Why Do Diversity Programs Fail Despite Their Potential?

Diversity programs have the potential to produce enormous benefits for the businesses that embrace them, but all too often efforts fail to generate the desired results. Why?

Before we answer that question, let’s first reiterate the underlying value of diversity (sometimes referred to more comprehensively as Diversity, Equity, and Inclusion, or DEI) to professional organizations. Certainly, inclusivity and representation are sound in principle, but they can also produce measurable business value when translated into smart, well-designed programs and initiatives. A failed diversity training program, for example, should not be taken as evidence that diversity in general does not or cannot produce value.

The Benefits of Diversity Programs

1. Diversity powers better business performance

Sabrina Clark, a managing partner with SYPartners, which specializes in organizational transformation, told CIO Magazine, “Research shows that even just the presence of physical diversity results in better performance and for companies that are data-driven, that extra performance boost can be extremely motivating.”

Other research backs up that assertion. Analysis from consultancy firm McKinsey & Co. shows links between greater workforce diversity and greater profitability. In fact, organizations in the top quartile of ethnic representation in the workforce have a 39% increased likelihood of “outperformance” compared to those in the bottom quartile, according to McKinsey. Similarly, companies with ethnic and gender diversity in their leadership teams show 27% to 30% higher financial performance than others.

2. Diversity fuels improved innovation

A survey by Boston Consulting Group (BCG) of 1700 companies found that organizations with above-average workforce diversity also generated 19 percentage points higher revenue from innovation (45% of total revenues vs. 26%) when compared to organizations with below-average diversity. “In an increasingly dynamic business environment, that kind of turbocharged innovation means that these companies are better able to quickly adapt to changes in customer demand,” the report’s authors concluded.

In fact, a separate 2023 report from Amazon Web Services and TechTarget found that three-quarters (75%) of business leaders with mature DEI programs see their DEI investments as improving their organization’s competitive positioning and two-thirds (63%) say they positively improved business agility and innovation.

3. Diversity protects against certain losses

Let’s not forget that government regulation also penalizes behaviors that can reduce diversity, like discriminating against a protected class. Lawsuits and government action can result in massive payouts and legal costs. For example, The Harvard Business Review (HBR) reports that Bank of America Merrill Lynch settled a race discrimination suit in 2013 for $160 million. Combined with similar cases, Merrill ended up paying out nearly half a billion dollars over the course of 15 years.

Yet many diverse programs don't seem to work 

Unfortunately, many diversity initiatives and DEI programs fail. In extreme cases, they may even reduce diversity and increase discriminatory workplace behavior. Poorly designed programs can thus both undermine the credibility of the initiatives and also exacerbate existing tensions and divisions. The specific issues causing these failures can vary tremendously, however.

1. Some types of diversity programs simply don't seem to work

Unfortunately, analysis by The Harvard Business Review (HBR) found that the three most popular forms of intervention designed to increase diversity—mandatory diversity training, job tests, and grievance systems—actually reduced it by as much as 11.3%, depending on ethnicity and gender.

“Biases are inscribed over a lifetime, and hundreds of studies of anti-bias training show that even the best [programs] have short-lived effects on stereotypes and no discernible effect on discriminatory [behavior],” write researchers Frank Dobbin of Harvard University and Alexandra Kalev of Tel Aviv University for The Economist. “Paradoxically, training can also awaken biases. Discussing stereotypes tends to make them more salient in trainees’ minds.”

Similarly, HBR’s reporting found that (1) performance evaluations that incorporate diversity considerations, (2) grievance procedures that might be underutilized but give a false sense of accomplishment, and (3) job tests for managers that give a false impression of managerial commitment to or ability with diversity initiatives all produce negative, counterproductive effects.

2. Other programs just don't work very well. 

A 2024 HBR analysis found that other diversity programs produce only small effects. For example, setting diversity goals and targets can help improve the diversity of the workforce but the impact is not very strong. Similarly, cross-training programs that are designed to enable minority and marginalized workers to forge new skills and network connections can themselves become vulnerable to systemic bias and end up reinforcing existing biases. As a result, when they do help, they may not help very much.

3. Program goals conflict with each other

What is the diversity program intended to produce as an output? In many cases, they are expected to produce multiple outcomes that might conflict with each other. For example, one goal might be to increase workforce or leadership diversity, and another goal might be to reduce regulatory or legal vulnerability related to discrimination and bias. These goals are not the same, and initiatives that prioritize one goal or the other might actually make the other goal harder to achieve.

4. Diversity programs lack necessary resources or support. 

Research from compliance training platform Traliant has found that over half (57%) of companies that have adopted one or more DEI strategies do not dedicate resources or budget to those initiatives. Similarly, only a tiny minority of companies (13%) have executives “as proactive and visibly engaged” in diversity-related activities. This lack of support means that diversity initiatives often never get off the ground. In fact, in many cases, support for DEI programs is being reduced or rolled back. Business Insider reports that 8% of DEI roles have been eliminated just this year. Absent organizational and executive support, many DEI initiatives simply achieve nothing.

These challenges do not mean that no diversity initiative will succeed. Clearly, the benefits achieved by organizations with mature DEI programs, like those described above, mean that many organizations are finding success. It just requires a well-designed, multi-layered approach. So, what can organizations do to ensure their programs truly deliver? We answer that question in Part 2 of this series: “How to Make Diversity Work for You.”

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