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DEI Rollbacks: HR and Business Leaders Unpack the Consequences

The corporate world is at a crossroads as major companies like Walmart, Meta, and Disney scale back their Diversity, Equity, and Inclusion (DEI) initiatives, citing shifting priorities and political pressures.

But what does this retreat mean for workplaces, employee morale, and business success?

We went straight to the experts, asking HR trailblazers and business leaders to weigh in on the critical question:

What are the potential outcomes of dialing back DEI efforts?

From risks like increased workplace bias and talent loss to opportunities for reimagining inclusion strategies, their candid insights—grounded in data like McKinsey’s 2023 report showing diverse teams boost performance by 35%—offer a roadmap for navigating this complex shift.

Join us as we unpack the real-world implications and what’s at stake for the future of work.

Read on!

Kim Clark
DEI Communications Speaker & Consultant, Kim Clark Communications, Inc.

Scaling Back DEI Risks Brand Damage

In short: Brand reputation damage. “Optics” backfiring. Unwanted attrition. Trust in leadership is sinking. Increased discrimination without the protections that DEI provides organizations. Still won’t be protected from intimidation and litigation threats.

It is extremely dangerous to pull back on legal, productive DEI work. This makes companies more vulnerable – not less – to legal issues and would be going in the opposite direction that employees, customers, shareholders, and society are going. Core to a company being sustainable is staying relevant and scaling back on useful, legal DEI work will make companies less relevant.

This is the time to protect your people. The ones doing the intimidation do not care about your company, or your employees, or your customers or your revenue. You do. If you’ve done a comprehensive audit of your DEI work according to applicable laws, all you’re doing with DEI work is living up to your mission, vision, and values. Your actions are in integrity with your statements.

To message this in a way that each audience can understand, I recommend using The DEPTH Model from the book, The Conscious Communicator.

Nurit Hattab
Consultant, DEI & Culture Change, The DEI Code

DEI Is Essential For Everyone’s Success

Scaling Back DEI initiatives? Here’s what’s at stake for everyone:

It affects all of us – Life is unpredictable. At some point in our lives, we all become “diverse” – through health challenges, caregiving roles, or unexpected life shifts. We need systems that can see us, support us, and help us thrive. DEI isn’t about “others”; it’s about all of us, in our full humanity.

DEI is not about labels – it’s about people. The real focus is on recognizing and valuing uniqueness. Scaling back DEI initiatives sends the wrong message: that people’s individual needs, strengths, and growth areas aren’t seen or supported. That erodes the human side of work and your attractiveness as an employer.

It’s about building organizations that work for everyone – Research shows that environments fostering belonging empower all employees -not just those from historically excluded groups. The result? Stronger collaboration, better decision-making, and improved outcomes.

In a knowledge economy, the difference is your competitive edge – When you stop creating spaces for different voices, perspectives, and ways of thinking, you risk losing the very innovation that drives growth -whether it’s a warning you didn’t see coming or a game-changing idea.

Why you scale back matters -If DEI programs are paused to be refined, aligned with legal frameworks, and improved–great. If they’re stopped to avoid discomfort or complexity, everyone loses. Avoiding difference is not a strategy–it becomes a liability.

System adaptability is still key – DEI practices help organizations evolve – updating outdated systems and unlocking fresh thinking. That’s not a “nice to have”; it’s business-critical in a fast-moving world.

While scaling back DEI initiatives may address certain legal or political concerns, it also introduces serious risks – around equity, reputation, and long-term org. effectiveness. Companies that step back too far may unintentionally send a message that people’s individual experiences and strengths don’t matter.

That’s not just a cultural loss–it’s a strategic one.

Brett Ungashick
CEO, OutSail

Scaling Back DEI Undermines Growth

As a professional HRIS expert, I see the scaling back of Diversity, Equity, and Inclusion (DEI) initiatives as a potentially short-sighted move that may undermine long-term organizational growth and employee engagement. DEI is not just a social initiative–it directly impacts recruitment, retention, and performance. Data shows that diverse teams are more innovative and productive, and organizations with inclusive cultures experience higher employee satisfaction and lower turnover rates. When DEI efforts are deprioritized, businesses may lose these strategic advantages.

From an HRIS perspective, DEI metrics are vital for tracking organizational health and equity in the workforce. Reducing focus on DEI initiatives could lead to less visibility into workforce disparities, affecting everything from promotions to pay equity. Systems that capture and analyze DEI-related data help leadership make informed decisions, ensuring fairness and compliance with equal opportunity laws. Scaling back can hinder progress, especially if the underlying analytics and accountability mechanisms are removed or weakened.

Moreover, the message sent to employees when DEI is scaled back can be demoralizing, particularly for underrepresented groups. It may lead to decreased trust in leadership, lower morale, and diminished feelings of belonging. This can result in a disengaged workforce, reduced collaboration, and even public reputation risk–especially in today’s environment where social responsibility matters to both employees and consumers.

In the long run, organizations that step back from DEI may find themselves less competitive in attracting top talent. Younger generations entering the workforce are more diverse and increasingly value inclusion and equity as core workplace values. Rather than retreating from DEI, companies should aim to integrate it more deeply into their HR technology systems and business strategies–making it measurable, actionable, and sustainable.

