DEI initiatives hurt by budget cuts, hostile politics

Diversity, equity and inclusion initiatives face multiple attacks from layoffs, budget cuts and political opposition that question the value of these programs.

At a recent U.S. House Armed Services Committee hearing, the Department of Defense's diversity, equity and inclusion initiatives came under a blistering attack by the committee chair, U.S. Rep. Jim Banks (R-Ind.).

The "DEI apparatus is based on faulty science and misguided principles," Banks said, arguing that these initiatives might increase bias and take away time from warfighter training. He put the Pentagon's DEI officials on the spot, but they are far from alone in facing threats to these programs.

Multiple states, including Florida, Texas, Missouri and Iowa, are seeing efforts to stop public funding of DEI initiatives for colleges. Meanwhile, in the private sector, layoffs and restructurings are testing businesses' resolve to continue with their DEI programs.

Corporate DEI "budgets are shrinking or evaporating," said Janine Yancey, founder and CEO at Emtrain, a San Francisco-based company that makes a compliance training SaaS platform. "And this is even with historically very open, very progressive organizations."

A former employment lawyer, Yancey said the cuts aren't affecting Emtrain's platform because it can demonstrate how training reduces bias, harassment and discrimination claims. These types of claims rise during corporate layoffs, she said.

DEI software

But overall, budgets for spending on new DEI tools are in doubt, said Stacia Garr, co-founder and principal analyst at RedThread Research. DEI "budgets have dramatically declined, and that includes head count," she said.

DEI software can help identify bias in job descriptions and performance evaluations. It also provides workforce analytics, tracks DEI initiatives and gathers employee feedback.

DEI initiatives gained ground for several reasons in recent years. The swell of the Black Lives Matter movement in 2020 was especially influential, prompting organizations including HR vendors to look at their shortcomings in hiring a diverse workforce, and particularly Black workers. The interest helped drive demand for DEI tools, which Garr has been tracking.

As demand for DEI software increased, HR platform vendors added tools to their platforms, meaning that businesses "don't necessarily have to have a dedicated DEI tech solution," Garr said.

Just how tech industry layoffs will affect DEI initiatives is now a new question. Businesses, in their annual voluntary diversity reports, have not yet reported workforce composition by gender, race and ethnicity since the layoffs started last year.

Meta, Facebook's parent organization, has cut 21,000 people in six months and has a workforce that is only 37% women, according to its 2022 diversity report. It also unveiled its intentions to become a flat organization -- a structure with few managers -- and according to one study, this might deter some women from applying to job openings.

Reuben Hurst, a Ph.D. student at the University of Michigan's Ross School of Business, worked with two other researchers to determine whether flat organizations helped or hurt women.

Flat organizations have problems

Researchers worked with a tech company that was filling business development and software engineering positions. They sent invitations to qualified people to apply for openings, some of which described the company as having a flat hierarchy. Researchers also conducted a separate survey to gather more information about applicants' employer preferences. In a paper released last year, they found that women were least likely to apply for a job at a flat organization.

"Women were disproportionately repelled by an employer that characterizes itself as having a flat hierarchy," Hurst said, who is starting this fall at the University of Maryland as an assistant business professor.

Women perceived flat organizations as environments with less opportunity for career advancement, both in terms of promotions and pay raises, and with heavier workloads, Hurst said.

In tech, where you have fewer women to begin with, a flatter organization might hinder women's ability to self-promote and "say no to the types of work that will never get you ahead," said Nikki Barua, co-founder and CEO of Beyond Barriers, a performance acceleration consultancy.

Barua said corporate cutbacks on DEI initiatives are also shifting more work to employees who volunteer with employee resource groups. They are organized around race, ethnicity, gender, sexual orientation, military experience and other groups, and are supported by the enterprise to, in part, help with professional development.

In defending the Department of Defense's DEI program before the House committee, Gilbert Cisneros, the military's chief diversity and inclusion officer, said pulling people "from diverse backgrounds amplifies innovative thought and will drive innovative solutions."

"This is not only about demographics, but also includes diversity of thought, talent, knowledge, skills and experience," Cisneros said during the hearing.

Carolynn Johnson, CEO of DiversityInc, a data analysis company that also ranks organizations for their diversity efforts, defended the DEI initiatives against the critics.

"Organizations that are very clear on what their [diversity] metrics look like are being accused of being 'woke,'" Johnson said. "What's the opposite of being woke? Is the opposite not measuring [the workforce] at all and being clueless about what's happening to your workforce?"

In the same way that a company audits its books, Johnson said businesses need to understand what's happening to talent from when they start and throughout their career.

Patrick Thibodeau covers HCM and ERP technologies for TechTarget Editorial. He's worked for more than two decades as an enterprise IT reporter.

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