A Thinking Business publication
When Donald Trump’s administration arrived in the White House in January, it quickly became clear that the returning president was going to make opposition to equity, diversity and inclusion (EDI) programmes a priority of his second term.
Since that political shift, a number of major companies have opted to roll back on their own EDI commitments, including a number that have a significant presence in the UK. Pepsi will no longer use representation goals in hiring, for example, repositioning its Chief EDI Officer to focus more on employee development, according to Forbes.
For now, such policy changes have not been seen on this side of the Atlantic. “The current rollback is focused on the US market” says Danielle Ingham, Partner in the Employment and Pensions team at Trowers & Hamlins.
“If anything, the conversation in the UK has been very much pushing in the other direction, with lots of voices championing EDI and working to develop and improve existing initiatives further.”
This includes the UK government, which is moving ahead with plans to drive through more equality legislation as part of forthcoming employment law reforms. Some private sector employers who are headquartered in the US have also actively come out to restate their commitment to EDI and driving forward more inclusive workplaces. For example, at the start of the year Costco reaffirmed its EDI approach in a statement saying that its EDI policies were not only legal but essential to its long-term success, adding, “Our commitment to an enterprise rooted in respect and inclusion is appropriate and necessary”.
Positive action does not equal positive discrimination
What does this all mean for employers who are looking to navigate the different approaches swirling between the US and the UK? An understanding of the different cultural and legal factors in play may be helpful. So far, the pushback in the US has been largely motivated by a number of US-specific drivers, underpinned by a suggestion that DEI initiatives have gone too far. Some have argued such initiatives are no longer necessary – when Goldman Sachs abandoned an internal rule that barred it from advising all-male, all- white boards looking to list on public exchanges, the bank’s vice chair reported:
“That policy was put in place to try and drive a change in behaviour and I think that’s happened.”
Others have focused on economic pressures and the perception that EDI programmes may be ‘wasting’ funds that may be better spent elsewhere, a view that is certainly shared by the Trump administration. However, a major point of challenge in the US is the fear is that EDI programmes have been straying into discriminatory territory by unlawfully favouring minority groups over others.
“This fear is already addressed in the UK by only permitting ‘positive action’ under employment law, which is not the same as positive discrimination,” says Ingham.
“Positive action is entirely voluntary and is about employers taking lawful, proportionate steps to address and overcome imbalances or barriers faced by those with particular protected characteristics. This can only be done in circumstances which are expressly permitted under the Equality Act 2010”.
To give a tangible example, in the UK targets for improving representation of groups with certain protected characteristics in specific roles are legal but quotas that prescribe the types of candidates that must get roles are not. “You cannot say it is mandatory to appoint X number of women to a board or make an appointment simply because a candidate is female,” says Ingham. “But it is permissible to target a certain percentage of female representation at board level if this group is underrepresented, provided any steps taken to achieve this are implemented within lawful parameters.
Failing to understand the difference between positive action and positive discrimination is not only a legal risk, it can create employee relations issues in that people who do get appointed are seen to be in post for the wrong reason.
“Of course employees want to be appointed, and businesses want to manage themselves, based on merit and suitability for the role in question must always come first, before any consideration of positive action,” says Ingham.
The focus therefore must remain on removing barriers and disadvantages and working to increase representation through legal tools, crafting EDI initiatives which are appropriate and relevant to each workplace.
EDI in your business
To avoid feelings of conflict and division, it is important that leadership teams ensure that the approach being taken on EDI is fully understood throughout the organisation. “EDI is an ongoing awareness and education piece,” says Ingham.
“All employment and recruitment processes need to be informed by an understanding of what is and isn’t lawful and what aims the business is trying to address”.
There is certainly plenty of evidence suggesting EDI is still an important part of successful recruitment and retention. Companies with diverse and inclusive teams regularly report benefitting from better attraction of candidates, more positive workplace cultures and a diversity of thought that drives creativity and productivity.
Candidates also increasingly want to work for employers that align with their values. Potential new recruits are now far better informed than previously, with many looking to work for organisations that not only value diversity but actively work to create inclusive environments.
Ingham says: “When it comes to recruitment and retention, employer brand is so important.
“Leaders need to think about what they want their organisation to be known for as an employer, how authentic their message is and what their values are, because that matters to employees.”
Companies that have previously made strong commitments to EDI may experience an unwelcome backlash from employees if they start to backtrack on those promises.
There might also be legal implications of changing course.
“If your organisation starts to give the message that EDI is no longer a priority, that could increase the risk of claims and challenges from individuals with certain protected characteristics,” says Ingham.
“It is not a huge leap to imagine a scenario where an employee believes their treatment or lack of promotion to be down to the fact that their employer is no longer supportive of people in certain minority groups. Whilst this may not be the actual reality of the organisation’s culture or EDI policies, negative perceptions can be incredibly hard to shift.”
Furthermore, if tangible commitment to EDI initiatives has previously played a roll in a business successfully winning new clients, contracts or new investment, changing course may impact those wider relationships.
“Investors and other interested stakeholders are going to be watching developments closely and asking businesses whether they are going to stand behind their stated commitments,” says Ingham.
“There have long been accusations that EDI initiatives are nothing but a tick-box exercise in some organisations – this could be crunch time for many to show whether or not these concerns were valid.”
In an era where culture wars are increasingly erupting into the workplace, whether as a result of intergenerational tensions, conflicting beliefs or misaligned views on practices like hybrid working, EDI seems to be the latest flashpoint that employers must be ready to navigate.
Building more diverse and inclusive working environments has been front of mind for many in recent years – leaders that remain committed to those objectives now need to articulate them more than ever.
