How Your Strategy for Escaping the DEI Backlash is Already Quietly Killing Your Business

In recent months, a growing number of companies have quietly replaced their seasoned Chief Diversity Officers and DEI strategists with HR insiders—often without meaningful communication with staff or stakeholders. These new appointees typically lack the business strategy mindset that made the original DEI leaders effective change agents, driving measurable financial impact. Instead, this latest crop comes equipped with a narrow, compliance-driven toolkit and an inclination to protect the company from discomfort rather than transform it for success. Their strategy is to deceive employees into believing the company still upholds values that they may never have truly supported.

So let me be as blunt as I was when Target announced its plans to abandon its DEI altogether, and I predicted its financial losses: this trend isn’t just shortsighted. It’s a major strategic blunder with costly long-term consequences that will make what Target did appear like a slight misstep.

What’s Happening?

Under pressure from political backlash, media scrutiny, shrinking budgets, uncertainty due to the unpredictable nature of tariffs, and a lack of understanding about what inclusion is all about, many senior leaders in organizations are quietly purging themselves of experienced DEI professionals who know how to produce business impact. In many of these organizations, DEI leaders have had the misfortune of reporting to HR, and their actual value was, therefore, hidden from top leadership. These were the people who connected inclusion to business value, although they may not have always clearly conveyed that message to the top of the house. In their place, companies are slotting in HR generalists or legal-minded risk managers whose top priority is to make DEI externally as invisible as possible while keeping employees thinking that the company has not changed its values. In other words, HR gaslighting.

They Are Literally Doubling Down on the Problem

Here’s the most ironic part: these companies are doubling down on the very toothless philosophies and empty gestures that gave fuel to the anti-DEI backlash in the first place. Instead of shelving all the performative, virtue-signaling nonsense and engaging in strategies that cut millions of dollars in cost and expand their revenue, market reach, and operational efficiency, they are going to perform more surface-level theatrics, albeit undercover from the outside world, to convince employees that they are a good company. These are the types of moves that reveal several things about a company:

1.     Their leadership is comprised of people who have a limited grasp of the power of truly modernizing practices to attract and engage a modern workforce in serving a modern marketplace.

2.     They clearly do not understand that a modern workforce is not comprised of the same type of naïve employees as those of the last century. Neither is your modern market place.

 By leaning into this risk-averse model, these leaders are proving the critics right. They’re reinforcing the narrative that they have always been practicing fluffy PR stunts rather than taking strategic action. And make no mistake: every empty gesture they employ today will simply draw more fire in the future from all quarters.

Why This Fails

Like the coward who stands in the corner of the ring blocking punches while their opponents assail them, this strategy is doomed to delay the inevitable defeat simply. Here’s why:

1. HR’s Traditional Lens Is Not Built for Innovation. They are listening to the wrong advisors. HR’s historical focus is on standardization, control, and minimizing risk. Authentic non-philosophical DEI, by contrast, thrives on challenging assumptions, disrupting norms, and driving business value. When HR controls inclusion, the focus tends to drift back to 1970s-style compliance checklists and under-the-tent, performative, patronizing gestures.
2. Authenticity Remains Absent, and Corporate Spin Goes on Steroids Unfortunately, for these companies, employees and customers can tell when a company’s DEI strategy is performative. The only people who seem to believe they are fooling anyone are the clueless senior leadership and HR teams, who are drinking their own Kool-Aid at these organizations. It is self-delusion at its finest.
3. Competitive Advantage is Lost In my audits of these types of companies, I have found millions of dollars in unnecessary expenses, coupled with lost opportunities and less-than-optimal revenue per full-time equivalent employee. This makes these companies a poor bet for talented employees, investors, and customers who seek a reliable and cost-effective source for products and services.

The Advice to Stakeholders

Depending on your relationship with a company making these moves, act as quickly as possible in the following manner:

• If you’re an employee, get your resume out there and start looking for a job at a smarter, more honest competitor.
• If you’re an investor, consider shorting the stock and going long on its competitors. Don’t wait. The best returns go to those who act the fastest.
• If you’re a client, I’m sure you can find a better cost-benefit solution from a competitor who isn’t burdened by the costs of their inefficiencies.
• If you’re a competitor, go after their top talent and clients.
• If you’re a business leader in one of these companies, stop listening to bad advice from sycophants who are leading you astray.

On a final note on that last bullet, I would remind leaders of Napoleon's advice as he faced the final phase of his life in exile: “The men who have done me the most harm are those who have always flattered me.” He went on to point out, and I paraphrase, that these were the sycophants who always agreed with him and never challenged him. Often, these were men who presented themselves as deep thinkers on topics on which they knew little. In many organizations today, unfortunately, business leaders who are cluelessly leading the discussions about DEI do so with the advice and support of sycophantic HR leaders who know little more than they do and simply say yes to their worse ideas and then go about implementing solutions doomed to fail as miserably as they have in the past.

A Better Way Forward While You Have Time

Rather than do this, company leaders would fare better by:

1. Engaging with evidence-based research: Engage with and educate yourself with investor advocacy organizations such as “As You Sow.” Let the data from extensive studies broaden your understanding as a CEO or Board member beyond the Kabuki Theatre approach often proposed by HR.
2. Discovering the Specific Multi-Million Dollar Improvement Opportunities in Your Organization. Have a free audit done by the CDO PowerCircle to see how many millions of dollars in opportunities are hidden holes in your company’s profitability. (Send me a quick private message if you want to explore this).
3. Hiring people to lead your inclusion effort who have business-impacting experience. Whether this was acquired through personal front-line experience or proven through delivering business-impacting results, ensure your inclusion leader is a strategic businessperson, not an HR support process person.
4. Demanding business goals from your inclusion leader: Your inclusion leader’s goals should be expressed in terms of target percentages of cost reduction, revenue increases, growing market share, or operational efficiencies rather than increasing representation or belonging. Your inclusion leader does not work for a social justice movement; they work for you and your shareholders. Social good will be a byproduct of their efforts, but the focus is on benefiting the organization. If your inclusion leader is too busy running celebration months to help you secure a $100 million market or reduce a $40 million expense by 70%, I’d say they're focused on the wrong things.
5. Demanding that your inclusion leader taps into the collective experience and creativity of every member and client of your organization. The key to unlocking many of a company’s most significant business opportunities and solving its most pressing challenges already exists within its workforce and client base. Inclusion leaders should be responsible for tapping into the collective intelligence, lived experience, and innovation potential of diverse employee groups and customers. Their role should be to build systems that identify patterns, elevate insights, remove barriers to employee contribution, and deliver the best experience to clients. When it comes to employees, unlike HR, which measures engagement through compliance and satisfaction metrics, inclusion leaders should drive and track the growth of their value creation. When it comes to clients, the inclusion role is to track their evolving needs.

Conclusion: The real tragedy in this wave of misguided DEI rollbacks isn’t just the loss of talent or the rise of more useful performative theater; it’s the opportunity cost of abandoning a powerful, untapped engine for business transformation. In a world defined by constant disruption and demographic shifts, companies that continue to treat inclusion as HR window dressing rather than a lever for competitive advantage are not just playing defense—they’re playing a losing game. The future belongs to organizations bold enough to lead with intelligence, authenticity, courage, and a focus on running their business effectively. And those who continue to think trying to fool employees and customers with performative nonsense is wisdom will find themselves outpaced, outmaneuvered, and ultimately irrelevant in markets that reward business progress, not pretense.

Want to know how much profit you're leaking and where? Take the free audit today!