Actions speak louder than words: How to avoid diversity washing

In a recent working paper, researchers looked at data from over 5,000 US public companies. [1] Looking at Securities and Exchange filings, they compared what these firms said about their diversity, equity, and inclusion (DEI) efforts to the diversity of their workforces. 

The conclusion? Many companies were all talk and no action, with a “significant disconnect” between their DEI commitments and actual employee diversity. The researchers labeled these companies as “diversity washers.”

Our advice? Don’t be a diversity washer.

In this article, we explain what diversity washing is and give you practical tips for steering clear of it. 

What is “diversity washing”?

Diversity washing is when a business makes surface-level statements or gestures without taking meaningful steps to support and promote diversity. It gives the illusion of workplace diversity and inclusivity without the real, genuine change needed to ensure an inclusive, equitable workplace. 

Companies that diversity-wash often don’t value diverse perspectives. As a result, those perspectives never contribute to greater innovation and organizational success – so the benefits of DEI initiatives never come to fruition. 

Diversity washing is a mismatch between what a business says they are doing and the real state of DEI within the organization. It’s similar to “greenwashing,” where companies exaggerate their commitment to environmental and sustainability efforts, or “woke washing,” where businesses portray themselves as socially aware when they aren’t. These various forms of washing help businesses promote their brand – but don’t do much else.  

Examples of diversity washing include:

• Hiring diverse candidates for lower-level positions but failing to address the barriers preventing them from moving into more senior positions 

• Displaying the rainbow flag on a website or social media accounts for Pride month while ignoring the issues LGBTQ+ employees face that lead to lower retention rates 

• Using stock photos of ethnically and culturally diverse people in recruitment materials without having policies to support diverse hiring

Why do businesses engage in diversity washing?

Consumers, employees, and job candidates demand that organizations engage in meaningful action to support DEI. 

For instance, consumers seek out brands with values that align with their own. Amazon Ads’ 2022 Higher Impact report surveyed 7,213 consumers across seven countries. Seventy-three percent of consumers said it’s important for the companies they buy from to support DEI. 

As another example, a Glassdoor survey involving 2,745 participants revealed that 76% of employees and job seekers identified workforce diversity as a crucial factor when assessing companies and job offers. This sentiment is especially strong for young millennials and Gen Z, with diversity and inclusion ranking among their top three criteria when choosing an employer. 

In response to these demands, many businesses are prioritizing DEI. In a poll of 325 business leaders, 82% said DEI initiatives are essential to their business strategies. 

However, achieving genuine diversity isn’t quick or easy. It requires organizations to reflect deeply on their values, structures, and processes and take proactive, ongoing steps. Meaningful diversity efforts also require time and money. 

As a result, businesses can fall into the trap of taking an overly ambitious, superficial, or “checkbox” approach to DEI, leading to diversity washing. 

In the extreme, some businesses use diversity washing opportunistically to attract investors, boost their brand, or deflect scrutiny. 

Matt Borneman, Senior Manager of Psychometrics at TestGorilla, says diversity washing happens when people don’t care enough about the importance of DEI. “You don't have to look far on LinkedIn or whatever social media platform to find examples of this exact behavior,” he explains. “Whether it's just a statement on a website, a press release, or even hiring a ‘director of DEIB’ only to give that person zero power to influence the org – it all boils down to a lack of respect for this discipline.”

Why diversity should be a business priority

Workplace diversity offers employers and employees a range of benefits. Here are just a few:

• Workforces of people with varied backgrounds, views, and experiences foster creativity and innovation. In a Forbes survey of 321 executives, 85% agreed that “a diverse and inclusive workforce is crucial to encouraging different perspectives and ideas that drive innovation." 

• Diverse workplaces have more engaged employees who are more likely to perform at higher levels and less likely to leave. A Deloitte study of Millennials’ attitudes towards DEI found that 83% are “actively engaged when they believe their organization fosters an inclusive culture.”

• Diversity improves the bottom line. McKinsey’s Diversity Matters Even More report analyzed data from 1,265 companies across 23 countries. It found that gender-inclusive and ethnically diverse companies are 39% more likely to outperform their competition financially. 

