TOMS in Turnaround: Can a Purposeful Pioneer Reinvent Itself?

BY Evan Hong | January 14, 2020

Even the most groundbreaking companies with a cause need to keep evolving to stay on their feet. TOMS, the shoe company that pioneered a mix of sales and philanthropy, is now under new ownership.

The company launched in 2006 with an uplifting promise–“With every pair you purchase, TOMS will give a pair of new shoes to a child in need"–but struggled recently in the face of price competition and declining novelty of the one-for-one concept.

TOMS owners, including founder Blake Mycoskie, have agreed to transfer the company’s ownership over to its creditors, according to a letter sent to employees last month by TOMS CEO Jim Alling. The group of creditors includes Jefferies Financial Group, Nexus Capital Management, and Brookfield Asset Management, who seized control of the company through an out-of-court deal.

Multiple credit ratings agencies had warned TOMS that they would not be able to repay their $300 million loan due next year without renegotiation, according to Reuters. In exchange for the ownership acquisition, the creditors will provide debt relief to the company as pledging to invest $35 million to help turn the company around.

The Los Angeles-based business was one of the first of its kind. Founded by former Amazing Race  contestant Mycoskie, TOMS drew its brand name from his initial concept, “Shoes for Tomorrow Project.” The idea behind TOMS stemmed from a trip Mycoskie took to Argentina where he noticed many shoeless children as well as a potential solution in alpargatas, the most popular shoe design among locals. After launching with a batch of just 250 shoes, by the time of the company’s 2019 impact report, TOMS said that the company has donated more than 95 million shoes as of November 2019 and hopes to reach the 100 million mark sometime in 2020.

In 2014, private equity firm Bain Capital LLC acquired a 50% stake in the company from Mycoskie in a deal that valued the company at about $625 million, with Mycoskie retaining rest of the equity. It is unclear at this point what role Mycoskie might continue to play at the company.

While the one-for-one model promoted humanitarianism and benevolence, the company has suffered in recent years as other companies began to imitate it. Popular shoe retailer Skechers launched BOBS back in 2010, a shoe line that began with a virtually identical business model as TOMS. As more companies continue to lower their prices and follow a similar model, the originality of the premise tended to wear off. TOMS transitioned from its one-for-one model in November, now sending a third of its profits to a fund that finances philanthropic and social causes. TOMS says they have dedicated $6.5 million to what they call “impact grants” to their 205 giving company partners.

“Maybe it’s time to evolve a little bit,” TOMS Chief Giving Officer Amy Smith said in the report. “Maybe it’s time to do more than just our one-for-one giving.”

TOMS has indeed done more than sell and donate shoes since their inception, including the launch of an eyewear line in 2011. With a similar format, TOMS has helped restore eyesight for over 400,000 people in 13 countries by donating prescription glasses and providing funding for medical treatment. In 2014, TOMS also launched a sister coffee company, TOMS Roasting, that helps provide safe drinking water to communities where their coffee beans are grown.

Even though TOMS did its best to branch out, the separate projects did not have the same success as the classic shoe line. According to a Business of Fashion report, the upstart eyewear company Warby Parker won the race with TOMS for direct-to-consumer eyewear with lower prices while using a similar charitable business model. Warby Parker partners with the nonprofit Vision Spring to donate glasses abroad.

Retail experts suggest that handing the company over to creditors was a “good start,” according to the Business of Fashion article. Some believe that this will push TOMS to use a stronger wholesale strategy to revive the company. Currently, TOMS operates nine retail stores nationwide but partnering with major retail chains like Walmart or Target could help its products reach a wider audience in a mass market.

With its new financial structure, the management of TOMS hopes it will have the resources to make that turnaround happen. Said Alling in his letter to employees:  “Combined with an enhanced capital structure, this funding will enable TOMS to further invest in our promising growth areas and continue our commitment to giving.”

