Episode 218 - Executive Orders and Their Impact on DEI

Welcome to the Workplace, a podcast by Cal Chamber. I'm Bianca Saad, General Counsel for Labor and Employment with the California Chamber of Commerce. Hello listeners. We are now several weeks into a new presidential administration and needless to say, a lot has happened in a short amount of time. One area that has received a lot of attention is diversity, Equity and inclusion, or better known by its three letter acronym, dei. DEI has been addressed in some of President Trump's earliest signed executive orders, signaling a shift in policy goals around this topic compared with President Biden's. Because of this policy shift and its potential impact on private employers, I am very excited to be co hosting this special episode with my colleague, Cal Chambers Associate General Counsel of Labor and Employment, Matthew Roberts, to have a discussion around the latest developments around DEI and what they mean for employers. Hello, Matt.

It's great to join you here, Bianca. And hello out there to all the listeners. It really has felt like a whirlwind with the volume of executive orders from the early days of the Trump administration. And, you know, especially in the area of dei, which itself still remains a relatively newer topic for some of our employers, only having come to the forefront in California nationally in the last few years. Taken together, it really feels like it has been difficult for employers to find their bearings at this point. So I'm very excited to join you today for this discussion.

Thanks, Matt. We are also incredibly excited to have the return of a prior guest for this discussion, Jonathan Mays. Jonathan is CEO of Jonathan Mays Consulting and former Senior Vice President, Chief Diversity and Inclusion Officer for Albertsons Companies, one of America's largest grocery and pharmacy chainsaw. Jonathan is an internationally known speaker on DEI topics, frequently presenting at conferences, major universities and corporations across the US and has received numerous awards as one of the top diversity and inclusion executives in the U.S. thank you for joining us again, Jonathan.

My pleasure.

All right, so let's start with some basics with this topic today. DEI is of course, a term that has become generalized over time and as a result, it's harder to understand really what that term really means. So, Jonathan, as an expert in this field, can you just start us off with how would you define dei?

I like how Verna Myers, another DEI expert, thinks about and defines diversity and inclusion. She has said diversity is being invited to the party. Inclusion means that you've been asked to dance. What does that mean? Well, in the work setting, diversity means congratulations, particularly if you're a person of color or someone who's underrepresented in leadership at the company. Congratulations. You're in the door.

Also, with regard to inclusion, it means not only are you in the door, but you feel welcomed. Because inclusion, according to Verna Meyers, means that you're invited to dance. And so not only are you in the door, you're at the party, but you also are invited to dance. And by dance, that means that you are invited to important meetings that involve the work that you do. People are interested in what you have to say about the work that you are doing and how you can help the company succeed. Equity, in the way that I think about it, is not only are you at the party, you've been asked to dance, but equity means if you have mobility issues as an example, and you need a wheelchair and the dance floor is elevated, there's a ramp for you. If there are issues with bright strobe lights, maybe you don't turn those on during the party, but you were given the opportunity to come onto the dance floor and bust a move. Equity in the workplace means you have the resources available to do the work you've been hired to do. So if you need ramps to get into the office, they are there. If you need a bigger screen to see the work that you do as you type, that's provided. Those are the sorts of things that involve equity.

I love that illustration. I think that's really helpful to just illustrate what we're talking about here. Now that we have that framework in mind, what would you say then is the purpose of dei?

Let me tell you a story I'll never forget. There was what's called a succession planning meeting. Many listeners are familiar with those. It was in a boardroom, people sitting around the table. This was years ago. But it's just a story that I think explains why this is important, what its purpose is. They were talking about who the next VP of a particular department would be at this meeting. And the person running this meeting, and they were almost all men in this meeting. Person running this meeting said, all right, so who do we recommend for the next VP of X? And the name of a woman came up to be the next vp. When the current VP might leave to go to a different company or a different position, this name of this woman came up. The head of the meeting said, hold on, didn't she just get married last year?

