February 11, 2025

President Trump has declared war on DEI policies, and many global businesses have fallen into line. This blog delves into the political shift around DEI and the necessity for businesses and staffing firms to still foster a diverse workforce. We'll also look at inclusivity's key components and benefits and consider how staffing firms can confidently navigate federal changes. What is DEI? DEI, an acronym for Diversity, Equity and Inclusion, stems from the anti-discrimination legislation of the 1960s. Its purpose is to address and correct discriminatory policies to create equitable workplaces and equal opportunities in education. The idea is that every company or school considers how it treats marginalized groups and promotes fairer representation regarding race, creed, color, national origin, gender, sexual orientation, and ability. DEI goals are a measure for overcoming unintentional discrimination. Examples of DEI initiatives include: Diverse recruitment practices DEI training Mentorship programs for underrepresented groups Employee Resource Groups (ERGs) Financial wellness programs Diverse leadership-building initiatives Promoting pay equity Holiday flexibility (not everyone celebrates Christmas and Easter, for example) How is DEI changing, and why? DEI hiring practices have met political opposition for some time. Many outspoken conservative activists have decried DEI, and some wealthy corporate leaders have back-pedaled on DEI initiatives. Why? Opponents of DEI believe that it unfairly discriminates against certain groups, including white people and men, and that it weakens the importance of merit in job hiring or promotion. President Trump signed an executive order to dismantle federal DEI initiatives on this basis. How will the political shift around DEI affect staffing firms? Trump's executive order to cancel DEI was felt immediately. It closed DE&I federal offices, put affected employees on paid leave, and terminated DE&I-related contracts. The big question now is how quickly it will ripple through American workforces. Meta, McDonald's, and Walmart have already reduced or halted their DE&I programs. Chad Douglas, founding partner at Primary Talent Partners, said that many firms have seen Trump's executive order as an excuse to bail on failed programs. "I think it's a 100% cop-out," he said when asked his opinion for an article by Staffing Industry Analysts. However, he added, "Workforce leaders with a passion for the concept will always strive to implement certain DE&I measures." Fiona Coombe, director of legal and regulatory research at Staffing Industry Analysts, notes the possibility of adverse consequences for staffing firms. She explained, "This may well affect any recruitment and staffing contracts which have been tasked with finding candidates based on a DE&I policy approach." Staffing firms understand the need for inclusivity (more about this in the next section), but their challenge now is to marry diversity with merit-based access and turn confusion about DEI into clear, newly imagined strategies. This could involve re-evaluating recruitment and training practices, fostering a culture of inclusion within their organizations, and providing guidance to client companies on how to maintain inclusivity in their hiring processes. Businesses that value DEI but are worried about the political backlash will look to staffing firms for guidance. Skills-based hiring and DEI If DEI is dead, will businesses and staffing firms adjust their strategy and go all in on recruiting people based on merit? Well, it's probably not such a great idea. That's precisely what recruitment firms used to do - hire based on skills, experience, and qualifications and evaluate candidates on their merit and ability to perform the role. Returning to this method would be a backwards step. Here's why. In the past year, the shift to skills-based hiring has been huge - a necessary strategic move in response to the skills gap. In a workforce trends survey by Springboard, 70% of leaders recognize the skills gap as an issue - not just that it exists but that it is having a negative impact on their organization's business performance. We can't hide from facts. The vast majority of U.S. companies are underskilled. A return to merit-based hiring and the dissolution of DEI initiatives will not solve this problem; it will likely worsen it if anything. The reason for this is apparent - there aren't enough people with the right skills and experience to fill roles. Skills-based hiring and DEI go hand in hand. In organizations serious about attracting talent, other ways of implementing diversity and inclusion into hiring practices will evolve. Others put a different slant on the DEI debate. In an article titled "How corporate America got DEI wrong," the report criticizes how companies embraced DEI in the first place. Many, the report states, never got DEI right. They simply sprinkled it on to look the part without implementing any meaningful strategy. In this context, those scrutinizing DEI's failure see Trump's current shake-up as having a potential silver lining. "Companies that care about building fairer, more inclusive workplaces are rethinking their strategies and may now finally have a chance to get it right." The benefits of inclusivity Last year, Forbes published an article on why DEI is important for business. It said: "Improving diversity, equity and inclusion has been championed as a strategic business priority thanks to its proven capacity to drive innovation, foster a more inclusive workplace culture and enhance organizational performance." Here's why inclusivity is vital for success. Diverse teams outperform to give a competitive edge McKinsey reports that companies with the most diverse executive teams are more likely to outperform peers on profitability by 39%. McKinsey's study spanned 1,265 companies, 