Evan Hong, a reporting intern at From Day One, is a journalism student from Vadnais Heights, Minn., who currently studies at the University of Wisconsin-Eau Claire. He works as the sports director at TV10, the university’s campus TV station


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What Transparency Can Expose: an Obvious Need for Organizational Change

In the realm of corporate values, few terms have been more universally embraced in recent years than the notion of transparency. Among its many applications, organizations have deployed it to contend with sticky social matters and public scrutiny of corporate ethics.  At the World Economic Forum’s annual conference in Davos this year, speakers repeated the term like a mantra, reflecting a movement that has been building for a while. Fast Company reported that at the summit in 2021, more than 60 businesses announced a “commitment to transparency” about their effects on society and the environment. In response to pressure from stakeholders on all sides, executives from TikTok, Glassdoor, Google, YouTube, Zoom, Boeing, Twitter, and the White House have all made public commitments to transparency in recent years.Yet lately it has been dawning on leaders that this magic, window-cleaning solution can make things worse, especially if what has been exposed seems to be hypocritical, poorly thought-out, or further obfuscation rather than moral clarity. The most notorious recent example came last December, when the presidents of Harvard, MIT, and the University of Pennsylvania gave hedged, lawyerly responses when asked in a congressional hearing whether calls for the genocide of Jewish people would violate their school’s conduct rules. Their answers frustrated stakeholders on many sides of the issue.Seeing the havoc that failed transparency can wreak, Harvard is second-guessing the value of transparency, and is considering keeping mum on divisive matters altogether. The Harvard Crimson reported in February that the school’s interim president is expected to announce that the school is considering a policy of “institutional neutrality,” in which it will make no statements on politicized matters. Leaders at other universities are in favor, it appears. During a recent panel discussion on the matter, Yale Law School professor Robert C. Post remarked that “when we speak outside of our lane, we invite reprisals, we invite regulations, which we cannot defend in terms of our mission,” he said. “There may be reasons to do it. But they have to be pretty good reasons because we’re vulnerable, we're especially vulnerable right now.” The public is not ready to retire the notion of transparency, however, so organizations need to take a more considered approach to it and the policies that it exposes. “Corporate values aren’t optional, and they’re more controversial and contested than ever,” writes Alison Taylor in her new book Higher Ground: How Business Can Do the Right Thing in a Turbulent World. “[Yet] aiming to base your values on commitments on the full range of stakeholder pressures and demands is a recipe for incoherence and fragmentation.”This has become the principal dilemma for leaders who want to run an ethical business, argues Taylor, a clinical associate professor at the NYU Stern School of Business. “It shows up in HR teams doing employee engagement surveys and trying to make themselves look good. It shows up in these glossy sustainability reports about all the wonderful things [the company] is doing,” Taylor told From Day One. “The thing that has changed is that those defenses don’t work anymore.”The Age of Clarity and CandorThe theory is that if you bare it all, the company will be rewarded for its candor. “If a single concept drives today’s businesses, regulators, journalists, and NGO activists, it’s that transparency is the route to accountability,” Taylor writes in her book. Yet all this new data-dumping, press-releasing, and report-publishing hasn’t necessarily reconciled what companies say vs. what they do, though trust in business has generally grown over the years, especially when compared with trust in government. Yet company after company, ranging from Boeing to Wells Fargo, have taken a shellacking for saying that they’ve fixed problems when they haven’t actually changed the culture or system that caused harm in the first place.In fact, disclosure is easily weaponized, Taylor argues. The companies that release details of their ethical transgressions or corporate misconduct can put the target on their own backs. In her book, Taylor tells of the story of a clothing company, operating in an industry known for its negative environmental effects and human-rights violations, that published a list of its suppliers in the spirit of transparency. They were among the first picked off as the target of a class-action lawsuit alleging forced labor. “The retailer making a good faith effort to be responsible and accountable was first in line for denunciation and punishment,” Taylor