A Straightforward Look at the Current Climate: DEI is Out, Diversity is In
DEI Implementation Completed. Prepare for Enhanced Diversity.
In recent weeks, Washington has seen an onslaught of executive orders and appointments, causing a ruckus on both the left and right. Some of these orders cozy up to Russia and distance us from our allies, while others dismantle climate progress and axe diversity, equity, and inclusion (DEI) policies.
The new administration is dead-set on erasing DEI programs and purging those who supported them, even if their only offense is attending a simple diversity training seminar. Federal agencies have even been ordered to investigate companies practicing "illegal DEI," with several media companies under scrutiny.
Conservative activists have brought the fight to the private sector. Robbie Starbuck roams the land, hunting down companies to target in his anti-DEI crusade. Major corporations like Tractor Supply, Harley-Davidson, Toyota, and even Walmart have caved to his pressure.
However, not all companies fold under this pressure. In a near-unanimous vote, Costco's board defended its DEI policies as essential to creativity, innovation, and customer satisfaction. The company even put the issue to a shareholder vote, and the DEI initiatives were upheld. Apple and John Deere followed suit.
A CEO of a large financial services firm shared his frustrations with me about Robbie Starbuck's antics. He was confident they would emerge intact, as creating an inclusive environment has long been part of the company's culture. Still, he was disheartened that they had to spend half a day of their board meeting on a distracting energy-sucker.
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Ten years ago, DEI seemed like a reasonable approach to expanding a company's talent pool. Five years ago, it turned into a superficial show of virtue-signaling after George Floyd's death. Today, it's a political distraction that just diverts leaders' attention.
But even as DEI crumbles, the underlying forces that drove it persist—and they're only getting stronger.
I always advise leaders to focus on the future rather than getting caught up in current headlines. And by "future," I mean how the world, their market, and their company will look in five to seven years. Companies that don't look to the future get blindsided by external forces. They get left behind.
Today, 53% of U.S. children are non-white. By 2045, America will be a majority-minority country. And no executive order can halt that demographic reality. Whether you like it or not, diversity is here to stay—we're just not going back to the Mad Men era.
Another reality is that companies are in a battle for talent, and their future success depends on their ability to attract, develop, and retain the best people, regardless of gender, race, or sexuality. Many regions and professions have record-low unemployment rates, meaning that if you want to hire someone, you'll likely have to poach them from someone else. If the person you want to recruit is a woman, and your company has a toxic masculinity problem, how likely is she to join you or stay with you?
This isn't about ideology or culture wars—it's about strategy. Companies that prioritize diversity as a core business imperative will outperform those that ignore it or treat it as expendable PR.
Ending Affirmative Action
Critics of affirmative action argue that organizations should be meritocracies. They say companies should hire and promote the best people regardless of identity.
I agree.
But a real meritocracy results in a diverse workforce. If your company's workforce, leadership team, and board don't reflect the nation's demographics, you're probably making decisions in recruiting, hiring, mentoring, promoting, networking, and even board selection that favor the majority. In essence, you don't have a meritocracy—you have an affirmative action program for white people.
DEI Damaged Itself
Quick-fix solutions after George Floyd's murder—such as setting up DEI offices, implementing implicit bias training, and hastily recruiting and promoting unqualified individuals—have done more harm than good. Such moves have made it easier for opponents to dismiss any female or racial minority executives in senior positions as incompetent "DEI hires."
However, Overtly unqualified "DEI hires" exist. But the attention they've garnered is telling. A senior exec at a major apparel company told me he was excited by recent changes, as DEI policies had given certain employees an unfair advantage, preventing a true meritocracy. He mentioned the name of a Black exec who had been recently let go, and I had to agree: the fired exec had been in over his head. But that observation ignored the raft of other white men at the company who were equally incompetent. The company's issue wasn't diversity—it was a lack of accountability and poor leadership overall. It's just easy to spot this when someone doesn't look like you.
Creating a True Meritocracy
To ensure genuine diversity and inclusion without getting caught up in the DEI battle, companies should focus relentlessly on a set of values that promote excellence, regardless of gender and race.
My teammates and I founded Jump Associates 27 years ago. Over that time, we've maintained a workforce that averaged 5% Black, 10% Hispanic, and 20% Asian. Our leadership team is 50% female. These numbers compete favorably with most other consulting firms. And we've never had a DEI program.
Our color- and gender-blind values stem from my background as the son of Indian immigrants. As a Hindu, I believe I am living one of many lives. In my past life, I might have been a Black woman or a Chinese farmer. Whatever identity I hold now is the external clothing I'm wearing this time around. I've been fortunate enough to surround myself with people who share the same ideal of seeing past people's identities to their character.
Achieving this hasn't been easy. For a company our size, we spend an inordinate amount of time and money on leadership development. But the payoff is worth it. When you develop leaders and a culture that look past illusions of external clothing, you get a workforce closer to representing the world at large.
That doesn't mean our work is done. We have plenty of work to do in other aspects of recruiting, particularly when it comes to economic diversity. My partners and I grew up middle-class, and we've been shocked by the wealth of our young teammates. Clearly, we need to expand our horizons when it comes to recruiting.
A Test of Leadership
DEI has become a political football and painful distraction. It might be tempting to simply roll back the gains that have been made. But pushing back on diversity is a losing strategy, as it overlooks the inevitable demographic shift.
Leaders should assess their talent strategies and ask themselves if they're attracting and retaining the best people who also represent society as a whole. They should also focus diversity on business outcomes, such as improved innovation and customer service, rather than treating it as a compliance box to be checked. And they should follow Costco's lead by demonstrating the tangible ways diversity improves performance and let stakeholders decide.
What's needed now is moral leadership: people who stand up for what's right, no matter the consequences. The actions of Jeff Bezos, Mark Zuckerberg, and the rest of the tech bros in the wake of Trump's election have been profiles in cowardice. Or maybe just opportunism. I have far greater admiration for conservative businesspeople like Dan Cathy of Chick-fil-A, who simply believe differently than I do and remain true to them.
- In 2045, diversity will still be a significant factor in companies' success as America will be a majority-minority country, and companies will need to attract, develop, and retain the best talent regardless of gender, race, or sexuality to remain competitive.
- The new administration's focus on erasing diversity, equity, and inclusion (DEI) programs and purging those who supported them has forced some companies, like Costco, to defend these policies as essential to creativity, innovation, and customer satisfaction.
- The battle for talent has become increasingly important, and companies that ignore diversity as a core business imperative may find themselves lagging behind their competitors, who focus on creating a true meritocracy, where excellence is prioritized, regardless of gender and race.
