The E Word

Why Are Corporate DEI Strategies Quietly Transforming?

• Karen McFarlane and Brittany S. Hale • Season 1 • Episode 17

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Corporate America's DEI initiatives are not what they seem! As Walmart rolls back its diversity programs, there are more questions about the future of equity in the workplace. Brittany and Karen ponder the repercussions on minority and women-owned businesses in a time of shifting political landscapes and discuss the balancing act corporations face between staying compliant with existing anti-discrimination laws and the looming threat of reverse discrimination claims, opening a dialogue on the fragile state of workplace protections for vulnerable groups.

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Brittany S. Hale:

Hey Brittany, hey Karen.

Karen McFarlane:

We're back. We're back on the E-Word.

Brittany S. Hale:

We are, we are. Mina is joining us, but she's napping.

Karen McFarlane:

As per usual, one day we're going to have to wake her up.

Brittany S. Hale:

I know, See what she has to say. I haven't handed her the mic, so I will next time. I haven't handed her the mic so I will.

Karen McFarlane:

Well, we are greeted with some new news right On the plight of diversity, equity and inclusion.

Brittany S. Hale:

Yeah, yeah, and it seems to be unsurprisingly directly related to the results of the 2024 presidential election.

Karen McFarlane:

Exactly so. One of the industry's largest titans, Walmart, has now pulled back their DEI policies and even beyond their policies. That that is. That's well, that's inclusive of their supplier diversity programs. And also they had funded a racial equity center which they are no longer going to fund, Right, so, and they're all. And they've also pulled back on the equality index as well, the LGBTQ equality, human, human shoot, I forgot the name of it now, but the LGBTQ human index, quality index, some ways is surprising for Walmart, right, Because of you know, first of all, they serve a large swath of people, but particularly many of demographics that they serve. Right, and because it's just a huge component of, I'm going to say, American society. Right, Walmart is a huge staple in ensuring, you know, access and opportunity, whether it be from the consumer level to the business level. A really surprising development that Walmart, again such a huge titan, seems to be bending to the incoming administration's stance on DEI, even before it's actually instituted actually instituted.

Brittany S. Hale:

Yeah, and so I think that's the part that's really interesting is that they're taking a more proactive approach to potentially guard against any sort of government censure, whereas previously, it seems as if many organizations maybe not Walmart, but other organizations were more reactive when it came to DEI adoption and implementing DEI policies to workplaces. So, yeah, I mean, walmart to me is such a stunning response because there's such a large company. And then the question is well, who's next? Right, right, who else is going to do so? And I saw that you mentioned they're not going to give priority treatment to women and minority-founded companies. Many organizations have what's called supplier diversity programs, where they want to exactly what it says diversify their suppliers, diversify the vendors that they work with so that there can be more expansive opportunity in business for people of all backgrounds. And, yeah, in 2020, they had a five-year commitment for a racial equity center and they are not doing that. And, to your point, the gay rights index.

Karen McFarlane:

The Human Rights Campaign Corporate Equality Index. I wanted to to get right. Yes, yes, yes.

Brittany S. Hale:

So then my question is you know we've people quite literally have died to further transparency. So in the absence of that transparency, obscurity kind of reigns, right. You know, we go back to places where it's really uncertain what happens. And we should note that Stephen Miller is Trump's incoming chief of policy, and this seems to be a priority for Miller because he was one of the people who led America First Legal Right. And they've been strategically suing corporations to scale back these corporate DEI policies, been doing this in preparation of a cabinet seat and will likely utilize the federal government to have this kind of broad overreach into what corporations are doing, which again seems quite odd, coming from a Republican administration, because Republicans are, at least historically, the party of small government to see that there's potentially a sweeping investigation into an overreach into corporate practices is interesting, it's super interesting, and I think that what is what what they have spoken about so far?

Karen McFarlane:

right, the administration is eliminating DEI in the channels that they control. Right, it's within the federal government. Right, in the channels that they control. Right Within the federal government. Right, sure, or any organization, company that takes federal dollars, correct, and I guess that is their right to do so. What is troubling is that corporations who are not subject to that are taking this proactive approach. And the question is why? Now, I sort of get, I do get why, right, they're mitigating their risk. Right, and that's part of the company's biggest posture, you know.

