The war on DEI is hitting marketing and hurting business
(This story was updated to reflect ongoing business developments)
It’s been a tough year for diversity, which is bad news for marketers and companies’ bottom lines. Most recently, Walmart, Ford, Molson Coors, Lowe’s, Boeing (which really should be focusing on other issues), Brown-Foreman, Tractor Supply, Harley-Davidson and John Deere have all cut or scuttled their diversity, equity and inclusion (DEI) efforts.
This comes on the heels of lay-offs at very profitable tech companies — Apple, PayPal, Google, Meta — which particularly hit DEI efforts. The layoffs have been justified as helping “maximize shareholder value.” I call this the Jack Welch strategy, named for the former General Electric CEO who laid off more than 100,000 employees to increase short-term stock value, but long-term cut $250 billion off its market cap.
At the same time, marketing organizations at major corporations are getting less diverse, according to the ANA’s latest report on diversity in the advertising and marketing industry (no registration required)
Before we get to that, let’s make one thing very clear. Cutting DEI is exactly what not to do to maximize shareholder value. There is a huge amount of research on DEI in the workplace. It overwhelmingly shows that companies with greater diversity and inclusivity at all levels outperform those with less.
Definitions: Diversity is the presence in an organization of people reflective of the society in which it exists and operates. Inclusivity is a work environment where everyone is treated fairly and respectfully and has equal access to opportunities and resources. Equity is the fair treatment of all people so that the norms, practices, and policies ensure identity is not predictive of opportunities or workplace outcomes.
Diversity is good business
Here is a tiny sample of that research:
- The top 100 Fortune 500 companies have more diverse boards than the other 400 companies. (Forbes)
- Ethnically diverse companies are 35% more likely to yield higher revenue, while gender-diverse companies are 15% more likely to yield higher revenue. (McKinsey)
- Companies with the highest number of women on top management teams have a 35% higher return on equity and 34% higher total return to shareholders than companies with the lowest number. (Catalyst)
Dig deeper: By the numbers: Diversity and inclusion are good business
The decision to cut DEI is being spurred by a War on “Woke,” driven by reactionary billionaires and filmmaker/activist Christopher Rufo who, to quote The Wall Street Journal, is on a “quest to end activities that he says divide Americans and foster bias against different groups, including white men.”
For these people, “Woke” is a nebulous concept with no clear definition. However, the gist of it is the antithesis of the original use of woke in a political context by Black Americans. There it is used to mean being informed, educated and conscious of social injustice and racial inequality.
This war involves attacking organizations that have done anything to make their populations (employees/student bodies) better resemble that of the nation. These attacks include numerous lawsuits to end efforts to make up for the nation’s long history of discrimination based on race, gender and sexual orientation.
Less diversity in marketing
The ANA has long understood the importance of DEI to marketing. It costs companies in opportunities missed and mistakes made.
Its report is based on research from 2023 (an updated edition is expected February), before corporations began loudly hailing their DEI cuts. Even then, the ANA knew this was a pressing issue for marketers.
The “diversity report is especially needed as [DEI] support seems to show signs of wavering, withering under the weight of a recent Supreme Court ruling and the blowback from several transgender marketing dilemmas,” CEO Bob Liodice writes in the survey’s introduction.
Last year, ethnic diversity in ANA members’ marketing organizations dropped from 32.3% in 2022 to 30.8%, the same as in 2021, according to the report.
“Ethnic diversity of the advertising/marketing industry remains below the 42.2% diversity of the total U.S. population,” the report states. “And after making progress in 2022, the decline in 2023 is very disappointing. Ethnic diversity remains particularly poor for the African American/Black and Hispanic/Latino segments.”
Losing ground
The number of Hispanic/Latino marketers declined dramatically, from 10.9% in 2022 to 9.5% in 2023. This was true at nearly every job level: At the senior level, it was relatively small, going from 8.2% to 7.8%. However, it went from 11.8% to 10% at the entry level. This “was especially disappointing since the Hispanic/Latino segment skews younger than the general population and we would have expected an increase here.” Overall, ethnic diversity at this level dropped from 34.2% in 2022 to 31.3% in 2023.
Progress is being made at the top levels of marketing and advertising organizations. Last year, ethnic diversity at this level increased to 27.9% from 27.4%, the second-highest level in the six-year study period. One reason for this is the increase in diversity among CMOs, which hit 17.3% ethnic diversity (up from 14.6%), the highest in the report’s history.
Marketing and advertising have a stellar record in terms of gender diversity. Women comprise 69.5% of the ANA member workforce and 57.7% of senior leadership — both are six-year highs.
Conclusion
Most trade associations are partisan cheerleaders for their industries. Many started touting DEI in 2020 following the murder of George Floyd and the rise of the Black Lives Matter movement, only to drop it within a couple of years. The ANA has been producing its diversity report annually since 2018. The research and analysis are thorough. It is clear about the problems, offering possible reasons and a list of actions to take. We can only hope others follow its lead.
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