Opus DEI: Diversity policies in the U.S. served a purpose, and cancelling them comes with real risks

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The cancellation of DEI: what's it like?

On January 20, the day Donald Trump was sworn in as President of the United States for the second time, he signed a decree canceling federal DEI initiatives, which he characterized as “illegal and immoral discrimination programs” that had spread to “virtually all aspects of the Federal Government, in areas ranging from airline safety to the military.”

The decree references two orders from his predecessor, Joe Biden. The first, issued on January 20, 2021, emphasized the importance of “promoting ethnic equality and supporting vulnerable communities” and recommended considering “historically underrepresented and marginalized groups” when designing programs in the spheres of education, employment, and lending. The need to address poverty and other social barriers was also highlighted. The second order, from June 25 of the same year, directed federal agencies to adhere to DEI principles, aiming to “attract a workforce from all walks of life,” including vulnerable minorities. Trump overturned both orders and tasked the U.S. Office of Personnel Management with reviewing all federal hiring procedures, union regulations, and educational programs, stating that hiring decisions should focus on “individual initiative, skills, performance, and hard work,” with any inclusivity-related criteria being eliminated. Employees involved in DEI programs were put on paid leave.

Since DEI policies have evolved over the course of decades, they can’t simply be undone with one decree. Trump can ban the use of inclusivity principles for government hiring and stop funding related programs in universities and the private sector. However, he cannot directly influence private businesses.

Some U.S. companies, acting independently, have embraced the incoming president’s stance and begun moving away from DEI policies. Walmart, for example, announced it would no longer prioritize diversity in its supplier relationships and would remove products with LGBTQ+ symbols from its shelves. Amazon followed suit, and Google announced it would scrap plans to hire more employees from historically underrepresented groups. Disney, too, decided to revise its diversity, equity, and inclusion programs, focusing instead on “commercial goals and corporate values.”

The development of inclusivity policy

The implementation of DEI principles in U.S. government agencies is not solely Biden's achievement. American human rights advocates trace the history of this policy to at least as far back as the passage of the Civil Rights Act of 1964. That law, among other things, prohibited employment discrimination based on religion, gender, and ethnic origin.

In response to a wave of discrimination lawsuits from workers in the 1960s and 1970s, American companies began independently implementing equality and diversity programs. Initially aimed at avoiding reputational and financial damage, these initiatives later came to be seen as an opportunity to strengthen team bonds, demonstrate corporate social responsibility, and achieve greater efficiency in the face of changing demographics.

When leaks in the 1980s revealed President Ronald Reagan's plans to cancel anti-discrimination laws during his second term and shift responsibility for enforcement to private companies, the combined resistance of civil rights activists, Democrats, Republicans, and businesses succeeded in blocking the move. According to surveys from 1985 and 1986, most major corporations were willing to maintain equality programs regardless of presidential decrees.

In recent years, amid the rise of movements such as Black Lives Matter and MeToo, the popularity of DEI policies in American businesses grew rapidly. According to a LinkedIn study, from 2019 to 2022, the number of leadership positions related to diversity and inclusivity increased by 169%.

Programs originally created primarily to combat social inequality, structural racism, sexism, and discrimination are often viewed by large businesses as integral parts of a winning long-term strategy. For example, the CEO of one of the largest international HR firms, Randstad, is confident that despite attacks on DEI, corporations will continue to prioritize diversity in their teams — ”because it’s good for business.”

Similar assessments were made by many other executives of major companies, such as those at JP Morgan, Deutsche Bank, Cisco, and Starbucks. Overall, 82% of executives and business owners in the U.S. believe that diversity is a key component of their path to growth. In 2024, 41% of corporations in the S&P 500 used various DEI metrics when hiring and shaping their boards of directors.

DEI and effectiveness

Researchers and economists haven't yet settled the debate over the commercial effectiveness of DEI policies. Alex Edmans, a professor at the London Business School, points out that robust research is lacking, as scholars have only recently begun focusing on the application of DEI principles. One challenge for researchers is the difficulty in gathering data: there are few universal, transparent diversity metrics, countless ways to implement DEI, and not enough long-term studies to draw definitive conclusions.

As mentioned earlier, much of the support for DEI initiatives comes from major international businesses. For example, McKinsey, the world’s largest consulting firm, consistently publishes reports and independent studies on the effectiveness of DEI in the commercial sphere. In their most recent work, they argue that companies with high levels of gender and ethnic diversity outstrip their competitors by 39% in financial performance.

Other studies have shown similar findings. A large analysis from the London School of Economics revealed that companies with greater gender diversity on their boards — defined by cases in which at least 33% of the members are women — experience better long-term growth, with their stock prices rising up to 21% faster over a five-year period. Another significant study found that high diversity in corporations correlates with 16-17% additional profit.

The challenge with all these findings is that it’s difficult to separate cause from effect. Large, progressive corporations that prioritize diversity tend to outperform others, but it’s hard to say if this success is directly the result of their diversity policies.

Experts often talk about the link between diversity and innovation. For instance, researchers from BCG discovered that diverse teams are associated with higher profits from innovative products and services. Similarly, a study by Edmans and his colleagues found that companies with diverse research departments are significantly more productive: their work is cited 121% more often.

