DE&I   //   January 5, 2023

‘My biggest fear is a homogenous organization’: DEI experts concerned about transparency around layoffs

The avalanche of mass layoffs that have occurred, particularly at big tech companies, has experts concerned that companies are backtracking faster than they are progressing on diversity, equity and inclusion efforts, despite all of the pledges made in the summer of 2020.

When Twitter culled its workforce after Elon Musk took the helm, a far higher percentage of women were laid off than men, for instance — a disparity that didn’t go unnoticed. In fact, it prompted a discrimination lawsuit by two women who were laid off, who alleged that Musk violated employment laws by discharging significantly more women than men. 

In some cases, decisions about layoffs happen so fast that leaders don’t take a beat to consider whether or not they will have a disproportionate impact on marginalized groups within their organizations. However, workplace experts say it is crucial that leaders start to incorporate this thinking into such decisions, or risk harming DEI progress and future goals.

“My biggest fear is a homogenous organization, where all of a sudden we look up and have an organization that’s made up of 30-year-old white men,” said Mary Shea, vp, global innovation evangelist at software development company Outreach. “That scares the heck out of me.”

Shea isn’t alone. An October study of over 500 senior leaders conducted by data company Dynata on behalf of Outreach found that 67% are concerned that their companies will be less diverse due to planned layoffs and continued reductions in headcount.

“My initial fears were the impact the layoffs would have on representation in the corporate world,” said Shea. “I was immediately concerned that the layoffs and rifts would disproportionately affect women in the workplace and underrepresented folks.”

Others are going a step further and trying to quantify whether this fear is justified. Desiree Morton, CEO and co-founder of equitable perks platform Visibli, is conducting a survey with a group of DEI practitioners to learn about the impact of layoffs on DEI professionals in tech and other industries. The survey is anonymous and asks for information about roles, demographics, experiences and the impact of the inequities from layoffs. Morton and her team will be using the data to identify themes and patterns within layoffs for current and future advocacy efforts. Findings will be shared publicly via LinkedIn this month.

Slow and steady wins the race

Bungling layoffs is an age-old problem. However, some companies have refined their approach to cutting staff more so than others. For example, last September communication API company Twilio promised its cuts wouldn’t disproportionally hit workers from marginalized communities. CEO Jeff Lawson said in a letter to employees the layoffs would be carried out through an “anti-racist/anti-oppression lens,” which sparked a lot of conversation on anonymous workplace network Blind about whether or not race should be mentioned in termination.

“There is no equitable way to lay people off,” said Bryce River Jordan-Celotto, founder and head of justice, diversity, equity and inclusion strategy at consulting agency Swarm Strategy. “But, there is a respectful and thoughtful way to lay people off.”

An approach like Twilio’s should be a rough blueprint for how layoffs can be handled in the most equitable way possible, according to some DEI experts. And there are other key approaches that companies can take while conducting layoffs to be mindful of who will be impacted.

“Their more recent hires are their more diverse employees. If you’re going strictly based on seniority, that’s automatically going to disproportionately affect your employees who are from a diverse background. That’s a problem right off the bat.”
Rebecca Weaver, the founder and CEO of HRuprise, an employee advocacy and HR consulting firm

For starters, Mandy Price, co-founder and CEO of DEI technology company Kanarys, said that the company advises its clients to refrain from the old approach of last in, first out, especially today with the recent push to hire more equitably in the past two years. This approach largely impacts BIPOC people, recent college graduates, people reentering the workforce after time off, people with disabilities and other folks who are likely to be siloed in the lower rungs of organizations.

“We have tons of companies who said that they were recommitting to DEI since the murder of George Floyd,” said Rebecca Weaver, founder and CEO of HRuprise, an employee advocacy and human resources consulting firm. “In that case, their more recent hires are their more diverse employees. If you’re deciding on layoffs based on seniority, that’s automatically going to disproportionately affect your employees who are from a diverse background. That’s a problem right off the bat.”

Corey Jones, co-founder of PrismWork, a consultancy focused on cultural transformation in the workplace, warned leaders against leaning on any unconscious bias they might have. For example, someone might lean toward hiring someone they personally know, but that bias should be eliminated. 

“You’re going to make mistakes that way,” Jones said. “You’re not only going to make mistakes, you’re going to rely on confirmation and affinity bias. When you have that, you’re going to affect people that have been marginalized.”

Shea agrees. She said that while it could be a natural reaction for a company to get back to its original DNA, it might not be helpful in the long term. 

“You need to have emotional intelligence to say, ‘I’m stressed, I’m pressured, I’m trying to save a business, but I need to take a step back and not immediately go down that path,'” said Shea. 

