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Toward Equity: In Economic Downturns, Focus on Diversity

Toward Equity: In Economic Downturns, Focus on Diversity

February 2023

Companies thinking of scaling back on their DEI initiatives in response to economic uncertainty should think again.

That’s the recommendation of Ashish Kaushal, founder of Consciously Unbiased and CEO of HireTalent, writing in Forbes as a member of its Business Council.

As the economy sputters, businesses might be tempted to shift resources away from their DEI efforts. Companies, especially tech firms, are laying off thousands of employees — a response to over hiring, they say. With the possibility of a recession, there are fears that companies in other sectors might soon follow suit. The firings have already taken a toll on the diversity of these businesses, as Reuters reported in early January.

Last year’s layoffs by tech companies “are disproportionately affecting women and mid-career talent which may make it difficult to improve diversity in one of the most sought-after industries,” according to Reuters. This alone could lead to “fewer women and non-Asian minorities in tech firms and further entrench the dominance of white and Asian males in the industry.”

Attracting Talent

As these firms become less diverse, they will find it more difficult to attract diverse talent. Benjamin Juarez, a recruiting consultant and co-founder of Latinos in Tech, told Reuters that means early-career, underrepresented talent will be competing with experienced workers for entry-level jobs.

But those are only two reasons that weakening the commitment to DEI efforts is a mistake. There are at least four others.

  • An inclusive workforce makes it more likely that a business can weather an economic downturn, Kaushal notes. Diverse workforces “help boost innovation, attract diverse talent, increase employee retention and ultimately lead to higher revenue growth. Companies that keep their foot on the gas pedal in terms of their DEI initiatives may be better prepared during a recession to not only survive but thrive. “Now is the time to get ahead by prioritizing DEI,” Kaushal writes. “Doing so has the potential to build your brand reputation, long-term talent pools and customer base — all of which set companies up to increase their revenue.” (He cites a study by Great Place to Work that found that between 2006 and 2014, companies with inclusive workforces “saw their stock performance increase 35 percent while the S&P 500 had just a 9 percent gain.”)
  • Consistent DEI efforts also strengthen a brand’s reputation. Kaushal writes, “Pushing your DEI efforts down on your list of business priorities during an economic downturn can signal to customers and employees that your actions are more performative than authentic,” which — even if your intentions are sincere — damages your brand.
  • genuine and durable commitment to DEI attracts workers when a shortage persists. You might not know it from headlines about big firms laying off workers, but there is a serious scarcity of talent. By some estimates, the economy is short some 4 million workers. “In order to attract and retain talent now and in the future, DEI must remain at the forefront of your recruiting process, your onboarding process and your culture,” Kaushal writes. “When a company is known for having a diverse and inclusive workforce, they become a preferred employer, with 76% of candidates saying they prefer to join diverse teams. If you aren’t consistent in your commitment to inclusion, you’ll be less likely to attract and retain talent, and your people are your greatest resource regardless of the state of the economy.”
  • Backing off from DEI can alienate customers. By 2045, this country will have no racial or ethnic majority, and companies that prosper will be those that look like their customers. “The most successful organizations will have a workforce that reflects the diversity of the customers they serve and will be more equipped to understand what their customers want, feel and need,” Kaushal writes.

Bottom line: “DEI is not a trend, and it’s not going away. If companies want to thrive and use the economic downturn as an opportunity to innovate, DEI must remain at the top of their priority list,” Kaushal advises.

toward equity

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