Attacks on Diversity, Equity, and Inclusion (DEI) are in full swing as the new administration tries to reverse long-fought efforts to diversify America’s boardrooms. One of the current U.S. administration’s first executive orders directed the federal government to review private sector DEI initiatives and identify “up to nine potential civil compliance investigations” that could target publicly traded corporations, nonprofits, and large foundations. Numerous companies, including John Deere, Tractor Supply, Harley Davidson, and Meta, have either eliminated or scaled back their diversity efforts. In a vague memo to staff, even Amazon has rolled back its DEI initiatives, stating, “We’ve been winding down outdated programs and materials.” In this article, we argue that diversity is essential for organizational success, in contrast to those who see it as merely a passing trend. Research shows that diverse companies enjoy 2.5 times higher cash flow per employee, and those with gender-diverse executive boards are 27% more likely to outperform their peers financially.

An educated understanding of diversity enhances workplace efficiency and productivity. With Millennials being 19% more diverse than Boomers and nearly half of Gen Z identifying as minorities, it is essential that companies reflect this diversity. Notably, women constitute 55.4% of the American workforce, yet they earn only 79% of what men do. Organizations with higher female representation on executive teams tend to perform better financially. Diverse “companies… scoring within the top quartile for gender diversity on their executive boards are 27% more likely to outperform those in the bottom quartile financially.” Meanwhile, those “in the top quartile for ethnic diversity on executive teams are 13% more likely to outperform their peers in the bottom quartile.”

Current critiques of DEI programs may stem from a blend of traditionalist perspectives and the zero-sum game view of society by older white cis men. For example, New York Times columnist Bret Stephens recently questioned whether certain diversity initiatives risk emphasizing group identity over individual merit. Critics in this vein often argue that mandatory training sessions and quota-driven hiring may foster resentment or reduce complex issues of inequality through box-checking exercises. However, a well-thought-out and nuanced approach to DEI initiatives can successfully address the concerns of critics—at least those without a narrow-minded agenda.

Though corporate culture often touts “meritocracy,” such systems frequently overlook deep-rooted, structural inequities that hinder underrepresented groups from competing on equal footing. Unconscious biases can shape everything from performance reviews to networking access, unintentionally sidelining high-potential talent. Additionally, the legacy of limited educational and professional opportunities compounds these disparities, making it harder for certain employees to rise through purely “merit-based” processes. Recognizing and addressing this “myth of meritocracy” is essential to creating equitable pathways for advancement — where DEI initiatives, targeted mentorship, and transparent accountability can correct imbalances and give all employees a fair chance to thrive.

Most boards are comprised of former or current CEOs, which is still a group of limited demographics. Active CEOs are 56% white and 60% men (for the Fortune 500, CEOs are 89.6% male); if boards continue to seek out this group for members, diversity will always be an issue. A Stanford University survey on corporate governance determined that while CEOs are the most sought-after for their strategic and leadership experience, they are no better than board members who are not. Additionally, these CEOs struggle with “being too busy to be effective directors,” being bossy and expecting things to always go their way. Other issues include their lack of availability, especially during a crisis, canceling at the last minute, not being as engaged, and not having enough time to review materials. This all being said, looking for new board members outside the CEO circle is a good idea, not just for diversity purposes.

Examples of DEI in the boardroom include tying executive pay to diversity metrics, shareholder pressure for transparent progress, “Rooney Rule”-style policies ensuring diverse slates for senior roles, robust sponsorship programs from senior leaders, and public third-party audits. For example, Microsoft links compensation to inclusive targets, Gap Inc. has achieved near pay equity across categories, and Goldman Sachs used to require at least one (and later, two) diverse board members before taking a company public. Meanwhile, diverse employees can benefit from building sponsor relationships, leveraging internal and external networks, and aligning personal goals with organizational DEI metrics. In tandem, these measures ensure diversity becomes integral to corporate strategy rather than a mere checkbox.

Though corporate culture often touts “meritocracy,” such systems frequently overlook deep-rooted, structural inequities that hinder underrepresented groups from competing on equal footing.

To borrow from Hamilton, being in the “Room Where It Happens” highlights a vital aspect of organizational diversity: who has decision-making power is directly related to who is present. A leadership team may appear diverse, yet if key committees for compensation, strategy, or risk are dominated by a single demographic, important perspectives may be overlooked. Even with significant racial and gender representation, a workforce can fall short of meeting the needs of all employees if decisions are made by a narrow segment of leadership. Research shows that companies with genuinely influential, diverse leaders — not just token representations — achieve better financial outcomes, higher employee engagement, and enhanced innovation. True diversity involves not just headcount but meaningful power-sharing, unlocking a wealth of ideas and experiences.

Taking stock of your company as it is now and collecting this data is vital to understanding workplace bias and improving the conditions for those repeatedly underpaid and left behind. If you haven’t already, this is the first step in diversifying your workplace and building success for the entire company. As of now, about 76.5% of boards are white, with whiteboard members earning substantially more than their racial minority counterparts. However, as the data shows, racially and ethnically diverse teams are more likely to be profitable, and diverse management teams outperform less diverse ones.

A leadership team may appear diverse, yet if key committees for compensation, strategy, or risk are dominated by a single demographic, important perspectives may be overlooked.

“Boards are responsible to their shareholders, and therefore, to the customers and communities the organization serves, including their employees. Good governance must mitigate risk for all stakeholders while ensuring the organization’s sustainable future.” In addition to creating a successful company, having a safe environment is even more critical. Besides discrimination based on sex and gender and the wage gap, women still have to deal with sexual harassment while at work. “Over 90 percent of U.S. employees have experienced discrimination at work… based on race, gender, disability status, age, and other factors,” with 20% experiencing harassment at work and 23% ultimately wanting to quit their jobs because of this and emphasizing diversity and following up with education and other actions that ensure safety while at work attract good employees and keep them.

The board’s role shifts to identifying the need for diverse talent and expanding its network into different professional circles. It’s crucial to differentiate between tokenism — hiring for appearances — and genuine diversity efforts, which require meaningful intention and results. Currently, only 44% of organizations prioritize diversity, equity, and inclusion at the C-level, a number that has been declining amid recent political shifts. Now is the time to enhance DEI initiatives, as younger generations value these principles. Organizations that embrace diversity will thrive, while those that resist change risk being left behind. A focus on diversity benefits everyone, fostering connections and promoting economic growth. In any industry, a multicultural mindset is essential for success.

In light of the current administration’s scrutiny of DEI initiatives and the ongoing debate over how best to foster genuine inclusivity, we must ask ourselves where we go from here. How do organizations address the valid criticisms of “group identity” or “box-checking” while still prioritizing equity and opportunity for all? Can tying executive pay to measurable diversity goals remain effective in a climate of increasing skepticism of such methods? In what ways might companies broaden the definition of “merit” to encompass the wide range of lived experiences and talents present in a truly diverse workforce while dispelling the myth of meritocracy that overlooks systemic inequities? Which innovative strategies or partnerships between private, public, and nonprofit sectors will prove most impactful in sustaining DEI over the long term, even if political winds shift again?

Such questions invite thoughtful exploration, urging leaders and employees to reimagine their roles in shaping equitable corporate cultures that thrive on genuine diversity. Now is the time to enhance DEI initiatives as younger generations value these principles and grow into leadership positions. Organizations that embrace diversity will thrive, while those that resist change risk being left behind. A focus on diversity benefits everyone, fostering connections and promoting economic growth. In any industry, a multicultural mindset is essential for success.