She's probably going to want to start a family. This job involves travel. I don't think we should consider her.

What happened next is even more amazing to me. And what happened next is no one said anything. No one said a word. What is the purpose of dei? For people to say a word, for people to say, do we know that we can assume that she's planning to start a family? Do we know that even if she does that her spouse isn't going to stay home with it? Can we make that assumption? Is it fair to do that? DEI is intended to have embedded into a culture where people ask questions respectfully about assumptions that people make about different groups. This extends to not only people currently working, but what about prospective employees? How do we think about hiring folks? How do we think about developing folks once they are there? How do we think about promoting folks in a way that is fair for everyone so that they can contribute to the company just like anyone else? That's the purpose.

Yeah, that's great. When you talk about things like hiring and promotional opportunities, things of that nature, we of course know we have existing laws to protect from discrimination based on any protected class. So then I guess I want to flesh this out a little bit more in terms of then, so what's the benefit or what would be a reason that a company would have a DEI policy separate and aside from what we already know the law requires us to do, and that is not discriminate when making these decisions?

Sure. So there are three things I want to mention briefly here in response to that question. The first is companies that have DEI policies have done this thing first and fundamentally. And that is they, at a fundamental level, acknowledge that despite the laws that are still in effect, people have preconceived notions sometimes about folks who are applying for jobs, folks currently in a role much like the illustration I just shared. And so, number one, why do you have these policies? Well, first of all, you acknowledge that bias exists. And two, you want to do something to address it. That's why you have these policies and address it in ways that are meaningful and tangible. And so things that involve courses such as unconscious bias. And so folks can understand a, that there perhaps is a bias that they have. They just at a conscious level, are not aware of it to help them recognize it and then to help them interrupt it, or when you see it in others, to interrupt it, much like the illustration I just mentioned. But there's another benefit as well that a lot of folks didn't know about until just relatively recently. And that is the strong evidence that organizations that lean into diversity, equity and inclusion in a meaningful and tangible and effective way typically outperform organizations that don't. There's so many examples of that. But firms such as Boston Consulting and Korn, Ferry and McKinsey, for example, have done extensive research on this and I'll just give one as an example. McKinsey has done research looking at companies that do the best in terms of having diversity at the leadership level in the organization and what they have found. And this is a report that was published in December of 2023 that involved more than 1250 companies. What they found is that companies that do the best in terms of diversity for women, people of color and leadership, there is a 39% likelihood that they will outperform companies at the other end of the spectrum. So again, bottom line, there are lots of reasons why companies should lean into diversity, equity, inclusion. One of them is if the company's goal is to be its best, then embracing DEI is part of that. And DEI done well. And we'll talk more perhaps about how not to do it, but DEI done well.

Great, Jonathan. I really appreciated actually the practical and storytelling aspect of this. Something we like to do in our seminars and webinars is not just the academics of it, but the so what really show me what does what we've now seen, of course, recently, as Bianca had discussed in the intro, was changes in presidential administrations at the White House always comes with a change in policy and priorities. And as we've seen, DEI was front and center to several executive orders that President Trump issued, especially on day one of his administration. So for employers who have heard about these things, how do the recent executive orders affect DEI currently?

Well, you talked about the first one issued on January 20, so let's talk about that one first. It's titled Ending Radical and Wasteful Government DEI Programs and Preferencing. That's what it's called. And it's executive order 14151. What does it do? Well, the president ordered that each federal agency should eliminate all positions such as chief Diversity officer, all DEI action plans, initiatives or programs. He also directed that the head of each agency compile a list of federal contractors who provided training and just a host of other things as well. Then it goes on to assert that these practices of DEI are illegal policies that not only violate the text and spirit of longstanding civil rights laws, but they undermine our nation's unity.

That's a real area of focus again at the federal level. For the first executive order that was issued on January 20. Let's talk about the second one. The second one was issued on the 21st. It's titled Ending Illegal Discrimination and Restoring Merit Based Opportunity. Again, Matthew, this now talks about how this potentially affects employers. It's Executive Order 14.

