Seramount, a workplace research firm that serves more than half of Fortune 100 companies, released a new report that highlights the impact of political and legal challenges to diversity, equity, and inclusion (DEI) in the workplace. The paper, “Keeping DEI Strong in Volatile Times,” shows that Chief Diversity Officers are nervous their efforts may be diminished or even eradicated, pushing them to adopt a more cautious approach.

Most (80 percent) of diversity officers are taking a “wait and see” approach to DEI. Roughly 10 percent of organizations are reversing DEI efforts, and an additional 10 percent are continuing forward, even doubling down on DEI.

Findings from the paper were presented today at the Society for Human Resource Management Inclusion 2023 conference. The findings were drawn from a review of DEI best practices from roughly 100 organizations across sectors and geographies, and interviews with dozens of CDOs, subject-matter experts, and other corporate leaders.

Seramount’s analysis identified four key drivers that are having a chilling effect on corporate DEI:

1. “Anti-Woke” Legislative and Political Pressures—The Supreme Court eliminated race as a factor in university admissions and state-led efforts seek to erode DEI efforts more broadly.
2. Threat of an Economic Downturn—In one 2023 survey, 62 percent of tech companies surveyed admitted that the current economic environment was slowing their DEI initiatives.
3. Turnover at the Top—When a new CEO is hired, they may not be as enthusiastic as the departing CEO about supporting anything they suspect may threaten profitability.
4. Mergers and Acquisitions—When two companies merge, cultural fit is critically important. Companies fear that a misalignment of DEI priorities could jeopardize the deal.

“To combat these challenges, DEI leaders need to tie DEI initiatives to specific business outcomes, such as increased revenue or retention, and use data to show results,” said Seramount Managing Director Katie Mooney. “Research demonstrating, for example, that more diverse teams tend to be more innovative and more productive is still accurate; however, citing general studies like this is no longer sufficient in the current climate.”

Instead, Seramount urges diversity leaders to navigate dual roles as DEI change agents and business leaders by tracking, measuring, and reporting on specific business outcomes that can be tied back to DEI initiatives. For example, a program created to increase the percentage of Black women in management positions may also bolster the retention of junior employees or decrease the time to hire for vacant roles.

“Too many companies view DEI as an auxiliary function, not as an integral component of their business,” said Smita Pillai, chief diversity, equity, and inclusion officer at Regeneron. “The business and moral case for DEI is crystal clear to us at Regeneron, in part because we’ve been able to tie our DEI initiatives to tangible business outcomes.”