DEI is done. Get ready for diversity.

This one is going to get me canceled by the left or defunded by the right. Maybe both.

The last month has seen a blitzkrieg of executive orders and appointments coming out of Washington. Some of those orders have focused on cozying up to Russia and distancing ourselves from our allies. Others have started to dismantle the progress we’ve made against climate change. Still more have gone after diversity, equity, and inclusion (DEI) policies.

The new administration is intent on wiping out DEI programs and purging those who supported them, even if their only sin was attending a diversity training seminar. Federal agencies have even been told to identify and investigate companies who practice “illegal DEI,” with several media companies in the crosshairs.

Riding the shifting tide, conservative activists have taken the fight to the private sector. Robbie Starbuck is roaming the land, seeking out the next targets of his anti-DEI crusade, which has successfully pressured companies like Tractor Supply, Harley-Davidson, and Toyota to retreat from policies they recently embraced. Even Walmart, the country’s largest private employer of black workers, caved to Robbie Starbuck and the anti-woke brigade.

While many companies fold, others are standing firm. In a near-unanimous vote to reject a proposal to ditch its DEI programs, Costco’s board defended its policies as core to its creativity, innovation, and customer satisfaction. Costco then did something innovative. They put the issue to a shareholder vote and the company’s DEI initiatives were upheld. Apple and John Deere followed suit.

A CEO of a large financial services firm recently shared his frustrations with me about Robbie Starbuck’s antics. My friend was confident that they would emerge from the challenge intact. After all, creating an environment of inclusion has long been part of the company’s culture. Still, he was frustrated that they had to spend half a day of their board meeting on what amounted to an energy-sucking distraction.

Ten years ago, DEI seemed like a reasonable way to expand and diversify a company’s talent pool. Five years ago, it turned into a performative act of virtue-signaling in the wake of George Floyd’s murder. Today, it’s a political distraction that’s only helping to take leaders’ eyes off the ball.

But even as DEI crumbles, the underlying forces that drove it are still here—and they’re only going to get stronger.

I always advise leaders that they need to avoid getting distracted by today’s headlines and focus on the future. And by future, I mean how the world, their market, and their company will look in five to seven years. Because companies that aren’t future-focused get blindsided by external forces. They get fracked.

And when it comes to diversity, the trend couldn’t be clearer. Today, 53% of U.S. children are non-white. By 2045, America will be a majority-minority country. And no executive order from the White House can derail that demographic reality. Whether you like it or not, diversity is happening—we’re simply not going back to a Mad Men world.

Another reality is that companies are in a war for talent, and their future success will depend on their ability to attract, develop, and retain the best people, independent of their gender, race, or sexuality. Many regions and professions have record-low unemployment rates, meaning that if you want to hire someone, you probably need to poach them from someone else. If the person you want to recruit is a woman, and your company has a toxic masculinity problem, how likely is she to join you or stay with you?

This isn’t about ideology or culture wars—it’s about strategy. Companies that treat diversity as a core business imperative will do better in the long run than those who ignore it or treat it as an expendable PR exercise.

Ending Affirmative Action

Critics of affirmative action and other diversity initiatives argue that organizations should be meritocracies. They say that companies should hire and promote the best people independent of their identity.

I agree.

But make no mistake. A real meritocracy should result in a diverse workforce. According to the Bureau of Labor Statistics, the US workforce is about 60% white. It’s 17% Hispanic, 15% Black, and 7% Asian. It’s 56% female. Those numbers then vary a bit by region and profession. If your company is really a meritocracy, then your workforce, your leadership team, and your board should be reflective of those numbers. 

And if your company doesn’t reflect those numbers, you’re probably making all sorts of decisions in recruiting, hiring, mentoring, promoting, networking, and even board selection that give preference to the majority. In essence, you don’t have a meritocracy. You have an affirmative action program for white people.

DEI Damaged Itself

The first step is admitting you have a problem. Unfortunately, that alone doesn’t provide us with a solution. And in the aftermath of George Floyd’s murder, too many companies jumped on quick fixes that were often ineffective or made the problem worse.

Companies set up offices of Diversity and Inclusion with objectives that had nothing to do with improving business performance. Some companies initiated training in “implicit bias” that sought to help white people reveal their own racist core. Multiple studies have shown that this sort of training is at best a waste of time and at worst reinforces the biases people already have. As any great parent knows, you don’t make people do good by making them feel bad.

