In recent years, diversity, equity, and inclusion (DEI) have been at the forefront of corporate strategy—widely hailed as essential for fostering a fair and socially responsible workplace. However, the journey has been more complex than many advocates hoped.
Enterprise leaders have reached a critical juncture. They must reassess and recalibrate their DEI efforts. This presents an opportunity to redefine and reinforce their commitment to these essential values, ensuring they remain integral to their corporate strategy.
As quickly as organizations embraced DEI, they now quietly quit these initiatives
Initially, corporations widely embraced DEI efforts as a direct response to social justice movements and growing demands for a more equitable workplace. Companies rushed to implement programs to increase hiring diversity, promote inclusive cultures, and ensure equitable treatment of employees. These initiatives were considered both ethically sound and vital for business success, as diverse teams were proven to be more innovative and effective at problem-solving.
However, the DEI landscape has shifted significantly in recent years. These initiatives have faced intense scrutiny—reducing their visibility within organizations or, in some cases, leading to their elimination. Propelled by the US Supreme Court’s decision to end affirmative action, state bans on DEI practices, and a slew of anti-DEI legislation, these programs faced increased scrutiny. In 2023, major tech companies, including Google, Zoom, Snap, Lyft, and Meta, scaled back their DEI efforts.
Our 2024 HFS Pulse further underscores this trend, highlighting the low priority DEI holds among macroeconomic factors impacting organizational goals (see Exhibit 1).
Exhibit 1: Diversity and inclusion are a low priority among top-ranked macro-environmental factors impacting organizational goals
Sample: N=605
Source: HFS Research, 2024
The initial DEI fervor evaporated, revealing a shortfall in commitment and a landscape riddled with performative gestures
The many reasons DEI initiatives have dwindled since 2021 include:
- Shallow commitment: Support for DEI often proved superficial, more about enhancing corporate images than enacting deep-seated change. Social washing took reign (presenting a façade of social responsibility without tangible actions), with efforts frequently rolled out with much fanfare but little strategic underpinning. These actions included public statements of support, one-off training sessions, and creating diversity committees that lacked real power or resources.
- Decision paralysis: Uncomfortable discussions paralyzed decision-making. For instance, a notable North American university quietly ceased its DEI program activities more than a year ago. The cochair of a faculty DEI program explained: “It felt uncomfortable a lot of the time. Even simple initiatives like promoting diverse guest speakers led to weeks of conversation about appropriately identifying speakers without making assumptions about someone’s identity.”
- Siloed initiatives: DEI efforts were often siloed and treated as standalone projects or groups rather than integral parts of every business function. “Our DEI efforts became increasingly confined to one team due to lack of priority within the organization; we’ve ended up with a fragmented approach that doesn’t engage everyone,” noted a DEI specialist at a North American academic research organization. The isolation of these initiatives diluted their potential impact, rendering DEI a peripheral concern rather than a cornerstone of organizational practice.
- Lack of metrics and benchmarks: Many DEI efforts lacked clear goals or milestones linked to business outcomes, leading to a lack of direction and an inability to demonstrate the promised tangible outcomes or business impacts.
Consequently, when economic pressures mounted or political winds shifted, DEI programs were perceived as nonessential and among the first to be eliminated.
Today, DEI finds itself at a crossroads—but not a death sentence
DEI stands at a pivotal intersection today—not a death sentence but in urgent need of a paradigm shift. It’s time for DEI to advance from the periphery to the core of organizational strategy, addressing deeper systemic issues rather than merely checking boxes. Here are ways to do that:
- Integrate DEI into the organizational fabric: DEI must evolve from a siloed function to an integrated, cross-functional imperative. This involves embedding DEI principles into every aspect of business operations—from talent management and product development to marketing and finance. Essentially, this means you don’t need to label it DEI or any other acronym but rather a pursuit to embed these principles into your practices. In the university’s case, the cochair noted, “We don’t use DEI language for any of these initiatives. It’s fallen under the terms of mentoring and belonging.”
- Leverage data and insights: Data and insights drive effective DEI strategies. Enterprise leaders should regularly collect and analyze data to understand the initiatives’ current state and track their effectiveness. For example, the EY People Experience Platform supports dissecting inequalities through active and passive listening techniques such as surveys and digital behavior analysis. The platform’s cohort analysis can identify groups with lower engagement or higher turnover and suggest targeted interventions refined by human expertise. By linking these insights to business outcomes, such as productivity, retention, and revenue growth, the platform makes a compelling case for DEI initiatives.
- Broaden the definition: Organizations must expand how they define diversity to include neurodiversity, age, socioeconomic background, and physical abilities. This means broadening the talent landscape and integrating a more far-reaching definition of diversity into your practices, products, and solutions. For instance, IBM recognizes the necessity of fostering diverse teams to manage and govern AI, moving away from traditionally homogenous groups and emphasizing the importance of different perspectives. In one case, they are focused on reducing educational inequities by leveraging AI, with its governance built through multidisciplinary and diverse teams, including neurodiverse individuals.
- Cultivate inclusive leadership at every level of the organization: Insightful leaders understand diverse perspectives, foster psychological safety, and support employee growth. Organizations must prioritize the development of these leaders through personalized coaching and leveraging technologies such as AI. These tools can help cultivate inclusive leadership skills at scale, creating a more connected and less heterogeneous leadership ecosystem.
Ultimately, cosmetic changes and rebranding efforts won’t bring about meaningful change, and inequities will not vanish overnight. Organizations must address the root-cause issues that necessitate DEI efforts to create a lasting impact. This involves tackling systemic inequities, unconscious biases, and historical injustices in the workplace. Whether through technology or structural changes, companies must strive to create environments where diversity, equity, and inclusion are not just aspirations but integral and valuable aspects of their identity.
The Bottom Line: DEI has an opportunity for rebirth and evolution—enterprise leaders must seize this moment to make genuine inclusion a core business strategy.
The next phase of DEI will see the evolution of traditional roles and acronyms, but the underlying values and their impact on business success will only grow stronger. By seamlessly integrating DEI into every aspect of the organization and focusing on inclusive leadership and communities, companies can navigate the changing landscape and ensure DEI—and its many benefits—survives and thrives.
