Bill Ackman and Elon Musk called DEI ‘racist’ but companies need it to succeed, experts say

The DEI Debate: What's Next for Diversity, Equity, and Inclusion?

Billionaires and business leaders are engaged in a heated argument over the existence of diversity, equity, and inclusion (DEI) efforts. Investor Bill Ackman and Elon Musk have gone so far as to label these programs as "racist." However, experts argue that DEI is crucial for the success of companies and that these efforts are unlikely to disappear.

Attacks on DEI by High-Profile Figures

The controversy surrounding DEI has caught the attention of influential figures in the business world. Billionaire investor Bill Ackman, known for his vocal criticism of antisemitic rhetoric at Harvard, has now turned his focus to DEI. In a recent post on X, Ackman claimed that DEI is the "root cause of antisemitism at Harvard," his alma mater.

Elon Musk also joined the debate, targeting fellow billionaire Mark Cuban for his support of DEI efforts. Cuban argued in a post on X that certain individuals are regularly excluded from hiring consideration due to their race, ethnicity, or orientation. In response, Musk dismissed DEI as "just another word for racism."

The Future of DEI: Evolution and Persistence

The clashes between billionaires over DEI suggest that the focus on diversity will continue to evolve in the coming years. While some aspects of DEI might change, experts believe that these efforts will remain a significant part of academia and the corporate world.

Joelle Emerson, cofounder and CEO of DEI advisory firm Paradigm, emphasizes that discussions surrounding DEI are not centered around whether it should exist but rather on how to navigate external distractions. Boards and C-suite teams are actively engaged in finding ways to overcome these challenges.

Practicality and Shifting Priorities

One reason why DEI efforts might undergo changes is the practicality of carrying out this work. Layoffs in DEI departments have resulted in a shortage of personnel. The departure of over a third of individuals who started diversity-related roles following the George Floyd protests has left a void, according to research by Live Data Technologies.

Jeffrey Sonnenfeld, senior associate dean for leadership studies at Yale School of Management, also points out that the business world's attention shifts between different topics. Currently, artificial intelligence is the primary focus, leading to less emphasis on DEI in some companies.

Sonnenfeld further highlights that the attacks on Harvard provided an opportunity for critics to redirect the conversation towards DEI instead of focusing on the issues at hand. This communication failure discredited the university's educators and diverted attention from the original concerns.

DEI Backlash and the Supreme Court Ruling

The recent attacks on DEI followed a Supreme Court ruling that effectively limited the use of affirmative action in college admissions. This decision emboldened conservative critics of affirmative action and influenced the discussion around diversity in various sectors. However, a survey by Bridge Partners revealed that 96% of C-suite and HR leaders still consider DEI programs to be important for their organizations.

Research from McKinsey supports the idea that diverse and inclusive companies tend to be more profitable, innovative, and show greater levels of patent filing. The representation of diverse voices in leadership positions is seen as a significant advantage by 95% of corporate America.

DEI's Impact on Business

Despite the criticism, CEOs are unlikely to retreat from their efforts to promote diversity. Kedra Newsom Reeves, a managing director and partner at Boston Consulting Group, highlights that equity and inclusion efforts can drive tangible business results. These include increased innovation, better access to customer markets, and improved employee performance.

BCG advises companies to adopt an equitable and inclusive strategy that benefits both the organization and society as a whole. Critics argue that DEI efforts can exclude talented workers based on their backgrounds, potentially putting shareholders at risk. However, many companies continue to pursue diversity initiatives by focusing on outcomes such as employee retention and revenue growth.

Moving Away from Performative Actions

Early discussions around DEI in the corporate world were often performative, driven by a fear of being called out for inaction. However, Joelle Emerson hopes that companies will move away from this superficial approach and integrate diversity and inclusion efforts into all decision-making processes. Instead of treating DEI as a separate initiative, she advocates for a comprehensive approach that ensures diverse voices are included across all teams.

Newsom Reeves also emphasizes the importance of driving impact and focusing on outcomes rather than simply meeting diversity targets. Companies should consider how their diversity initiatives can positively influence employee retention, revenue generation, and overall performance.

Understanding the Context: The Case of Harvard

Jeffrey Sonnenfeld cautions against using DEI debates to exploit individuals and distract from the real issues at hand. In the case of Harvard, the focus should have been on the handling of the university president's testimony before Congress and the subsequent allegations of plagiarism, rather than making her a symbol of DEI-related problems.

The debates surrounding DEI are regrettable because they overshadow the true reasons behind the resignation of Harvard's president. Exploiting individuals for ideological purposes distracts from the core issues and hinders progress.

In conclusion, despite the criticism and debates surrounding DEI, experts agree that these efforts are essential for the success of companies. The future of DEI might involve some changes, but its significance in academia and the corporate world will persist. Business leaders are encouraged to adopt a comprehensive and outcome-driven approach to diversity and inclusion.

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By: tparadis@businessinsider.com (Tim Paradis,Josée Rose)
Title: Bill Ackman and Elon Musk called DEI ‘racist’ but companies need it to succeed, experts say
Sourced From: www.businessinsider.com/bill-ackman-elon-musk-dont-want-dei-diversity-equity-inclusion-2024-1
Published Date: Sat, 06 Jan 2024 12:04:01 +0000