What was perhaps most damaging was when companies rushed to recruit and promote unqualified individuals on the basis of their identity. And make no mistake: in the years after George Floyd, that happened. These well-intentioned but guilt-driven moves ended up damaging the cause, making it easier for opponents to write off any female or racial minority executives in senior positions as incompetent “DEI hires.”

It is an ugly truth that some “DEI hires” have been unqualified for their job. However, the attention they’ve drawn is in itself quite telling. A senior exec at a major apparel company told me he was excited by recent changes there because he felt DEI policies had been giving certain employees an unfair advantage and preventing a true meritocracy. He mentioned by name a Black exec who had been recently let go. And I had to agree: the fired exec had been in over his head. But that observation ignored the raft of other white men at the company who are downright incompetent as well. The company’s issue isn’t diversity. It’s a lack of accountability and poor leadership overall. It’s just easy to see it when someone doesn’t look like you.

Creating True Meritocracy

So how can companies ensure they are encouraging genuine diversity and inclusion without being drawn into the fraught and sometimes counterproductive DEI battleground? By relentlessly focusing on a set of values that focuses on excellence, regardless of gender and race.

My teammates and I founded Jump Associates 27 years ago. Over that time, we’ve had a workforce that averaged 5% Black, 10% Hispanic, and 20% Asian.  Our leadership team is 50% female. Those are numbers that compare favorably with most other consulting firms. And we’ve never had a DEI program.

Our color and gender-blind values partly stem from my own background as the son of Indian immigrants. As a Hindu, I believe I’m living just one of many lives. In my last life, I might have been a Black woman or a Chinese farmer. And whatever identity I have now is the external clothing I’m wearing this time around. I’ve been lucky enough to surround myself with people who are committed to the same ideal of looking past the distractions of people’s identities to see the content of their character.

Doing this hasn’t been easy. For a company of our size, we spend an inordinate amount of time and money on leadership development. But we’ve found that the payoff is worth it. If you can develop leaders and a culture that gets past the illusion of external clothing, you get closer to a workforce that looks more like the world at large. 

That doesn’t mean that things are perfect at Jump. We have a lot of work to do in other aspects of recruiting, particularly when it comes to economic diversity. My partners and I grew up middle-class, and we’ve been stunned by how many of our young teammates come from backgrounds of eye-watering affluence. Clearly, we need to expand where we recruit from.

A Test of Leadership

Diversity, Equity, and Inclusion have become political footballs and painful distractions. It can be tempting to simply roll back the gains that have been made. But taking a cue from politicians and activists to reverse or deny diversity is a losing proposition, if only because it fails to respond to the unshakeable trend toward a more diverse population.

Leaders should take this moment to assess how they are doing on talent and ask whether they’re attracting and retaining the best people who also reflect society as a whole.

They also should look for ways to focus diversity on business outcomes—like better customer service and improved innovation—rather than treating it as a compliance box to be ticked. And they should take a page from Costco’s playbook by showing the tangible ways in which diversity improves performance and letting stakeholders decide.

What’s really needed now is moral leadership: people who stand up for what’s right, no matter the consequences. The actions of Jeff Bezos, Mark Zuckerberg, and the rest of the tech bros in the wake of Trump’s election have been profiles in cowardice. Or maybe just cynicism. I have far greater respect for conservative businesspeople like Dan Cathy of Chick-fil-A, who simply believe different things than I do and stay true to them.

A few years back, we had a welcome event at Jump for new hires. Sitting in a circle with glasses of wine in our hands, folks were encouraged to ask me anything. A bright, young woman asked me why we had no DEI program. I told her this: “Last year, in the class I teach at Stanford, there was one student who was head and shoulders above the rest. At the end of the second class, my co-teacher told me that I should hire them. I told him I’d be lucky if we could do so.” I then pointed across the circle. “That star student is right over there. And I don’t ever want him to think he got hired because he’s Black. We hired him because he’s the best.”

Stay focused on the future. Navigating to that future will demand meaningful shifts in strategy, leadership, and culture along many fronts. How we manage talent is just one of those fronts. DEI is done. Get ready for diversity.