Pushback and cuts prompt diversity strategy refresh

Initiatives on diversity, equity and inclusion have surged in popularity in the past few years, inspired in part by the Black Lives Matter movement. But, more recently, a political backlash and corporate belt-tightening, particularly in the US, have prompted a reassessment. Some companies already have cut their diversity budgets or teams.

As a result, UK consultants specialising in advising on DEI policy are also feeling some pressure. But many report a more nuanced landscape, with demand changing rather than disappearing, and clients requesting more sophisticated engagement with the subject.

“We’re seeing a reframing,” says Verity Creedy, vice-president for product at leadership consultancy DDI. Ringfenced diversity initiatives — such as a dedicated DEI department or budget — are becoming less popular, she explains. Instead, at least for DDI’s clients, “it’s becoming purposely woven into their everyday leadership responsibilities”.

For example, training staff in how to coach or delegate is done “through the lens of inclusion”, to cover how to ensure staff members from diverse groups are included.

Last year, DDI warned that many companies were “on the brink of a serious backslide on DEI progress”. In a survey published in 2023, it estimated the number of companies with no diversity programmes had increased from 15 to 20 per cent since 2020. And the number of leaders who endorsed their company’s efforts in this area had fallen by 18 per cent in that period.

Lucy Brown, a senior DEI consultant at human resources consultancy Mercer in the UK, says she has heard increased talk of “DEI fatigue”. She points out, however, that in Mercer’s recent talent survey, diversity and inclusion was ranked third among the priorities of global organisations. “That’s the highest it’s ever been,” says Brown — noting that increased regulatory focus and greater competition for talent is driving interest.

But a gap could be emerging between “more mature companies . . . pushing the envelope” with holistic policies, and those that are interested only in meeting statutory requirements, Brown says.

“As consultants, we need to work even harder to reshape perceptions, to show that [DEI] needs to be [part of] business as usual and not a tag-on,” she argues.

Sometimes companies . . . don’t seem super sincere, they’re transactional

In the US, consultant and Columbia University professor Peter Coleman says a political backlash has driven some organisations to cut investment into in-house diversity initiatives. While cutbacks like these sometimes increase demand for outsourced advice, he says: “I haven’t seen the pivot to consulting.”

Coleman observes that the initiatives companies are scaling back are typically the attempts at quick fixes, such as unconscious bias training. These are “not necessarily bad but are insufficient to move the needle,” he says. The work consultants do, on the other hand, is often more demanding — requiring deeper analysis and strategising from the organisation.

Lily Zheng, an independent DEI consultant and author based in the US, who uses the pronoun they, says demand for their consulting services has not fluctuated at all.

A likely reason for this is that Zheng’s work treats diversity, equity and inclusion as a long term effort requiring investment and organisation-wide change — Zheng’s commissions run for two years or more, involving detailed assessments. “The companies that are astute enough to know they need something like that are not the companies that are going to be shuttering their DEI practices because of a tweet someone makes,” Zheng points out.

As for the wavering interest in DEI more broadly, Zheng suggests it reflects a “common” pattern in an industry “marked by very severe ebbs and flows as awareness of sexism, racism, transphobia fluctuates.” This is “enormously unhelpful for actually creating fairer organisations” and leads to companies engaging with the subject in only a “shallow, surface level way”.

Karyn Twaronite, global head of DEI at professional services firm EY agrees. “Consultants and the companies they’re working with should treat DEI as a multiyear business strategy . . . a business investment that requires long-term, authentic commitment,” she says. But she, too, is relatively optimistic. While a few companies have downsized their DEI efforts, survey data by legal consultancy Littler shows 57 per cent of employers have expanded their initiatives over the past year.

What is more, the need for consulting in this area is as profound as ever, Twaronite says. Given the complex political and economic pressures that tend to weigh more heavily on marginalised groups, she says “it is smart business for leaders to stand up, build and continuously evolve their DEI strategies so they are prepared to consistently foster a more inclusive environment”.

This also means it is premature to panic about the death of diversity and inclusion, argues Zheng, who believes there will always be good employers prepared to make the investment: “There are sometimes bad companies that practitioners don’t feel great about, they don’t seem super sincere, they’re transactional. Let them leave — there is always space for this work.”