Verity Creedy, vice-president for product at leadership consultancy DDI, says: “A lot of organisations have learned their lesson. It’s brutal, but even those tick-box exercises cost money.”
The challenge for HR departments has been spotting the DEI snake oil sellers in an increasingly crowded market of management consultants all vying for shrinking budgets.
However, critics argue that HR departments have also forgotten what fuelled the corporate diversity drive in the first place: money. Companies once believed that championing diversity, equity and inclusion was the magic key to unlock higher profits and productivity. Being seen as an inclusive employer would allow them to access broader pools of talent, recruiting employees who reflected the customers they were trying to sell to.
Even this starting point has become increasingly difficult to stand-up.
Researchers have cast doubts on studies by consultancy giant McKinsey which claimed more diverse companies earn higher profits, often cited by consultants to justify increased DEI spending. However, a study in Econ Journal Watch in April found that McKinsey’s lauded studies were based on data which cannot be replicated.
Tanya de Grunwald, who advises companies on HR issues, says: “Employers did a really good job of convincing young people that they genuinely care about them as employees more than they care about the business. That was never true, obviously.”
Experts claim the diversity project quickly suffered from mission creep, hijacked by a new generation of progressive workers pressuring companies to take positions in political debates and complex geopolitical issues, including the Gaza war.
De Grunwald says: “The HR directors have not been quick enough to realise that their head of DEI is actually practising what looks more like their own political activism from within the organisation.”
Some argue this is the consequence of a chilling effect within businesses where employees have been afraid to scrutinise DEI for fear of causing offence or being cancelled. It has seen business leaders, who would demand rigour and scrutiny from any other parts of the business, for years remain silent to avoid being seen as an out-of-touch dinosaur or worse, a bigot.
De Grunwald says: “The sensible people who have reasonable questions have all been silenced, or they’ve just silenced themselves. They’re self-censoring.”
The HR commentator also notes that DEI teams themselves are often not diverse.
De Grunwald argues this results in group-think which feeds through to bad business decisions that alienate customers and the diverse workforce they set out to attract.