We can’t understate the importance of genuine DEI efforts. As Tory Clarke, Co-founder and Managing Partner of executive search firm Bridge Partners, notes, “DEI is not a trend, it is the foundation from which other labor market trends will evolve.”

Why everyone loses with diversity washing

Diversity washing is bad news for businesses, employees, consumers, and shareholders. Here’s why. 

No positive impact on diversity 

The worst thing about just paying lip service to diversity? By prioritizing optics over action, you miss the opportunity to create meaningful change.  

The diversity washing working paper we mentioned at the start revealed that diversity washers not only hired less diverse candidates – they also had higher turnover rates for diverse employees. One explanation for this is that employees of diversity washers may become disillusioned and disengaged once they realize their employer’s commitment to DEI is superficial. 

One of our own employees told us: 

About twenty years ago, I worked at a Fortune 10 company in the US. The company always advertised its diverse workforce, and there were classes and refreshers to promote diversity. However, it became clear that the company did not really practice diversity. Perhaps as a result, there was a toxic culture in the company. I quit after about two years.

For employers, losing talent means shrinking their talent pools and missing out on top performers. 

Reputational and brand damage

If you engage in diversity washing, you’ll likely be caught. Businesses that do this face scrutiny. Public consumers aren’t afraid to call companies out on social media, and employees who expect their employers to act ethically won’t hesitate to whistle-blow. 

A diversity washer label can seriously damage your brand’s reputation and undermine trust in your business. 

This loss of trust has wide-ranging consequences, as highlighted in a recent PwC survey. The survey involved 503 executives, 2,508 consumers, and 2,002 US employees. It found that 71% of consumers are unlikely to buy from a company that loses their trust, while 71% of employees would leave their employer if it loses their trust. 

For public companies, diversity washing raises specific risks. Shareholders may require a board to conduct a full environmental, social, and governance (ESG) audit if they suspect the company’s DEI efforts don’t live up to its claims. A lack of shareholder confidence can also affect a company’s ability to raise capital.

Increased compliance risk

The diversity washing working paper revealed that diversity washers are more likely to face Equal Employment Opportunity Commission (EEOC) violations now and in the future. They’re also more likely to receive larger penalties. 

Lawsuits against companies based on misleading statements about their DEI efforts also pose threats. According to an analysis of Bloomberg Law data, “Almost 40 suits have been filed against companies including Delta Air Lines Inc. and Wells Fargo & Co. in the last three years because of allegedly misleading statements about diversity and equity commitments.”

While several suits have been dismissed, no business wants to be involved in lengthy, costly litigation and the reputational damage that can accompany it. 

How to avoid diversity washing and promote authentic inclusivity: 9 ways

When it comes to DE&I, you must back up your words with action. If you make promises or declare your commitment to supporting diversity, follow through. Then, ensure the steps you take are impactful. Here’s how.

1. Set the tone from the top  

You can’t achieve genuine diversity in your organization without strong leadership support. According to a joint report from the Global Parity Alliance and World Economic Forum, “deep commitment from executive management” is one of five common factors in successful DEI programs.

Leadership and management must understand the benefits of DEI and set diversity as a core value and business priority. This sends a clear message to the rest of the organization about the importance of genuine DEI efforts and provides a clear direction for action. 

However, genuine diversity requires more than just words. It requires investment. In 2020, businesses worldwide were estimated to spend around $7.5 billion on DEI strategies, a figure expected to reach $15.4 billion by 2026. Business leaders must allocate the necessary resources to support meaningful DEI efforts. 

2. Conduct diversity audits

You can’t take any meaningful steps towards true diversity without first understanding the state of DEI in your workplace. Diversity audits are a great way to do this. 

These involve reviewing and evaluating your organization’s policies, practices, strategies, and metrics to see if your actions are effective. 

For example, you might evaluate your hiring practices to see if they’re successfully attracting diverse candidates by: 

• Analyzing the demographic data of applicants and hires

• Comparing these figures with industry benchmarks and your company's diversity goals 

• Seeking feedback from candidates and new hires

Such audits can be invaluable tools for highlighting issues you should address. 

