The ESG-DEI discussion continues to elicit shareholder interest, at least according to a recent report from The Conference Board about the upcoming proxy season. The report focuses on the political bent underpinning some ESG-related shareholder proposals, some of which are characterized as DEI “backlash”. One recent proposal by the National Center for Public Policy Research to Deere & Co. suggests that Deere undertake a review of its DEI programs to discern whether Deere's DEI policies have moved the needle to a legally suspect employment decision-making focus on race and gender rather than on merit. Framing the question as the Policy Center suggests both begs the question and pre-loads the answer, but it also highlights how people could be led astray by this discussion. 

To contend that merit should be disregarded when it comes to hiring misconstrues the nature and purpose of the employment relationship. It makes no sense for an employer to hire an individual without regard to whether the person has the right education, background and experience or if the person can actually do the job. Hiring someone because they check a box is self-defeating. No sensible business would pay someone to do a job the person is not capable of doing, which wastes the company's money and fails to serve its purpose. But that is not why DEI opponents posit this question in this manner. Instead, removing merit from the DEI equation actually masks the very essence of DEI's point.

If DEI's goal is to level the playing field for people, modernize thinking about skill sets and debias (to the extent possible) assumptions that prewire hiring managers, then the true reason to implement, administer and embrace these programs is to unmask overlooked merit rather than to ignore it. If DEI is framed as talent-searching, then the business case is easier to make. Employers might miss unique and important talent because employment decision-makers cannot recognize or appreciate some talent because their own background and beliefs lead them to limit talent sources. If the aperture of potential hires is widened, it might disclose people with useful skill sets who might have been previously missed. This creates a much richer and merit-filled talent pool and will ultimately lead to successful hires.

Hiring on merit should always remain a business goal because doing so mutually rewards the business and the employee. Most shareholders would agree with that proposition. But it is equally important to understand, confront and effectively rebut the insidious suggestion that DEI, at its core, means anything other than expanding what could be limitless possibilities that enhance the mission of the business and meet shareholder goals.

“But in practice what that ‘equity’ really means is the distribution of pay and authority on the basis of race, sex, orientation and ethnic categories rather than by merit,” according to the center, a stance it argues might violate the Civil Rights Act of 1964. 

“By devaluing merit, corporations have sacrificed employee competence and morale—and therefore productivity—to the altar of ‘diversity,’” the proposal states.