Designing Corporate DEI Initiatives in Wake of US Affirmative Action Ruling

Rally Held At Harvard University In Support Of Affirmative Action After Supreme Court Ruling

On June 29, the Supreme Court of the United States imposed strict limitations on the use of race in college admissions decisions. The rulings in the Students for Fair Admissions (or SFFA) cases against, respectively, Harvard University and the University of North Carolina have been characterized as the “end of affirmative action,” with numerous academics and practitioners commenting on the potential impact of the decision on the diversity, equity, and inclusion (DEI) initiatives of private employers in the United States.

Given the outsized (and oftentimes misguided) nature of US influence on both global perceptions and corporate practice, it is essential to consider how the SFFA decision is likely to affect corporate DEI initiatives around the world. In this article, we discuss how an incorrect understanding of the SFFA decision could negatively impact global perceptions of DEI and provide guidance for how to minimize these impacts.

The Truth about Employer Affirmative Action in the United States

An enduring myth about “US-style” corporate DEI is that it relies heavily on affirmative action. In our practice and teaching in Europe and in Asia, we have encountered the misconception that racial quotas are widely used by private employers in the United States. In our experience, the mythology surrounding DEI methodology as primarily or exclusively affirmative action has two important impacts on the global perception of DEI. Proponents of corporate DEI often fear that if they are constrained in the use of affirmative action in their local context (whether as a matter of law or normative practice), their DEI initiatives will be ineffective. Opponents of corporate DEI, on the other hand, often argue that the use of affirmative action is inconsistent with a societal ideal of meritocracy as a guarantor of equal treatment. Examining the immediate impact of the Supreme Court decision on US corporate DEI initiatives provides an opportunity to debunk this reductive myth.

Put simply, the Supreme Court decision does not substantially change US corporate DEI methodology. The SFFA opinion is consistent with the “anti-discrimination” approach to advancing racial equality that has long been a feature of US law. In a 2007 case striking down use of a racial tiebreaker for public school assignments, Chief Justice Roberts asserted, “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.” Although the case did not involve private employers, the quotation illustrates a position that any decision based on a protected category (such as race or sex) equates to unlawful discrimination, a view that underpins the US approach to DEI initiatives by private employers embodied in Title VII of the Civil Rights Act of 1964. Although enacted with the legislative intent of addressing the long history of marginalization of African Americans, Title VII has been interpreted as prohibiting most social identity classifications in employment-related decisions and policies. Accordingly, the use of quotas and other race-based preferences in the context of private employment is significantly constrained, despite the myth.

Formal “affirmative action” programs—in which US employers are legally permitted to consider race (or other protected categories) in hiring or promotion—are strictly limited to circumstances where the employer is adopting targeted remedies to correct its own specifically-identified discriminatory practices. The US Equal Employment Opportunity Commission (EEOC) has stated unambiguously:

“Affirmative action under [these] Guidelines is not a type of discrimination but a justification for a policy or practice based on race, sex, or national origin [when] designed . . . to break down old patterns of segregation and hierarchy and to overcome the effects of past or present practices, policies, or other barriers to equal employment opportunity.”

The constraints on these “voluntary” affirmative action plans are, however, significant, and relatively few US employers, even those committed to advancing diversity, currently seek to implement them.

Rather than pursuing mandatory representation percentages or other preferential policies, contemporary corporate DEI initiatives in the United States focus primarily on institutionalizing practices that reduce discrimination and its effects. A key tenet of US DEI practice is that anti-discrimination initiatives will disproportionately, but not exclusively, benefit those candidates and employees most subjected to identity-based discrimination. Accordingly, US DEI practice seeks to limit the impact of bias in decision-making about and evaluations of people and create inclusive workplace climates free from dynamics that disproportionality thwart the success of historically marginalized groups. It also strives to foster both formal and informal interpersonal interactions (such as sponsorship, allyship, and mentoring) that support the two aforementioned objectives. As these practices and policies are typically race-neutral, they should not be impacted by any eventual extension of the reasoning in SFFA to private employers. (Law firms have cautioned that policies that could be mischaracterized as providing favour or benefit to only one group, such as diverse-slate mandates, closed employee resource groups, or incentive pay linked to firm DEI targets, could expose companies to litigation costs in defending against plaintiffs seeking to rely on the logic of the ruling.) Informed discussion of the SFFA opinion and its relationship to the realities of current US DEI practice provides opportunities to silence criticisms of “US-style” DEI as discriminatory and to make visible a wider range of DEI techniques to those who would consult US practice for evidence-based guidance.

