Business culture blues

DEI jobs are already being cut. How can businesses avoid more recessionary damage?

The business world changed dramatically in 2020. The police-involved murder of George Floyd added fuel to the call for diversity, equity, and inclusion (DEI), and the COVID-19 pandemic changed how and where we work. In the three years since, many companies promised a DEI focus and hired DEI managers to recognize a call to action and raise awareness, just as employees began working either remotely or hybrid.

Left in the dust was company culture, which prior to the pandemic was gaining in importance as a means to attract and retain workers. Now, companies large and small are trying to strike a balance between both DEI and workplace culture just as fewer employees are filling the physical office space. Top that off with fears of a looming recession, and top-notch leadership becomes even more critical.

Company culture and DEI will forever be intertwined when it comes to attracting workers. What follows is an exploration of what’s going on as corporate leaders face potential staff cuts in a post-pandemic recession and best practices for creating a healthy employee culture in a mostly hybrid world.

We sought comment from Nick Lombardino, co-founder of CultureCon, an annual two-day conference scheduled for August, Diara Parker, a CultureCon Advisory Board member and organizational equity consultant, and Kwame Salter, founder and CEO of The Salter Group LLC.

Preparing for a recession

The push and pull between whether to hire with a recession looming concerns many top executives. Historically, Greater Madison has tended to shuck the worst of economic downturns, but will that good fortune continue?

Around the country, employers are preparing. Jobs are being shed in anticipation of what some believe will be a downturn “worse than 2008,” impacting, in many cases, commitments made to DEI initiatives, typically a human resources function.

Big tech firms have begun announcing layoffs, and in many cases, DEI managers are among the cuts in a last hired/first fired strategy. Ironically, the cuts are more commonly affecting the people these companies committed to help. Amazon, Google, Microsoft, IBM, and Dell are among those that have announced cuts to thousands of employees in the past few months, with some citing automation as the reason. However, research from 365 Data Analysis indicates that most of those layoffs have been centered around human resources positions including recruitment and DEI.

According to Glassdoor, corporate DEI initiatives increased nationwide since 2020, from 29% to 43%, yet the latest layoffs question DEI commitments. Notes Cloey Callahan of WorkLife, “The avalanche of mass layoffs that have occurred, particularly at big tech companies, has experts concerned that companies are backtracking faster than they are progressing on diversity, equity, and inclusion efforts, despite all of the pledges made in the summer of 2020.” Does this threaten the future of DEI?

There’s a gender issue as well. Layoffs generally put an end to recruitment, at least temporarily, and recruitment and human resources jobs are largely held by women. According to the Tech Layoff Report 2023 conducted by Women Impact Tech and Andiamo, as tech companies cut 7% to 15% of their workforce, they also cut talent acquisition and recruiting jobs, affecting between 33% and 66% of DEI leaders. Paula Bratcher Ratliff, CEO of Women Impact Tech, suggests companies may “bury DEI shortcomings with the backdrop of anticipated recession and efficiency measures.”

This, at a time when recent data indicates that 76% of job seekers and employees nationwide consider diversity and inclusion when seeking a new employer. Workers aged 18–34 are the most passionate on that level; passion wanes, however, as workers age. By the age of 55 to 65, only 52% say they would leave a company if it didn’t support a DEI mindset. This may not be surprising considering DEI is a relatively new concept, but it does emphasize the importance DEI will hold in the workplace as companies prepare their cultures for the future.

Cultural cutting

KPMG, a global network of professional accounting firms, surveyed 1,300 CEOs recently and found that more than half were considering layoffs. A separate survey last October of 500 senior leaders conducted by Dynata on behalf of Outreach found that 67% are concerned that their companies would be less diverse due to planned layoffs and reduced headcounts.

Meanwhile, Glassdoor and Indeed’s Hiring and Workplace Trends report for 2023 identified five trends that will define the worker and the workplace of the future: a tight labor market and rising unemployment rates; remote/hybrid work; increased benefits — including mental health assistance — to differentiate organizations; happiness and well-being at work is important to workers, but often not a focus; and an increased commitment to DEI.

In fact, DEI should be embedded into every stage of the employee lifecycle, not just company recruiting efforts and hiring, but also in separations, according to an article in the Harvard Business Review [“Don’t Let Layoffs Undermine Your DEI Efforts”]. If forced to lay people off, there are ways to let people go in a kinder, more equitable manner, the article states:

1) Approach the separation with empathy. Layoffs are hurtful in all cases, so be upfront with your employees about how difficult it is, and let the world know the value of those people released by inviting other companies to hire them.

2) Consider demographics before cost-saving goals when determining who will be cut. Focusing only on cost savings at the expense of inclusion risks undermining the work they’ve already done to build trust and connection with their employees, particularly women and employees of color.

3) Design inclusive severance packages that offer a base package and then credit people for seniority as well; or offer a minimum of three to six months of COBRA coverage to help provide continuity for medical needs. COBRA distribution also can be presented as a lump sum so employees can manage finances based on need.

4) Don’t place the burden on the employee. They’ve been through enough and deserve a conversation in person as to why they were let go. Present all information in verbal and written formats and provide avenues for them to ask questions.

5) Care for the remaining employees. It will take time for things to get back to normal so it’s important that management supports the remaining staff, especially since a study by Leadership IQ found that 74% of employees who remained after a layoff reported their productivity declined. Encourage them to reach out to former colleagues and provide references if requested.

