also announced diversity measures for their clients.

Talent recruitment and retention. Millennials and Generation Z employees and job seekers are increasingly utilizing Glassdoor (a leading social media platform about jobs and companies) and LinkedIn to evaluate current and prospective employers on their DEI performance. In September 2020, a Glassdoor survey reported that 76 percent of employees and those looking for jobs said a diverse workforce was important to their evaluation of companies and employment offers. Nearly half of Black and Hispanic workers and job seekers said they had quit a company after witnessing or experiencing discrimination at the work place.

The bigger questions

By 2045, white Americans are projected to comprise less than 50 percent of the population, and the labor force will become more diverse and older than at any other time in the nation’s history. These anticipated facts alone have intensified the “fear of losing advantage” for an already existing movement of hard core white nationalists and others sympathetic to their cause.

In its present form, DEI represents a set of modest efforts for legal and institutional reforms but nothing close to a mass movement capable of resolving the widening crevices of American society and politics. Some major unresolved challenges for DEI proponents and all citizens and civil society institutions include:

  • Will leaders across the spectrum of American institutions collaborate with the commitment, urgency and scale necessary to preserve the American democratic experiment in the coming decades?
  • Do companies operating in America believe that a dysfunctional democracy and growing societal disharmony can provide clear and consistent rules necessary for their economic success? Can they become engines of egalitarianism and more equitable social mobility rather than of inequality?
  • Can public policy develop remedies to systemic racism that have historically impeded access to educational opportunity, environmental protection, health care, unbiased law enforcement, living wages and resource allocations for lower-income populations?
  • Can white Americans be reassured that their constitutional freedoms will be preserved even as their relative size and influence diminishes in a growing multiracial, multigender society?

Absent an ability to act with confidence and sustained urgency to achieve demonstrable progress in the next few decades, America will become increasingly bewildered about its own purpose and values. It will begin to hear, once again, the “fire bell in the night” that awakened and terrorized Thomas Jefferson early in the 19th century as he feared for the preservation of the Union.

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