We spoke to HR expert Yashna Wahal, who believes decentralized diversity audits involving various stakeholders – including customers and independent diversity consultants – can offer an advantage over subjective HR assessments. She explained, “A transparent, comprehensive, and less biased audit process can provide you with honest feedback and actionable insights that genuinely improve your DEI practices.”

3. Encourage and actively respond to feedback

Use employee input on DEI to gain insights into the state of diversity in your organization and how it can be improved. Here’s how to encourage and collect employee feedback:

• Feedback forms. Set up an online form on your intranet where employees can raise any DEI concerns anonymously. 

• Employee resource groups (ERGs). These voluntary groups consist of employees who share common backgrounds or interests. For example, HubSpot has various ERGs, including People of Color at HubSpot, BLACKHub, the LGBTQ+ Alliance, and Women@HubSpot. ERGs provide a space for people to share their concerns and suggestions about DEI at work and formally relay this feedback to senior leadership. 

• Diversity pulse surveys. You can use surveys to conduct regular checks on the state of diversity in your organization. For example, you might ask, “What changes would you recommend to make our workplace more inclusive for all employees?” Answers can help you identify common issues or themes while providing fresh, employee-led solutions.

Salesforce’s gender-inclusive benefits are a great example of how to respond meaningfully to employee feedback on diversity issues. Through surveys and an ERG, Salesforce received feedback from its LGBTQ+ employees about their experiences and challenges in the workplace. 

In response, the company introduced various gender-inclusive benefits, including financial support for gender affirmation treatments. 

4. Invest in regular employee training

Diversity training is a key DEI strategy to help your business achieve genuine diversity. Designed to educate employees about the importance of DEI in the workplace, it helps employees understand diversity and their role in supporting it. But effective training goes beyond understanding. You must also provide employees with practical tools to address underlying biases and behaviors. 

Research shows that diversity training programs that equip employees with concrete strategies are effective. 

According to professors at Harvard Business School, “Researchers trained STEM faculty at the University of Wisconsin to reduce gender bias.” Part of this training taught individuals practical strategies to overcome bias, including adopting others’ viewpoints, interacting with different kinds of people, and challenging stereotyped perspectives. Here’s what happened over the next two years: 

• The hiring rate of female faculty in these departments increased from 32% to 47%.

• In contrast, departments that didn’t participate in training saw no change in their hiring of women. 

Tailor your training to suit your workforce’s needs. Topics may include unconscious bias, empathy, microaggressions, and discrimination, and courses can be delivered online or in person. Provide training to all levels of the organization, including leadership. Also, provide ongoing – rather than one-off – training opportunities. 

5. Use skills-based hiring to build a diverse workforce

Your workforce should reflect the diversity of the clients or customers it serves. However, unconscious bias during the hiring process can be a barrier to employment for many minority groups.  

Skills-based hiring – prioritizing candidates’ skills over their education, experience, or background during recruitment – is one of the most effective ways to reduce the risk of unconscious bias in recruitment processes and attract candidates from diverse backgrounds. It gives candidates equal access to employment opportunities. 

Our State of Skills-Based Hiring report gathered insights from 1,500 employers. Eighty-four percent said skills-based hiring has a positive impact on diversity, with 23% saying it had a very large impact. 

Here are several ways to adopt a skills-based approach to hiring and support diversity in your organization:

• Use inclusive language in job ads. For example, asking for marketing candidates who “live and breathe” marketing will exclude those candidates with other commitments – including working mothers.

• Try blind hiring. Removing any identifying information from candidates’ resumes – such as names, genders, ages, and photos – supports fairer hiring practices. Nelson Sherwin, manager of PEO Companies, who’s been experimenting with blind hiring, says, “It has taught us a lot about internalized biases we don’t even know we have.”

• Incorporate talent assessments into your hiring process. Talent assessments assess candidates’ job-related skills, personalities, and ability to enhance your company culture. They reduce the risk of unconscious bias affecting the hiring process by providing objective, standardized assessments. 

