HR departments are routinely expected to do more with less, a phenomenon closely tied to the explosion of third-party tools during the past decade.
But for diversity and inclusion work, that outsourced investment may be decreasing, according to HR Dive’s 2023 Identity of HR survey.
The number of respondents who said they use third-party D&I consultants has inched down with each year that the survey has been conducted; in 2023, only 10% of 475 respondents said they used third-party D&I consultants, compared to 13% in 2021 and 12% in 2022.
At the same time, respondents reported an increase in outsourcing tasks related to benefits and staffing.
Investment in D&I consultants dips while HR ups outsourcing for benefits and staffing.
‘Between a rock and a hard place’
The finding reflects a complicated economic environment and, in some cases, wavering DEI progress — but it doesn’t necessarily reflect waning interest, Crystal Styron, senior principal in the Gartner HR practice, told HR Dive.
“The interesting thing is, if you ask organizations if they think DEI is important, they are going to say ‘yes,’” she said. But the “complicated calculus” of managing investor expectations for something like DEI work — for which return on investment is not usually immediate or even fast — could make some organizations wary of missteps in an already harsh environment.
A combination of economic headwinds, political controversy over “quotas” and internal pressure has put many organizations “between a rock and a hard place” regarding DEI investment of any kind, Styron said.
Other studies have also indicated a potential “recession” for diversity work. DEI initiatives are often “the first to go” when costs need to be cut, recruiters told Monster in an early 2023 report, while access to DEI initiatives fell in late 2022, according to Glassdoor analysis.
Another expert previously told HR Dive that DEI is simply “not a priority” for organizations, potentially due to misunderstanding what that work looks like.
Work moves in house
A decline in DEI third-party consultancy investment does not mean companies are dropping initiatives, Styron said. But it doesn’t mean they’re creating high-level, full-time roles and bringing the work in house, either, job listings indicate.
Instead, employers may be thinking of comparatively low-cost ways to approach DEI to meet their employees’ growing demands for better inclusion and expectations from boards that also may be sharply analyzing costs.
“I think on the whole, the trend that we’ve been seeing is that often DEI leaders are being asked to do more with less,” Styron said. “Teams are small. You don’t often see teams of more than a few people. They have to be more creative with what they are doing.”
Anecdotally, Styron reported rising interest in employee resource groups thanks to their reputation as a low-cost way to foster belonging at work. ERGs tend to be employee-driven, but they also signal that the organization cares about its employees having a voice in the business — something that can benefit both groups, experts have said.
ERGs also represent the kind of work employers may need to perform to keep DEI top of mind even amid investment concerns: listening, pathway building and measurement, according to McLean & Co. research.
DEI is integrated into the employee experience, too, which means employers have opportunities to adjust various aspects of the employee lifecycle to make headway on DEI initiatives. They can evaluate recruiting efforts, for example, as well as performance review processes.
“Organizations have to … give a lot of thought as to thinking about their culture, their environment,” Styron said. “What factors have played most heavily into the success or lack thereof of their staff?”
But these still require investments of time that DEI staff may be struggling to maintain. “DEI staff burnout is another huge thing,” Styron said. “It’s really hard to have a continuous strategy when DEI leaders are burning out.”
In other words, the moment a company sees visible success may be the moment the DEI team moves on to greener pastures, sending efforts back to square one. That, on top of political pressures — including a pending U.S. Supreme Court ruling on affirmative action — may prompt employers to pull back on some initiatives, Styron said.
Still, various studies continue to show benefits that result from investing in diversity and inclusion, including better financial metrics — data HR leaders can bring to the table now that HR topics seem to have the attention of corporate boards.