writes.Contending with a Public Wary of Good IntentionsAs companies see that their attempt at transparency can get them in trouble, many flatten their reporting into glossy packets and palatable stories. Some disclosures are required by law, yet by and large, these reports are voluntary. To steel themselves against criticism, especially involved tricky issues, many organizations appoint leaders charged with improving company culture and creating a more equitable workplace: chief culture officers, heads of compliance and integrity, and leaders of diversity, equity, and inclusion (DEI). To be sure, many who sit in these offices are formidable forces. Figures like Yelp’s chief diversity officer, Miriam Warren, and Bumble’s founder Whitney Wolfe Herd set high bars for the influence executives can have on equity and integrity inside and outside an organization.But some of the leaders installed in these roles are faced with the uncomfortable truth that their position is corporate PR. Taylor sees this often: People take jobs and think of themselves as organizational change agents, only to find that senior leaders think of them as defense mechanisms to protect corporate reputation and, in the case of compliance teams, to deflect regulators.For instance, the chief diversity officer is typically charged with making the business more demographically diverse and equitable for people across every department at every level of the business, yet many of them work with very limited resources. It's no wonder that turnover for the job is high.From Token Hire to Meaningful InfluenceOnce a company decides that it won’t favor transparency more than change, good things start to happen. This is when those leaders originally appointed as tokens can use their positions. If Taylor were to find herself in a role and learn that her presence was manipulative PR, she said, “I would make an argument about transparency needing to adapt the organization to a new generation. You can’t control the narrative, so hiring a load of people to do window dressing has become a waste of money. We can’t rely on confidentiality agreements, and we can’t rely on telling a good story.”Companies have to assume that young workers in particular are ready to undercut nice, neat stories and pounce on corporate misdirection, she says. Where a glossy report no longer suffices, those once-impotent appointees can play a valuable role, holding the company accountable from the inside before an angry public holds them accountable in the open air.Now that the public is suspicious of public declarations of corporate goodness, “no one believes it. There’s a total ‘gotcha’ mindset. Everyone rolls their eyes, and now there’s all this greenwashing and woke-washing litigation,” Taylor said. “It’s a pointless investment. You need to stop treating these as messaging challenges and treat them as organizational strategy challenges.”‘A Less Varnished Assessment of Activities’Taylor’s Higher Ground is loaded with case studies, action outlines, and advice. Not only for avoiding corporate blunders, but also correcting the bad habits and outright crookedness that cause them. Be a “first mover,” setting the example for peers, she writes. Companies often wait until a public scandal to start talking, but this tends to create chaos. She cites the example of Google releasing its transparency report on how it works with law enforcement in 2010. “This was not the result of a specific scandal but an effort to correct widespread misunderstanding.” Its success was due in part to the company being clear about what it can and cannot influence.Sure, there will be companies that invite scrutiny with their reporting, but that’s why Taylor warns against bending too deeply to public opinion and impatience that lures firms into dangerous waters. Don’t succumb to the pressures of social media, which turn companies into reaction engines, she advises. Wait long enough, and sensationalized social-media storms pass. Similarly, transparency often generates “impatient calls for an issue to be addressed instantly,” when real change takes time.Finally, forget about having 100% control over the stories told about your company and control over the behavior of your employees, which some companies increasingly see as liabilities, as evidenced by the new popularity of surveillance tools.Taylor believes that many corporate leaders sincerely want to avoid superficial reporting and put-on commitments to transparency. In five years of speaking to investors about sustainability reports, Taylor writes, “they told me again and again how much they–and their companies–would benefit from a less-varnished assessment of activities.”Emily McCrary-Ruiz-Esparza is a freelance journalist and From Day One contributing editor who writes about work, the job market, and women’s experiences in the workplace. Her work has appeared in the BBC, the Washington Post, Quartz, and Fast Company.(Featured illustration by Fermate/iStock by Getty Images)

