After DEI Controversies, Companies’ Diversity Talk Falls Flat

A study of nearly 1,300 diversity, equity, and inclusion-related controversies at 315 U.S. public companies between 2008 to 2022 found that companies increased their hiring of women and people of color by an extremely modest amount following public scrutiny.    

When companies face backlash over issues like workplace discrimination or racial bias, many respond quickly — announcing new hiring goals or issuing public statements about their commitment to diversity and inclusion.

A new study by David Larcker, professor emeritus of accounting at Stanford Graduate School of Business and visiting scholar at the Hoover Institution, challenges the assumption that these efforts lead to lasting internal change.

Most of these gains occurred in jobs that are typically lower paid: junior and “non-core” back-office positions. The researchers also examined who left a company following DEI controversies, and found that turnover increased among women and people of color.

“When you look at who’s leaving, it’s often the same demographic they just brought in,” says co-author David Larcker, a professor emeritus of accounting. “So, when you net it out, nothing really changes.”

Read the study here.