Ford has retreated from its DEI goals. But a new study says companies that embrace them are more innovative.

By Bill Peters

The automaker 'remains deeply committed to fostering a safe and inclusive workplace and building a team that leverages diverse perspectives,' CEO says in memo

Days after Lowe's Cos. backed away from its diversity, equity and inclusion plans, Ford Motor Co. said it has done the same over the past year as DEI practices face attacks in court and from conservative activists.

The automaker's decision is the latest corporate move in the fight over DEI, as businesses look to cut costs and defend against legal challenges while advocates try to highlight the benefits of DEI initiatives.

In a memo to employees - the authenticity of which Ford (F) confirmed on Wednesday - the company said that earlier this year, it had stopped participating in external culture surveys like the corporate equality index from the Human Rights Campaign, an LGBTQ+ civil-rights group, and some "best places to work" lists.

The company added that over the past year, it had "evolved" its employee-resource groups to focus on professional development and community service. It also said it would not "use quotas for minority dealerships or suppliers," and would hold off on publicly commenting on the "many polarizing issues of the day."

Ford's message was shared online earlier in the day by Robby Starbuck, an anti-DEI activist and filmmaker, who said he obtained the memo Wednesday morning. Starbuck has put pressure on other companies - including Lowe's (LOW), Tractor Supply Co. (TSCO) and Harley-Davidson Inc. (HOG) - and taken credit after they scaled back their diversity goals.

When asked to comment on whether the company's changes were in response to Starbuck's efforts, a Ford representative told MarketWatch: "The communication to our global employees speaks for itself. We have nothing further to add."

Starbuck, in a social-media post on X earlier Wednesday, said: "We were in the middle of investigating woke policies [at Ford] but this morning Ford confirmed to me that they're making changes.

"This isn't everything we want but it's a great start," Starbuck added in the post. "We're now forcing multi-billion dollar organizations to change their policies without even posting just from fear they have of being the next company that we expose."

Ford Chief Executive Jim Farley said in the memo that the automaker had taken a "fresh look" at its workplace policies within the past year.

"Ford remains deeply committed to fostering a safe and inclusive workplace and building a team that leverages diverse perspectives, backgrounds and thinking styles to craft the best products, services, and experiences for our customers," he said. "We have more work to do to realize this vision."

The Human Rights Campaign condemned Ford's new policies in a statement.

"Ford Motor Company's shortsighted decisions will have long-term consequences," Kelley Robinson, the group's president, said in a statement. "Hastily abandoning efforts that ensure fair, safe, and inclusive work environments is bad for business and leaves Ford's employees and millions of LGBTQ+-allied consumers behind."

Legal challenges to DEI have increased since the Supreme Court last year ended affirmative action in higher education, raising bigger questions over what businesses can do legally to promote diversity. DEI consultants, along with executives and researchers, have argued that diversity makes workplaces, and business results, better - with some experts claiming that companies that have committed to DEI practices over prolongued periods have reaped the benefits.

A new report from business-consulting firm Korn Ferry and the Global Black Economic Forum, which analyzed thousands of public companies, said that "companies see 19% higher innovation revenue and [their] inclusive teams are 75% more likely to execute ideas successfully" when they commit to DEI.

And as more companies embrace artificial intelligence, the report added that technology could play a bigger role in keeping the workplace diverse.

"Companies that employ technology and advanced analytics can seamlessly integrate evidence-based, equity-centered strategies into their culture and values," the report said. "Leveraging artifcial intelligence (AI) and analytics tools can help better track retention, address skill gaps, and promote inclusivity, as well as gauge employee sentiment through the lens of behavioral and structural issues."

Shares of Ford were down 0.5% after hours on Wednesday. The stock is down 9.4% so far this year.

-Bill Peters

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08-28-24 1920ET

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