Emily McCrary-Ruiz-Esparza | March 24, 2024

Apprenticeships: a Classic Solution to the Modern Problem of Worker Shortages

The U.S. labor market has become like a crazy quilt: mass layoffs in certain industries, along with dire shortages of workers in businesses ranging from accounting to trucking. To close the critical gaps, industries are turning to modern versions of an age-old institution: the apprenticeship. “Apprenticeships are the most promising solution to addressing the current labor shortage. Why? Because apprenticeships are jobs first and foremost–jobs that pay a living wage–not just training programs,” Ryan Craig, author of Apprentice Nation: How the Earn and Learn Alternative to Higher Education Will Create a Stronger and Fairer America, told From Day One. “They’re accessible to anyone with the potential and willingness to work hard–and much more accessible than tuition-based, debt-based college, or other training programs.”Causes of the labor shortage are many: A workforce quickly aging into retirement, the slowing of population growth, the burdensome cost of post-secondary education, lack of access to affordable childcare, and an increase in entrepreneurship. All of these have contributed to a shrinking workforce. As of January, the U.S. labor force participation rate is 62.5%. A couple decades ago, at the beginning of 2001, it was 67.2%.Employers are attacking the problem on many fronts. Some are pulling out the stops to retain older workers who might otherwise retire, and some are coaxing the semi-retired back to the office with flexible new arrangements. Others are dropping four-year degree requirements to broaden their talent pools, or bulking up benefits packages to include childcare, paid leave, and fertility benefits to attract and retain workers. Apprenticeships have joined that medley of solutions, with employers, advocacy organizations, and policymakers exploring and investing in the “earn-and-learn” model to fill talent pipelines from hospitality to healthcare to finance. Apprenticeships Beyond Blue CollarsApprenticeships represent a mutually beneficial way of hiring and training workers. Apprentices get on-the-job training, related instruction (often in a classroom or virtual classroom), and a paycheck all at the same time. Employers get the workers they need, trained to their specifications. In the U.S., apprenticeships are most often associated with skilled trades–it’s normal for plumbers, electricians, construction workers to complete apprenticeships–yet white-collar professions are only beginning to forge a connection with earn-and-learn programs. In 2020, professional services firm Aon announced that it would invest $30 million in its apprenticeship program over the next five years, with a goal of creating 10,000 apprenticeships in the U.S. within Aon and its partner organizations by 2030. In 2022, IBM committed to putting $250 million toward apprenticeships and other “new collar” programs by 2025.Aon’s program includes three tracks: insurance, HR, and IT. Apprentices take courses in insurance and business administration at partner colleges. Francheska Feliciano, the director of Aon’s apprenticeship program, told From Day One that career changers have found a home there. “We have found that those that thrive in our program tend to be career changers, but our program has a wide range of candidates with varied backgrounds, customer service, hospitality, or other service type roles.”Last year, the Biden Administration announced that it will invest $330 million to expand federally registered apprenticeships programs. In July, the Department of Labor awarded $17 million to expand existing apprenticeships and promote the model in new industries. In November, Maryland Governor Wes Moore committed $3 million to developing apprenticeships for public-sector jobs and $1.6 million toward the development of hospitality industry apprenticeships. “Maryland has set ambitious goals for expanding apprenticeship and we mean to meet them,” said Portia Wu, Maryland's Department of Labor secretary, in a press release. “Registered apprenticeship is key to our state’s economic success. We’ve already hit historic highs in apprenticeship adoption and today’s investments will accelerate our progress.”Alleviating the Local Labor ShortageApprenticeships could help solve local labor shortages for companies whose workers must be on-site–crucial for skilled trades like manufacturing or nursing–which are experiencing a pipeline problem of their own. Rather than recruiting the skilled talent from elsewhere, employers can use apprenticeships to develop the talent in their community. As housing inventory trails demand, employers who can tap their local talent markets will have the advantage, said Renee Haltom, the VP of research communications at the Federal Reserve Bank of Richmond, during a panel discussion last month at the Richmond Economic Forecast  “The regions that figure out housing are going to be ahead of the curve in terms of dealing with the coming demographic shifts,” Haltom said, referring to the aging U.S. workforce. Annelies Goger, who studies how to scale earn-and-learn models at the Brookings Institution, sees the advantages for local employers. Apprenticeships are a way to draw on local talent, and employers are more likely to retain locals than workers who have relocated, she told From Day One. “Rising rents have made it hard for employers to find and retain people only with the normal ways they’ve recruited people, so they’re looking into a lot of other ways and channels for finding talent,” Goger said. Apprentices Enter Finance and AccountingIn