Guest commentary: Ford's DE&I policy shift could prove costly in the long run

Henry Ford's legacy as a pioneer of diversity, equity and inclusion initiatives in American corporations is well-established. His decision to pay fair wages to African-American workers, a strategic move to increase the purchasing power of his target market, demonstrated a pragmatic approach to social progress.

However, recent policy-driven changes at Ford Motor Co. suggest a potential shift from this business-oriented perspective.

On Aug. 28, Bloomberg reported: "Ford said it will no longer engage with the Human Rights Campaign's Corporate Equality Index and various 'best places to work' lists, and that it refocused employee resource groups and opened them to all its workers. The carmaker also said it would shift some of its corporate sponsorships, and comment less on polarizing issues."

The company's departure from its historical focus on the business case for DE&I raises questions about the motivations of its leadership. While it's possible that Ford is responding to external pressures, it's worth considering whether this shift aligns with its long-term financial interests.

Research from On Wheels Inc. provides compelling evidence that DE&I initiatives can have a significant positive impact on the automotive industry. Numerous studies have found a direct correlation between increased DE&I efforts and higher new-vehicle sales volume.

Studies by the Harvard Business Review cited the "benefits of diverse teams, including increased creativity, problem-solving, and decision-making.

Key factors that contribute to the positive correlation between DEI and profits include:

• Increased innovation: Diverse teams bring different perspectives and experiences to the table, leading to more creative solutions and innovative products or services.
• Improved employee engagement and retention: When employees feel valued and included, they are more likely to be engaged and committed to their work, leading to higher productivity and lower turnover.
• Enhanced reputation and brand image: Companies with strong DE&I reputations are often seen as more attractive to customers, investors and talent.
• Better decision-making: Diverse teams are more likely to consider a wider range of perspectives, leading to more informed and effective decision-making.

Corporate DE&I policies can increase profits by reaching diverse customers. Companies with diverse executive teams are more likely to outperform their competitors financially. They are better positioned to understand and serve diverse customer bases, leading to increased customer satisfaction and loyalty. This results in higher revenue and customer lifetime value through repeat business and new customer acquisition. Additionally, diverse companies are 70 percent more likely to capture new markets, further enhancing their financial performance.

Several companies have successfully increased revenue through DE&I initiatives:

• Slack: Implemented programs such as "The Next Chapter" and "Rising Tides" to support diverse talent, contributing to innovation and growth.
• Microsoft: Ranked first for diversity, with initiatives addressing inequalities and enhancing career opportunities for minorities, boosting innovation and revenue.
• Accenture: Focuses on gender equality, LGBTQ+ support, and racial diversity, showing economic benefits from a diverse workforce.
• Sodexo: Achieved a 23 percent increase in gross profit with gender-balanced leadership, enhancing employee engagement and brand image.

Conservative vilification of DE&I is often seen as political rather than factual. Critics argue that DE&I initiatives are costly and divisive, accusing them of promoting reverse discrimination and stifling conservative viewpoints. However, DE&I efforts are designed to address inequities and enhance organizational culture by fostering inclusivity and fairness. Companies recognize the need to reach growing multicultural markets, as diverse teams can drive innovation and better serve diverse customer bases, ultimately benefiting the bottom line.

As Ford navigates this evolving landscape, it's crucial to consider the long-term implications of its decisions. A return to a pragmatic approach that prioritizes the business case for DE&I could not only enhance the company's financial performance but also solidify its reputation as a leader in social progress.