Today’s Supreme Court ruling striking down affirmative action is, sadly, not a surprise. Over the past few months, as the Court’s decision has drawn closer, dozens of business leaders across industries have started asking me the same question: “how will we need to scale back our DEI efforts if the Supreme Court rules against affirmative action?”
As a former civil rights lawyer who now counsels companies on how to build more equitable and inclusive cultures, my initial instinct was to say, “you won’t.” Underlying many of these leaders’ questions is the incorrect assumption that the Supreme Court’s ruling will in some way govern corporate actions. It doesn’t. Not only because the cases before the Court were specifically about college admissions, but also because the practices at issue in the cases are not the practices most companies use to increase diversity. Colleges and universities that practice affirmative action use race as one factor (of many) in admissions. In contrast, as a general matter, organizations are already not allowed to use race as a factor in employment. Instead, corporate DEI programs are far more focused on tactics like attracting a broader pool of talent, minimizing bias in internal processes (to avoid disadvantaging underrepresented groups), and creating community to boost belonging and engagement for employees from underrepresented and marginalized backgrounds — practices that are not at issue in the cases before the Court.
In fact, looking at data from the companies my organization has advised over the years, practices that look anything like affirmative action are exceedingly rare. In 2022, only 2% of companies in our dataset even had race/ethnicity representation goals for new hires. There is a long way to go before companies even set goals around increasing representation, let alone explicitly consider race as a factor in hiring.
While the Court’s ruling needn’t stand in the way of organizational DEI practices, it will have an impact for private businesses. Companies are right to be concerned, just not necessarily for the reasons they might think.
One of the immediate risks we’ll see is a chilling effect on corporate action on DEI. As companies’ legal teams try to parse out what the rulings mean for their organization, many will overreact, halting efforts related to proactively building a diverse workforce and setting representation goals (in Oklahoma, which banned affirmative action in 2012, some private companies have shared challenges working with city and state offices around diversity initiatives). When President Trump signed an executive order in 2020 limiting some of the topics that can be covered in diversity trainings, we saw numerous organizations halt DEI training altogether, stopping trainings that had nothing to do with the topics addressed in the executive order.
Instead of worrying whether their hiring practices run afoul of the Supreme Court’s ruling, companies should be far more concerned with the most obvious consequence of this decision: a less diverse talent pipeline. More than 20 major American employers, from Bristol Myers Squib to Google to Starbucks — urged the Supreme Court to uphold affirmative action because they rely on colleges and universities to educate their future workforce. Companies want that workforce to be diverse because it’s good for business. In an amicus brief filed by these companies, they explain: “Research and experience demonstrate that racial diversity improves decision-making by increasing creativity, communication, and accuracy within teams. Experience in a diverse university environment prepares students to interact with and serve racially diverse client and customer bases and to work with people of all backgrounds. The result is a business community more aligned with the public, increased profits, and business success … businesses cannot achieve those goals alone. They depend on universities to recruit, admit, and train highly qualified, racially and ethnically diverse students to become the employees and business leaders of the future.”
These businesses know better than nine justices what it looks like to run a company, and they’re right to predict that their jobs are about to get a whole lot harder. While universities will still try to build diverse student populations using race-neutral practices, and those with large endowments to invest in this will be more successful than those without, it won’t be easy. After the 1996 affirmative action ban in California, the representation of Black students dropped significantly in the University of California system: in just two years it went from 7% to 3.98%, a decade after the ban, it was down to 2%. While some of the more well-funded universities will have greater resources to throw at this challenge, many will simply be unable to close the gap.
Over the next decade, traditional talent pipelines will become less diverse because of this ruling. Companies that want to build competitive, strong workforces are going to have to work harder to build the workforce they need to stay competitive: hiring from non-traditional backgrounds, building strong cultures that make them an employer of choice for underrepresented groups, and focusing on retaining and growing those employees. So while this ruling risks stalling many companies’ DEI efforts, it also accelerates the urgency of private businesses investing in new ways to build a diverse workforce. Companies who do this well will have all the proven competitive advantages of diversity, but they need to start now.
June 29, 2023
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