accounting and finance, more workers are retiring than are entering the field. According to a 2024 analysis by the U.S. Chamber of Commerce, “even if every unemployed person with experience in the financial activities or professional and business service sectors were employed,” the report reads, “only 42% and 44% of the existing job vacancies in these industries would be filled, respectively.”In 2022, the Association of International Certified Professional Accountants (AICPA) and Chartered Institute of Management Accountants (CIMA) launched the first federally registered apprenticeship for finance and accounting professionals, and in its first year signed up 17 employers from 15 industries, including healthcare, industrial gas, banking, and manufacturing. One hundred apprentices have registered with the program in its first year.When AICPA and CIMA set out to create apprenticeships, the aim was to address the worker shortage in the accounting and finance field with early career talent. “When we started talking to employers who would want to hire people from these programs, we found that they were more interested in reskilling workers,” said Joanne Fiore, AICPA’s VP of pipeline and apprenticeships. Rather than recruit new talent, employers wanted to use apprenticeships  to retain their current workforce and train them as strategically minded contributors. The purpose of the Registered Apprenticeship for Finance Business Partners is to develop management accountants for the finance function of the future–not just number-crunchers, but “key players in strategic decision-making and broader business transformation,” said Fiore.Even if this program is able to shrink the skills gap, the labor shortage is likely to persist. There just aren’t enough young people entering the field to balance out their retiring elders. One problem: the profession has a reputation for being, well, dull.To fill the talent pipeline, and help rebrand the profession, AICPA and CIMA have piloted a youth apprenticeship program in Maryland high schools, aiming to drum up excitement and interest in the field among young people.Customizing the Programs Organizations, employers, and educators have found ways to tailor apprenticeship programs to their needs. They’re not just for recruiting, they can be deployed for talent development as well. “With the digital transformation of our economy, tens of millions of jobs now require workers to use tools to build things–only the tools are digital and workers no longer need to wear hardhats,” said Craig, author of Apprentice Nation.Often, those skills are software related. Where hospitals and healthcare providers use Epic, marketers use HubSpot, and HR uses Workday. “Companies are increasingly demanding that applicants for these jobs already have these platform skills–skills which are much harder to learn in a classroom than on-the-job via an apprenticeship,” Craig said.“Apprenticeship brings an organic culture of learning into any workplace and helps business perform better,” writes Jean Eddy in Crisis-Proofing Today’s Learners: Reimagining Career Education to Prepare Kids for Tomorrow’s World. “An apprenticeship program breathes new life into workplaces and lets employers quickly tap into a culture of learning that so many now are desperate to build.”Scaling Earn-and-Learn to Quell the Labor ShortageApprenticeships are difficult to start, and they’re difficult to scale. Few employers have the infrastructure to both employ and train unskilled workers at the same time, and most require the help of intermediaries like the AICPA and CIMA, which provide the instruction and the infrastructure.While it may be a while before apprenticeships alone make a dent in the labor shortage, analysis of the success of existing programs is promising. Not only are retention rates high–Aon, for instance, retains 80% of its apprentices–the Department of Labor estimates that employers get a 44.3% return on investment for apprenticeship programs.“While traditional apprenticeships emphasized hands-on skill acquisition under a mentor, modern apprenticeships often integrate technology-based learning, including virtual simulations and online coursework, to complement on-site training,” said Katie Breault, SVP of growth and impact at YUPRO Placement, a recruiting firm focused on skills-based hiring. Finance and tech roles are particularly suited to apprenticeships, she told From Day One. “Industries undergoing digital transformation, for example, greatly benefit from such programs. They offer real-time learning opportunities, crucial for staying relevant in dynamic fields.”The problem with apprenticeships as a solution to the labor shortage is that we just don’t have enough of them yet, said Craig. Plus, in his estimation, they’re under-funded and under-marketed on both the demand and supply side. “Many young people and their parents think of apprenticeships as a ‘second tier’ option–if they think of them at all,” he laments in Apprentice Nation. White collar employers may be thinking much the same. Yet as investment continues and apprentices pop up in surprising places, like the finance department, enthusiasm may spread. “It certainly fits the accounting profession,” Fiore said. “And if it fits the accounting profession, my sense is that it will fit many professions.”Emily McCrary-Ruiz-Esparza is a freelance journalist and From Day One contributing editor who writes about work, the job market, and women’s experiences in the workplace. Her work has appeared in the BBC, The Washington Post, Quartz, Fast Company, and Digiday’s Worklife.(Featured photo by Amorn Suriyan/iStock by Getty Images)

