DEI is Not Disappearing—It’s Evolving: 3 Areas to Prioritize in 2024

Workplace Diversity, Equity and Inclusion (DEI) is in the midst of a perfect storm. The Supreme court decision to overturn race-based affirmative action policies in college admissions gave way to a series of legislative challenges targeted at workplace DEI.  Now, executives and board members are grappling with the aftermath and continued close inspection on DEI, with many asking ‘what now?’.

To address some of these crucial questions, Russell Reynolds Associates brought the best of the academic and business world together at our annual DEI summit, hosted in partnership with Stanford Graduate School of Business. In this paper, we summarize the themes that arose from discussions with over 40 executives and board members who are looking towards the future and its DEI evolution.

• DEI needs to be built-in, not ‘bolted on’
  
• DEI needs to be in service of your business outcomes
  
• DEI needs to be treated as a governance issue

DEI needs to be built-in, not ‘bolted on’

The legal context necessitates that leaders build-in DEI across everything

DEI programs have been in the cross-fire lately, with conservative activists questioning the legality of initiatives designed to close the gap on outcomes for historically underrepresented groups. Underpinning this contention is the belief that creating targeted programs for select groups excludes others, thus giving cause for discrimination.

Take, for example, a C-suite accelerator program targeting women of color. While these programs are valuable—especially in the aftermath of the US racial justice movement—when they exist outside of the standard C-suite succession process, their exposure to legal contention is heightened. Instead, organizations need to build in equitable succession practices into the overall succession process and include all employees.  The difference to bolt-on or build-in may seem subtle, but it can be the marker of establishing evergreen solutions that remain intact in a changing legal landscape, whilst ensuring maximum impact for all groups.

“It is critical to start with the company strategy, whether that be three-year or a yearly strategy.  Understand what the top priorities are and how DEI aligns across those priorities. If your company has values, is DEI one of them?  If not, your implementation will be tougher.”

– Sherida McMullan
VP of Diversity, Inclusion & Belonging, GitLab

Building on the importance of taking a thoughtful approach to integrating DEI across organizational culture and strategy,  Karen B. Greenbaum, AESC CEO outlined the three most impactful approaches that business leaders can employ globally: ‘Foster a safe and inclusive environment, communicate the importance of DEI and ensure leadership demonstrated public commitment to DEI’.

“Not only is it critical for business leaders to show their public commitment to DEI, but it’s also important that associations lead the way. As leaders, we can lead with realistic optimism focused on celebrating results.”

– Karen B. Greenbaum
AESC CEO

Beyond supporting a more systemic approach to DEI, external affinity-based associations can also play a vital role in complementing workplace DEI initiatives with affinity focused programming. We heard from many associations leaders that, despite the evolving legal environment, they are continuing to offer programming designed to supplement gaps in board and executive attraction, development, and retention.

“By virtue of being a connector of professionals and companies in a corporate environment, member associations are uniquely positioned to gather together constituents across industries and the community to strengthen and build our collective DEI knowledge, share information, and conduct research, which can in turn be used to enhance people/talent practices.”

– Anna W. Mok
President, Executive Board Chair & Co-Founder, Ascend & Ascend Foundation

The Latino Corporate Directors Association and our peers recognize a unique opportunity to reinforce our commitment to inclusion by placing a strong emphasis on talent development. By providing targeted resources and initiatives, we aim to equip executives and board members with the skills and insights necessary to navigate the complexities of the corporate world. This talent-centric approach also recognizes the inherent value of diverse perspectives in driving innovation and sustainable business success.

– Ozzie Gromada Meza
President and CEO, Latino Corporate Directors Association

DEI needs to be in service of your business outcomes

Working backwards from business outcomes will ensure impact and sustainability of DEI

Organizations leading the charge with a built-in DEI strategy are also connecting DEI to their business outcomes. This approach centers on the ability to identify business outcomes (i.e., market growth, customer activation, community engagement, talent attraction and retention), and consider how DEI can enable said outcomes. Working backwards from this, DEI principles and practices can be baked into all layers of the business to drive collective impact. What’s more, by tying DEI closely with the business, the opportunity for impact increases and becomes more sustainable.

The current economic and business environment places a premium on achieving business results, making DEI a vital enabler.

– Dr. Deepti Sodhi Jaggi
Board Member, Envision Pharma Group and Technology Credit Union (Tech CU)

Across industries, we’ve observed how DEI can act as critical driver of business. In fact, via RRA’s DEI governance survey, we know that 96% of chief diversity officers and HR leaders with DEI responsibility connect their DEI and business strategies. When it comes to DEI operations, 40% of DEI leaders reported an approach which saw DEI activity happening at the business unit level, alongside a more traditional centralized approach.

“This year, one of our company objectives is to continue building and retaining a diverse team of high performing talent. To achieve this, I met with our CEO and his staff to discuss where each division's objectives & key results (OKRs) align to that objective. Our People team developed global aspirational DEI goals in alignment with our CEO. Similar conversations occurred for each group leader and hiring area, allowing us to focus our efforts and set OKRs aligned across division leaders, people business partners, people operations, and the talent acquisition team.”

– Sherida McMullan
VP of Diversity, Inclusion & Belonging, GitLab

DEI needs to be treated as a governance issue

The shareholder environment necessitates boards with DEI knowledge to manage risk & enable impact

As DEI topics become intertwined with broader macro trends, business outcomes, and risk mitigation -  DEI governance has become a board priority. Over the past three years, shareholder requests for DEI audits have grown, despite a small rise in ‘anti-ESG’ proposals. For the 2023 proxy season, approximately 89 pro-Human Capital Management proposals were submitted—of which DEI made up 61%. DEI reporting requirements from listed companies, as well as emerging state-level diversity legislation, have also elevated DEI to a governance issue. As of an October 2022 report by EY, 41% of S&P 500 companies included DEI among their compensation committees’ areas of oversight, and 11% had a separate sustainability committee.

Yet while the DEI agenda looks here to stay, we’ve heard concerns about the boards preparedness to effectively govern it. Now, more than ever, DEI subject matter knowledge will be an important differentiator for future boards.

“With the socio-political environment in flux, there has never been a more complicated or challenging time to be an executive and board member.  We all need to continue to relate to our many different stakeholders in an inclusive and holistic way that helps all be successful… the leader’s job is not to know everything, but to have the skills and embodiment to navigate through uncertain and unpredictable times through felt authenticity and deeper connections to other people.”

– Anna W. Mok
President, Executive Board Chair & Co-Founder, Ascend & Ascend Foundation

“Boards play a pivotal role in ensuring DEI practices are not just implemented, but consistently reviewed. Governance structures should be designed to prevent bias or quotas, instead focusing on equity, inclusion, and belonging. Regular reviews of DEI metrics enable organizations to track progress and make necessary adjustments.”

– Dr. Deepti Sodhi Jaggi
Board Member, Envision Pharma Group and Technology Credit Union (Tech CU)

Despite our current climate, the leaders we spoke with were optimistic and energetic about the road ahead. Whilst DEI is at a crossroads between challenge and opportunity, activating its benefits to create balanced, successful, equitable organizations remains the ultimate goal.

Author

With special thanks to our guest contributors:

• Anna W. Mok, President, Executive Board Chair & Co-Founder, Ascend & Ascend Foundation
• Dr. Deepti Sodhi Jaggi, Board Member, Envision Pharma Group and Technology Credit Union (Tech CU)
• Karen B. Greenbaum, AESC CEO
• Ozzie Gromada Meza, President and CEO, Latino Corporate Directors Association
• Sherida McMullan, VP of Diversity, Inclusion & Belonging, GitLab