Businesses are abandoning diversity, equity and inclusion amid economic uncertainty

According to Paradigm, diversity, equity and inclusion (DEI) initiatives lost steam in 2023 compared to previous years as companies increasingly shifted resources due to tightening economic conditions.

The total percentage of US organizations with a DEI budget fell 4 percentage points, from 58% in 2022 to 54% in 2023, while the number of organizations with a DEI strategy fell 9 points over the same period of time seconds to a report from the Paradigm consultancy. DEI initiatives in the workplace gained a lot of momentum after the death of George Floyd, which encouraged companies to divert resources to the practice, but now “external forces”, including tightening economic conditions and public and judicial pressure, are setting back these efforts. .

“After two years of unprecedented investment fueled by the 2020 racial justice movement, global momentum around DEI slowed this year,” according to Paradigm’s report. “There are a number of headwinds contributing to this change: the first is economic uncertainty that not only led to a reduction in overall spending, but also shifted the balance of power firmly back to employers.”

Despite the drop in funding, there was a 6-point increase in the number of companies that had a senior DEI leader and an 8-point increase in organizations that had goals related to the representation of women in leadership by 2022 to 2023, according to Paradigm. . A total of 20% of companies in 2023 had goals related to increasing employment related to race or ethnicity, an increase of 4 points year over year.

Change continues concerns of companies that the Supreme Court could target DEI and racially based hiring in the workplace in the same way it struck down race-based admissions at colleges and universities earlier this year. A pair of decisions by the Supreme Court in June, involving Harvard and the University of North Carolina, cumulatively, ruled that the use of race as a factor in college admissions is not permitted under the Fourteenth Amendment US Constitution.

“Over the past few months, we’ve heard from a number of HR leaders who are de-emphasizing data and analytics as part of their DEI efforts in response to the changing legal landscape and increased scrutiny of HR efforts. DEI,” according to the Paradigm report.

Only 26 percent of companies examine hiring outcomes by race or ethnicity, while 33 percent analyze promotions the same way, according to Paradigm. About 36% of organizations measured the attrition rate of their employees by race or ethnicity.

The companies withdrew from the recruitment in October, and added not more 150,000 jobs in the month compared to 297,000 in September, while unemployment rose to 3.9% from 3.8%. The leading economic index predicted that 2024 will see only 0.8% in the US economy due to a possible recession.

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