Austin Benton
Founder, Speaker Drive

DEI Rollback Makes Companies Easier To Ignore

Imagine you’re building a soccer team. Not just any team, but one meant to win tournaments, attract fans, and actually matter. Now, if everyone on that team plays the same way, thinks the same way, and trained under the same coach… sure, things might feel smooth at first. But the team becomes predictable. Easy to read. Eventually, you lose to teams that know how to bring in different styles, weird plays, unexpected moves. That’s what happens when companies scale back DEI.

I’ve worked in marketing for a speaker agency, and let me tell you–when events start sounding like echo chambers, people stop listening. DEI brings in voices with different life experiences, ideas you wouldn’t have come up with on your own. And when companies cut that out because it feels “too political” or “too risky,” they lose edge. It’s like benching your most creative players because their style is different. Sure, it’s quieter… but also less powerful.

Long story short: pulling back on DEI might make things look neat for a while, but in the real world, it just makes you easier to ignore.

Paul DeMott
Chief Technology Officer, Helium SEO

Shift DEI From Policy To Action

For organizations looking to create a tangible, measurable impact in DEI, one of the most effective steps is to shift from policy creation to actionable, data-driven initiatives. This means setting clear, measurable goals tied to DEI outcomes, like hiring targets, career advancement opportunities, or retention rates for underrepresented groups.

Rather than just relying on broad statements, organizations should establish a system for tracking progress. For example, using employee surveys to measure inclusivity, reviewing hiring practices to ensure they are equitable, and analyzing promotion patterns to identify gaps. These actions allow leadership to see where they’re succeeding and where they need to improve. Regularly reviewing this data and making adjustments in real-time shows a commitment to real change, not just lip service.

Accountability is key–setting up DEI champions at different levels within the organization to lead the charge can also make a difference. With tangible goals and data behind them, organizations can build a DEI culture that has measurable, lasting effects on the workforce.

Sheena Yap Chan
WSJ Bestselling Author, Sheena Yap Chan

DEI Rollback Harms Team Morale

One unexpected consequence of a DEI rollback I observed was a noticeable decline in team morale and collaboration.

When leadership deprioritized DEI initiatives, it sent an unspoken message that inclusivity and diverse perspectives weren’t valued. This led to underrepresented employees feeling unsupported and hesitant to share their ideas, which stifled creativity and innovation.

The rollback also created silos within teams, as trust and psychological safety diminished across the organization.

What I learned from this experience is that DEI isn’t just a program or initiative-it’s the foundation for building resilient, high-performing teams. When inclusivity is sidelined, it impacts everyone, not just those who are directly marginalized. Organizations thrive when all employees feel valued, heard, and empowered to contribute authentically.

This experience reinforced my commitment to advocating for DEI as a non-negotiable priority in any workplace, as it directly influences the health, success, and sustainability of the entire organization.

Aimie Ye
Director of Marketing, Centime

Embed DEI In Performance Management

One practical step organizations can take is embedding DEI into performance management–tying leadership bonuses or promotions to specific, measurable DEI outcomes. It forces accountability beyond good intentions.

For example, you can track inclusive hiring metrics, retention rates for underrepresented groups, or team-wide participation in bias training and mentorship programs. If DEI goals are treated like revenue or operational KPIs, they’re more likely to drive real behavior change.

At Centime, we’ve seen the difference when DEI isn’t siloed under HR but is part of how every team operates. This means empowering ERG leaders with actual budgets, inviting diverse voices into product and marketing reviews, and analyzing whether vendor partnerships reflect your values.

DEI can’t be a checkbox–it has to be a lens through which the entire organization makes decisions.

Maurice Harary
CEO & Co-Founder, The Bid Lab

Scaling Back DEI Risks Long-Term Reputation

Scaling back DEI initiatives might bring short-term gains, but the reputation of brands that do so might suffer in the long run.

I’d advise organizations to carefully consider what they have to gain– and weigh that against what they’d have to lose by doing so.

There’s plenty of research out there that shows the most successful companies are the ones that are the most diverse. It makes sense to me that you’d want your workforce to reflect your target audience– which is everyone in your niche!

Doug Crawford
President & Founder, Best Trade Schools

Track DEI Success For Real Outcomes

One practical step an organization can take is to start tracking and measuring the success of its DEI initiatives in a way that connects directly to real outcomes. This could mean collecting data on hiring, promotions, and retention rates across different demographics.

Beyond just having policies in place, it’s essential to understand how those policies are influencing the workforce in tangible ways. This helps ensure that DEI efforts are not only surface-level but are actually contributing to a more inclusive and equitable work environment.

Joseph Commisso
Owner, WeBuyHousesQuick.ca

Scaling Back DEI Has Long-Term Consequences

Scaling back DEI (Diversity, Equity, and Inclusion) initiatives may seem like a way to cut costs or avoid controversy, but it can lead to serious long-term consequences.

Without these efforts, organizations risk losing diverse talent, lowering employee morale, and weakening innovation due to a lack of varied perspectives. It may also hurt a company’s reputation, especially with younger generations and socially conscious customers who value inclusivity.

In some cases, pulling back on DEI can even lead to legal and compliance issues if protections and fair practices aren’t maintained.

Overall, while cutting DEI programs might offer short-term relief, it could cost much more in the long run in terms of talent, trust, and performance.

The HR Spotlight team thanks these industry leaders for offering their expertise and experience and sharing these insights.

Do you wish to contribute to the next HR Spotlight article? Or is there an insight or idea you’d like to share with readers across the globe?

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