Emily McCrary-Ruiz-Esparza | February 14, 2024

DEI Starts Over: How It Needs to Adapt to Survive the Battles of 2024

When Elon Musk and other headstrong billionaires start using you as a punching bag, it might be a smart time to duck. In his latest tirade against diversity, equity, and inclusion (DEI), Musk attributed the door plug blowing off a Boeing 737 Max 9 jet earlier this month to the aviation industry’s efforts to diversify their workforces. “Do you want to fly in an airplane where they prioritized DEI hiring over your safety?,” he wrote on X, formerly Twitter. Citing no evidence, Musk’s claim echoed the conspiracy theory asserting that DEI led to last year’s collapse of Silicon Valley Bank, which proved to have no basis in fact. While corporate America proudly carried the banner of DEI in recent years, 2024 is shaping up as the year in which many companies will be lowering the profile of their efforts and changing the approach of their programs. Recognizing that the term DEI has become another cudgel in the culture wars, joining “wokeness” and ESG, corporate leaders are responding to a wave of legal and political challenges. Among them: The Supreme Court is considering a case that could inspire a raft of regulatory complaints against DEI programs, charging them with reverse discrimination; conservative billionaires are funding a wave of lawsuits against such programs; and red-state politicians are threatening to follow the example of Florida and Texas by passing  new laws threatening to limit the scope of DEI. “They’re starting with letters, but I don’t think that they’re bluffs,” said Zamir Ben-Dan, a Temple University assistant professor of law. “It’s going to be a problem,” he told the AP. “It’s going to lead to a decline in racial diversity in the workforces.”Corporate America doesn’t want that to happen. In a survey late last year by the Conference Board, none of the 194 chief HR officers said they plan to scale back DEI initiatives, programs, and policies; 63% said they plan to attract a more diverse workforce. Employers say that an embrace of diversity and inclusion has become an important corporate value when it comes to recruiting the workers they need, especially younger ones who tend to favor diversity. As Fortune put it, “DEI Is Dead. Long Live DEI.” Yet companies are looking for ways to step away from the term “DEI” as well as aspects of programs that could make them legally vulnerable. “Companies are really starting to look at other ways to do the work without saying that they’re doing the work,” Cinnamon Clark, cofounder of Goodwork Sustainability, a DEI consulting firm, told Axios. Among the pressures and the responses that will characterize the evolution of DEI this year:The Supreme Court’s Other Shoe to DropOnly a day after releasing its historic decision last year to outlaw affirmative action in higher education, the U.S. Supreme Court agreed to hear a case that could have a parallel impact on DEI programs among corporate and government employers. In Muldrow v. City of St. Louis, a police sergeant alleges that she was transferred out of her prestigious job because of her gender, thus violating Title VII of the Civil Rights Act, which forbids discrimination according to race, gender, and other protected characteristics. Lower courts have upheld the city’s argument that Muldrow failed to demonstrate that the transfer amounted to an “adverse employment action” that caused material harm.The Biden Administration has supported Muldrow’s case because it could enable more people to file discrimination cases with the Equal Employment Opportunity Commission [EEOC], yet a broad interpretation of Title VII by the Supreme Court, relaxing the need to prove harm, could also “open the door to a flood of reverse discrimination claims against certain workplace diversity, equity and inclusion programs–such as mentoring and training programs for underrepresented groups–that ordinarily would not survive in court,” the Washington Post reported. “Such complaints have become more common since the Supreme Court overturned race-conscious college admissions in June.”Well-Funded Legal ChallengesEdward Blum (pronounced “bloom”), a white, 73-year-old former stockbroker, has made it his life’s work for more than three decades to stamp out affirmative action. He does not have a law degree, but he spends his day planning lawsuits to challenge affirmative action in the Supreme Court, helping to persuade the court to hear eight cases. Most recently, in June, he was in large part responsible for bringing the case that led to the court’s decision to outlaw affirmative action in higher education (Students for Fair Admissions v. Harvard College).Since then, he has been suing elite law firms over their DEI language. Many firms have yielded and made changes to avoid litigation. While Blum told Bloomberg Law that he’s done suing law firms–“There’s nothing left for us to do in that space,” he said–legal experts are watching where he’ll turn next. “Well, I think employment is one area that I think will garner greater attention, not just from me, but from other organizations, other legal policy foundations,” he told the New York Times. “I also think that some of the things that we associate with higher education–internships, scholarships, certain research grants–those need to be revisited if they have been race-exclusive.” One group that Blum founded, the American Alliance for Equal Rights (AAER), filed a lawsuit last August against Fearless Fund, “an Atlanta-based venture capital firm run by two Black women, alleging that the fund is engaging in racial discrimination by running a grant program exclusively