Not all companies are abandoning DEI: Most firms still adhere to diversity, equity, and inclusion practices

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

Panelists speaking at the Society for Human Resource Management annual conference said these moves reflect the increasingly challenging environment facing any company or HR department aiming to build a diverse workforce and leadership. As a result, many companies are re-evaluating their DEI policies.

Yet most companies are still holding firm to these policies.

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

Diana Scott, head of The Conference Board's U.S. Human Capital Center, said that because companies have diverse stakeholders, including employees, customers, and shareholders, and because profitability is their business, questioning the effectiveness of their DEI programs and evolving them as needed is not only acceptable but necessary. Scott said via video call that overall, about 90% of companies working with The Conference Board remain committed to DEI after experiencing these changes.

"Most organizations are trying to stay the course because they want to foster an inclusive, diverse, and dynamic organizational culture," Scott said. "Because they know it drives employee engagement, which in turn boosts 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."

The impact of the anti-DEI movement

While social media agitator Robby Starbuck has been claiming credit for most recent high-profile companies scaling back or ending DEI programs, these companies themselves have not confirmed this. Tractor Supply declined to comment, and other brands did not respond to multiple requests for comment. All companies were asked whether Starbuck was behind their policy changes.

Experts say this silence may stem from Starbuck's extreme stance as a political agitator, whose aggressive approach does not align with prudent business decisions.

"This is an extreme activist who is actually profiting from his own activism," Valeria Piaggio, Kantar's global DEI lead, said by phone. "Most companies are not abandoning DEI. What we do know is that some companies are adjusting their language. Or, if they have a program supporting young professionals in the company, they won't state it benefits a specific group, but will 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 succeeded. Earlier this year, a federal judge in Ohio dismissed a lawsuit against Hello Alice, a fintech platform focused on "providing fair access to capital and support for underrepresented entrepreneurs." The lawsuit was filed by America First Legal, an organization led by Trump advisor Stephen Miller, targeting issues like "woke corporations" and DEI.

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

—Diana Scott, head of The Conference Board's U.S. Human Capital Center

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

"There's quite a bit of resistance coming from what I would describe as a small group of far-right extremists trying to completely erase, destroy, and dismantle DEI efforts, whether in public policy or in private sector practices," he said in a 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 DEI efforts for damaging its reputation. Many companies belatedly embraced diversity after the murder of George Floyd by police in 2020, prompting brands to rush to prove they were not just paying lip service on social media and in marketing. But experts say the benefits of DEI do not accrue to companies whose policies are limited to superficial initiatives such as sensitivity training, book clubs, or heritage month celebrations. The Conference Board noted that bias training in particular has been shown to be largely ineffective, despite billions of dollars spent on it over the past few decades.

"For diversity efforts to be sustainable, companies that do it well typically view it as a lens for evaluating all business practices and strategies, ensuring alignment with the organization's shared values," Henderson said. "So it's not a shelved program, but an integral part of how business operates."

Moreover, the term "diversity" encompasses far more than the race, ethnicity, 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 familiar attributes, along with others such as educational background, geographic location, and life experiences—including military service—all help bring valuable perspectives to teams.

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

The case for sticking with DEI

According to The Conference Board, corporate America first adopted DEI initiatives in the 1960s. Experts say any company that has incorporated DEI in a meaningful way is unlikely to easily abandon it, for several 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, the Civil Rights Act of 1964, 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, among others.

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 but means building systems that promote effective decision-making across the organization, from product design and supply chains to operations and marketing, to leadership and 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 diverse perspectives to get feedback and help solve problems?" he asked.

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

—Valeria Piaggio, Kantar's global lead for diversity, equity, and inclusion

Jo-Ellen Pozner, a management professor at Santa Clara University's Leavey School of Business, said teams with diverse perspectives are more likely to innovate and make sound decisions. "If everyone inside an organization looks the same—holds 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 in an email. "When internal teams are too similar, they tend to assume all other stakeholders are also similar, and therefore hold 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 perspectives 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 U.S. 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.

Although the anti-DEI boycott movement's slogan is "go woke, go broke," the reality is the opposite, according to McKinsey & Company's ongoing research over the past several years. For example, companies with the most diverse executive teams in terms of gender and ethnicity are on average 9% more likely to outperform their peers financially. According to the latest series of reports McKinsey released last year, companies with the most gender-diverse and ethnically diverse boards are 27% and 13% more likely to outperform their peers, respectively. Companies with the least diverse executive teams are 66% less likely to outperform their peers financially—worse than the 27% figure from four years ago—"suggesting that a lack of diversity may be increasingly costly," McKinsey said.

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 its 9 executives are white men. At Tractor Supply—which Henderson said was making good progress before abandoning DEI—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 is "49% female and its board is 40% female."

In fact, while Starbuck celebrates whenever a DEI program is canceled, these companies may still have some ongoing DEI initiatives, or may be reluctant to give up the progress they have already made. For example, in its June announcement, Tractor Supply said it "strives to live our mission and values every day and to represent the values of the communities and customers we serve."

Experts say that 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 said, and has sparked 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, and those that abandon it face significant losses, especially if their programs were well-designed and well-executed. Those that persist have typically made clear to stakeholders that the focus of DEI efforts is comprehensive fairness, with The Conference Board's Scott specifically pointing to Walmart as particularly effective in this regard.

"A lot of the division stems from one group feeling they are at a disadvantage because another group is benefiting. I do think some organizations are better at communicating 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 more diverse, equitable, and inclusive companies is for everyone."

Although DEI is now under widespread scrutiny, companies have embraced it for decades. For example, according to research by The Conference Board and the University of California, San Francisco, funded by Walmart, bias has been seen as counterproductive to business interests for decades. According to the report: bias undermines 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 cites a 2019 Gallup estimate that the cost of replacing an employee can be 1.5 to 2 times their annual salary.

"There's quite a bit of resistance coming from a small group of far-right extremists 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 appear 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 influences "a great deal" or "a lot" whether they stay with the company.

Experts say retailers that cancel DEI programs risk alienating not only employees but also a large segment of consumers. Lowe's last year launched a series of DIY project workshops aimed at millennial homeowners, while 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 migration from urban areas, driven mainly by millennials." Observers also note that hobby farmers, an important and growing part 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. "From populations that are growing in size, purchasing power, and cultural influence, which is critical for retailers or brands, especially in the mass consumer market. Companies making decisions today that do not align with where growth is coming from are jeopardizing their future, when we look at the demographics of their younger employees and younger shoppers."