Diversity, Equity, and Inclusion (DEI)

011 min

The problem DEI names

Picture a founder of a software company with about fifty people. Over two years the company hired many engineers. Almost every new engineer came through a referral from someone already on the team. Each referral was honest, and each hire was good.

Then the founder counted. The team was made of people with very similar backgrounds. Friends and colleagues often share a background, and people tend to favour others like themselves, a pattern called ingroup bias. Anyone outside that circle never saw the job posting. No single decision was unfair, but the result was uneven.

That gap between fair-looking decisions and an uneven result is the problem DEI sets out to address. The cost is practical. A team that looks alike tends to miss the same mistakes. Capable people who were never asked to apply are lost to other employers. People who do join from outside the circle may have to learn rules that nobody wrote down, and some may leave.

The founder asks what to change. The answer starts with three separate ideas that are usually packed into one label.

022 min

What diversity, equity, and inclusion mean

Diversity, equity, and inclusion each answer a different question.

Diversity describes a group, not a person. A person is unique. A group is diverse when its members differ in things like race, gender, age, disability, language, religion or social background. Some of these differences cannot be seen. A diverse team is only a starting point. The founder could hire ten people from different backgrounds and still have a team where only some of them are heard.

Equity is about fairness in what people get, not in how everyone is treated. Equality means the same treatment for everyone. Stony Brook University's DEI toolkit says that equity starts from the fact that people have different needs and need different support to reach the same opportunities. An interview that is identical for every candidate is equal. It can still shut out a candidate who needs the questions in writing. Giving that candidate the questions in writing is equity: the treatment differs so that the opportunity is the same. The aim is equal access to opportunity, not equal outcomes for everyone.

Inclusion is whether people feel they belong and can take part fully. It is judged by what people experience, not by what a policy intended. A meeting rule made to help can still push someone out, so the effect matters more than the intention.

The three depend on each other. Diversity without equity brings people in and gives them unequal chances. Equity without inclusion gives access to a room where some people are not heard. Inclusion without diversity makes a welcoming group of people who are all alike.

The label also varies. Some organisations add belonging (DEIB) or accessibility (DEIA). In the United Kingdom the usual term is EDI, which uses equality in place of equity, and some groups say D&I for diversity and inclusion alone. Check what the label means in the place you work.

031 min

Where DEI comes from

DEI has no single inventor. It grew out of law, then management practice, then public debate. In the United States the legal root is a 1961 order. President Kennedy signed Executive Order 10925, and The order required federal contractors to take affirmative action so that applicants and employees were treated without regard to race, creed, color or national origin. The phrase affirmative action entered government policy there. Equal employment laws followed in the 1960s, and companies set up offices to comply with them.

Management writers then added a second argument: a varied workforce is a business matter, not only a legal duty. In 1990, R. Roosevelt Thomas Jr. wrote in Harvard Business Review that affirmative action would eventually fade out on its own.

The word equity gained weight later, as organisations asked not only who is hired but whether people get what they need once they are in. So DEI is not one invention. It is three older ideas, legal fairness, business management and belonging, put under one label.

042 min

How DEI is meant to work

DEI works through two separate routes. The first route is access. A rule or habit that stops a qualified person from reaching an opportunity is an obstacle, often called a barrier. In the founder's company, referral-only hiring is one, because only people connected to the team can apply. Posting the job openly and judging every candidate against the same written criteria removes it. The aim is that the best person for the job can get it, whoever they know. This is the fairness argument for DEI, and it holds even if diversity never made a team more profitable.

The second route is how groups think. People with different experience bring different information and different guesses about what could go wrong.

Why mixed groups prepare harder

Katherine Phillips argued in 2014 that the gain is not only new information. A group of similar people expects to agree, so its members prepare less. A mixed group expects disagreement, so its members prepare more and test their reasoning. In one experiment Phillips describes, Democrats prepared better for a discussion when they expected a Republican to disagree than when they expected a fellow Democrat to. The experiment used political parties, not race or gender, so it shows the effect of expecting disagreement and not the effect of any one kind of diversity.

This has a price. Mixed groups often feel less comfortable and reach agreement more slowly. The extra effort pays off only if people voice what they think. A team where it is safe to disagree, which psychological safety describes, is a likely condition for the second route to work. Without it, the team has the discomfort of a mixed group and little of the benefit.

053 min

What the evidence shows about DEI

Does DEI work as intended? Three kinds of evidence answer three different questions. One shows whether unfair treatment exists. One shows whether common programs change who is promoted. One asks whether diversity pays, and the next section takes that up.

Self-managed teams, in which people in different roles and functions work together as equals, raised the share of several groups in management by 3% to 6% over five years. The idea comes from a wartime finding. White soldiers who served with Black soldiers as equals, working toward a common goal, showed less bias, according to Samuel Stouffer's study of the European front in World War II.

Task forces that review diversity numbers every quarter or two were linked to increases of 9% to 30%. The authors explain this as social accountability, which is the wish to look fair-minded to the people around you.

