Why DEI Job Cuts Will Hurt Your Company

Recently the Bank of England warned us that the UK is on the brink of a recession. According to EY “High energy prices, elevated inflation, rising interest rates and global economic weakness mean the UK economy is expected to be in recession until the middle of 2023”.

Whilst not minimising the effect that a recession will have on anyone, it is usually the Diversity, Equity, and Inclusion (DEI) category that is worst hit.

The Covid-19 pandemic, or more specifically, Lockdown, set us back almost 100 years and it’s now currently forecast that it’ll be the year 2279 before there is true gender equality in the workplace.

We have seen an unfortunate trend in the past year of job cuts at many major tech companies, including Meta, Stripe, Amazon, and Lyft – with some of the deepest cuts affecting those who work in diversity and inclusion teams. As our world increasingly moves online, it’s more important than ever to have a workforce that represents the diversity of our users. These job cuts not only set back the progress that has been made in recent years, but they also send a message that companies are not prioritising DEI initiatives.

And then there is Twitter. Since Elon Musk has taken ownership their DEI team has been almost wiped out immediately. This was following the ‘Chief Diversity Officer’, Dalana Brand, who resigned with immediate effect upon Musk’s purchase of the business. Employees also reported that the company has since dissolved its Employee Resource Groups (ERG). 

When times get tough, and budgets are tight, DEI teams are often one of the first areas to have their spending slashed despite being essential to maintaining a positive workplace atmosphere. This is likely because these departments are seen as pure overhead with little direct impact on the company’s bottom line. However, it can be argued that this way of thinking fails to take into account the indirect benefits of happy and diverse employees who are more productive and less likely to leave the company.

While it may seem difficult to keep functions in place whose bottom-line impact isn’t readily apparent during an economic recession, company leaders can still show a dedication to DEI. This can be done by ensuring DEI initiatives and best practices are embedded across all functions, collaborating with diversity business partners and ERG leads, involving remaining DEI staff in executive meetings, and examining promotions and performance management with an equity-minded perspective.

As a CEO, there are many factors you can control; however, the state of the economy is not one of them. With today’s ever-changing financial trends, even the slightest possibility of a recession can cause fear and panic among business leaders which quickly turns their attention to finding ways to reduce spending.

In times of economic hardship, it’s important to stay calm and strategic. When revising your corporate budget, be thoughtful and careful – you want to make sure you’re still able to achieve your company’s goals of operating efficiently and growing strategically. If you cut too deeply, you’ll only end up hurting your company in the long run.

Those that have had to put their DEI initiatives on hold during the recession may find that, as they emerge from the recession and try to restart those initiatives, they face negative consequences in terms of staff morale and ultimately, their bottom line.

Your company has likely spent a lot of time, effort, and resources into developing a strong DEI program – so it would make very little sense to get rid of it now. Instead, focus on cutting back assets or programs that could be easily replaced or recreated if necessary. The economy can change at a moment’s notice, so be conscious of not taking away funding for personnel, capabilities, or assets that you’ll end up needing in the future when things start to look up again. Staying committed to your DEI initiatives will continue to positively impact your company in the long run.

Times of hardship and adversity are when a company’s values should shine the brightest. This is the time to stand by your commitments, especially when it comes to DEI. To decrease or even eliminate the risks associated with a lack of DEI reputational damage that will be difficult to repair down the road. Companies that are successful with DEI stay “true to their word” daily, and will be the ones to prosper when we turn the corner into economic expansion.

Pinky Ghadiali

Pinky Ghadiali

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