Not all companies are abandoning DEI: Most firms still stick to diversity strategies

Since Tractor Supply adjusted its long-standing diversity, equity, and inclusion (DEI) practices in June 2024, more retailers, brands, and other businesses—including Lowe's, Harley Davidson, Ford Motor Company, Indian Motorcycle, Molson Coors, and Jack Daniels parent company Brown-Forman—have also abandoned their DEI programs.

These moves reflect an increasingly challenging environment for any company or HR department aiming to build a diverse and dynamic workforce and leadership, as reported by sister publication HR Dive. As a result, many businesses are re-examining their DEI policies.

Yet most companies are sticking with these policies.

A Conference Board survey of nearly 200 chief human resources officers in December 2023 found "consistent support for maintaining or even strengthening DEI efforts in 2024, with 63% actively seeking to further diversify their workforce." Several experts say some companies are sidestepping current scrutiny by renaming their DEI programs while keeping their substance intact. According to the think tank's recent report on "repositioning DEI," companies taking this approach should evaluate their changes to ensure alignment with business strategy and stakeholder interests.

Because companies have diverse stakeholders, including employees, customers, and shareholders, and profitability is their business, questioning the effectiveness of their DEI programs and evolving them as needed is not only acceptable but necessary, said Diana Scott, leader of The Conference Board's US Human Capital Center.

Overall, about 90% of companies working with The Conference Board remain committed to DEI after taking action, Scott said via video call.

"Most organizations are trying to stay the course because they want to create an inclusive, diverse, and dynamic culture within their company," Scott said. "Because they know it drives employee engagement, which in turn drives employee productivity, and ultimately impacts bottom-line business results. You do DEI not because you're trying to be 'woke,' but because it genuinely serves your business."

Impact and reaction

Although social media agitator Robby Starbuck has been claiming credit for most of the high-profile cases of companies scaling back or ending DEI programs that he calls "woke," the companies themselves have not confirmed this. Tractor Supply declined to comment for this article, and other brands did not respond to multiple requests for comment. All companies were asked whether Starbuck was behind their policy changes.

This reluctance to take a stance may stem from Starbuck's extreme position as a political agitator, whose aggressive tactics do not align with calm business decisions, experts say.

"This is an extreme activist who is actually profiting from his activism," Valeria Piaggio, Kantar's global DEI leader, said by phone. "Most companies are not abandoning DEI. What we know is that some companies are adjusting their language. Or, if they have programs supporting young professionals in the company, they won't state that it benefits specific groups, but rather broaden its scope."

Piaggio noted that the anti-DEI movement has been gaining momentum over the past year or two, with this year's presidential election and last year's Supreme Court ruling banning affirmative action in universities intensifying uncertainty and attention around DEI.

The court ruling has sparked lawsuits against private companies, though not all have been successful. Earlier this year, a federal judge in Ohio dismissed a lawsuit against Hello Alice, a fintech platform focused on "providing fair capital access and support to underrepresented entrepreneurs." The lawsuit was filed by America First Legal, an organization led by Trump advisor Stephen Miller, targeting issues such as "woke corporations" and DEI.

"You do DEI not because you're trying to be 'woke,' but because it genuinely serves your business."

—Diana Scott, leader of The Conference Board's US Human Capital Center

Overall, the anti-DEI outcry is a blunt instrument that fails to account for the benefits well-executed programs bring to organizations, said Effenus Henderson, HR consultant and co-director of the Institute for Sustainable Diversity and Inclusion. He previously served as convener of the working group at the International Organization for Standardization that developed global diversity and inclusion standards, adopted by ISO three years ago.

"The few far-right extremists I've described are pushing back hard, trying to completely erase, destroy, and dismantle DEI efforts, whether in public policy or in private sector practices," he said via video call. "This is very short-sighted, and many people use the term 'DEI' without fully understanding it."

