In a recent post I postulated that DEI (Diversity, Equity, and Inclusion) helps ensure good management. In the wake of the Trump administration excising all DEI initiatives from the federal government—and many big corporations, including Amazon, Target, and Walmart, following suit—a bigger question is raised. In an increasingly anti-DEI environment, is DEI good or bad for business overall?
Why Some Believe DEI is Good for Business
DEI is intended to create a more diverse workplace and more productive business environment. When implemented well, that makes DEI good for business.
One notable proponent of DEI, investor Mark Cuban, believes that “having a workforce that is diverse and representative of your stakeholders is good for business.” That is, to be successful, your employee base needs to look like your customer base. Having an all-White male management team, as an example, would likely result in bad decisions if you’re marketing a product to Black females. You need diversity to best understand your customers and meet their needs.
As I detailed in my previous article, bringing more diversity into the workplace demonstrably improves decision making, increases productivity, and leads to greater marketplace success. More and different viewpoints make any team stronger, and that’s one of the primary benefits of DEI. By enabling better decision making and creating more attractive products, DEI is definitely good for business.
It’s also possible that a company with visible DEI efforts will attract customers who themselves are strongly supportive of DEI. An increasing number of politically active customers like to throw their business to like-minded companies; if your company is pro-DEI, you’re likely to attract a pro-DEI customer base.
Why Some Believe DEI is Bad for Business
DEI is not universally supported, however. Many individuals believe that DEI is a form of reverse racism, one that discriminates against traditional groups, White males in particular. Many of these critics believe in inclusivity but not having it forced upon them. Others believe in the principles of diversity and inclusion but feel that many DEI programs are ill-conceived and poorly implemented. Still others dislike DEI because it threatens their traditional White male privilege.
Some critics say that companies, In trying to embrace diversity and inclusivity, have gone overboard, promoting employees from traditionally disadvantaged groups over equally or better qualified White male employees. Influential billionaire Elon Musk, for example, has stated his belief that DEI is a “ridiculous overcompensation regarding racism.”
Others claim that focusing on DEI can distract a company from its core business. They also fear that taking DEI into account when hiring can result in less-qualified individuals entering the workforce.
Whatever the criticisms, many corporations that enacted DEI programs in recent years have pulled back on those initiatives in the wake of the Trump administration’s anti-DEI initiatives. Some are doing so out of fear of government reprisals; the Trump administration has threatened to prosecute both for- and non-profit organizations for their DEI activities. Others are pulling back because their previous support of DEI was either reluctant or ill-constructed. Still others are afraid that continuing with DEI will turn off a large enough number of customers to materially affect their revenues and profits.
To that last point, it is an unfortunate truth that some customers are unsupportive of DEI and may boycott companies with visible DEI policies. In today’s highly politicized environment, customers of all persuasions, often encouraged by likeminded individuals and groups on social media, are likely to shift their purchasing away from companies that do not share their political views. Aggressively anti-DEI customers might take their business elsewhere if your company is too visibly DEI-friendly.
How big might this negative impact be? It’s difficult at this point in time to measure how much business a given company may stand to lose due to DEI-related controversary, but there are some concrete examples, the biggest of which happened almost two years ago.
In April of 2023, Budweiser hired transgender influencer Dylan Mulvaney to promote its Bud Lite brand on social media. The backlash was immediate and massive, with many conservative figures calling for a boycott of the brand. As a result, Bud Light sales decreased by 28% over the next three months compared to historical trends. That was enough of a decrease to force Budweiser to cut its ties with the trans influencer and implement more traditionally White male-oriented advertising.
That was a definite and significant example of customers reacting negatively to a company’s well-intended DEI efforts. If it happened once, it can happen again.
What’s the Reality—Is DEI Good or Bad for Business?
DEI programs, when properly implemented, can create a more welcoming workplace that results in increased productivity and effectiveness. These benefits can be mitigated, however, if a large enough subset of your customer base is vocally predisposed against the concept of DEI. If DEI is too divisive among your customers, supporting DEI may cause your business to suffer.
That said, pulling back on DEI can have its own negative results. The National Action Network (NAN), for example, is urging its supporters to boycott companies that abandon their commitments to DEI. NAN founder and president Rev. Al Sharpton issued the following statement:
“Companies that think they can renege on their promises to do better, bring in new voices, or abandon us will see the impact of Black buying power. That’s why in the next 90 days we will begin to send a message that we will not go back, and we will bring this issue to the topline by going after their bottom line.”
Here’s another example. Target, after announcing an end to their DEI programs (to stay “in step with the evolving external landscape“), has already seen organizers urge shoppers to boycott their stores. The company has also been disinvited from the annual Pride parade and festival in their corporate hometown of Minneapolis. The company’s business is likely to suffer to some degree, especially among those groups supportive of DEI.
For these reasons, and because they strongly believe in the concept of DEI, many companies continue to actively support their DEI initiatives. Apple, Costco, and Delta are just a few of the many companies sticking to their DEI guns, even while others (including Amazon, Ford, Harley-Davidson, Lowe’s, Molson Coors, and Walmart) are abandoning theirs.
What Should Your Company Do?
So, given today’s highly polarized political environment, should your company maintain or scale back its DEI efforts? It’s a tough decision—and there may not be a win-win position available. No matter which side of the issue you come down on, you’re likely to be pilloried by whichever group you go against.
It may simply come down to listening to your company’s moral and ethical compass. If you believe that DEI is a good thing and truly benefits your company culture, customers, and business, then you should continue to embrace DEI, recognizing the possible marketplace and legal risks that may ensue. If you believe in it, stick to your guns.
However, if you never really embraced the principles behind DEI or if you truly fear governmental action or a customer backlash, then now is the time to pull back on DEI initiatives. It may not be worth the risk, especially if you weren’t a big believer in the first place.
Personally, I hate to see any business or individual cave to the demands of a reactionary government or public. However, I understand that a business must behave in what it believes to be its own best interests. I’m enough of an idealist, though, to believe that DEI is a force of good that should be defended. Whether it will be or not is something we’ll all find out in the coming months and years.
