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Donald Trump’s first weeks in office, and his executive orders aimed at dismantling DEI, have sent shivers down the spine of corporate America and are already impacting how companies are doing business. Many Fortune 500 companies including Goldman Sachs, Disney, and Target have made efforts to eradicate programs that the new administration may consider illegal or discriminatory, only a few years after making such commitments in the first place.
But companies that once boosted their DEI programs, only to later retract their promises, could be in trouble, according to new research from the Columbia Business School. Researchers analyzed 348 statements on allyship from Fortune 500 companies and found that to effectively convey true allyship with disadvantaged groups, organizations must commit both resources and demonstrate an ongoing commitment. Only then are they perceived as more “authentic” to customers.
If brands turn their backs on previously made dedications, they could face reputational risk that tends to “stick” with them long after the political climate changes, says Rebecca Ponce de Leon, assistant professor of management at Columbia Business School and one of the researchers of the study.
“Just because a company has released a statement talking about injustice against marginalized groups, or has donated money towards a cause will not necessarily improve their ranks amongst consumers,” says Ponce de Leon, “unless people can also trust that these types of actions are likely to continue over time, when the specific moment has passed and it’s no longer prescribed.”
Retail giant Target finds itself in just this kind of dilemma. After being a leading advocate for DEI programs in the business world for years, the company announced on Jan. 24 that it will be eliminating hiring goals for minority employees, as well as stopping a program set out to partner with more brands from Black-led companies. The backlash was fierce, sparking outrage from customers who boycotted the move. Even the daughters of the late Target founder wrote they were “shocked” by the rapid change of pace, calling it a “betrayal” of their father’s original vision of the brand.
That kind of backlash “speaks to the importance of leaders being really clear about what their values are and staying true to those values,” says Ponce de Leon. “Even if the politics in society change, even if public opinion changes.”
Brit Morse
brit.morse@fortune.com
Around the Table
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DEI pushback is affecting companies outside of the U.S. as European executives are touting such efforts significantly less than a few years ago. Bloomberg
The FAA fired hundreds of employees in charge of aviation safety and security operations while the agency deals with recent crashes.Wall Street Journal
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