“Those who stand for nothing, fall for anything” – Alexander Hamilton
When S. Mitra Kalita said in her 2023 article in Time Magazine “We’re backsliding on this diversity thing.” I felt that. A great many of us did. Over the past few years especially, we have watched Diversity, Equity, and Inclusion (DEI) initiatives become both a business
imperative and a political minefield. Though once hailed as essential to workplace innovation and corporate responsibility, DEI programs are increasingly under scrutiny. Some corporations, like Harley-Davidson, Ford, and Lowe’s, are rolling back DEI efforts amidst backlash from conservative constituents and anti-DEI campaigns (Gibson, 2024). This raises critical questions: what is the true purpose behind DEI, and how should companies respond to a polarized environment? With the meaning of DEI varying between firms, the answer depends on a company’s angle.
Why Do Companies Engage in DEI?
While diversity in the workplace was coined in the 1990s (Roberson, 2019), at their core DEI efforts are rooted in the Civil Rights Movement of the 1960s with initiatives aiming to create inclusive workplaces by increasing representation and ensuring opportunities for all employees (Gill, McNally, & Berman, 2018). Given the historically homogenous workforce in corporations, research shows that diverse organizations can benefit from improved problem-solving capabilities and creativity through access to a broader talent pool (Bermiss et al 2014; Filbeck et al., 2017). In so doing and in other ways, studies also suggest that DEI can improve overall workplace culture (Gill, McNally, & Berman, 2018; Roberson, 2019). So, although DEI rhetoric from firms often insinuates a values-driven purpose (Pasztor, 2019), it differs greatly from the value-driven reasons in which many companies engage in DEI along with the tactics
employed.
Research on DEI, broadly speaking, has consequently been limited in scope as it has historically tended to focus on its effects on more immediate and easily accessible performance measures (Pasztor, 2019; Roberson, 2019) such as profitability. However, more recently, studies have started to suggest that DEI can improve a company’s reputation especially among external stakeholders-including customers and shareholders-with strong reputations known to positively impact a firms competitive advantage (Bermiss et al., 2014). Specifically, signals like appearing on Fair360’s Top 50 Companies can boost a firm’s image, attract top talent, and foster consumer
loyalty (Filbeck et al., 2017). DEI programs also help mitigate legal risks, signaling a proactive stance on discrimination and inequality to shareholders who increasingly push for its integration into corporate strategies (Hiatt et al., 2018). Despite this though, with growing political and financial pressures from conservative stakeholders, it seems the winds have changed with
mounting backlash.
A Double-Edged Sword
Whether DEI efforts are self-serving or societal, companies face challenges in maintaining consistent initiatives in a volatile social landscape. Firms that pursue DEI purely for optics are more susceptible to pressure, leading to surface-level changes. When faced with activist movements, companies often ramp up prosocial claims—aligning with socially acceptable norms—without making substantive organizational changes (McDonnell & King, 2013). Many “DEI hires” have observed this firsthand. These superficial responses might protect a company’s image temporarily but expose it to accusations of hypocrisy or inconsistency when deeper structural issues remain unaddressed (King & Soule, 2007; McDonnell & Werner, 2018). When companies lack a genuine commitment, their responses can quickly unravel, leading to reputational damage. Firms that fail to embed social values into their core operations often face more severe threats when confronted with boycotts or protests (McDonnell & King, 2013).
Navigating the Political Climate
In today’s polarized environment, companies must carefully navigate DEI-related pressures. Staying silent can alienate employees and consumers who value inclusivity, while publicly supporting DEI risks backlash from conservative groups that view it as politicized.
Companies pursuing DEI for reputational benefits or performance-related outcomes risk adopting superficial measures that erode its impact. The result is often perceived fickleness, where companies shift their stance based on political winds rather than core principles.
DEI is at a critical juncture. Businesses must clarify their “angle”—whether they pursue DEI out of genuine belief or strategic reasons related to performance and reputation. Research suggests that firms committed to social responsibility, even under pressure, experience long-term reputational and financial benefits (Bermiss et al 2014). As such, a clear, consistent stance will help companies navigate the political climate while retaining stakeholder trust. Ultimately, whether DEI is a principled commitment or a means to an end will determine if companies continue with substantial or “minimally invasive” strategies. But what is increasingly clear given the case with Harley-Davidson and other US firms as of late, is this-you cannot serve two masters, let alone make everyone happy.