Say It and Mean It: Committing to Inclusion and Company Culture
by Kelly Lewis, Vice President at TurnkeyZRG
Over the last year, Corporate America has been estimated to lay off nearly 275,000 employees according to Layoffs.fyi, a website that tracks such announcements. The reports of cuts continue to occur from companies as large as Meta and Amazon to smaller corporations and startups. While the perceived looming thoughts of a recession are cited as the cause, many scholars disagree.
Stanford Business Professor, Jeffrey Pfeffer, attributes the recent layoffs to a phenomenon called "Social Contagion." Meaning companies are engaging in copycat behavior. In the Atlantic article The Tech-Layoff "Contagion," Professor Pfeffer was cited saying: "Was there a bubble in valuations? Absolutely … Did Meta overhire? Probably. But is that why they are laying people off? Of course not … These companies are all making money. They are doing it because other companies are doing it."
It turns out that in these layoffs, Diversity and Inclusion departments are disproportionately affected. Revelio Labs released a new report that found a 33% churn rate for DEI-related roles. Attrition rates for DEI roles in companies experiencing layoffs have outpaced non-DEI roles by more than 10% since 2020. However, in the last six months, the report shows a precipitous increase in layoffs of Inclusion practitioners and an overall decline in company-defined "diverse" hiring.
Many companies invested in DEI talent as part of the post-George Floyd pledges to intentionally increase employees' and consumers' economic and societal outcomes. Yet, three years later, we are seeing a continuous wave of failed commitments and the complete elimination of departments. Ultimately leaving these companies at risk for navigating imminent DEI issues, including Affirmative Action in education and national political policies (i.e., Florida's Stop WOKE Act). Additionally, these layoffs most assuredly impact recruiting and retention efforts; as a Washington Post article suggests, "for younger job seekers, diversity and inclusion in the workplace aren't a preference. They're a requirement."
Why Should Businesses Care About Affirmative Action?
Affirmative Action will have a direct impact on the potential makeup of the workforce.
The potential visual makeup of the workforce might change drastically. Let's look at the University of Michigan, for example. I selected this institution due to its rich history in Affirmative Action debates. On June 23, 2003, the United States Supreme Court upheld the right of universities to consider race in admissions procedures to achieve a diverse student body. However, three years later –and 17 years ago —Michigan voters passed Proposal 2 in 2006, banning all Affirmative Action in the state's public universities. Since then, the percentage of Black undergraduate student enrollment has failed to reach levels pre-Proposal 2.
Using data from Michigan's largest and most progressive College, Literature, Science, and Art, we can see an interesting trend in post-secondary attainment for those benefiting from Affirmative Action and race-centric practices. As stated in the UMICH 2003 press release following the victory in the Supreme Court, "Historically, the College of Literature, Science, and the Arts has been committed to the ideal of a diverse student body, pioneering in the admission of women and students of color." According to the Registrar's office, in 2023, there were 20,399 students in Michigan's largest College, the College of Literature, Science, and the Arts. In that year, there were 887 Black students: just 4% of the population of the College. While in 2006, there were 17,603 students, 1351, or approximately 8% of the population, were Black students. This results in a 34% decrease in Black representation; the same can not be said regarding Hispanic representation.
At first glance, one might assume that the promise of that commitment is evident in the Hispanic representation during the same period. The table does illustrate an increase in Hispanic representation, leading one to naively assume the growth shows that we can still achieve maximum diversity in a "post-race-centric" society. However, when the onset of the Deferred Action for Childhood Arrivals (DACA) program and Instate tuition was announced in the state of Michigan, we saw an 82% uptick in Hispanic representation between 2006 and 2023, illustrating that intentional race-based policy designed to level the playing field has proven successful.
Similarly to Affirmative Action, the future of DACA is unclear. In October, a federal appeals court agreed with a district court in Texas that DACA's creation in 2012 was illegal. According to the Texas Tribune,
the ruling halted new applications for DACA, affecting roughly 93,000 people. Currently, the appeals court tasked the federal district court with reviewing the differences between the 2012 executive order that created the program and the 2022 rule that seeks to preserve it. In the meantime, Attorney Generals from nine conservative states have formed a coalition to challenge the Biden Administration's attempt to preserve the program.
Dozens of companies across all different industries filed an amicus brief supporting Affirmative Action, noting that diverse workforces improve business performance "and thus strengthen the American and global economies."
Affirmative Action will have a direct impact on corporate initiatives.
With the changing landscape of diversity and inclusion, publicly traded companies, including Pfizer Inc., Amazon.com Inc., and Starbucks Corp., have recently faced lawsuits over diversity programs, with conservative groups alleging discrimination based on race and ethnicity. The potential collapse of Affirmative Action programs, designed to level the playing field for historically underestimated identities, particularly women and people of color, are at risk. This includes any charitable initiatives for minorities, employee resource groups, intentional investment in minority-serving institutions, or mentoring and leadership opportunities for underrepresented groups.