Karen McFarlane:

And but there's risk on both sides, right, so we have the Civil Rights Act, we have certain policies that were put in place to prevent discrimination in many facets, right, and so DEI was in some way a protection against, you know, allegations around Violation of exactly, allegations around violation of exactly right. But now you have this threat of reverse discrimination, which is an interesting term to me, by the way. Reverse discrimination, discrimination is discrimination, I don't what is. And so I think it is a very difficult needle to thread, because as you pull back, you start to open yourself up to things that you were trying to protect yourself from before. So it's this weird balancing act that corporations are now going to have to try to figure out. And I also just want to sit on what you said, which is this isn't just about race, right? This is minorities and women, right?

Brittany S. Hale:

Minorities, women, disabled, older employees right, Because the 1964 or the Civil Rights Act of 1964 precludes discrimination on age, race, color, creed, nationality, so on and so forth. So everyone who shows up at work on Monday morning likely fits into one of those protections. And so to your point, if DEI policies are implemented to guard against and to mitigate the risk of violating federal anti-discrimination laws, and we're rolling those back, are we now to assume that these federal anti-discrimination laws are going to be rolled back and or abolished?

Karen McFarlane:

It's so incredibly scary, even said like that, right, like, because it feels like you roll back one thing, then you can roll back other things, correct, correct. It just shows how precarious everything really is. When you have people who aren't necessarily standing on ethics and I'll just say the right thing to do Right and even in rolling back DEI, you have corporations that are either taking it all together right or rebranding it right Something else, but let's just say you don't call it what it is right Then you are actually leaving out a very important aspect of why it even exists in the in the first place, which is the systemic and historical inequities that have led us to this point where we even needed it. And there's always been a goal, I think, to not need it. But we're not there yet and you can't fix what you don't measure.

Karen McFarlane:

So if you are rolling it back or still trying to practice it in some way, the big question is like how are you measuring the effect of your programs if you're not setting some targets around that to see if you're successful and what that's supposed to look like for your organization? Like, you always look at where you're winning and where you could do better, right, that's always the calculus for anything that you do, but what this says to me is you cannot look at that through a clear lens when you're not necessarily allowed to measure those different aspects that are affecting whether you can become more successful in certain areas by diversifying different aspects of your company. So that's how you look at your financial portfolio, but you can't look at people in the same way, and so it's very confusing right now as to what's next.

Brittany S. Hale:

I mean, if you look at the federal government, that's over 60 programs alone just within the federal government, not to mention other organizations.

Brittany S. Hale:

I mean this is incredibly extensive, expansive.

Brittany S. Hale:

What does it mean, especially when there are a lot of people who feel a certain amount of security and pride in being a federal employee, to know that their contributions and attempts to forward our conception of who is competent, capable and talented gets wiped out? And I did want to revisit the point that you brought up, which is a great one, which is this isn't the question about whether or not this makes business sense? Is, we'll see, because businesses are to your point, the risk of attracting attention from this incoming administration and having to deal with that, the ability to attract top talent, right? How many people are now going to be drawn to other organizations, whether or not they're in the United States or abroad? Right, because there aren't the same guarantees what we once thought were inherent or implicit guarantees that you know talent will be rewarded or you know organizations are seeking the best talent.

Brittany S. Hale:

That may not be the case if organizations fear that their pursuit of the best talent goes through implementing inclusive practices and that may draw undue attention. And so it is this question. I'll be curious to know. You know, two years from now, assuming we'll be here I'm curious to know what we'll see.

Karen McFarlane:

I don't and I don't know if we'll actually see it. See it right, because you know we think about I'll just did a very loose type of way, right, we think about a company's risk profile, right, and what their appetite for risk is. In certain categories they may just have a lower risk tolerance for I'm not saying they break out DEI this way, but just for argument's sake, right now, right For DEI activities and a higher risk tolerance for whatever. Reverse discrimination sorry, discriminatory suits may come because of this. Maybe, looking at their past history, we haven't really seen that many or we feel like we're going to have a strong stance or people just don't. They don't come to fruition in that way because it's very difficult to prove. There'll be a lot of conversations around if something happens. What does that mean Exactly?