Two firms show these tactics at work. At Deloitte, the share of women among partners rose from 5% to 14% in eight years, and turnover among women fell to the level of men's. Coca-Cola used mentoring and recruitment after it settled a race discrimination suit in 2000 for a record $193 million.

These are averages across firms over five years, in the United States. They show which programs went together with change. They do not promise the same result in every company.

061 min

Does diversity pay? The contested evidence

Many employers say diversity raises profit. The most quoted source is McKinsey & Company, which published studies in 2015, 2018, 2020 and 2023 that found a positive relation between the diversity of executive teams and profit margins. McKinsey says its own result is a correlation and does not show that diversity among executives causes higher profit.

None of this shows that diversity lowers profit. It shows that the profit argument is not settled. The fairness argument does not depend on it.

072 min

What DEI work looks like in a team

Back in the founder's company, the work has four parts. Each one is a decision someone makes.

• The founder stops hiring by referral alone. They post each role openly and score every candidate against the same written criteria. Defining the job by the results it must deliver, as performance-based hiring does, gives those criteria something concrete to measure.
• The product manager collects written comments before a meeting and calls on people who have not spoken. This helps colleagues who work in a second language or in another time zone.
• The designer tests with users who differ from the team, because a team that looks alike tests with people like itself. Inclusive design applies the same thinking to the product.
• The engineering lead writes down the rules for promotion and on-call duty, so that the rules do not depend on who knows them.

Beyond the team, organisations often add a few common tools. Employee resource groups are voluntary groups of people who share a background or interest. Flexible work and equal pay policies remove obstacles for caregivers and people with disabilities. Mentoring and sponsorship, where a senior person speaks up for a junior one, help people build a career. Most large programs also set goals, train staff, and make leaders answer for results.

The last part is measurement. Count applicants, interviews, offers, promotions and departures by group, where the law allows it, and compare each stage with the one before. A drop between two stages shows where to look.

081 min

How to apply DEI in a small team

Start with the count, not with a program. The founder lists the last ten hires and asks where each one heard about the job.

1. Open each role to people outside the team's network, and write down what the job must achieve.
2. Use the same questions and the same scoring sheet for every candidate.
3. Offer adjustments to everyone, in plain words: "We send the interview questions in writing in advance. Tell us if you need another format."
4. Ask new hires after one month whether their ideas were heard and used.
5. Review the numbers each quarter and ask what changed.

Signs it is working: applicants come from more than one network, offers are accepted by people the team did not know, and new hires contribute in meetings within their first month. Signs it is not: the same people speak in every meeting, people from outside the network leave within a year, and the numbers do not move for two quarters.

A team of fewer than ten people cannot read group numbers in any useful way, because one person changes every share. For a small team, judge the process and ask people directly.

091 min

When DEI breaks

Programs fail in a few predictable ways, and each has a sign you can look for.

• Diversity without inclusion. People are hired but not heard. The sign is that new colleagues speak less in meetings than their peers.
• Control instead of engagement. Required training, hiring tests and grievance systems are the common first tools. As the training result above shows, they tend to produce resistance instead of change.
• Words without practice. Employers that printed an equal opportunity line in their advertisements discriminated as much as others in the 2004 experiment.
• Extra work for a few people. The few employees from a group are asked to run every DEI task on top of their jobs. The sign is that the same names fill every committee.
• Doubt about merit. When colleagues believe a person was chosen for their group and not their skill, that person pays for it. A visible, fair process lowers that doubt.
• A weak profit argument. If DEI is sold as a profit tool, it loses support when the numbers are doubtful, as the previous section showed.

Context matters too. A plan built on the categories used in one country may not fit another. The differences that matter most can be caste and religion in India, or gender and age in Japan, and not the categories familiar in the United States.

101 min

DEI in law and courts

DEI is now argued in courts, legislatures and boardrooms, and the rules differ by country. The US Supreme Court held in Students for Fair Admissions v. Harvard that the race-based admissions programs of Harvard and the University of North Carolina broke the constitutional guarantee of equal protection. The ruling came in 2023. It concerned admissions to universities, and employers are covered by separate employment law, so it does not settle what a company may do.

Since 2020, some US states and the federal government have restricted DEI programs in public bodies, and some companies have cut or renamed their programs. The rules are changing quickly, so ask a lawyer who knows your country before you copy a program.

Critics make three claims. They say programs favour group over skill, lower standards, and distract from the work. Supporters reply that written criteria and the same questions for everyone judge skill more consistently, and that obstacles to fair access are a distraction in themselves. The strongest critics of common tools are researchers. Dobbin and Kalev argue that popular tools such as required training do little, and Green and Hand dispute the profit case. The evidence for each side is partial, so judge a program by what it does in your team.

111 min

DEI vs. nearby concepts

DEI is often confused with its neighbours. The deciding fact is scope. DEI covers who is in the group, whether they get what they need, and whether they belong.

?5 questions

Questions people ask

§8 sources

Sources