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Corporate America began losing its love affair with DEI -- diversity, equity, and inclusion -- departments in 2023. Companies in many sectors cut DEI officers and programs -- in fact, one-third of DEI professionals lost their jobs in 2023, including reductions in DEI staff at Amazon, Applebee's, and Twitter. States also began outlawing DEI programs in state-funded universities. More recently, former Harvard President Claudine Gay's resignation was at the front and center of DEI controversies.
So, it's no surprise that DEI is a matter of hot contention on X (formerly known as Twitter). But what was surprising was the interaction between Elon Musk and Mark Cuban. Musk tweeted, in the context of Gay's resignation:
He then added:
Mark Cuban countered with a multi-post thread describing why he values DEI. It begins:
And here's the reality: Cuban and Musk are both right. And they're both wrong.
Cuban is on the mark that diverse companies can offer things that other companies cannot. A 2020 McKinsey study found that "the business case [for diversity] remains robust but also that the relationship between diversity on executive teams and the likelihood of financial outperformance has strengthened over time."
A lack of intellectual diversity doomed Anheuser Busch when they insulted their current customers in an attempt to gain new ones. As business Strategist Roger Martin explained, when "Bud Light Marketing VP Alissa Heinerscheid was explicit about wanting to send to younger beer drinkers a message of 'inclusivity' that 'appealed to both men and women'", they neglected to realize that insulting the "fratty, kind of out of touch" (Heinerscheid's words) curent buyers, no one thought through how their core customer base would respond. Perhaps if they had had a more diverse department, someone would have pointed out that inclusivity shouldn't mean insulting a group of people.
Companies, as Cuban said, that can understand where their employees and their customers come from will have better success. He says,
One of my favorite sayings is that 'Great employees reduce the stress of those around them.'
Great companies create environments that reduce unnecessary stress of their employees (Im [sic] not talking hitting quota or getting the product out the door stress), which in turn increases productivity
This is what Inclusion is all about. Making all employees, no matter who they are or how they see themselves, feel comfortable in their environment and able to do their jobs.
But Musk also has a point.
Companies -- and, more publicly, universities -- have tried to increase diversity by discriminating on the basis of race. In June of last year, the U.S. Supreme Court ruled that Harvard and the University of North Carolina had violated the law in making race a central part of their admissions criteria. Chief Justice John G. Roberts Jr wrote:
The Harvard and U.N.C. admissions programs cannot be reconciled with the guarantees of the equal protection clause. Both programs lack sufficiently focused and measurable objectives warranting the use of race, unavoidably employ race in a negative manner, involve racial stereotyping and lack meaningful end points.
Following this court decision, the Attorneys General of 13 states sent a letter to Fortune 100 company CEOs detailing similar issues. They wrote:
Racial quotas and other explicitly race-based practices in recruitment, hiring, promotion, and/or contracting have also been adopted by other major companies, such as Airbnb, Apple, Cisco, Facebook, Google, Intel, Lyft, Microsoft, Netflix, Paypal, Snapchat, TikTok, Uber, and others.
If you or your hiring managers judge candidates or employees based on their skin color or ethnic background, that is discrimination -- and illegal discrimination at that. Companies that prioritize skin color over skills are engaging in illegal discrimination.
What's more, the DEI programs that became so popular in 2020 often didn't make things better. Writing at (irony alert) Harvard Business Review, Lily Zheng a DEI strategist and consultant, says: "Unconscious bias training rarely changes actual behaviors and has little impact on explicit biases. A meta-analysis of hundreds of prejudice-reduction interventions found few that unambiguously achieved their goals."
Zheng went on: "Many popular interventions run the risk of backlash, strong adverse reactions that sustain or even worsen the inequity that practitioners attempt to eliminate. Even 'the business case for diversity,' a decades-old rhetorical framing and justification for DEI work, has been found to backfire on marginalized groups' feelings of belonging and weaken support for diversity programs when organizational performance drops."
There isn't one perfect way to make everyone feel included, but there is a legal one: You cannot hire, promote, assign projects, or do anything else based on employees' race. That's illegal discrimination. You can reach out to different groups and work hard to get applicants from all backgrounds to apply. But once they've applied, you've got to pick the best candidate for the job.
Musk is right that DEI can lead to discrimination. Cuban is right that diversity can be helpful for companies. But on the other side, Musk is wrong in that DEI can lead to better outcomes for businesses and employees. And Cuban needs to recognize that there are often negative outcomes when there is a push to judge people by their skin color rather than their knowledge, skills, and abilities, which sometimes happens with DEI efforts.
If your DEI efforts result in discriminatory hiring, or perks for some groups and not for others, then that is a failure. But if your DEI efforts result in a happy, engaged staff where people feel comfortable working together, then that's a win.
A refreshed look at leadership from the desk of CEO and chief content officer Stephanie Mehta
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