The Billion Dollar Question No Company Should Ignore

Kelley Johnson is the Tech Founder and Chief Transformation Officer for KEIRUS. She is author of INFINITE: The Power of Love, a Bible study about diversity, equity and inclusion.

Too often, leaders plan and strategize based on what is right in front of them. It’s natural to focus on what we know best, and that’s typically what we can see, taste, touch, hear or feel in the present.

Balancing the current and future state of your business is no easy task. A fixation on the present may mean missing future opportunities. Conversely, a hyper-focus on the future can create immediate issues in profitability, production, and promotion of goods and services. DEI is one of those business and talent issues companies must weigh strategically, especially within the current climate.     

The surge in anti-DEI activism and the overturning of affirmative action at universities have created a million, perhaps billion, dollar conundrum for companies trying to decide what to do about their DEI initiatives.

Proponents of DEI believe it’s the right thing to do for both top- and bottom-line growth. After all, multiple independent studies have concluded that diverse and inclusive companies outperform their competitors.

Challengers say DEI programs impose beliefs, practices and policies that violate the rights of certain religious groups or create a disadvantage for straight White men.

Are DEI programs perfect? Absolutely not, but neither are customer service programs, research and development initiatives, or month-end close processes. Every business practice, policy or program has room for significant improvement. Companies do not abandon core business functions because they need refining; instead, smart companies invest the resources to evolve them. The problem lies with business leaders who view DEI as a fringe, nice-to-have effort. They underestimate its short- and long-term impact on growth and innovation.

Let’s put this in dollars and cents. A 2022 report by the University of Georgia's Selig Center estimates that U.S. minority buying power to equate to nearly $1 out of every $5.75 of buying power in the U.S.: 17.4% belongs to an African American, Asian-American or Native American household.

The Selig Center reported the buying power of African American, Asian American, and Native American consumers increased from $458 billion in 1990 to $3.2 trillion in 2021. Hispanic households also saw a jump from $213 billion in 1990 to $2.1 trillion in 2021 rising from 5% of the total consumer market to 11.3%.

Despite healthy gains in buying power, pay equity gaps still exist for women and people of color. Research by the Federal Reserve Bank of St. Louis suggests that economic equity leads to widespread prosperity—to the tune of $25.6 trillion in gross domestic product gains over a 30-year period. With contributions from researchers at Stanford University, Boston University, and the Federal Reserve of San Francisco, authors claim systemic disparities prevent people from reaching their full economic potential hamper the economy overall. Eliminating these barriers, then, has the potential to better employ people’s talents and abilities to promote widespread economic gains. (Read full report here.)

This leads me to ask some hard questions.

To C-Level Leaders

Why are you throwing out the proverbial baby with the bathwater to appease people who know nothing about your business? Develop a strategy to consistently listen to all employees and customers - conservative, moderate and progressive - and be balanced in your approach. Make decisions using data to ensure alignment with your vision and long-term business objectives.

If you do not already have one, consider launching faith-based Employee Resource Groups to better understand the concerns and needs of employees and customers with religious identities and values.

Business leaders have a fiduciary responsibility to shareholders, their employees and society to make decisions that balance short- and long-term business goals.

To Consumers

Continue to vote with your dollars. Continue to support companies that reflect your values. Use civility to respectfully share your concerns about unethical business practices that harm communities.

That said, here’s my question to anti-DEI consumer activists: Why do you care if companies want to build relationships with customers who are not like you?

Continue to do what you believe is right for you and your families. By all means, monitor what content enters your home, but respect the rights of businesses to grow and the rights of individuals to make their own choices.

Advocate for more entertainment and content that reflects your values. Better yet. Use your energy and resources to produce it instead of causing financial harm to the businesses that employ your neighbors.

The challenge with the anti-DEI movement is that it is very short sighted economically. In just over five years, there will be significant changes to the workforce that make a focus on DEI a necessity, not merely a “nice-to-have-if-everybody-agrees.”

According to the U.S. Bureau of Labor Statistics, we are in a 20-year decline in workforce participation. It’s expected to dip to about 60% by 2030. The U.S. workforce is also aging rapidly with the decline in the birth rate. Men are leaving the workforce at a faster rate than women, and while women are earning more college degrees than men, they are not typically choosing STEM fields. Simply put, it will become increasingly harder to fill job openings, especially in STEM-related positions.

Most of us already know that the U.S. population is increasingly becoming more racially and ethnically diverse, but it’s also becoming more neurodiverse – with more than half of Gen Z identifying as neurodiverse. Recruitment, onboarding, training and performance management practices will need to evolve to maximize the available talent pool and ensure that everyone has the opportunity to perform optimally and advance.

Over the next several years, we are heading into very challenging territory regarding companies’ ability to hire and retain the workers they need. Even with advancements in AI, companies will always need people to deliver their products and services. The decisions we make today will have significant downstream implications 10 to 20 years from now.

So, while anti-DEI activists may stop or deter some companies today, they are harming the health of the economy in both the short and long term.

The Fallacy of the Anti-DEI Movement

Anti-DEI activists argue that DEI and social justice issues do not belong in the workplace. While there should be healthy boundaries between work, home, and society, the claim that DEI politicizes the workplace is precisely what anti-DEI activists are doing.

An issue is only deemed political when it challenges our personal ideologies.

Likewise, deniers of Critical Race Theory (CRT) have, in fact, proven the existence of institutionalized racism as activists mobilized politically and on school boards to prevent students from being taught an accurate account of slavery and the civil rights movement in U.S. history.

Unfortunately, one of the missteps of some DEI initiatives and practitioners is that they have insufficiently sustained the engagement of straight White men. They, too, reflect the very definition of diversity. They bring a perspective that is valuable and important, just like any other population segment.

That said, much of the anti-DEI activism is rooted in privilege and a motivation to avoid perceived loss. This fear of loss is ironic, given that the primary aim of DEI is to help companies grow profitably, innovate, and more effectively attract, develop, and retain talent.

What should companies do?

In the current political environment, it is likely not enough to change the labeling or packaging of DEI efforts. Now is a good time for companies to make sure their DEI strategies and programs are directly and integrally aligned with their business strategy. Executives and boards of directors should be involved in the strategic review process to ensure end-to-end-alignment. Ask the questions: Why are we doing X, Y, Z? There should be both quantitative and qualitative data supporting decisions to spend budget and people resources – just like in any other area of the business.

Do not wait for an anti-DEI campaign to target your company. Be proactive and include DEI and other socially charged issues in your business continuity planning process. Anti-DEI activists pose a threat to your business. Have a strategy and response in place before you are targeted.

Ultimately, a company’s response to anti-DEI activists is about balancing risk and betting on the future. As leaders, this is what we are here to do. It’s our job to have the best possible advisors around us to help us make difficult decisions, so choose your team wisely.

DEI is an important tool within business and culture transformation that can lead to commercial success. Diverse, equitable and inclusive teams strengthen organizational collaboration, risk-spotting, and problem solving. Does any company exist that does not want to be better in these areas?

If a company decides to cater to activists in the short term, the key questions are: Who did we lose in the process? What value – what market segment – what employees did we lose? Who or what did we gain, and for how long?

Every decision has an impact.