Brittany S. Hale:

exactly? And what do we call it right? Naming things is very important, and ascribing a name to the practices that we've been engaged in for better or worse helps us determine our relationship to it. Yeah, and so when we look at Walmart Walmart rolling back their center, where, again, to your point, they dedicated space and time and talent to measuring their impact, and it's likely through this center and through their practices that we know that about $13 billion in goods and services go through Walmart, through the businesses that are owned by women, people of color, veterans, right as well, and so that's just in this past year alone. That's just in this past year alone. So if these businesses are no longer given priority or are instructed to be deprioritized because of the people who own them, how does that impact Walmart's bottom line? So you know, the question is are we just now going to practice the DEI policies and not call it DEI? It seems like a lot of organizations are just hoping to kind of fly under the radar with that. What's your thought on that?

Karen McFarlane:

fly under the radar with that. What's your thought on that? I think that's absolutely right. I think the ones where it was ingrained from the very beginning will continue to do so and just not name it. I mean Walmart's changing their chief diversity officer title to chief belonging officer, right, which you know. Same connotation. This took the D, the E and the I out. Same connotation this took the D, the E and the I out. And so I think some of the changes are definitely going to be cosmetic.

Karen McFarlane:

For those who truly believe in it and also believe it will come back around, right, Four years is four years and things can change in four years, and so it might be safer, less riskier, to just keep your head down. Don't call it that and just you know, keep working your plan. For those who weren't fully vested, it's a great get out of jail, free card right. And those who are somewhere in the middle, they're going to have to figure out what that means for them. I think that there can be huge implications, right. So if we just take supplier diversity, for example, that has existed for decades upon decades, right Again, to right the historical wrongs, Walmart removing a supplier diversity program is going to have huge economic effect if they are actually removing it and not just rebranding it something else, which we don't know.

Karen McFarlane:

I suspect they're just going to rebrand it something else, Right, but um and kind of you know, reinterpret the data in some meaningful way. So you know, if they have a large percentage of female buyers, right, then they're going to want to stock their shelves with things that are attractive to female buyers and that more than likely, will come from female suppliers, right, Things of that nature. So understanding their customer and having like a deeper, more fuller understanding of that, which they probably do to some extent right now, will probably still fuel a lot of what they're doing undercover, Right. But when you are a huge organization and you say out loud we're not doing this anymore, then it just sends this huge signal and, to all the companies that are not as huge as Walmart and don't have the apparatus around them to defend their activities, you're going to want to play it really safe for whatever that looks like for them 100%, because, despite all this talk about innovation and ingenuity and all of this, most companies don't want to be the first to do anything Right.

Brittany S. Hale:

They want to toe the line. And so we're thinking about conflict, this kind of this gap between what we want and what we're expecting or what we're experiencing. Again, I, even if I disagree I understand the business strategy to try to err on the side of caution, yeah. At the same time, data works in many ways right, so we understand what's coming in. But I also think it's important to note that Pew, in October, did a study and they found that 52% of people in October still said focusing on workplace diversity was mostly a good thing. Still said focusing on workplace diversity was mostly a good thing. So a majority of people still believe that this is worthwhile. The survey that they did prior to that was in February 2023, and it was at 56%. So a little bit of a drop, not necessarily one that I think could justify these huge sweeping shifts to DEI.

Brittany S. Hale:

Outside of the fact that the incoming administration has its priorities and an executive would be foolish not to listen, not to take heed and plan for whatever they have coming, we're not saying ignore the incoming administration. What we are saying is there are still a significant group of consumers and you have to deeply know and understand your consumers. When you look at Walmart, who's there? Who's there? What do they want to see and what are you making money off of?

