Is DEI dying? Trump turns the tide on America’s racial reckoning

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The strongest philosophical basis for DEI has come from a series of McKinsey studies which trace a line to increased profitability. The studies, carried out between 2015 and 2023, suggested that the most diverse firms had a 39 percentage point advantage in having higher-than-average profit margins over the least-diverse firms.

From this sprang a wide range of actions from America’s most influential boardrooms. The world’s largest asset management firm, BlackRock’s decision to support a board diversity target of 30 per cent in its proxy voting guidelines was owed to these findings.

The same study was cited when in 2021 Nasdaq required listed companies to meet certain minimum targets for the gender and ethnic diversity of their boards – or explain in writing why they aren’t doing so.

The other push for DEI is mainly moral. It is seen as the right thing to do to achieve a just and less unequal society.

Less than 2 per cent of Fortune 500 CEOs are black, for example. And only a few women are in leadership positions despite making up about half of entry level corporate jobs.

DEI is often misunderstood and oversimplified in media coverage, according to Ms Minal Bopaiah, the founder of Brevity & Wit, a Washington DC-based consultancy, and the author of a 2021 book Equity: How to Design Organizations Where Everyone Thrives.

Her work has included working with National Public Radio’s news managers to design a system for diversifying news sources.

Eroding DEI would have consequences on American competitiveness, she told The Sunday Times.

“When you roll back DEI, you no longer are a global competitor for talent, because immigrants, people of colour, people with disabilities no longer feel like that’s a space where they can really succeed,” she said.

“The other part is when DEI is done well, it is integrated into products and services. And when it is rolled back, that means that your products and services can no longer speak to a more diverse and globalised customer base or audience. So it’s probably not in the company’s long term best interest.”

Today, when artificial intelligence (AI) algorithms are often tasked with selecting candidates who match the profiles of historically successful employees in an organisation, there is an additional need for DEI-aware hiring systems, or they may perpetuate existing inequalities, she said.

Even when explicitly instructed not to use race or gender as selection criteria, AI can err, Ms Bopaiah says. It might find “proxy” characteristics that correlate with race or gender, even if they are not directly related to job performance.

“AI might say this person played rugby in college, they’re probably going to do well here, but that’s a proxy for being white and male,” she said, adding that having played rugby is immaterial if the job is at a tech firm, for instance.

The US education system tends to perpetuate historical inequalities, she pointed out.

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Is DEI dying? Trump turns the tide on America’s racial reckoning

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