23 countries, and six global regions, making it its most extensive DEI research to date. Inclusivity drives innovation When people from different backgrounds, with a variety of life experiences and unique world views, come together, multiple mindsets and ideas are brought to the table. Statistics from Korn Ferry show that 80% of the world's most admired companies purposely create inclusive and diverse teams to improve team performance and creativity. Also, "diverse-by-design teams make better decisions than homogenous ones 87% of the time and are 70% more likely to capture new markets." Employee engagement and productivity Inclusive working environments boost morale, reduce turnover, and enhance productivity. A diverse and inclusive environment makes people feel more connected and gives them a sense of belonging, driving happiness and satisfaction at work. Inclusion in the workplace also provides equal access to opportunities, which empowers workers. When people are valued, they thrive and subsequently do their best work. Stronger client relationships Diverse teams understand diverse markets and can, therefore, engage with a broader number of clients and build stronger client relationships. This is vital for staffing firms that deal with a wide range of sectors and businesses. Those with a diverse workforce are better equipped to understand and address the unique needs of a diverse client base. Beyond the business: the social impact Diversity and inclusivity go beyond the bottom line. In addition to improving financial and operational outcomes, McKinsey argues, "More diversity in boards and executive teams is correlated to higher social and environmental impact scores." Inclusivity: the results Research by Deloitte found that organizations with inclusive cultures are: Twice as likely to meet or exceed financial targets 3 times as likely to be high-performing 6 times as likely to be innovative and agile 8 times as likely to achieve better business outcomes Key components of an inclusive workplace Diverse hiring practices Hiring practices must aim to prevent discrimination to attract and retain a wide range of candidates. This can be achieved by: Crafting inclusive job descriptions Diversifying recruitment channels and actively engaging with diverse communities Creating diverse interview panels Considering blind candidate screening or using recruitment tools and AI to conduct video interviews Find out more about how TrackerAI empowers recruitment teams here! Employee Resource Groups (ERGs) These voluntary, employee-led groups aim to foster a diverse, inclusive workplace. They are formed by employees who share common interests, backgrounds, or characteristics, such as gender, religion, socioeconomic background, sexuality, etc. ERGs enable employees to connect, collaborate, support one another, and exchange insights and perspectives. Unsurprisingly, many companies, including Ernst & Young, KPMG, Zillow, and AT&T, have ERGs. Inclusive training programs Everyone has biases. Inclusive training refers to the delivery of training that accommodates its participants' diverse needs and backgrounds. Unconscious bias training is essential for recruiters. It helps recruiters and hiring managers recognize and address any inherent biases that might influence their perception of candidates. This requires: Offering regular unconscious bias training to all staff involved in the recruitment process Incorporating real-world examples to show how biases can easily manifest without a person realizing they are doing it Encouraging open discussion within your diverse teams to open eyes to some of the challenges How do staffing firms navigate the DEI dilemma? Finding top talent is an increasingly tough gig. A growing skills gap, fierce competition, and Millennial restlessness - the Millennial generation is notorious for job-hopping - mean organizations must stand out to potential candidates. Those organizations showing a commitment to equity and fairness signal they are actively striving to prevent discrimination and remove barriers to advancement, making them more attractive employers. This doesn't just apply to the businesses recruiters work with but also to staffing firms themselves. Staffing firms must monitor litigation closely. In an article for ESG Dive, Jonathan Segal, partner at International law firm Duane Morris, said, "Businesses shouldn't dump DEI, but they need to consider the nuances of where legal threats might exist." For recruiters, joining the American Staffing Association could be wise to keep up with industry news. Staffers should be closely watching how the business world is responding to Trump's executive orders and monitor the reaction of the public and candidates. Summary In a climate where DEI will be under increasing scrutiny, the benefits of inclusivity highlight why maintaining such practices is not only ethically sound but also strategically advantageous. Francesca Profeta, a research analyst at Staffing Industry Analysts, said, "Organizations that prioritize equity, inclusion and the well-being of their workforce will be better positioned to attract and retain top talent, ensuring long-term resilience and success in an unpredictable future." DEI has never been under such a high-profile attack, and many businesses are rushing to cancel their inclusivity programs. It may be a good time to step away from the noise and work out what is best for your business. Inclusivity has clear advantages, and it may be a mistake to sweep away all of the ethical practices. Even if the term 'DEI' goes out of fashion, think about what your candidates actually want. Find out how Tracker's platform can help you meet tomorrow's recruitment challenges. Contact us to speak with our experts now.

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How staffing firms can reimagine inclusivity following the DEI shake-up