(This story has been updated to reflect ongoing business developments)
It’s been a tough year for diversity, which is bad news for marketers and companies’ bottom lines. More recently, Walmart, Ford, Molson Coors, Lowe’s, Boeing (which should really focus on other issues), Brown-Foreman, Tractor Supply, Harley-Davidson and John Deere have all reduced or scuttled their diversity, equity and their inclusion (DEI) efforts.
This follows layoffs at highly profitable tech companies – Apple, PayPal, Google, Meta – which have hit particularly hard DEI Efforts. The layoffs were justified as helping to “maximize shareholder value.” I call this the Jack Welch strategy, after the former CEO of General Electric who laid off more than 100,000 employees to increase the value of its shares in the short term, but in the long term it reduced its market capitalization by $250 billion.
At the same time, marketing organizations at large companies are becoming less diverse, according to the latest ANA report. Advertising and Marketing Diversity Report (no registration required)
Before we get to that, let’s clarify one thing. Reducing DEI is exactly what not to do to maximize shareholder value. There is a huge amount of research on DEI in the workplace. This overwhelmingly shows that companies with greater diversity and inclusiveness at all levels outperform those with less.
Definitions: Diversity is the presence in an organization of people who reflect the society in which it exists and operates. Inclusiveness 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 standards, practices and policies ensure that identity does not predict opportunities or outcomes in the workplace.
Diversity is good business
Here is a small sample of this research:
The 100 largest companies in the Fortune 500 have more diverse boards than the other 400 companies. (Forbes) Ethnically diverse businesses are 35% more likely to generate higher revenue, while mixed businesses are 15% more likely to generate higher revenue. (McKinsey) Companies with the most women on their management teams have 35% higher return on equity and 34% higher total shareholder returns than companies with the fewest. (Catalyst)
Dig Deeper: By the numbers: diversity and inclusion are good business
The decision to remove the DEI is motivated by a war against “Woke”, led by reactionary billionaires and filmmaker/activist Christopher Rufo, who, to quote the Wall Street Journal, “seeks to end activities that he says divide Americans and promote prejudice against different groups, including white men.”
For these people, “Woke” is a nebulous concept with no clear definition. However, the gist is the antithesis of the original use of woke in a political context by Black Americans. There, that means being informed, educated, and aware of social injustice and racial inequality.
This war involves attacking organizations that have done everything to make their populations (employees/students) more like that of the nation. These attacks include numerous lawsuits aimed at stopping efforts to compensate for the country’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 for marketing. It costs businesses through missed opportunities and mistakes made.
Its report is based on research conducted in 2023 (an updated edition is expected in February), before companies began to loudly welcome their DEI reductions. Even then, the ANA knew this was a pressing issue for marketers.
The “diversity report is particularly necessary because [DEI] support appears to be showing signs of wavering, withering under the weight of a recent Supreme Court ruling and the fallout from several transgender marketing dilemmas,” CEO Bob Liodice writes in the survey’s introduction.
Last year, ethnic diversity in ANA member marketing organizations fell from 32.3% in 2022 to 30.8%, the same as in 2021, according to the report.
“The ethnic diversity of the advertising and marketing industry remains lower than the diversity of 42.2 percent of the total U.S. population,” the report states. “And after progress in 2022, the decline in 2023 is very disappointing. Ethnic diversity remains particularly low for the African American/Black and Hispanic/Latino segments.
Lose ground
The number of Hispanic/Latino marketers declined significantly, from 10.9% in 2022 to 9.5% in 2023. This was true at almost every job level: at the senior level, it was relatively low, going from 8.2% to 7.8%. However, it fell from 11.8% to 10% at entry level. This “was particularly disappointing since the Hispanic/Latino segment is younger than the general population and we would have expected an increase here.” Overall, ethnic diversity at this level increased from 34.2% in 2022 to 31.3% in 2023.
Progress is being made at the highest levels of marketing and advertising organizations. Last year, ethnic diversity at this level increased from 27.4% to 27.9%, the second highest level during the six-year study period. One reason for this is the increase in diversity among CMOs, which reached 17.3% ethnic diversity (up from 14.6%), the highest in the report’s history.
Marketing and advertising has a remarkable record when it comes to gender diversity. Women represent 69.5% of the ANA membership and 57.7% of senior executives, a six-year high.
Conclusion
Most trade associations are partisan spokespersons for their industries. Many began touting DEI in 2020 after the killing of George Floyd and the rise of the Black Lives Matter movement, only to abandon it after a few years. The ANA has produced its diversity report annually since 2018. The research and analysis is thorough. It clearly lays out the problems, offers possible reasons and a list of actions to take. We can only hope that others will follow his example.
