The Current State of DEI’s Impact on Employee Retention

Due to economic challenges, many businesses have scaled back their diversity, equity, and inclusion (DEI) efforts, reducing resources, laying off chief diversity officers, and making budget cuts. Culture Amp’s Lyssa Test describes the current state of DEI’s impact on employee retention in an article highlighting a survey of 165 companies and nearly 400 organizations. 

Confidence in DEI initiatives within organizations has declined, with only 60% of HR teams extending efforts beyond basic compliance in 2023, down from 71% in 2021.  Consequently, there has been a change in employee perceptions. Employees are three times more likely to leave within 12 months when their company no longer considers DEI essential to its core operations.

The survey notes three major challenges: a need for DEI expertise, diminished leadership support, and insufficient data for informed decision-making. For instance, hiring external DEI consultants dropped from 66% to 47% in 2023, and only 41% of companies had a dedicated DEI leadership role, down from 56% in 2021. Additionally, 42% of organizations do not track or report DEI metrics, making it difficult to measure progress.

Despite these setbacks, a strong business case exists for investing in DEI. Companies that hire DEI consultants, value diversity, and effectively engage employees show better performance, including higher stock prices and reduced employee turnover. 

The report emphasizes that businesses can take actionable steps to enhance their DEI efforts and secure executive buy-in even in resource-constrained environments. In reevaluating the current state of DEI and its impact on employee retention, businesses have an opportunity for reprioritization, ensuring their company’s growth and profitability.