How an early Kanye West scandal showed Adidas’ massive DEI shortcomings

Adidas recently shared upbeat Samba-fueled sales figures and an optimistic forecast. However, as I reported in a feature story published last week, its current turnaround obscures a reversal at the company that’s likely to have a long-term financial impact. 

There’s been an exodus of Black talent at the German athleticwear maker since 2020, when corporate America, including Adidas, faced a racial reckoning. That year, a coalition of 12 Black employees pushed the firm to take on ambitious DEI goals. Most members of that collective have since left. What’s more, nearly all Black leaders at the VP level and above in Adidas’s North America HQ have departed since early 2023. Many were “micro-aggressed” out the door, as one former employee said. One example: A Black senior leader recalled being asked in a meeting with the company’s executive board, “Why do Black men like to shoot people?” 

The spectacular collapse of Adidas’s partnership with Ye, the rapper formerly known as Kanye West, in 2022 has often overshadowed an older story about the experiences of Black employees at the company. In fact, the two themes are connected. In 2018, Black employees complained to Adidas leaders after Ye called slavery a “choice.” Many Black employees pushed the company to respond forcefully to the comments—some wanted to see the partnership severed then. But Adidas didn’t terminate the collaboration until Ye made antisemitic statements on social media. (The company had ignored offensive comments made in private meetings for years.) 

Adidas told Fortune that it remains committed to DEI and is proud of the progress made since 2020 in hiring Black and Latino workers and placing Black people into leadership roles. It denied assertions like that above regarding the question asked by a board member. It also said the rate of Black executive departures was similar to that of other groups, though it declined to share actual numbers or discuss changes at the highest levels of leadership. Employees have pushed back on Adidas’s claims, with one former insider telling me that employees feel a “rewinding” of the company’s DEI efforts. 

The situation at Adidas, in many ways, mirrors the struggle happening inside scores of firms. Several lessons about DEI also surfaced and reinforced some of the core principles that experts in this field have shared for years. Here are three examples:

Don’t ask those traumatized by a disaster to fix it. While the population who’s hurt by diversity shortcomings should have a voice in how to effect change, former employees say the coalition of people of color and their allies that was formed in 2020 was asked to take on loads of DEI work for free while senior management could remain less invested. One former executive and coalition member used an analogy. “It’s like there was a fire in the house and mom and dad didn’t know there was a fire, and you said, ‘Hey, mom and dad, there’s a fire here.’ And mom and dad said, ‘Oh, why don’t you put it out?’” 

Be transparent about retention, not just hiring. An Adidas spokesperson said the company tracks and responds to retention rates for employees of different underrepresented groups but declined to share those numbers. Needless to say, employees notice when people of a minority population are leaving as quickly as they’re being hired and will lose faith in a company that isn’t transparent about that data. “Any progress that we make is temporary progress,” one Adidas employee told me, calling retention a “loophole” in the company’s public DEI narrative.

To change corporate culture, go deep. When I asked former employees how Adidas could create sustainable change, the most common response was some version of “replace everyone at the top.” Several ex-employees of color told me the company had a habit of recycling executives, and they saw hiring now-CEO Bjørn Gulden, a white man who previously led Puma, as evidence of that playbook.

Read my full story here.

Lila MacLellan
@lilamaclellan
lila.maclellan@fortune.com

Today’s newsletter was curated by Ruth Umoh.

What’s Trending

Vote green. Black entrepreneurs, already finding it challenging to access loans, are frustrated over higher interest rates. That could sway how they vote. NYT

Death drop. Black and Latino workers have a higher on-the-job fatality rate than any other racial or ethnic group despite making up a significantly smaller share of the workforce. NBC News

Conservative quest. Officials in about one-third of U.S. states have now taken some sort of action against DEI initiatives. AP

The Big Think

The lack of adequate racial representation in the entertainment industry comes at a cost: a whopping $32.4 billion, to be exact.

McKinsey analysts tallied the potential revenue gain if Hollywood adopted more culturally inclusive business solutions, writes The Hollywood Reporter: 

—$10 billion per year from the Black market
—$12 billion to $18 billion from the Latino market
—$2 billion to $4.4 billion from the Asian and Pacific Islander market