The Reality of “Affirmative Actions” Globally

While the US myth weighs heavily on perceptions, global practitioners must address the complex reality of varying legal regulations governing the use of affirmative action-like measures. Many countries permit, and in some cases mandate, identity-based targets and preferences for private employers. While US employment discrimination law holds fast to its anti-discrimination approach, other laws embrace an “anti-subordination” approach to achieving social equity. Much like the EEOC carveout allowing for voluntary affirmative action plans mentioned above, an anti-subordination approach permits the use of otherwise prohibited categories when such use is designed to address historic discrimination and marginalization. Policies such as “employment equity” in Canada, “positive action” in Europe, “special measures” in Australia, or “affirmative action” in Brazil require, encourage, or tolerate to varying degrees explicit social identity-based quotas, preferences, and even exclusive recruiting measures of the type prohibited in the United States. Anti-subordination places equity as the central concern, permitting methods that explicitly pursue this objective. (Organizations often use the acronym EDI or other name variations to signal and recall prioritization of equity.)

”Despite headlines announcing the end of affirmative action, the US Supreme Court decision actually provides an opportunity to examine and, where appropriate, reinforce the role of affirmative actions in corporate DEI initiatives in crucial ways.”

Implementing preferential programs as part of a DEI strategy can, therefore, be justifiable but is rarely without controversy. Private employers may embrace temporary affirmative actions with the aim of having staff at all levels, including leadership, represent the populations in which the organization is embedded. These options may have their greatest appeal where a society or employer has devoted limited prior attention to social equity, creating a sense of urgency to make meaningful progress toward concrete DEI goals.

Hard targets do shift the needle on representation, but they and other explicitly affirmative actions also can create dynamics that negatively impact DEI initiatives. Notably, many practitioners are sensitive to the risk of strong reactance from employees who feel overlooked. The US Supreme Court decision may heighten this potential risk. Without a proper understanding of the impact of the SFFA decision in the US corporate context, some may rely on the decision to argue that US quotas are now dead. The erroneous belief that US practitioners must abandon a device that has not been a part of their toolkit could erode support for, or stoke backlash against, legally permissible affirmative actions globally.

To minimize these potential reactions, it is crucial that global companies adopt and communicate DEI strategies that are localized and nuanced to take account of not only local regulatory frameworks but also the local history of marginalization and discrimination. Basing global strategy on what is legally permissible or apparently necessary in the United States would mean depriving local actors of techniques that could allow their country-specific DEI initiatives to have more immediate impact. Social inequality dynamics similar to those originally justifying an anti-subordination approach in the United States remain largely unaddressed or acute in other countries (and some would argue in the present-day United States). When a local context allows and supports their use, we recommend setting targets in a context that builds the logic for anti-subordination efforts in the minds of the managers who will enact these practices within the organization. Effective implementation of targets and other affirmative actions requires education about current underrepresentation and the systemic reasons for exclusion of some groups. Developing an anti-subordination narrative based on the local context, including quantitative data, can strengthen the justification for and acceptance of local affirmative actions. Additionally, an iterative DEI process of learning about underrepresentation and its root causes helps to determine how ambitious targets should be along with realistic timelines and the most ameliorative methods for achieving them.

Advancing Equity after SFFA

Despite headlines announcing the end of affirmative action, the US Supreme Court decision actually provides an opportunity to examine and, where appropriate, reinforce the role of affirmative actions in corporate DEI initiatives in crucial ways.

Moving to debunk the “quota myth” surrounding US practice, for example, allows for developing knowledge about the variety of methods that make up a comprehensive DEI strategy. Meanwhile, understanding the anti-subordination approach, rejected by the Supreme Court majority but embraced by many national laws, allows for a recommitment to “do equity” using explicitly affirmative actions, where they are permitted, and an equity-based approach to all DEI initiatives.

Organizations serious about equity should also formulate comprehensive DEI strategies that integrate system-level interventions. These may include numeric representation targets as part of organizational policies and must include internal education programming on the systemic nature of marginalization.

Finally, in order to counter resistance to explicit affirmative actions (and in general policies that may be perceived as such), organizations should craft historical, values-based, and data-informed narratives to support local uses of curative, equity-promoting measures.

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