Demonstrate Equity and Diversity by Reinvesting in Employees

Diversity. Equity. Inclusion.

Separately, those three words remain pillars in the workplace, but when you put them together to constitute a formal corporate program or initiative, it has become a very different story.

A Jan. 21 Resume.org survey of 1,000 business leaders within organizations with diversity, equity and inclusion (DEI) initiatives (also known as the push toward equitable and diverse workplaces) found 1 in 8 of those entities are eliminating or reducing their programs. That number has likely risen since that survey was released, as President Donald Trump recently issued an executive order to terminate DEI policies on the federal level and a subsequent administration memo laid out plans to end such initiatives at not just the Department of Justice (DOJ) but also private employers and educational institutions.

Recent headlines show large organizations such as Target, Amazon, Meta and Deloitte have scaled back on their diversity efforts, citing the shifting political climate as a top reason.

For total rewards (TR) professionals, there are various factors to evaluate before reducing or ending initiatives focused on equitable and diverse workplaces. But if that is the path forward, there may be opportunities to reinvest those funds back into other parts of the organization.

Before You Cut

Even with the President’s executive order and administrative memo in place, federal anti-discrimination laws, like Title VII of the Civil Rights Act of 1964 and the Equal Pay Act, remain in effect, said Joanna Colosimo, a principal consultant and the vice president of workforce equity and compliance strategy at DCI Consulting.

“Organizations should ensure their DEI practices align with current laws and case law. Most initiatives and programs are legal,” she explained. “Programs that require preferences, quotas or set-asides are considered illegal. Avoid hastily cutting or reducing programs to prevent the appearance of wrongdoing [and] consider organizational values, customer expectations, applicants, employees and risks at federal, state and local levels when making decisions.”

Marta Turba, WorldatWork’s vice president of content strategy, said organizations should thoroughly assess several areas:

Potential impacts on talent
Reputation
Legal compliance
Stakeholder relationships
Financial performance
Strategic alignment

“It’s crucial to approach any changes with a thoughtful and transparent process to maintain trust, and continue fostering a positive and inclusive workplace culture,” she said.

Turba noted a Gallup survey that found 42% of surveyed U.S. employees would consider whether an organization is “diverse and inclusive of all types of people” when deciding whether to accept a job offer.

“Reducing DEI initiatives can make it harder to attract and retain top talent,” she said. “Diverse and inclusive workplaces often see higher levels of employee engagement and productivity. Cutting these programs can lead to a decline in morale and performance.”

Turba added employers that announce the reduction or elimination of these programs can send a strong negative signal to both current and potential employees, as well as customers, leading to public backlash that may damage corporate reputation or brand — which ultimately has an impact on the bottom line.

Creating an Opportunity

Among organizations in the Resume.org survey that reduced or eliminated DEI initiatives, 51% redirected funds to general operating expenses, while 40% are investing in artificial intelligence or technology initiatives. Additionally, 28% allocated funds to employee salaries or benefits, 24% shifted them to marketing, and 8% invested in office space or facilities.

The core consideration here, Turba said, is not where to reinvest perceived “savings” that come from removing a budget allocation that may include training programs, salaries or development programs — it’s to evaluate both the short-term and long-term impact of a shifted strategy.

“If reinvestment is warranted, determine where the funds will have the greatest business impact,” Turba said. “This is typically a business decision on the broadest scale, which could lead to other people strategies to advance employee engagement and innovation, or in infrastructure and technological advancements.”

She advised organizations to conduct a clear return-on-investment (ROI) analysis, which can include these steps:

Identify the goals DEI aimed to achieve, such as improving employee engagement, reducing turnover and enhancing customer satisfaction.
Evaluate these goals using key performance indicators (KPIs) like retention rates, diversity in leadership and employee satisfaction scores.
Calculate the total costs of the DEI initiatives, including training, program development and any additional resources.
Weigh these costs against the benefits, such as reduced turnover, increased productivity and improved customer loyalty.

If the decision is made to reallocate funds into employee salaries and benefits, clear communication is key, Turba said. TR professionals can:

Align these changes with the organization’s philosophy — whether it’s well-being, pay-for-performance or core values.
Focus on the specific benefits to employees, like better compensation, enhanced benefits or improved work-life balance.
Highlight how these investments drive long-term goals, such as greater satisfaction, retention and business success.

“Remember, in total rewards, reinvestments are common and part of the ongoing process to optimize and rebalance rewards investments,” Turba said. “It’s not necessary to quantify DEI funding shifts when conveying ongoing change — just focus on clarity and how the changes support employees and organizational objectives.”

However, it is likely that certain programs are still legal and may need to be reframed, said Colosimo.

“In some organizations, reasonable accommodations for individuals with disabilities may fall under DEI programmatic efforts and would be retained to comply with the Americans with Disabilities Act [ADA],” she said. “Employers should redirect other funding to EEO [Equal Employment Opportunity] risk analytics on personnel activity, and pay to identify and mitigate risk in hiring, promotions and compensation.”

Colosimo said redirected funds also could be used for employee benefits to replace legal programs (e.g., employee assistance programs) previously managed by a DEI department.

“It’s important for organizations to thoughtfully communicate this information to the remaining staff, as some may experience grief over the loss of their colleagues or the discontinuation of certain programs,” she said.

Promoting Equitable and Diverse Workplaces

A commitment to equity and diversity is often part of an organization’s brand and values, Turba said, and scaling back these initiatives can be seen as a betrayal of those values, leading to a loss of trust and loyalty.

“Employers can demonstrate commitment to equity and diversity by ensuring fair hiring, career growth and pay practices,” she said. “Align efforts with measurable outcomes that drive both employee satisfaction and business performance. Foster shared values, invest in well-being and create inclusive environments where diverse perspectives fuel innovation and results.”

Rachael McCann Jones, an advisor for integrated and global solutions at WTW, said organizations can take this moment to:

Reframe the narrative to focus on fairness, culture, employee and business sustainability.
Invest in employee connectedness and community that makes sense for the workforce and aligns with corporate brand.
Increase career opportunity for all, including refreshing career frameworks, profiles and other components that support transparency and fairness.
Improve equality, fairness and well-being in health and wealth outcomes through pay and inclusive and flexible benefit programs that meet the range of employee needs and merit.
Elevate human capital data analytics that align with business performance.

Colosimo said organizations can show they are still committed to equity and diversity through various actions. These can include:

Maintaining legal ERG groups, providing inclusive training, adhering to anti-discrimination laws and ensuring fair pay through robust pay equity analytics.
Delivering regular messaging on a workplace culture of compliance, dignity, respect, nondiscrimination, anti-harassment, no bullying and no retaliation.
Reconfirming their commitment to skills and merit-based fair hiring and promotional practices along with ensuring rigor, fairness and credibility with employee performance evaluations, compensation and other personnel actions.

“What seems to have been lost in the past month is the difference between eliminating illegal DEI actions, like quotas, and publicly declaring a repeal of DEI efforts,” WorldatWork’s Turba said. “Nondiscriminatory practices in hiring, advancement and pay are the law and a primary focus for everyone in total rewards. Recent repeals and shifts in support don’t change this fact. Every legal method must be used to support these practices.”

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