The idea is that a greater variety of experiences and cultural backgrounds leads to more ideas and, likely, higher-quality ideas. It has also been suggested that having DEI metrics can actually encourage recruiters to challenge their biases and hire qualified candidates they might otherwise overlook. However, as with profitability, proving this connection requires distinguishing correlation from causation. To do so, one would need to compare research departments at companies that are identical in every aspect other than diversity — but none of the studies mentioned above succeeded in controlling for other variables. Moreover, since DEI is made up of three different components — diversity, equity, and inclusivity — each may have a different impact.

But while there is no definitive proof that DEI policies are the direct cause of increased efficiency, one thing is clear: there are no serious studies suggesting that such policies harm effectiveness. So if there is no harm — and much potential upside — why cancel them?

Equal opportunities or “positive discrimination”?

Biden's executive orders didn't introduce anything fundamentally new to DEI principles, but they solidified the requirement for federal agencies to adhere to them. This triggered a wave of criticism in American society — or, at least, from segments of it.

Opponents of DEI are convinced that implementing such initiatives leads to “positive discrimination,” meaning that a person's ethnicity, gender, or sexual orientation is prioritized over their achievements and skills when applying for jobs or applying for social benefits. The head of Trump's “Department of Government Efficiency,” billionaire Elon Musk, even referred to DEI as “another word for racism.”

Critics of DEI believe that considering anything other than professional qualifications when hiring employees is a flawed practice rooted in left-wing ideology. For example, Yan Rathman, who coordinates educational programs for a range of American corporations, told The Insider that the rise in the number of DEI leadership positions is linked to the popularity of “critical race theory“ in U.S. universities. According to CRT, racism and other forms of discrimination are inherently built into all institutions of American society, and special efforts are needed to root them out, including the implementation of inclusive policies. “Graduates of these universities take jobs related to diversity issues. In fact, they create quotas for companies, requiring the hiring of a certain percentage of women, Black people, or LGBTQ+ members, sometimes at the expense of their professional qualifications,” says Rathman.

If DEI harms businesses, entrepreneurs should be the first to oppose this policy, but it is often businesspeople who defend DEI. For example, American billionaire Mark Cuban responded to Musk's critical comments about DEI by stating that good companies stand out because they look for employees where other employers don't think to look. Searching for candidates in different social groups actually helps businesses hire more qualified specialists.

Dmitry Abramson, who held leadership positions in large American corporations for over 12 years, told The Insider that he agrees with this view. He believes the establishment of DEI policies at the legislative level was a response to the historically discriminatory nature of the hiring process in the U.S. and adds that discrimination in hiring originates from the habit of selecting candidates based on personal connections:

“One of the main filters for hiring is not qualifications, but recommendations. Where 'outsiders' have to fight for a job, a candidate with a good recommendation will get it unless they clearly fail the interview. Having worked for many years in a major American corporation, I saw this process in action. For very prestigious positions, family members and friends of current employees were hired. There were even times when new positions were created specifically for them.”

Historically in the U.S., most leadership positions are held by white Americans, explains Abramson, and the friends and relatives they think of first when a position opens up tend to be of a similar background — “No, I am not accusing them of conscious racism, but an entirely neutral recommendation-based hiring system leads, in practice, to a racist outcome.”

According to him, “DEI managers” don’t impose specific hiring quotas for any particular vulnerable group but instead encourage companies to develop strategies to increase diversity if they notice an overrepresentation of, for example, white men.

“As part of this plan, employers might, for instance, visit a campus with a higher proportion of women and organize recruitment there. This approach benefited both employees and companies, as it opened up new avenues for talent search and recruitment. Rather than staying in their own comfort zone, companies could attract people with different perspectives, which in turn sparked growth,” Abramson explains.

Creating a healthy work environment

Corporate DEI programs face criticism not just for “positive discrimination” but also for being ineffective in achieving some of their stated goals. Frank Dobbin, a Harvard University professor of social sciences and a specialist in diversity programs, points to efforts aimed at training employees to identify their personal biases or at establishing procedures for filing discrimination complaints as examples of initiatives that often fail to meet their objectives.

In Why Harassment Prevention Programs Don’t Work, Dobbin and Alexandra Kalev of Tel Aviv University argue that trying to change people's views by highlighting their flaws or threatening punishment often backfires. They found that in companies where harassment training labeled men as aggressors, women were more likely to quit, and men tended to justify their behavior when acting as perpetrators. Instead, Dobbin and Kalev suggest that fostering a workplace environment where employees are seen as allies, not potential aggressors or victims, could be the solution. This approach applies not only to harassment, but also to any form of discrimination or violence.

It’s also important to note that DEI principles don’t necessarily require quotas or positive discrimination. According to researchers from Boston University, an effective inclusivity policy could involve setting consistent hiring and pay standards for all social groups. A company where any employee, regardless of gender, orientation, or background, has equal opportunities and is judged by the same criteria, is actually much more in harmony with DEI principles than one where diversity is only reflected in training programs.