for early-stage companies owned by Black women,” the Washington Post reported.While Blum has often been portrayed as a one-man-band, challenging major institutions on his own, a study by the Democratic Policy & Communications Committee, produced by seven prominent Democratic senators, called Blum’s various organizations “fronts for corporate mega-donors seeking to change the law through the courts.” In particular, the report cited Students for Fair Admissions as “funded primarily through the Koch [Brothers] operation’s shadowy dark-money operation DonorsTrust, known as the ‘dark-money ATM of the conservative movement.’” Blum has a fellow traveler in Stephen Miller, the arch-conservative former Trump Administration advisor best known for his hard line on immigration issues. Miller has been zealously targeting corporate DEI programs through his well-funded group America First Legal. Since 2022, his group has filed 25 complaints against companies with the EEOC. Miller’s organization has notched few legal victories, but that may not be the point. More than 85% of the AFL’s budget went to advertising, while only 4% was spent on legal services, the Daily Beast reported. Even so, “at least six major U.S. companies including JPMorgan Chase have modified policies meant to boost racial and ethnic representation that conservative groups threatened to sue over,” a Reuters review of corporate statements found.How Corporate Employers Can RespondWhile corporate leaders in the Conference Board survey said they don’t intend to pull back on DEI, the combination of corporate austerity and high-profile backlash is surely depleting the resources available to DEI. In a report last October, Forrester, a research and advisory company, found “the percentage of companies that funded a DEI function with an endorsed strategy and personnel dropped from 33% in 2022 to 27% in 2023; we predict that this number will fall to 20% by the end of 2024 in the wake of cuts that disproportionately affect DEI teams. As a result, too many companies will default to ‘check the box’ efforts such as heritage days, leading to performative–rather than substantive–DEI programs.”Organizations that are still motivated to maintain their commitment the principles of DEI will need to adapt their approach. “As the law inevitably evolves in a more conservative direction, the new legal standards will be absorbed into the field of DEI, transforming it as an enterprise. While this shift will occur organically, smart organizations can avoid a lot of pain and expense by thinking about how to adapt in a more intentional way,” reports Harvard Business Review. In their HBR story, Kenji Yoshino and David Glasgow, lawyers at New York University and authors of Say the Right Thing: How to Talk About Identity, Diversity, and Justice, identify three aspects that can make a DEI program legally risky: it confers a preference for some individuals over others, the preference is given to member of a legally protected group under Title VII, and the preference relates to a palpable benefit, like a job, promotion, or L&D opportunities.Given those criteria, write Yoshino and Glasgow, the specifically risky programs include hiring quotas, tiebreaker decision-making for hiring and promotions based on identity; group-specific internships and fellowships; and tying manager compensation to diversity goals. While all of those measures may be designed to compensate for systemic biases, “it is clear that the conservative supermajority of the Supreme Court does not agree with such a worldview.”Reshaping Programs as Well as the LanguageTo avoid charges of reverse discrimination, employers can make several changes to existing plans. Among other things, they can make DEI initiative more identity-neutral yet still designed to remove bias, like making employee-resource groups and other affinity groups open to all, rather than restricted based on identity. “These approaches do not ‘lift’ certain groups above others, but ‘level’ the playing field for everybody,” write Yoshino and Glasgow.The language, too, is shifting, with more focus on the “inclusion” aspect of DEI, as well as “belonging” and “well-being.” Reported the Post, “While some demographic-specific efforts will probably remain, overall, corporate DEI is likely to shift and focus more on ‘universal’ efforts to make recruiting, hiring and retention more successful for everyone.” Even as they adjust to the risk of being sued for reverse discrimination, employers have to make sure they don’t over-correct in the opposite direction. “Getting sued for a regular discrimination claim from someone who belongs to an underrepresented identity in the workplace is still more common than a reverse discrimination claim from a white person,” reports Thomson Reuters.  Companies shouldn’t abandon DEI initiatives that help to make those from underrepresented backgrounds feel more welcome or offer more opportunities to succeed, NYU’s Glasgow told Reuters, “because doing so could create an environment that is more hostile and unwelcoming to people who belong to these marginalized groups.” For example, he said, eliminating mentorship or sponsorship opportunities that were helping more women advance through an organization might lead to a more one-dimensional leadership team–a prospective setback to decades of progress.Andrea Sachs, a graduate of the University of Michigan Law School, began her career as a lawyer in Washington, D.C., at the National Labor Relations Board, then spent nearly 30 years in New York City as a reporter at Time magazine.  (Featured photo by Violeta Stoimenova/iStock by Getty Images) 

Andrea Sachs | January 17, 2024