Jen Anthony of FleishmanHillard HighRoad and Pride at Work says companies that shut down active DEI work are demonstrating to women, Indigenous, racialized, 2SLGBTQ+ and disabled employees that they’re no longer valuable.Amy Romer
As the business sector navigates an uncertain economy, organizations across the country are no doubt strategizing how budgets can be tightened.
While diversity, equity and inclusion (DEI) initiatives might seem like an easy target for cuts, employers may not be prepared for the short- and long-term consequences, says Jennifer Anthony.
“If companies see it as a quick and easy solution, they’re taking a big risk,” says Anthony, senior vice-president at FleishmanHillard HighRoad and chair of the HR and governance committee at Pride at Work Canada, a non-profit that works with employers to celebrate all employees regardless of gender expression, gender identity and sexual orientation.
Companies that shut down active DEI work are demonstrating to women, Indigenous, racialized, 2SLGBTQ+ and disabled employees that they’re no longer valuable, says Anthony. De-prioritizing diversity can alter perceptions of the workplace and its brand, leading to employees losing interest in their workplaces.
“[Employees] start to look at their leaders and go, ‘Are you sure? What does that mean about what you think about my role here?’” says Anthony.
“When employees don’t see themselves reflected, when they don’t see themselves as being important, they start to look around for new opportunities.”
Cuts are already happening
Manpreet Dhillon is the founder of DEI consulting firm Veza Global. She says that while many organizations have put substantial resources toward DEI initiatives in recent years and seen tangible benefits, staff and programs in the space are shrinking. “Lately, we are starting to see budget cuts,” she says.
“A lot of [DEI] programs pave the way for stronger organizational culture, good business practices,” Dhillon says. “Leadership knows that this is important, but they have so many other pressing issues.”
This observation is reflected in broader findings by U.S.-based workforce intelligence company Revelio Labs. In a 2022 study, Revelio found that recent waves of layoffs in the Big Tech disproportionately impacted DEI roles compared to other roles. At the same time, many major companies also saw steep declines in the diversity of their new hires.
Dr. Jing Wang, an associate professor of human resource management at York University, says that employers will often look for areas over which they have full purview when trimming budgets.
“When seeking to cut costs, employers generally look for expenses that are under their control,” she says. Unlike other areas of the business that may be affected by external factors such as consumer demand, supply chain issues or the economy, “DEI programs are completely controlled by employers.”
Dr. Wang adds that during economic downturns, most companies lay off employees based on the principle of “last in, first out.”
“Many fresh hires are the result of DEI recruitment efforts in recent years,” she says. “Staff from diverse backgrounds will thus worry about being laid off and losing their job security.”
While an exodus of young talent could result in short-term staffing challenges, the long-term consequences could be even worse, says Anthony. Companies may run the risk of earning reputations as undesirable employers, so when they’re ready to hire or restart DEI work, they may lack the credibility that is critical for attracting top talent.
Dr. Barnini Bhattacharyya, assistant professor of organizational behaviour at the Ivey School of Business, says that slashing DEI now can stunt an organization’s hard-won gains.
“Any sort of progress you may have made in the DEI space might also come into question,” says Dr. Bhattacharyya. “If you don’t have that pipeline going or if it’s stopped for a while, you really lose that momentum.”
At an individual level, slashing DEI staff and programming can negatively impact employees of diverse backgrounds.
“Canada is a deeply multicultural country,” says Dr. Bhattacharyya. “Are you creating workforces that look like the populations that you’re in… and creating equal opportunities?”
Indeed, the Revelio Labs study found that the presence of DEI teams at an organization boosts employee morale. Companies with DEI teams experienced higher levels of employee satisfaction with their company’s culture and values than those without DEI teams.
How companies can adapt in a recession
When making tough decisions around budget cuts, Dr. Wang says businesses need to remember that DEI initiatives can be instrumental to success.
“The same advantages that a diverse workforce ordinarily brings to the company can also help the company when it goes through difficult times,” she says. “A diverse workforce will ensure the company has better decision-making, greater innovation, engaged employees and improved profitability.”
Dr. Wang points to a study conducted by research and management consultancy firm Great Place to Work. “They found that [companies] with highly diverse workforces and inclusive cultures not only thrived after the 2008 Great Recession, but also during the recession,” she says.
If a company does come to the point where DEI cuts must be made, Dr. Wang says that they should retain their core values. When laying off staff or shuttering programs, companies should “adopt the DEI principle of being fair and transparent when doing so.”
Anthony notes that diversity, equity, and inclusion metrics should still be tracked even if a program is discontinued.
“[Organizations] should continue to measure [DEI] within performance indicators,” they say. That way, company leadership “won’t lose sight of the fact that this is needed and necessary, and it keeps it top of mind for everyone.”
Dr. Wang says that for any organization, “irrespective of whether it is operating in good or bad times,” the key priority should be its employees.
“Fostering an inclusive workplace culture benefits companies in the long run,” she says.
Interested in more perspectives about women in the workplace? Find all stories on The Globe Women’s Collective hub here, and subscribe to the new Women and Work newsletter here. Have feedback? Email us at GWC@globeandmail.com.