• Ensure diversity on hiring panels. This reduces the risk of one person’s unconscious bias affecting hiring decisions. 

6. Leverage technology to support diversity

Harnessing the power of technology can turbocharge your DEI efforts. It can help you gain deep insights into diversity in your organization and help your workforce adopt daily habits that support inclusivity. 

There are various apps and technologies designed to support diversity in the workplace, including:

• Witty works: This AI-powered browser extension helps you and your employees use more inclusive language in your writing. 

• Gapsquare: This software aims to help organizations achieve pay equity by analyzing and addressing disparities in pay. 

• TestGorilla: We offer customizable talent assessments to support skills-based hiring and remove unconscious bias from the hiring process.

7. Look critically at your donations and partnerships

Your organization’s commitment to diversity should extend beyond its internal practices. You should also look at how it supports diversity externally. This includes looking at whether charitable donations or corporate sponsorships align with the DEI values of your organization. 

We spoke to Daniel Wolken, a talent acquisition specialist at the job board Daily Remote. He highlighted that corporate giving strategies can be inconsistent with businesses’ DEI commitments. 

“While publicly espousing support for marginalized communities and equal rights,” he explains, “some organizations concurrently donate substantial funds to political campaigns and causes that actively work to restrict rights, deny protections, or roll back policies benefiting those very same communities.” The problem? “By financially supporting regressive agendas undermining diversity and inclusion, these organizations reveal their true priorities lie elsewhere.”

Another way to promote external diversity is through a supplier diversity program. These initiatives actively seek out more inclusive suppliers, including women-owned, minority-owned, and veteran-owned businesses. 

For instance, workplace safety firm Johnson Controls has an award-winning supplier diversity program. It’s awarded contracts to over 300 diverse companies and offers annual fellowships to support training opportunities for managers of diverse firms. 

8. Commit to transparency

Transparency around your DEI efforts shows a willingness to be held accountable. This builds credibility and trust with stakeholders, including employees, customers, and shareholders. 

As founder and CEO of Patriot Software, Mike Kappel explains, “You made a commitment to your customers, investors and lenders, employees, and yourself to build the best venture you could. You might as well show everyone how you’re holding up your end of the bargain.”

Start by setting clear, measurable goals and developing policies and procedures to support them. Make these easily accessible to employees via your intranet or employee handbook. You can also present your DEI goals and initiatives on your website – and in your annual report if you’re a public company. 

9. Measure your progress

Without measurement, you can’t understand the effectiveness of your DEI efforts and ensure you’re not inadvertently being a diversity washer. 

The Global Parity Alliance and World Economic Forum’s joint report identifies “rigorous tracking and course correction” as one of the five common factors of successful DEI programs. The right DEI metrics depend on your organization’s diversity goals. These metrics enable you to course correct and address any initiatives that prove ineffective. They also help you spend time and money effectively. 

For example, Ernst and Young (EY) runs Neuro-Diverse Centers of Excellence. These centers train and support neurodivergent individuals who face disproportionately high unemployment rates. EY observed an impressive 92% retention rate among employees hired through these centers and a 1.2-1.4 times increase in team productivity. By taking a data-driven approach, EY confirmed its initial pilot program's effectiveness and rolled it out across eight countries. 

Don’t be a diversity washer: Embrace genuine inclusion

Talking about diversity without real action quickly leads to a bad reputation and compliance issues. Worst of all? It does nothing to improve diversity in your organization. 

When it comes to diversity, actions speak louder than words. Think strategically about the tangible steps your organization can take to effect meaningful change. These include ensuring management leads by example, tracking diversity metrics, and investing in skills-based hiring to build a diverse workforce. 

By reflecting deeply on the state of diversity in your business and how best to address it, you can avoid diversity washing and become a champion of inclusion.  

Sources: 

1. Andrew Baker, David Larcker, Charles McClure, Durgesh Saraph, and Edward Watts. “Diversity Washing.” The European Corporate Governance Institute (2023). https://www.ecgi.global/sites/default/files/working_papers/documents/diversitywashing_0.pdf