Brittany S. Hale:

You know, we know, that Walmarts are, in many places, the cultural hub of some small cities and towns. That's correct. It's the place where people go to get supplies, to congregate, to socialize to. You know, you will see some supermoms, they have a bank and a hair salon and you know a post office all of these things in this one place. So Walmart, you know it's rolling this back as a legitimate business purpose may be part of the strategy, but also understanding the function of Walmart and what they offer. And to your point again, there are women. We know that the United States I believe as of now we are a majority femme identifying group I believe that there are more women in the United States than men. Someone will fact check me. But, with that being said, if we are not prioritizing women-owned businesses, if we're not offering products that people have been introduced to gotten comfortable with, developed relationships, with Right Supporting their growth, correct, are people more likely to just choose another brand, or are they more likely to choose another store?

Karen McFarlane:

Yeah, or are they more likely to just pull back, right? So that's also a choice. Just don't buy anything. And what's also frustrating is I. I thought it was just going to be a blip, but it's not. You know the rise of the mei argument um the merit, excellence and uh. Intelligence acronym that elon musk supported quite vigorously, and of course now he's in the administration and so you know we talked about this before in a previous show, as if merit, uh, excellence and intelligence was not part of the DEI framework.

Karen McFarlane:

But that's how it is being built and it's an attractive alternative. Let's just be honest right. It feels on face value um equitable and universal in the language.

Karen McFarlane:

But again, we're ignoring, you know, why this model hasn't worked in the past? Right, and I'll be clear, like I agree that we have to name it right, okay, okay, it could have another word, as long as the practices are put into place and we're acknowledging why we need those practices in the first place. Correct, because is has been for a select few, historically speaking. Right, that it was more about nepotism, um, you know, affinity, bias, things of that nature, and those are, those are things that are, those are unconscious within people's psyche, right, it's not that you can just flip a switch and these things go off.

Karen McFarlane:

And that's the challenging part of just saying, hey, di is bad, let's put MEI, and everybody's just going to be like, all right, cool, let's just do that, do that. What are the policies and practices that you're going to put in to ensure that MEI is the framework that everyone is using and is inclusive of different groups and is not subject to bias and and and, which is exactly what DEI was doing? So, if your okie doke is to just change DEI to MEI and do the exact same thing, more power to you. Do the exact same thing as DEI. More power to you because you believe in what the purpose was in the first place.

Brittany S. Hale:

And it seems oh, no, go for it. No, no, go for it.

Karen McFarlane:

Well, I was, I was gonna say you're not gonna acknowledge this is the reason why it was there, then it's it's. It's not gonna work and we're gonna be right back in the same place yeah, two things it reminds me of.

Brittany S. Hale:

The first point is, uh, me, I suggest that there's only one particular group that can objectively determine whether or not something is discriminatory. True, and that's problematic, because how are we? What is the objective level? Or is, is the center spoke, whether or not a Christian, heterosexual, able-bodied white male feels excluded, and anything that's outside of that or challenges that or brings up difficult feelings, is therefore not an extension of MEI and must be eradicated. So that's one question, but I don't know, have you seen Wicked? Not yet?

Brittany S. Hale:

Okay, not a spoiler if you're listening or watching, but there's a particular line where one of the characters says to the professor I don't know why you can't just teach us history without going on and on and on about things that already happened in the past. And this seems to be what we're talking about. Right, just um, teach us history, but nothing that makes us uncomfortable. Yeah, um, let's do business, but only to the extent that it centers me. Yeah, yeah, don't.

Brittany S. Hale:

You know and I bring this up because you're talking about the reason why we have DEI policies or MEI policies, right, which is to provide the historical, systemic, the problematic and systemic inequities that have plagued this country since before it was a country, and it seems that there's this cognitive dissonance between what got us here and where we're standing, and it seems like the incoming administration doesn't necessarily want us to examine all of the things that have gotten us here and why we need these anti-discrimination laws and want to instead just say let's just get rid of it. I also want to bring attention to RFK, who's also part of the incoming administration, and have you heard RFK's recent comments on racism? What'd he say? So he says let's see, I just want to pull it up. I do not want to misquote him.