Diara Parker [CultureCon] advises against cutting culture and DEI staff. “While some companies may see culture and DEI initiatives as an optional, nonessential expense, cutting these core operational areas may have long-term adverse impacts on an organization’s reputation, employee morale and output, as well as its ability to thrive in a competitive market.”

She explains that the relationship between creating an inclusive and equity-centered workplace and the benefits it yields for businesses creates a mutually beneficial feedback loop for both employees and businesses. A diverse and inclusive workplace fosters innovation, improves decision making, and leads to increased productivity and employee outputs.

“Ultimately, organizational culture and DEI work is centered on supporting a company’s most valuable asset — its people. By continuing to prioritize the health and well-being of employees, particularly during a recession, companies can foster a sense of loyalty and commitment among their team, which in turn can boost morale, increase productivity, and lead to better business outcomes.”

While cost cutting may seem necessary during a recession, employers should carefully consider the potential unintended consequences of cutting culture and DEI initiatives, Parker cautions. “In many cases, the long-term benefits of these programs may outweigh the short-term cost savings.”

A kinder, gentler workforce

Workers continue to have the upper hand, and their demands are, in many cases, changing the workplace environment.

Lombardino and his CultureCon co-founder Zach Blumenfeld point to a societal shift that has risen from the pandemic, where empathy rules as employers embrace employees in holistic ways. Summarizing last year’s conference, they write: “Working environments are shifting from rigid, hierarchical, and inflexible to become more collaborative, equitable, and innovative.”

Lombardino provides some best practices companies can utilize to help keep employees engaged:

1) Encourage open, multichannel forms of communication. Companies cannot cultivate an inclusive culture if they don’t create open, safe spaces for employees to share their unique voices and diverse perspectives. Whether these channels include emails, chat platforms, town hall meetings or one-on-one meetings with managers, they can result in a celebration of diversity and a spirit of belonging at work.

2) Recognize your employees. A simple concept that often gets lost in the daily shuffle, recognition goes a long way. Salesforce, 2021, reports that 82% of employees who receive recognition and praise for their work are more likely to stay with their current employer. Recognition can be done verbally, with thank you notes, or in team shoutouts.

3) Emphasize work-life balance.
Trusted employees are those that can step away from their work to refocus during the day. “So long as employees understand their responsibilities to their organization and team members, they should have the autonomy to craft their day to bring out their best positive psychology and productivity,” Lombardino notes. Going to the gym in the morning, visiting friends for lunch, or taking time for medical appointments is becoming increasingly popular and, in many cases, encouraged by employers.

4) Promote learning and development. One growing trend is providing employees the autonomy to self-direct learning opportunities in support of their professional development goals, Lombardino says. Offering employees the freedom to select their experiences and educational outlets is particularly engaging to them.

5) Empower employees to create community. Businesses should empower employees to start their own self-forming interest groups and allow them to build meaningful relationships in person or virtually around shared passions.

6) Make leadership visible. The involvement of company leadership should be visible every step of the way.

Furthermore, employee burnout, can be addressed by prioritizing employee well-being through flexible work arrangements and by providing employee-assistance programs for mental health counseling. Many organizations also are adopting ‘no communications after 5 p.m.’ policies whereby employees are allowed to work if they so choose, but not allowed to contact other colleagues until the next morning.

The next generation of talent is motivated by purpose, humility, and social responsibility, Lombardino says, and companies recognizing this will have a “massive” competitive advantage.

Rather than focusing first on financial goals, the trend for some companies is redefining their purpose to move toward altruistic outcomes that inspire employees, connect better with customers, and reflect the business’ values.

Salter untapped

Kwame Salter, founder and CEO of The Salter Group LLC, has heard the chatter around a “retrenchment” in corporate headcounts and expects that some job cuts will occur, including positions related to diversity, equity, and inclusion.

“I’ve been skeptical of DEI in the way it’s set up,” he admits. “It’s not about DEI, because the issue is so much larger than that. What impact is DEI having? That’s the question.”

He discusses an illusion of inclusion. “What happens is we tend to placate people, but we’ve been at this game of affirmative action and diversity for over 60 years, and to what effect? Have we gained traction, or are we simply provided opportunities for some people to become DEI leaders? And what happens after that? Is there any upward mobility? Where do they go?

“As your business keeps growing, people around you are moving up the ladder but you’re still in that same DEI position. Do you have the power, the influence, or the connections you need to make a difference within the organization and really change the way the organization operates? Are the values of the organization behind you?”

Salter knows he rankles some people by suggesting that these positions should be filled by young, up-and-coming white males who understand who has the connections and who can make changes. “Instead, we take people who are basically targets for improvement and uplift and tell them, ‘You cure your own problem. We’re going to make you the voice of the organization.’”

They may have a voice, but no power. “Can they talk to a business leader and tell them to fix something? No, because they don’t have the power. Companies can take a very confident, high-performing person and give them a DEI position, but what about their skills, knowledge, and abilities? That’s what got them the job!”

Only three things can affect political change, Salter explains — power, value, and resources. “People in control will always give you the resources if you make enough noise — DEI, right? They may even give you some power in the area you’re responsible for, but what you’ll never get is a shift in values because what looks good, and what is good, is defined by those in power.”