And in the Executive Order it says that influential institutions of American societies, so the federal government and major corporations, financial institutions, et cetera, et cetera, have adopted and used dangerous, demeaning and immoral race and sex based preferences under the guise of dei. And so again, that's the second executive order. It asserts again that these practices are illegal. And then another part of this executive order applies to an executive order that's been in effect for more than 60 years. It was issued by President Johnson, and among other things, the executive order by the President on 21 January. It says that the order that was in effect 60 years ago is now essentially rescinded. That initial order said that every government contract should include a statement that the contractor will not discriminate against any employee or applicant for employment because of race, creed, color, national origin, et cetera, et cetera. That's what the initial executive order said 60 years ago. This new executive order issued January 21st rescinds that. So we have those executive orders. What's going on in the courts? What's happening since they've been issued? Well, just a few days ago, not Long ago, on 24 February, a federal district judge issued a preliminary injunction to block or to bar the enforcement of certain provisions of these two executive orders that I just described relating to federal contractors and relating to private sector employers. This, by the way, is consistent with what some other courts have ruled. And so the judge ruled that one, that the executive orders were unconstitutionally vague and in violation of the First Amendment. That's what he said about the executive orders with regard to federal contractors. And then the judge also said that the plaintiffs, that is those challenging the executive orders were likely to succeed on the merits that the executive orders are not lawful. So where that leaves us now is that there is a question about the legality of some of the specific aspects of the executive order. And perhaps we can talk a little bit more about that in a few minutes, but that's where we are as of today. It's a very ever changing landscape legally.

Yeah, and I really appreciate that you highlight the litigation. Notwithstanding the litigation, it is a clear priority choice by the Trump administration to scrutinize, at the very least, DEI programs. So that means are going to be under the microscope to the extent that the federal government can put such programs under the microscope for private employers. So, Jonathan, with this in mind, what are the reasons for continuing a DEI program with this extra scrutiny?

So let me tell you another story again, stories I tell are all true. I'm not going to mention the company involved but it's easy to look it up. It's a large international retailer that sells clothes. And several years back, this retailer ran an ad that some of our listeners may have seen. It's an ad that features a young African American boy, probably around the age of nine or ten, wearing a sweatshirt. And next to him was a kid, a Caucasian boy, probably about the same age, and they both had, again, sweatshirts on. The black kid had writing on his sweatshirt, as did the other child. And here's what the writing said on the black kids sweatshirt. It makes me sad to even say it, but just for purposes of explaining why this is important for this DEI work, the language on the hoodie said coolest monkey in the jungle. That's what it said on the black kids.

Wow.

Huge backlash, apology. Of course, again, it's all in the media. People can look it up. Another company very well recognized. I won't mention it by name, but they ran an ad and featured someone by the name of Kendall Jenner. And it just showed a lack of sensitivity to certain groups. And again, the CEO of that company apologized for lack of sensitivity. Here's what happened in both instances. From what I've been told, in both instances, people who were in the room who were looking at those ads.

Happen not to be people of color who would say, having a black kid wear a jersey or a sweatshirt that says coolest monkey in the jungle, that's probably not a good idea, right?

People may not know what they don't know. And one of the ways to learn is to get different voices in the room. And one of the ways to have different voices in the room is to have a diversity of thought and background and experience in the room. And so why do you have a DEI program? It's to prevent things like this from. From happening. As I just described then. In addition to that, and I mentioned this earlier, there are huge other benefits. I mean, there are big PR hits that come from not having the right people in the room. But there are huge advantages for companies, and I alluded to some of them. But it's a workplace where everyone can reach their potential. If this is a culture that's really inclusive, it enhances employee morale to work in a place where they feel included, to go back to that word, where they feel welcomed. And then, as these stories I just mentioned illustrate, you get different perspectives in the organization that are reflective of the communities that you are trying to serve, that say, hey, I know that community. I'm from that community. Maybe we shouldn't run that ad. Or maybe this product will work well because I know people in my community would like it. They just don't know where to get it. But let's make this product or let's offer it for sale. Those are some of the many, many benefits in addition to the bottom line benefits that I mentioned that explain why some companies have said, yes, we are going to go forward and we're going to continue to have or we're going to launch a DEI program.