The Conference Board also blames hastily implemented initiatives for damaging DEI's reputation. Many businesses belatedly embraced diversity after George Floyd was killed by police in 2020, prompting brands to rush to prove their support beyond just social media posts and marketing. But experts say the benefits of DEI do not accrue to companies whose policies are limited to performative initiatives such as sensitivity training, book clubs, or heritage month celebrations. Bias training in particular has been shown to be largely ineffective, despite billions of dollars spent on it over the past decades, according to The Conference Board.

"For diversity efforts to be sustainable, companies that do it well typically view it as a lens through which they evaluate all business practices and strategies, ensuring they are integrated or aligned with the organization's shared values," Henderson said. "So it's not some kind of set-aside program, but an integral part of how the business operates."

Moreover, the term "diversity" encompasses far more than the racial, ethnic, sexual orientation, or gender issues that Starbuck and others focus on, he said, citing the work of Marilyn Loden in the 1990s, which defined diversity in multiple ways. DEI experts say these more visible attributes, along with others such as educational background, geography, and upbringing—including military service—all contribute valuable perspectives to teams.

"It's not just about race and ethnicity, it's also about women, people with disabilities, and all forms of diversity," Piaggio said. "And those who want DEI to end don't realize that they are sometimes working against themselves."

Roots of DEI

Corporate America first embraced DEI initiatives in the 1960s, according to The Conference Board. Experts say any company that has incorporated DEI in a meaningful way is unlikely to give it up easily, for a variety of reasons.

Henderson noted that certain aspects of these programs are necessary because they help ensure compliance with anti-discrimination laws. Landmark diversity legislation includes: the Equal Pay Act of 1963, prohibiting wage discrimination based on sex, and the subsequent Lilly Ledbetter Act signed by President Barack Obama; the Civil Rights Act of 1964, which according to the US Department of Labor "prohibits discrimination in hiring and promotion based on race, color, religion, sex, or national origin"; the Age Discrimination in Employment Act of 1967; the Pregnancy Discrimination Act of 1978; the Americans with Disabilities Act of 1990; and the Genetic Information Nondiscrimination Act of 2008, which prohibits federal agencies from using employees' or applicants' genetic information in hiring decisions.

But effective DEI measures go beyond complying with such laws, helping to "create a workforce that reflects the customers, communities, and so on that we serve," Henderson said. In this sense, DEI is not limited to the HR department. Rather, it means building systems that promote effective decision-making throughout the organization, from product design and supply chain to operations and marketing, and from leadership to governance. This process must also be flexible due to demographic shifts, which require testing and market research, he said.

"Who is at the decision-making table? How do you invite those different perspectives to get feedback and help solve problems?" he said.

"Those who want DEI to end don't realize that they are sometimes working against themselves."

—Valeria Piaggio, Kantar's global DEI leader

Teams with diverse perspectives are more likely to innovate and make sound decisions, said Jo-Ellen Pozner, management professor at Santa Clara University's Leavey School of Business.

"If everyone within an organization looks the same—shares the same political values, represents the same racial, ethnic, gender, and age characteristics—then the decisions it makes will reflect that narrow perspective," she said via email. "When internal teams are too similar, it tends to assume all other stakeholders are also similar, and therefore share similar perspectives and value systems. Once an organization includes people with different perspectives, life experiences, political values, and demographic characteristics, it is better equipped to consider the viewpoints of different external stakeholder groups in its decisions."

For retailers and brands, it matters that consumers value diversity programs. According to Kantar's Brand Inclusion Index released this year, 65% of US and 71% of global consumers agree that "diversity of culture and thought is necessary for the progress of my country." Nearly 80% of Americans also say diversity and inclusion are important to them.

Despite the anti-DEI backlash slogan "go woke, go broke," the reality is the opposite, according to ongoing research by McKinsey & Company over the past several years. For example, companies in the top quartile for executive team diversity by gender and race are on average 9% more likely to outperform their competitors financially. According to McKinsey's latest series of DEI reports released last year, companies with the highest board gender and racial diversity are 27% and 13% more likely, respectively, to outperform their peers. Companies with the lowest executive team diversity are 66% less likely to outperform their peers financially—worse than the 27% four years ago—"suggesting that a lack of diversity may be increasingly costly," McKinsey said.

