September 30, 2024

ETHICS MEGATREND:

How Equal Employment Became D.E.I.

This is the fourth of a series of essays on the history of the “responsible business” movement. In prior essays, I addressed how workers are treated; the responsibilities of companies to produce safe, effective, and fairly priced products; and the rapidly changing meaning of corporate social responsibility. The past essays are available here. Be sure to look at the end of this newsletter for some feedback from readers regarding the first essay on how workers are treated.

One of the great advances in business responsibility in the past 60 years has been how opportunities for Americans previously excluded from the workforce—people of color, women, the disabled, the aged, and sexual minorities—have been expanded. Prior to the 1964 Civil Rights Act, very few women and people of color held supervisory and professional jobs. Job notices often stated “men only” and “women only,” and occasionally even “white applicants only.”  

The Equal Employment Era

President Harry Truman opened the military to minorities in a 1948 executive order. The Supreme Court outlawed segregated public schools in 1954. In 1964, President Lyndon Johnson signed the landmark Civil Rights Act, which banned discrimination based on race, color, religion, sex, or national origin. Ironically, sex was added as an amendment by a southern congressman who thought the notion that women would have equal employment rights to be so controversial that he was sure it would help defeat the act. Besides employment, the act banned discrimination in public accommodations, public education, voting rights, and federally funded programs. In 1967, the federal Age Discrimination Act further prohibited discrimination against workers over 40 years old.

These federal laws launched corporate programs under the banner of “equal employment opportunity.” However, progress on this massive cultural change was limited until 1971 when President Richard Nixon signed the Equal Opportunity Employment executive order. During the interim period, as with any other business responsibility reform, some companies had moved forward rapidly while many others lagged behind. Most business schools lagged behind as well. My Stanford Business School MBA class of 1971 had just four women and about the same number of Black students, out of a class of 315.  

The Affirmative Action Era

In 1965, to follow up the Civil Rights Act one year earlier, President Johnson had issued Executive Order 11246 which required government contractors to adopt ‘affirmative action’ programs. In 1971, President Nixon followed up by signing the Equal Employment Opportunities Act which empowered the Equal Employment Opportunities Commission (EEOC) to enforce the non-discrimination provisions by conducting investigations, hearing complaints from workers that they were discriminated against, requiring reporting by companies on their minority and women’s employment, and joining private lawsuits and class actions on behalf of employees who faced discrimination.    

An increasing number of businesses throughout the 1970s and 1980s launched “affirmative action programs” to screen in minority and women candidates, and to encourage their advancement in the firm. Some went further to create programs and set quantitative goals to aid these employees to move up to management positions.  

The growth of equal employment and affirmative action programs was not without controversy. Pushback against specific goals or quotas for the hiring and promotion of women and minorities provoked claims that such programs were unjust and illegal. In 1978, the Supreme Court ruled that the affirmative action program for admission to the University of California Davis School of Medicine was illegal because it reserved 16 of 100 places in each entering class for minorities. From 1975 to the present day, the Supreme Court has weighed in multiple times to classify particular strategies to hire and promote workers, and to promote diversity in the student bodies of colleges, as legal or illegal. Throughout this period, companies and colleges found ways to promote diversity that passed judicial review.

The 1980s and early 1990s saw an epidemic of HIV/AIDS which first focused national attention on gay Americans, who were disproportionately early victims of the disease. For a few pioneering companies, gay and lesbian issues, and later advocacy for the concerns of the entire LGBTQ+ community, were gradually incorporated into diversity concerns. Despite the fact that no federal law banning discrimination against LGBTQ+ employees was passed, their acceptance and inclusion in diversity concerns advanced steadily.

During the 1970s and 1980s, increasing demands from those with disabilities made discrimination in employment and accommodations, as well as the consumer marketplace, a major issue. The 1990 Americans with Disabilities Act added the disabled to the agenda of equal employment/affirmative action programs nationwide.

The Diversity Era

During the 1990s through the 2000s, corporate programs became more sophisticated in promoting both hiring and promotion of previously excluded employees. Affirmative action programs increasingly were described as diversity programs. More stringent federal and state requirements for employment reporting, and increased attention to the effects of discrimination, encouraged this trend. Innovations developed included more effective corporate recruiting programs to attract diverse candidates, mentoring for employees in underrepresented groups, and company-sponsored employee resource groups (ESGs). 