Brittany S. Hale:

Let's not misquote him, yes, so he hosted a town hall, and so RFK Jr. He hosted a town hall with Eric B, of Eric B and Rakim, and he discussed racism and Black children specifically in the United States. And he says that we should arm African-American boys and girls with education and resilience so racism will bounce off of them like the Avengers. And so he says it's more likely that we will be able to teach them resilience and help them deal with racism than it is to eradicate racism from the United States, which I thought again that I don't necessarily disagree with. Right, it's as American as apple pie. So, rfk, I agree with you on that point. However, the fallacy in that argument is the belief that African Americans haven't been arming their children like the Avengers for decades, if not centuries.

Brittany S. Hale:

Since this country has been founded, there have been different conversations, and so my question is when you have Black children that you're preparing them, right, you are going to encounter people who treat you poorly. You're going to you need to be resilient to suggest that we should do this so the children can be super human. Right, like the Avengers, the Avengers are superheroes, right, you have to be super, above and beyond a human reaction to what you're experiencing and we do not offer the same for children of other backgrounds, specifically white children, who may be the proponents of this behavior that could be harmful. Why are we not having that conversation with these white children? Because we want to arm them, we want them to be superheroes as well and be so anti-racist and so aware of the types of behavior that could be harmful to other people that they unequivocally say no, that may have been the America of old. That is not our America now.

Karen McFarlane:

Yeah, no, he really is just talking about modern day slavery, right, since we've since Black people were pulled over on the ships, okay, to to face these types of atrocities, they have built up a resilience that no normal human should have to have. Right, they weren't even treated like humans, despite being humans, and that has been ingrained in our DNA since all of this happened for hundreds of years. So what he's talking about is pure nonsense. It's really just saying we don't want to change, okay, so just keep doing what your ancestors did and everything will be all right.

Karen McFarlane:

And what's also quite fascinating about that statement and you know even your comment about let's not learn about history, the uncomfortable parts of history is that when you watch television, for example, right, you know television and you watch these period pieces, it has become normal and glorifying of history when Europeans or Americans right, particularly Europeans, though are colonizing different countries, right. And the atrocities and the brutality, we watch that as normal, accepted behavior in history. That does not make anyone uncomfortable. But the minute you talk about slavery or Japanese internment camps and things of that nature, the minute you talk about that aspect in a very focused way, all of a sudden it's uncomfortable. You weren't uncomfortable when your ancestors were ripping the guts out of people and displaying them for the whole town to see Public executions. You weren't uncomfortable with all of these wars that were waged and all of the violence and the deaths just to take over a territory. You weren't uncomfortable with all of those things. It's in every single movie that we've watched about history european and american history. So why is that not making you uncomfortable?

Brittany S. Hale:

well, I think it's not only for the reason of um perception and marketing, right, because when we see a period piece or a period drama, we drop these people in the world that's happening around them, but we want to center it on these two unique individuals so we can have that cognitive dissonance that are falling in love, right, this is a love story. And so we can marvel at the beautiful silk gowns without wondering where the silk came from. We can marvel at you know the gold-tipped it out in the Wild West without wondering where the people who inhabited that land went. Or you know an esteemed British man who made his fortune in exports in the 1800s. We know what that means. Oh, I get the little bubble. We know what that means, but we don't have to ask.

Brittany S. Hale:

It's quite ugly and it's discouraged from asking well, what were you exporting? Or who are you exporting, or who? Right, and so. So then we, we get to revisit these situations, even when you go to um. We have living history all around us, but we've sanitized it, we've distanced ourselves, and I think that is the the trouble and the problem, and that's why we have such difficulty and resistance to DEI, because we don't connect the two, why you need to diversify your workplace or why you need to give priority to Black-owned businesses Like. It's very fascinating to me to see that you can separate the two so keenly.

Karen McFarlane:

You know, and particularly women right. So just talking about white women, if you look at your period pieces right, like women recently just got their rights right. They couldn't do anything. They couldn't only have their bank accounts, they couldn't. They just passed around as like baby making mills. And do you want to go back there? Yeah right, that is your recent history, okay, recent, and so if you, just yeah.

Brittany S. Hale:

Okay, recent, the year I was born was the first year that a woman could own a business by herself without having a man. Wow Right, I don't think that I look that old. So.