Yeah. And I think you've really laid out why. Right. The purpose of this and why it's really important. Again, with those practical examples, this last question I'm going to leave you with, for my part at least is kind of a two parter. Businesses may be interested now in either starting or continuing on with their DEI initiatives at the workplace, even despite the current environment at the federal level. But as we know, some businesses evaluate things from a risk perspective and they may just decide, you know, what we want to limit or maybe even just move off of our DEI programs because we're just concerned too much about the environment. Briefly, for both sets of employers, can you provide some practical ways in how they should proceed either to continue on with their programs or to limit and maybe wind down the programs in a way that is still effective for their workforce?

For organizations that want to continue, I'm going to give five recommendations. Number one, work with your attorneys to keep your hand, if you will, on what's going on with the current legal landscape. So work with your attorneys to get their perspective. Number two, conduct an internal audit to evaluate all of your internal and then external facing DEI initiatives. Again, if you already have a program, look at what they say and look at them from the beginning to the end, if you will. How do you go about hiring? How do you go about developing people? How do you go about promoting? If you have supplier diversity, how do we go about doing that? You look at them through the lens of whether they include elements that may not comply with existing anti discrimination laws. Again, your attorneys can help with that. But really focus on any policy that could imply that certain demographics get preferred treatment over others.

Next, number three, it's called Quiet dei. Called Quiet DEI and a new term. But again, look at your website, look at your annual report, look at your external facing documents and really think twice about how you represent DEI in writing on your site. Just think about that in terms of particularly any suggestion that you're favoring one demographical for another. Number four, prepare for inquiries from internal and external sources. Even if you decide to stay the course, there might be some inside or outside the company. They'll say, why? Why are you doing this? And so think clearly about how you're going to respond to that. And again, one of the ways to respond to it is because we want to have a culture of inclusion because we believe by doing so we can be the very best version of ourselves as a company. But again, be clear on what you say in response to those inquiries, both inside the company and then externally and then five. Again, just really focus on consulting with your attorneys every couple of weeks or so just to see what's new with regard to the legal landscape. One other thing I'll say we won't have time to go through it, but for those who want to kind of double click on Things to do guidance was just issued on February 25th by the state attorneys general of 16 states, including California. And they lay out eight things that organizations can do to have a go forward strategy with DEI that in their view, as highly skilled lawyers complies with the executive orders. And so I direct your attention to that. Now, Matthew, to your other question about what about organizations that say, you know.

Limit what we're doing, or perhaps they might even say abandon, what are the best ways to do? And say, let me give those organizations at least five or six recommendations in terms of a go forward strategy. Again, carefully consider, number one, carefully consider the impact of this decision. And why do I say that? Well, Litvr Mendelsohn, a large law firm that many of you may know about, did a survey recently and they found that 60% of their companies of their clients are taking a wait and see approach. And so in other words, before kind of pulling the plug on dei, they're just kind of doing a wait and see. They're making some changes. I'm going to talk about them in just a moment. But in terms of completely banning DEI, 60% of companies, according to this survey are taking a wait and see perspective. Number two, understand that if you decide to just pull the plug completely on DEI, that you're going to likely be seen as, particularly if you've made DEI commitments in the past as going back on regressing on commitments you've made previously. And so you have to think about how that could affect your brand image. Again, not going to mention any names, but we see that happening already in what's going on in our communities involving certain stores and different companies as well. You also consider the risk of talent attrition where some people will vote with their feet saying I want to work for a company that embraces inclusion. This is not one I'm leaving. So just again, it's more cautions if you will, just encourage you to kind of be really deliberate in how you think about moving forward. Number three, be very clear about your reasons and communicate them. If you have things such as employee resource groups or what are called network groups. And so I'm talking about maybe a woman's network group or LGBTQ network group, many companies have those or any sort of network group meet with the leaders of those groups and talk about what you're thinking about doing and why. And the reason for that is those leaders are going to be contacted if you are perceived as backtracking and you it's better to go through them first so they can help explain it to kind of try to minimize any backlash that might result from your doing what may be perceived to be kind of backpedaling on prior commitments.

