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How laying off DEI teams adversely affects overall business

Updated: Nov 26, 2023

DEI teams layoffs

Diversity, Equity and Inclusion (DEI) jobs soared in the past few years as organizations displayed pure intentions of creating diverse and equitable workplaces. Workplaces set up core DEI teams and made room for leadership roles such as Chief Diversity Officers to bring about a shift in workplace culture for the better.

DEI Team Layoffs

However, as the economic climate changed, organizations resorted to cost-cutting by laying off a significant chunk of their employee base. Amidst this, employees in DEI roles were more affected than others. They witnessed a higher rate of churn at 33% than non-DEI employees at 21%. This skew could be attributed to the nascent stage of these teams as well as lack of understanding about how DEI contributes to organizational growth.

Read on to find out why laying off or disbanding DEI teams altogether does not bode well in the long run.

Starting from scratch

DEI teams and their initiatives need time to create a visible impact on work culture. The policies and processes they influence such as diverse hiring, pay equity, and product innovation, provide long-term gains. Creating and maintaining Employee Resource Groups (ERGs) is an integral part of DEI programs. They grow as the company grows and brings people together through the power of internal communities. By obliterating these teams within a year or two of their inception, organizations are letting go of fundamental groundwork created by these teams and will have to start from scratch whenever they plan to resume their DEI efforts.

Business impact of ERGs

The business impact of DEI initiatives is often disregarded while making the decision to layoff DEI team members. Employee Resource Groups or Employee Networks as they are called in some organizations contribute to increasing employee engagement and boosting employee satisfaction. They reduce employee turnover which could cost the company 1.5 to 2 times the exiting employee’s salary. Evolved ERGs which are called Business Resource Groups (BRGs) contribute to product innovation and help maintain a competitive edge by implementing consumer insights from different employee groups. Moreover, their projects are tied to business goals. By laying off employees who manage ERGs and BRGs, organizations are directly impacting the bottom line.

Brand Image

A company that does not stand by its Diversity, Equity and Inclusion team, sends out a message that DEI is not a priority. This step can adversely affect the brand image and reputation. Prospective employees, end consumers or partners in B2B associations might not wish to be associated with an organization that does not value DEI. Such a decision can directly impact sales as customers would want to be associated with a company that upholds equity at the workplace and is not in the media for the wrong reasons.

Back to homogenous workforces

By reducing Diversity and Inclusion task forces, companies risk going back to being homogenous workplaces instead of multicultural, inclusive ones. Employees who survive layoffs are observant of how equitable the layoffs were and how thoughtfully they were handled and will keep their options to switch companies open. All efforts taken in hiring a diverse workforce will be thwarted if the diversity ratio of the laid off employees is not factored into decisions. Prospective employees, especially those belonging to Gen Z, take into consideration the existing DEI practices of an employer. Disbanding DEI teams could potentially alienate top talent with diverse backgrounds and the pool will continue to get more and more homogenous.

The key is changing the overall approach to DEI. The needle on DEI has moved from nice-to-have to must-have and organizations need to acknowledge and accept this change. The Diversity, Equity and Inclusion teams should be treated just as other key teams and should not be considered dispensable or just an overhead.

The workforce is the beating heart of any organization. Practices that contribute to workforce well-being should never be compromised or there will be a heavy price to pay in the long run.

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