Karen McFarlane:

You're not, you're a baby. So it's recent, very recent history, Very recent history Right, we're living through it.

Brittany S. Hale:

So in the span of my life to our lifetime, both of us business owners. To my knowledge, you're the sole owner of your business, as am I. We would not have been able to do that.

Karen McFarlane:

I just don't get it. I just don't, I don't understand. I guess I don't understand because we're the ones being potentially affected by all of this and I guess other groups have felt threatened for a very long time and this is their opportunity to enact some policies to slow down the progress that other groups are making. And it's very sad. And I actually was really hopeful I'll still remain hopeful because you can't give up, right. But I was really hopeful that these big corporations would just be like okay, well, we're going to do what's best to build our business, and I think they still will.

Karen McFarlane:

At the end of the day, I believe the ones again that I said before were committed will bake it in. They'll figure it out. It might not be as aggressive as it was. It was already waning to some degree anyway and they'll just wait it out until the next term and they'll call it something else and they'll keep pressing on. I just urge the smaller companies, the mid-sized companies, to figure out their approach, because workforce diversity, figure out their approach, because workforce diversity, inclusiveness, equity as your center to creating all of this is key to your success. And that doesn't change because an administration or anybody, okay, has got their feelings hurt. Okay, you want to reach into your business and affect it. It doesn't change the facts. So you know, businesses are very creative and that's why they exist. Yes, yes, continue being creative.

Brittany S. Hale:

Yeah, and I really just think that's that's, and I I really just think that's that's. It is the need for creativity. Now is the time for creativity and innovation, because we know what the buying power of these particular groups is and it is not good business sense to alienate billions of dollars worth of commerce. And I understand that, elon. You know he's spoken about there being hard economic times. You know that are coming with the transition. But assuming that he doesn't speak for the president, assuming that the president is, you know, we don't know what the tone and tenor of that relationship is. We can make some guesses, but the one thing that I do think is interesting is that Donald Trump seems to he loves ratings. Right, this is a reality TV star, so he wants to go in the sway of what the people want. You know you gotta give the people what they want and this doesn't seem like the people want it.

Karen McFarlane:

So we'll see. It doesn't seem so, but the people have to scream a little bit louder.

Brittany S. Hale:

The people are going to have to scream louder and the people are going to. I look at Starbucks as an example. Right, starbucks lost billions in one quarter due to people boycotting them for various reasons, and the result of that was they had a new CEO, they had new business practices to revamp and take back who they purported to be, which is this luxury coffee house where you could go in and, you know, be part of the elite and listen to. You know, listen to acid jazz and write the next great American novel with your organically sourced coffee. And that's what they're hoping to work toward. But they had to make changes because they knew what they were doing wasn't working. Similarly, for the people who love Walmart, the question is if you love Walmart but you don't love their practices, do you still shop there? Do you move with your feet? Do you make a statement with your wallet? A tweet isn't necessarily going to do it, right?

Karen McFarlane:

Right, yeah, you have to choose your causes and your battles and do it in multiple different ways.

Karen McFarlane:

Tweet about it with your wallet share with your friends, get perspectives, comment on Walmart's customer service feed. Let them know that you're a consumer and you're concerned about this. Right, your voice really does matter and, like I said, I'm optimistic. It's four years, right, the tides can turn. The tides have turned on DEI before it will turn again, and so we just have to stay the course and continue to fight the fight. And I have a little thing in my throat and, at the end of the day, right, you need to just partner with you know people who understand what you're trying to do and can help you find creative and innovative ways to move forward. So that's me.

Brittany S. Hale:

Yeah, I guess the question that I will leave you with, and maybe we can answer it next time, is with corporations ousting, concealing whatever their DEI policies, is this the resurgence of small business? Small business, Is this now an opportunity for smaller businesses to attract more clients, more customers who want different?

Karen McFarlane:

That's a great teaser for next time.

Brittany S. Hale:

I have answers. Mina told it to me, that was Mina's contribution.

Karen McFarlane:

Thank you, mina. As always, brittany, it was fantastic discussing these issues with you. I always learn from you, so I hope the audience is like you. See ya, till next time.