"Once an organization includes people with different perspectives, life experiences, political values, and demographic characteristics, it is better equipped to consider the viewpoints of different external stakeholder groups in its decisions."

—Jo-Ellen Pozner, management professor at Santa Clara University's Leavey School of Business

This may be why even now, a degree of diversity remains on the boards of John Deere, Harley Davidson, and even Brown-Forman, whose leadership still includes founding family members. At Lowe's, fewer than half of the 13 board members are white men, and only a third of the 9 top executives are white men. At Tractor Supply—which Henderson said was making good progress on this front before abandoning its DEI practices—fewer than half of the 9 board members are white men, though its leadership is less diverse. In a 2023 press release, the company touted its "workplace diversity and inclusion" recognition, noting its workforce was "49% female and its board 40% female."

In fact, despite Starbuck's delight whenever a DEI program is canceled, these companies may still have some types of DEI initiatives underway, or may be reluctant to undo progress already made. For example, in its June announcement, Tractor Supply said it "works every day to live out our mission and values, and to represent the values of the communities and customers we serve."

Experts say this will be difficult to achieve now that Tractor Supply has disbanded its DEI team. Moreover, its decision to abandon DEI was not well thought out, experts say, sparking backlash from Black farmers and other dissatisfied customers.

This could be damaging both inside and outside the company.

The cost of abandoning DEI

Most companies stick with DEI because of its advantages, while those that abandon it face significant losses, especially if their programs were well-designed and well-executed.

According to The Conference Board's Scott, those that persist have typically made clear to stakeholders that the focus of DEI efforts is overall fairness, and she specifically pointed to Walmart as doing this particularly effectively.

"A lot of the division comes from one group feeling they are at a disadvantage because another group is benefiting. I do think some organizations are better at communicating the message that this is not a zero-sum game—it's not that if one group wins, another loses," she said. "It's really a case of 'a rising tide lifts all boats.' So focusing on creating a more diverse, equitable, and inclusive company is for everyone."

Although DEI is now under widespread scrutiny, companies have embraced it for decades. For example, bias has long been seen as counterproductive to business interests, according to research by The Conference Board and the University of California, San Francisco, funded by Walmart. According to the report: bias hinders employee engagement and can reduce productivity by about 20%; biased employers miss opportunities to recruit talent; and their bias often leads to turnover. The latter is costly: The Conference Board cited a 2019 Gallup estimate that replacing an employee can cost up to 1.5 to 2 times their annual salary.

"The few far-right extremists I've described are pushing back hard, trying to completely erase, destroy, and dismantle DEI efforts, whether in public policy or in private sector practices. This is very short-sighted."

—Effenus Henderson, co-director of the Institute for Sustainable Diversity and Inclusion

Younger employees do seem ready to leave or avoid companies without fair hiring policies. A 2022 EY survey found that 76% of millennials said they would leave if their employer did not offer DEI initiatives, and nearly a third said they were already planning to leave because the company did not align with their values. The study also found that about half of Gen Z, millennial, and LGBT+ employees, as well as 40% of racially and ethnically diverse employees, said their employer's public stance on social issues had a "great deal" or "fair amount" of influence on whether they stayed with the company.

Retailers that cancel DEI programs risk alienating not only employees but also large consumer segments, experts say.

Lowe's last year launched a series of workshops to help millennial homeowners with DIY projects, and Tractor Supply has also been actively reaching out to a new generation of consumers, with CEO Hal Lawton telling analysts two years ago that its "new customers continue to skew younger," partly due to "net out-migration from urban areas, driven largely by millennials." Observers also note that hobby farmers, a major and growing segment of Tractor Supply's customer base, tend to be younger and more diverse.

"For many companies, growth is coming from these groups," said Kantar's Piaggio. "These groups are growing in size, purchasing power, and cultural influence, which is crucial for retailers or brands, especially in the mass consumer market. Those making decisions today that are inconsistent with where growth is coming from are jeopardizing their future, when we look at the demographics of their younger workforce and younger shoppers."