If a company lets its managers help make decisions about cuts on their teams, Daina Middleton, a collaborator at PrismWork, stressed that leadership then needs to take a holistic look at how those proposed cuts will affect the workforce as a whole, before confirming them.

“Best-intended actions sometimes roll down, but when you roll it back up you see a different picture,” said Middleton. “The data and looking at it from a variety of different angles, chopped up and then in aggregate, before and after, and really thinking about that is key. You need this analysis.”

Technology can also be used to help companies check in on their demographics. For example, payroll services provider ADP offers its Pay Equity Storyboard product, which combines analytics and benchmarking to help employers understand potential pay gaps. And Varicent, a sales compensation management technology provider, has a gender pay app that highlights median pay by role and gender, and a diversity app that highlights ethnic and racial diversity by roles and levels and monitors voluntary and involuntary departures.

Diverse cultures lead to higher engagement

Naturally, such approaches aren’t short-term fixes.

“This is the price of leadership today,” said Weaver. “This is absolutely what you have to do if you want to be in a leadership role. It’s by definition more work and sometimes takes more time. It’s by definition and design because you will produce a better product, have a better service and provide a better experience overall.”

John Carlson, CEO of BrancHR Group, said he finds that in some instances DEI teams are considered not essential at other companies, which he argues couldn’t be further from the truth. 

“There isn’t a great way to see the impact, and of course a company isn’t going to come out and say themselves they laid off a DEI team entirely,”
Desiree Morton, CEO at equitable perks company Visibli.

“The thought is well, we have less employees, we’re hiring less, we don’t need as much HR support, and DEI probably isn’t a huge priority to them [companies] at that point,” said Carlson. “When you weave DEI strategy into your overall business strategy, and you bring those numbers together, and you understand that if we do right by our people, they do right by our customers, you see a shift in engagement, productivity and numbers that are exponentially higher than what people expect.”

Companies with diverse leadership and executive teams can see their profits increase by up to 33%, according to research from McKinsey. At companies with a high level of gender diversity in leadership positions, profit margins have been seen to increase by 21%. 

There are countless benefits that result from an organization’s DEI efforts. For example, other studies have shown that having a highly diverse culture and a highly engaged workplace culture go hand in hand. That stems from someone working in a job they truly care about, which often leads to employees being more productive and having the drive to support their company. Not only does this help productivity, it leads to better retention rates because employees feel welcomed, respected and valued.

Additionally, in today’s job market, candidates are looking to work at companies that have clear values when it comes to DEI. Eighty percent of job seekers say that a commitment to DEI is vital when choosing between employers. All in all, a company who values DEI initiatives will attract and retain happier, more productive employees who in turn boost the bottom line.

The issue around transparency

Numerous companies across the U.S. made bold statements in the summer of 2020 following the death of George Floyd that they would prioritize and commit to DEI initiatives. Ambitious pledges were posted on websites and social media about commitments to social justice. There are signs that these efforts have gone beyond lip service to show real, albeit slow, progress.

However, DEI experts worry that overall momentum has slowed, and in some cases initiatives have even collapsed entirely. River Jordan-Celotto puts it simply: “Your actions in 2023 need to match your messages of 2020.”

“There isn’t a great way to see the impact, and of course, a company isn’t going to come out and tell themselves they laid off a DEI team entirely,” said Morton. “They won’t come out and say that with the same vigor they made with their original commitments. It’s a whispering thing.”

Morton said while she’s glad that women from Twitter are able to file a lawsuit, she recognizes that isn’t an option for most people disproportionately impacted by layoffs.

“That’s one avenue to bring transparency, but there has to be others,” said Morton. “I’d like to see as much transparency as possible. It’s the only way we are going to hold companies accountable to the commitments they made. It’s laying it all out there. This is what’s happening, the humans impacted, and the work they were doing.”

A number of people might post on LinkedIn or Twitter about being laid off and that they’re looking for work, but Middleton warns that those are just the folks who are making themselves visible. “We don’t necessarily have visibility to the lower layers,” said Middleton. “I don’t see companies coming forward with bad numbers. They like to advocate when they have a good story to tell.”

However, there are many ways that an external brand will suffer after conducting layoffs that aren’t morally sound, whether that’s through reviews on Glassdoor or conversations on Blind.

“Employees are going to check out an intentional employer before they join,” said Middleton. “Some of that data is already out there affecting brands and they don’t always take that into account.”

Morton said she hopes that when the economy strengthens again, companies continue to be held accountable. “That’s my hope, as much transparency as possible and long-lasting memory,” said Morton.