'Chief Diversity Officers' at major companies are leaving as the diversity industry crashes

A new report says that thousands of diversity-focused workers have been laid off since last year, while companies scale back racial justice commitments made in 2020.

'Chief Diversity Officers' at major companies are leaving as the diversity industry crashes
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Companies like Netflix, Disney, and Warner Bros. Discovery have recently announced that their diversity, equity and inclusion (DEI) executives will be leaving their positions, in what appears to be a larger trend of scaling back DEI jobs. 

According to a report in the Wall Street Journal, "Thousands of diversity-focused workers have been laid off since last year, and some companies are scaling back racial justice commitments." Many such racial justice commitments were made in 2020 as a response to the killing of George Floyd and subsequent widespread protests and riots across the United States. Companies raced to fill Chief Diversity Officer roles, adding a new position to the C-suite.

"In 2018, less than half the companies in the S&P 500 employed someone in the role, and by 2022 three out four companies had created a position, according to a study from Russell Reynolds, an executive search firm," the WSJ reported. 

However, the tide may be turning against the DEI industry, the global market for which a McKinsey report estimated at $7.5 billion in 2020. And the rush to hire diversity officers may have contributed to the ineffectiveness of the positions. 

During the pandemic, some companies moved people into diversity leadership if they were an ethnic minority, says Dani Monroe, even when they weren’t qualified. Monroe served as CDO for Mass General Brigham, a Boston-based hospital system and one of the largest employers in the state, until 2021 and convenes a yearly gathering of more than 100 CDOs.

“These were knee-jerk reactions,” she says of the hurried CDO hires, adding that some of those elevations didn’t create much impact, leaving both sides feeling disillusioned.

One factor behind the decline in DEI jobs may be massive layoffs across the tech sector that began in 2022 and have continued through the present year. Companies including Amazon, Google, Meta and Microsoft have laid off thousands of workers each, among numerous other companies. As these companies examined their workforce for weak spots, DEI was among the divisions to take a hit.

Another potential reason for the decline in DEI demand is increasing scrutiny of racial equity policies. In June, the U.S. Supreme Court struck down affirmative action in college admissions. Following the decision, there have been signs that Republicans plan to challenge race-based criteria in hiring and promotions.

Current and former diversity officers told the WSJ that corporate commitments to diverse hiring were not always implemented as promised. Some feel that the "quick about-face" regarding enthusiasm for equitable hiring left them questioning their career choices.

Others noted that the increasingly political nature of the work has left them feeling targeted: 

“There’s a combination of grief, being very tired, and being, in some cases, overwhelmed,” says Miriam Warren, chief diversity officer for Yelp, of the challenges facing executives in the field. Warren says the fear that company commitments are imperiled fuel her and others to feel “more committed to the work than ever.” Yelp’s DEI budget has grown for the past five years.

DEI employees were once considered part of the Human Resources division of a company, but now are expected to have input on anything from product development to marketing campaigns. They must also monitor the social media landscape, where viral firestorms regarding corporate practices often play out. 

New information from employment data provider Live Data Technologies shows that diversity positions have been more likely to be terminated than human resources ones, with a 40% higher turnover rate. According to Jason Hanold, chief executive of Hanold Associates Executive Search, which helps Fortune 500 companies recruit for DEI positions, searches for CDOs are down 75%. He says it's the lowest rate of demand he's seen in 30 years of recruiting.

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