Companies are ‘diversity ditching,’ which could have long-term consequences on employee retention

Companies are abandoning the DEI commitments made in mid-2020. Since last fall, employers have been slashing DEI roles to cut costs and pulling back on related initiatives. 

And now, with the Supreme Court striking down the use of race-based college admissions in late June, the attack on corporate diversity programs that DEI experts feared might be unfolding. Earlier this month, 13 Republican attorneys general sent a letter to Fortune 100 CEOs warning of legal consequences for using race as a factor in hiring and employment practices.

But corporate rollbacks on DEI aren’t going unnoticed by diverse talent, according to a July poll from job search and career advice website The Muse.

“We have been hearing from many of our job seekers and employers alike how frustrated they are that many companies have been seemingly backing away from diversity commitments that they’ve made in the last few years,” says Kathryn Minshew, cofounder and CEO of The Muse. 

Sixty percent of 803 surveyed site users say they’ve noticed their company has pulled back on its diversity commitments, including by hiring or recruiting fewer diverse candidates, offering less internal discussion or DEI programming, or through leadership changes like their diversity executives exiting. Over one-third of survey respondents say their employer talked much about DEI during the interview process, but the on-the-job diversity efforts proved far less than promised.

While Muse’s survey is not reflective of the general U.S. population—70% of respondents are non-white, 65% are female, and 53% are millennial and Gen Z—the results offer some insight into how diverse talent feels about DEI cuts. Moreover, a May Pew Research study of 4,744 working U.S. adults, weighted to be representative of the American adult general population, found that roughly one-third of respondents feel it is extremely or very important to work somewhere with a mix of employees of different races and ethnicities or ages.

Minshew notes that it’s much cheaper to commit to inclusion or diversity than to take action on those commitments, especially in a cash-strapped economic environment. But drastic cuts to DEI budgets, signaling a 180 from the lip service made just three years prior, can alienate younger or diverse talent who put stock into diversity and inclusion.

“I don’t think that the job seeker pool is going to care less about [diversity],” says Minshew. “So the question that I ask a lot of employers is whether they’re willing to be caught flat-footed or behind the curve when the labor market becomes stronger, and they struggle to keep talent in a more pronounced way because of their lack of attention to diversity.”

Paige McGlauflin
paige.mcglauflin@fortune.com
@paidion

P.S. I will be taking on the mantle of writing CHRO Daily. Shoot me a line at paige.mcglauflin@fortune.com.

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