With companies pulling programmes and altering language partly in response to Donald Trump’s MAGA agenda, diversity, equity and inclusion schemes are having to evolve rapidly. Daniel Snell offers pointers on the future direction of DEI and why it remains an important driver of business success – despite the backlash.
The DEI rollback dominating recent headlines marks a public shift in corporate priorities. Although it coincides with President Trump’s executive order to drop DEI policies, there has been a deprioritisation of DEI among investors and executives for some time. Data from Alphasense backs this up, highlighting a significant, steady drop from 2021 to 2024 in mentions of DEI during investor calls, well before the current furore.
Why did senior leaders stop talking about DEI?
There are two central reasons why DEI stopped being a priority for many C-suite leaders. Firstly, they couldn’t see a direct connection between the efforts and resources placed into DEI and greater business productivity, with some leaders even perceiving DEI as a barrier to performance.
Secondly, businesses faced greater headwinds in a climate of economic uncertainty, with shifting investor expectations and intensified competition all-consuming their limited attention.
With UK business productivity and growth remaining stagnant since the global financial crisis of 2008, leaders looked elsewhere for productivity answers and began talking less about DEI.
DEI – a compelling idea but a flawed execution
There are a range of reasons why DEI evolved to become such a central focus in UK businesses, including shifts in demographics, Brexit, US influence, market opportunities, work and social expectations, increased globalisation, and a tight job market.
At the heart of the DEI concept, businesses perceived a “diversity dividend” in their ability to unlock new insights and opportunities through diverse teams. The idea was that people with different knowledge and cultural experiences could connect better with new customer groups and markets, driving better insights and decision-making.
A politically charged dilemma
However, although DEI may have started out as a narrative about performance and talent, it was diverted by wider societal conversations, which made the politics of it extremely hard to navigate for many leaders.
Perhaps it has been these wider societal narratives that have made DEI an easy target for political pushback, fuelling the idea that it is a costly distraction for companies rather than a strategic advantage.
Business leaders and HR professionals face the complicated challenge of navigating a climate where either doubling down on or stepping away from DEI commitments and quotas has become a bold political statement. So, how do companies move beyond performative initiatives in a way that doesn’t alienate employees or stakeholders, or crucially, miss out on the true value that a diverse workforce, in a diverse world, can contribute?
Evolving DEI to focus on performance
Building workforces of talent with diverse capabilities, skills, knowledge and experience, who have a deep understanding of different customer groups, should be viewed as a key component of a company’s talent and performance strategy, rather than a social or moral obligation.
We have seen time and time again, in almost every context and market, that when done right, and placed into the growth agenda, well-managed diverse teams that reflect their target markets deliver obvious business advantages, bringing a wider range of perspectives and a better understanding of different market needs and customer bases. The oft-cited research from McKinsey has demonstrated the business case for diverse teams, showing that gender-inclusive and ethnically diverse companies are 39% more likely to financially outperform their peers. Similarly, a Boston Consulting Group study revealed that companies with more diverse management teams have 19% higher revenues due to increased innovation.
Businesses need to make their culture and organisational behaviour work for, and not against, its productivity”
The key is moving beyond hiring for diversity’s sake, and instead unlocking what makes diverse teams valuable – their different perspectives, knowledge, skills, and experiences that can deliver on a company’s unique strategy.
Unlocking the diversity dividend
DEI works best when it unlocks the unique contributions of each person in an organisation to enhance overall business performance. Supported by leaders who know how to, and are skilled at, creating environments where everyone feels that their contributions are wanted, welcomed and valued.
For an organisation to unlock everyone’s contributions, it needs to:
- Ensure that the whole organisation, including all of its activities, focus and efforts are aligned and in service to the successful execution of the business strategy.
- Create an inclusive environment in which every employee, at every level, understands how to contribute to the execution of this business strategy.
- Working towards this requires that your managers and leaders have the tools to create a high-performance environment that unlocks their people’s performance-driving contributions.
When this organisational alignment is put into action, DEI moves from a passive, bolt-on, box-ticking exercise, to a tangible driver of growth.
Doing nothing is not a growth strategy
If your organisation has or is contemplating dropping its diversity targets or changing the company values, it had better be clear on what they’re replacing them with. Doing nothing and having a gaping void where there used to be a DEI culture agenda isn’t going to deliver greater results either.
Although cost-cutting can be a necessary aspect of business, sustained business growth cannot come from cost-cutting alone. Only by doing the hard and complex work of changing how businesses operate and how culture supports the business strategy can leaders unlock the long-term growth they strive for. Businesses need to make their culture and organisational behaviour work for, and not against, their productivity.
Ultimately, DEI efforts have failed in many organisations because they felt as though they were implemented as a one-size-fits-all compliance measure, rather than a tailored, contextually relevant strategic tool. When done right, however, the result is a meritocratic culture in which diverse perspectives fuel innovation, drive competitive advantage, and deliver measurable impact.
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