Additionally, organizations must be prepared to assess their DEI programs for any gender-conscious efforts—which is often left out in recent Affirmative Action discussions. While initially, women weren't even included in legislation attempting to level the playing field in education and employment, the amendment in 1967 to include sex has propelled White women in the workplace disproportionally faster. According to one study, in 1995, 6 million women, the majority of whom were white, had jobs they wouldn't have otherwise held but for Affirmative Action.
Today this notion still runs true. The new Women in the Workplace report published by McKinsey & Co. and LeanIn.org found that the representation for women of color in the C-suite was 4%, versus a whopping 62% for white men. It was 20% for white women and 13% for men of color. Additionally, as we even begin to look at the position of Chief Diversity Officer, we can see different professional and financial outcomes.
The Makeup of Chief Diversity Officers was reported in a recent study. Contrary to popular belief, more than 70% of these positions are held by those who identify as white, with women holding more roles at 54.5%. Additionally, White chief diversity officers have the highest average salary compared to other ethnicities; Black or African-American chief diversity officers have the lowest average salary at $92,978.
Partisan Politics
Today some political policies and acts directly impact the inclusive culture of companies and businesses. The business world has been pulled into partisan politics, with both parties bringing their efforts to congress and legislation.
Republicans:
In recent months, Conservatives have increasingly attacked the practice of social consciousness in business, arguing that it promotes liberal priorities not associated with the business. Such liberal proprieties include climate change, the Black Lives Matter movement, and LGBTQ rights.
These pressures have caused many publicly-traded companies to reverse some of their commitments. Vanguard, one of the world's largest investment firms, recently withdrew from the Net Zero Asset Managers initiative. This program was intended to engage institutional money managers in the fight against climate change. According to a N.Y. Times article, BlackRock, the world's largest asset manager, intentionally reminds conservative politicians that it still invests in fossil fuel industries. However, it supports efforts to reduce planet-warming emissions, illustrating a fear of repercussions from top GOP representation.
The fear of repercussions is alive and well in today's society. In recent months, Governor DeSantis and Abbott moved to block state colleges' diversity, equity, and inclusion initiatives. And Governor Abbot took the initiatives one step further by warning state agencies and public colleges that it is illegal to make hiring decisions based on DEI. Since this announcement, there have been stories such as Florida teacher who posted video showing empty bookshelves in school library gets fired." DeSantis signed a bill to take control of municipal services and development for the special zone encompassing Walt Disney World. This move is believed to be political payback for Disney officials opposing discussions about gender identity and sexual orientation in classrooms.
Democrats:
Under the Biden administration, we have continued to see policies that encourage workplace transparency and equity. New salary transparency laws are rolling out across the U.S. As of Jan. 1, 2023, three additional states, California, Rhode Island, and Washington, joined the cause of enacting salary transparency laws. Touted as a means to build trust with employees and boost engagement and productivity, pay transparency laws also have some hidden benefits: it allows workers from underrepresented backgrounds to have more leverage in negotiation with the hope of closing the gender and racial wage gaps.
Recently, the NLRB banned non-disparagement clauses in severance agreements. The decision involved severance agreements offered to employees that prohibited them from making statements that could disparage the employer and from disclosing the terms of the agreement itself. This change has dramatic impacts on workplace culture. For those companies not thinking intentionally about culture and inclusivity, gone are the days where you can "buy" silence of those negatively impacted by your organization's culture.
Other democratic lead initiatives:
California's Reparations Task Force
Bill Would Study Universal Health Care for Colorado
When it comes to the public commitment to advancing an inclusive culture, sporting organizations joined alongside tech and other fortune 500 companies. Since then, across all leagues, we have seen a positive boost in these efforts. Whether it's the NHL strategic plan on DEI advancement, the NBA ensuring the CDO representation despite transition in the position, MLS historic partnership with Black Banks, or Athletic conferences with designated DEO practitioners, U.S. Soccer is 100% committed to equal pay for our national team players or the WNBA excelling in diverse hiring; sports entities are doing the work. The question becomes, for how long?
We know the road to inclusive excellence is long, with no definite destination. To be better requires a long-term commitment to rethink our definition of culture, deepen our understanding of whom DEI programs affect, and the courageousness to stand up against all detractors for what's right for the athletes and employees, the business, and the fans. As sporting professionals and companies, we have a unique opportunity to go against the tides regarding the groupthink and copycat behavior of being disingenuous with our commitments to inclusion and culture. It's now more essential than ever that we remain steadfast in our commitments to an inclusive culture.
We said it. We said it loud. Now we must mean it.
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ABOUT TURNKEYZRG
Founded in 1996, TurnkeyZRG is a highly specialized talent recruitment/executive search firm filling C-level, senior-level and mid-management level positions throughout sports, entertainment and media. Over the past 25 years, TurnkeyZRG has filled more than 1,400 positions throughout sports, entertainment and media. TurnkeyZRG helps teams, leagues, stadiums, arenas, theaters, college athletic departments, events, sponsors, agencies, media companies, private equity companies and other clients identify, recruit and hire the very best management talent. Turnkey now benefits from ZRG’s global footprint, full array of industry practice groups, data-driven, analytical search tools, and technology investment in changing the way executive search/talent recruiting is done. TurnkeyZRG becomes a tech-enabled disrupter of the prior executive search model.