Number five is again, look at what your website says. If you have a website, look at your external facing communications. What some companies are doing who are taking a step back and is they are removing all references to the term dei, they're removing the term diversity from their external facing publications. And so again, if you're thinking about taking a step back again, just look carefully at what you say externally and also with internal communication as well. And then last but not least, if you decide that you're going to just completely eliminate the program and if you have people who are focused maybe 100% on diversity, equity and inclusion and advancing that in your organization. But if you're thinking about letting them go, ask yourself, is there another role for them in the company where they can contribute before you just send them, if you will packing just ask yourself, be sure to go through that analysis carefully. Those are some of the things that I would say. Then I guess the last thing I would say is continue to pay attention to what's going on in the legal landscape, but also what other companies are doing. The media have kind of painted a picture that companies are pulling the plug left, right and center on their DEI programs. But I've read dozens of articles and what I'm seeing is not that. What I'm seeing is they're taking a step back on numerical goals that they have set with regard to people in leadership or the amount that they will spend with diverse vendors. People can be kind of misled to think, oh, people are pulling the plug. But that's really not that typical of what is happening with companies in California in particular.

That is such an excellent point, Jonathan. I love the points and the tips that you've given for employers, no matter which side of the coin on this issue they're falling on, whether they're leaning into their DEI practices or whether they're going to take a step back? As you mentioned, this is an ever changing landscape. And so I know that this has been very helpful for many employers as again, I think a lot of employers are likely in that boat as sort of let's wait and see what's happening as we know things are developing every day. I love what you said about, again, no matter which side you're falling on or which direction you're going in, that employers are deliberate and you know that there's meaningful, tangible and effective policies, again, whichever way they may go. Right. So that has been fantastic. I know we're running out of time. I just want to ask you, you Is there anything we haven't touched on, any final notes that you want to give out there for employers, for companies.

That want to continue diversity equity inclusion work, but to do so in a way that's helpful, that can have impact? I want to commend to you the Chamber product on diversity equity inclusion. It's an online course that you may not be aware of as a listener, but it is a way to help folks understand what bias looks like, to recognize it in themselves, but more importantly, to try to interrupt it. That's just a closing comment in terms of a recommendation for folks. The other thing I would say is when 2020 happened and George Floyd and all the events surrounding that and other things that have happened against certain groups, a lot of people raised their hand and said, I, I'm a DEI expert. Hire me. I can help. And just to be fully transparent here, not everyone who raised their hand and said, I'm a DEI expert truly was. But think about it just for a moment. Think about people who are doctors. You may know of or you may have read about some people who are licensed doctors. And I think we've agreed they should not be practicing medicine.

There are accountants who are great, but there are some who are not so great probably shouldn't be practicing. I would say the same for lawyers or think about any field. But I don't think any objective person would say, let's do away with all doctors or let's do away with all accountants or all lawyers. The idea is if you want to move forward in this, just be mindful that there are people out there who can be helpful to you in ways that are constructive to help you build upon an inclusive culture in your organization.

Thank you so much, Jonathan, for taking time out of your busy schedule to sit down with us for this excellent discussion on current DEI trends.

My pleasure. Good to be with you both. I hope that this has been helpful.

To the listeners and thank you listeners for joining this discussion on the workplace. Please share and subscribe to Cal Chambers podcast by visiting calchamber.com.