What: Corporate America's dramatic retreat from DEI initiatives is causing significant workplace disruption, with 20% of companies dismantling programs and another 16% planning cuts by year-end.

Why it is important: This corporate retreat from DEI represents a strategic gamble, as companies risk increased discrimination reports and decreased morale while navigating between political pressures and workforce expectations, demonstrated by the retail industry's 51% turnover rate.

The landscape of corporate diversity initiatives is undergoing a dramatic transformation in the wake of President Trump's re-election. Twenty percent of companies have already eliminated their DEI programs, with an additional 16% planning to do so by year-end. This shift has produced immediate effects, with half of the companies that eliminated DEI reporting decreased morale and one in five experiencing increased discrimination and bias reports. The impact on talent management is particularly concerning, as over one-third of companies report lower retention and attraction of diverse talent, while 57% note a decline in hiring from underrepresented groups. The consequences extend beyond internal metrics, with one-quarter of companies facing reputational damage. This trend is further validated by recent data showing declining workplace happiness among LGBTQ+ workers, contrasting with slight increases among heterosexual employees. The changes are already manifesting in tangible ways, affecting employee empowerment, pride in work, and overall job satisfaction.

IADS Notes:

The retail industry's response to DEI initiatives has undergone significant transformation since late 2024. In November 2024, Walmart pioneered a strategic shift by maintaining inclusion practices while removing explicit DEI language, achieving strong market performance. By January 2025, the emergence of the FAIR framework (Fairness, Access, Inclusion, and Representation) offered retailers a new way to balance inclusive practices with business performance, as evidenced by Amazon's rebranding to "Inclusive eXperiences and Technology." However, Target's experience in February 2025 demonstrated the risks involved, with a $10 billion valuation loss and 9% drop in store traffic following DEI policy changes. Recent industry data from March 2025 reveals the broader impact of these shifts, with a 51% industry turnover rate and only half of major retailers meeting the 40% women in leadership target. The latest research findings showing that 20% of companies have eliminated DEI programs align with these developments, while the reported 50% decrease in morale at companies that cut DEI programs reflects the workforce challenges identified in the retail sector.

1 in 5 companies say they’ve slashed DEI since Trump’s election