Walt Disney World is just one of the latest companies to put the brakes on its Diversity, Equity, and Inclusion efforts amid a tumultuous political environment.
The recent U.S. Supreme Court Affirmative Action decision has led some other corporations to pause their DEI efforts. This is a continuation of a trend of companies slowing their DEI work in the last few years.
After the racial unrest in 2020, there was a surge of investment in corporate diversity efforts. A 2023 LinkedIn Study showed that “Chief Diversity Officers” was the fastest-growing title in the C-Suite in the years after the summer of racial unrest.
The surge seems to be short-lived; studies show cuts to DEI roles outpaced cuts in other departments in recent layoffs, and legislators in states like Florida and Texas have begun to target DEI programming in Higher Education and beyond.
The tumultuous political environment is not the only reason corporations are pausing their DEI efforts. As the co-founder of a DEI consulting firm, I often hear from leaders who report they are nervous about making a mistake in their DEI efforts. So, instead of risking error, their fear leads them to freeze and stall their companies’ DEI efforts.
Yet, instead of giving in to political pressure and fear, company leaders need to learn how to continue their DEI efforts; their company will be stronger for it. That is because the systemic challenges that DEI programs aim to address are still here. And the effect of toxic, discriminatory workplace cultures is not only bad for the health of individuals but bad for the health of the organization.
A recent study from the National Bureau of Economic Research shows persistent racial discrimination in hiring by large employers in the U.S. Lean In’s most recent Women in the Workplace report indicates gaps in leadership and promotion for women and people of color persist. A 2023 report showed that the pay gap persists and worsens for women as they become more senior.
Discrimination like this is not simply unfortunate and unjust. Discrimination negatively affects the health and well-being of people experiencing discrimination. Discrimination can cause a trauma response and has been shown to take years off of people’s life expectancy. Companies have a duty to eliminate practices that are harming people.
Further, customers and employees expect employers to do something about discrimination. A recent study showed that 8 out of 10 employees are willing to quit workplaces that are discriminatory. Research shows that 7 out of 10 people expect CEOs to address discrimination.
A recent McKinsey & Co. report shows that diverse teams outperform less diverse teams. Diversity alone is not enough; diverse teams outperform less diverse teams when diverse teams are more psychologically safe and team practices are more equitable and inclusive. Team practices do not become more psychologically safe, equitable, and inclusive on their own. Organizations need to do intentional work, like the work they do through DEI efforts.
Leader behavior influences whether a team environment is inclusive or exclusionary. Research shows that leaders who use coercion, ostracization, and fear to dominate and control their teams foster exclusionary environments. Leaders who use their power to advance equity, act as an ally, and champion their team fosters inclusive environments.
Done well, DEI efforts help organizations change their practices to stop discrimination and subordination of marginalized groups. Moving away from practices of domination and subordination changes how power moves in the organization, moving away from the triangle of top-down hierarchy and moving towards the circle of shared power.
Operating from this circle requires leaders to operate in new ways that challenge their notions of power and control. Leading from the edge of the circle calls on leaders to share power, be vulnerable, demonstrate care, and be accountable for the team environment. Luckily, these ways of leading are shown to strengthen the performance of their companies.
Teams perform well when power is distributed on teams that are diverse and team members value each other’s contributions. A growing body of research shows that shared leadership enhances team effectiveness.
Research suggests that employees who work for vulnerable, authentic leaders – leaders who act in alignment with their stated values, who are vulnerable about their challenges, and who ask for feedback on interpersonal relationships perform better, are more creative, and are more committed to their companies and organizations.
Leaders who demonstrate helping behaviors are more likely to have teams that thrive at work. Leaders who use resonate leadership, which focuses on empathy and care, and encourage relationship building at work create more compassionate workplaces, which research has shown leads to less burnout and turnover in the workplace and improved organizational performance.
Humble leaders, who take accountability for their mistakes are more likely to foster psychological safety and accountability from team members across their teams. Using restorative practices, including rituals for regular connection and relationship building, to address missteps and mistakes that cause harm has been shown to improve workplace cultures.
The research overwhelmingly demonstrates that leading from the edge of the circle in these ways improves companies.
To be sure, some may say that DEI efforts are divisive and distract teams from getting things done but what the truth reveals is it is discrimination that is divisive and distracting. DEI addresses discrimination and helps diverse teams learn how to perform well together.
In the U.S., the future workforce will become more diverse over time. Leaders who use their DEI efforts to reimagine team practices and learn to lead from the edge of the circle will likely create companies that are built for demographic change.
Eliminating discrimination at work isn’t just good for companies’ bottom line, it is good for public health and well-being. Leaders must choose to get out of DEI paralysis and lead from the edge of the circle. Their businesses and our communities depend on it.