As companies expanded their diversity programs, a positive case for diversity emerged. Diversity, it was increasingly argued, increased creativity and problem solving in corporate teams and managements. Diversity programs could unlock talent already in a company’s workforce and create a culture safer for all employees. Diversity in university settings, it was argued, prepares college and professional students to manage the growing diversity of workforces in the coming decades.

The DEI Era

Beginning in about 2010, the terms “equity” and “inclusion” were increasingly added to the corporate agenda. Equity focused attention on the disadvantages many workers suffered due to poor schooling, few family resources, and the racial wealth gap that continued to exist. Many companies expanded their efforts to level the playing field and enable “underrepresented” groups to qualify and take advantage of employment and wealth-generating opportunities. Inclusion focused on what happens after an employee takes a job. It seeks to ensure that diverse people are welcomed, supported and valued in a workplace and community.  Psychological safety became an explicit concern of DEI.

A few vice presidents and managers of diversity adopted the DEI title before June 2020 when a police officer in Minneapolis murdered a Black man named George Floyd, an incident filmed by a bystander. In the wake of this incident, which highlighted how minorities are often mistreated as if they did not matter, corporate efforts toward diversity, equity and inclusion expanded rapidly and dramatically. Companies expanded their efforts to make DEI part of the company’s core values, to combat unconscious bias, to encourage cultural connections and celebrations, to adopt inclusive language, and to find ways to give employees a sense of belonging in the company. The title VP or manager of DEI became the norm in most large American companies.

DEI Under Fire

The polarized politics of the 2020s, characterized by conservative politicians seeking to establish their credentials as anti-social change or even anti-diversity (which they call “anti-woke”), led to a backlash against DEI efforts across all American institutions. Florida Governor Ron DeSantis banned DEI programs in any Florida public university or government agency. Conservative activist Robby Starbuck threatened prominent consumer products companies, as well as universities and colleges, with boycotts and litigation to protest their DEI programs.   These threats were taken more seriously after Bud Light beer suffered significant loss of market share in 2023 due to a boycott to protest the brand’s collaboration with a transgender blogger.  

Over the last 12-18 months, a series of notable companies—Ford, Deere, Tractor Supply, Lowe’s, brewer Molson Coors, Harley Davidson and others—announced they were curtailing their DEI programs to avoid boycotts and negative publicity. Among other actions, such companies are withdrawing from voluntary associations which collected data to track progress on employment equality. Supporters of DEI argued that such decisions are capitulation to racist attitudes, and will cost the companies more in the long run because they would not capture the benefits of diversity. As clearly as can be determined today, most corporate DEI activities continue, but participation in publicly visible initiatives is being avoided by a growing number of companies.

Where is DEI Going? 

The future of DEI efforts is unclear. Many institutions, including a large number of public and private universities, have reaffirmed their efforts toward diversity, equity and inclusion. Other companies, often targeted by anti-DEI politicians or activists, have formally abandoned DEI programs, but continue most DEI efforts under new program names and titles. Given executive or board decisions to limit or abandon some DEI efforts, a small but highly visible number of DEI executives have resigned to protest their institution’s decisions. 

Some observers believe the current anti-DEI and anti-woke period will pass quickly. Should conservatives suffer significant electoral defeats in the fall 2024 elections, a few observers believe the momentum will shift back to a renewed DEI era. Some argue the anti-DEI movement is simply an anticipated and temporary backlash after 5-10 years of rapid progress toward greater diversity. Others argue that the DEI movement has indeed tested the tolerance of Americans for programs which favor selected groups, no matter how disadvantaged they may have been.

What do you think is the most likely future for DEI efforts? Please respond to this newsletter, and I will include selected responses in a future newsletter.

Reader Feedback on my essay on responsible corporate actions to treat all employees more humanely. See here for the original essay.  

Key predictions made by my readers included:  

• Millennial and GenZ workers will demand different things than prior generations, particularly expanded parental leave policies and permanently flexible work. 

• Companies will finally realize they need to help employees grow in their capabilities and self-actualize, in Maslow’s terms. This will dramatically change the workplace and terms of employment. 

• The issue of overwork will be a prominent one over the next decade as demands for reduced hours for medical interns, young investment bankers, and so many others accelerate.

Past newsletters available at: kirkohanson.com/newsletters.

ETHICS MEGATRENDS is published twice monthly by Kirk O. Hanson, Senior Lecturer Emeritus at the Stanford Business School, retired university professor and executive director at the Markkula Center for Applied Ethics at Santa Clara University.