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Why even ‘woke’ companies are turning their backs on HR ‘snake-oil’ sellers

WOKE HR
WOKE HR

Behind office doors, HR departments at some of Britain’s biggest businesses have recently been feeling defensive and on the backfoot.

Increasingly laid at their doors is the blame for allowing toxic identity politics to enter the workplace, and wasting millions of pounds on pointless diversity, equity and inclusion (DEI) schemes.

Pointing the finger are belt-tightening senior leaders scrutinising their returns amid soaring wage bills, with some even feeling betrayed for being shepherded by HR into the vicious culture wars.

Christoffer Ellehuus, the chief executive of workplace training company MindGym, says: “A lot of them are blaming HR for not having reined it in and having had a much clearer business focus about what they were doing.”

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Fuelling this blame game are recent findings that Britain’s diversity drive is “counterproductive” despite businesses spending millions of pounds on ultimately ineffective workplace initiatives.

It was the conclusion of an independent report commissioned by Kemi Badenoch, the Business Secretary, which discovered popular so-called ESG (environmental, social and governance) practices had little to no tangible impact on boosting diversity or reducing prejudice.

Ms Badenoch in March warned British companies against outsourcing or delegating to workplace training consultants with “potentially conflicting incentives” which are ultimately selling “snake oil”.

She told The Times: “There are lots of people who just cook up stuff and say, ‘Oh, I’ve got a course. Why don’t you buy my course?’ ... They’ve been making money out of selling stuff that is not evidence-based.”

Badenoch’s report is damning for HR departments who now face questions from their superiors about why they fell prey to so-called snake oil sellers in the first place.

This includes decisions to roll out divisive training programmes in the wake of the Black Lives Matter movement, designed to spread awareness around unconscious bias, white privilege and gender pronouns.

However, what were sold as quick fixes to create a fairer workplace – in online training sessions as short as 30 minutes – many have discovered to be little more than fashionable fads with damaging consequences.

Lloyds Bank found out the hard way. Earlier this year, the lender was ordered to pay almost £500,000 in compensation after an employment tribunal found a former dyslexic bank manager was wrongly sacked for using the N-word during a discussion about racist language in a training session. The tribunal ruled that Carl Borg-Neal was unfairly dismissed and discriminated against on account of his dyslexia.

A Lloyds spokesman said at the time that it accepted the findings.

Carl Borg-Neal outside a Lloyds Bank branch
Carl Borg-Neal was awarded £500,000 after a tribunal found he was unfairly dismissed by Lloyds Bank - Paul Grover

Verity Creedy, vice-president for product at leadership consultancy DDI, says: “A lot of organisations have learned their lesson. It’s brutal, but even those tick-box exercises cost money.”

The challenge for HR departments has been spotting the DEI snake oil sellers in an increasingly crowded market of management consultants all vying for shrinking budgets.

However, critics argue that HR departments have also forgotten what fuelled the corporate diversity drive in the first place: money. Companies once believed that championing diversity, equity and inclusion was the magic key to unlock higher profits and productivity. Being seen as an inclusive employer would allow them to access broader pools of talent, recruiting employees who reflected the customers they were trying to sell to.

Even this starting point has become increasingly difficult to stand-up.

Researchers have cast doubts on studies by consultancy giant McKinsey which claimed more diverse companies earn higher profits, often cited by consultants to justify increased DEI spending. However, a study in Econ Journal Watch in April found that McKinsey’s lauded studies were based on data that cannot be replicated.

Tanya de Grunwald, who advises companies on HR issues, says: “Employers did a really good job of convincing young people that they genuinely care about them as employees more than they care about the business. That was never true, obviously.”

Experts claim the diversity project quickly suffered from mission creep, hijacked by a new generation of progressive workers pressuring companies to take positions in political debates and complex geopolitical issues, including the Gaza war.

De Grunwald says: “The HR directors have not been quick enough to realise that their head of DEI is actually practising what looks more like their own political activism from within the organisation.”

Some argue this is the consequence of a chilling effect within businesses where employees have been afraid to scrutinise DEI for fear of causing offence or being cancelled. It has seen business leaders, who would demand rigour and scrutiny from any other parts of the business, for years remain silent to avoid being seen as an out-of-touch dinosaur or worse, a bigot.

De Grunwald says: “The sensible people who have reasonable questions have all been silenced, or they’ve just silenced themselves. They’re self-censoring.”

The HR commentator also notes that DEI teams themselves are often not diverse.

De Grunwald argues this results in group-think which feeds through to bad business decisions that alienate customers and the diverse workforce they set out to attract.

Wickes LGBT Brighton Pride carnival float
Wickes finance chief alienated its core customer when he said that trans-critical shoppers were not welcome

DIY giant Wickes, for example, was accused of quickly alienating its core “white van man” customer base who boycotted the company after its finance chief said that trans-critical shoppers are not welcome.

John Lewis was also accused of pushing a “dangerous ideology” onto religious and gender critical employees after launching a magazine for staff which advised parents on how to find breast binders for trans children.

“What they’re doing is sending messages that you can be your whole self as long as yourself looks ‘like this’ and thinks ‘like this’,” says De Grunwald.

Businesses, once eager to spend thousands of pounds on winning DEI accolades and awards, are now quietly backtracking.

MindGym, which uses behavioural science to help FTSE 100 companies improve how they operate, last week noted that bosses are tightening their grip on HR budgets and pulling the “handbrake” on DEI projects.

Octavius Black, chairman and founder of MindGym, said this triggered a revenue slump as US political upheaval perturbed clients.

Supporters of Palestine gather at Harvard University to show their support for Palestinians in Gaza at a rally in Cambridge, Massachusetts
Harvard University students gather to show their support for Palestinians in Gaza - Joseph Prezioso/AFP

He pointed to the US Supreme Court’s ending of affirmative action in college recruitment, Ron DeSantis’s so-called “war on woke” and the backlash that Harvard University and other Ivy League universities faced over their handling of antisemitism on campuses following Hamas’s Oct 7 attacks on Israel.

Black, who attended Eton with former prime minister Lord Cameron, says the HR refocus is happening globally. Zoom, Meta, Tesla, Lyft and X are among the organisations that have responded to the backlash by slashing diversity teams amid efforts by HR departments to reframe DEI around everyday leadership responsibilities.

The result is that external HR consultants will be under pressure to prove to business leaders that their DEI schemes will actually boost sales, performance, employee retention and productivity.

Syano Musyimi, chief executive of HR consultancy firm Ipsus Human Capital, says that unless schemes can be measured then business leaders will quickly lose interest.

He says: “Remember, these are not politicians. These are not heads of our churches or mosques. They’re not here to drive moral values. They’re there to make money and to make their businesses grow.”

Musyimi warns this could see more HR consultants pretend to be more data-driven and simply “repackage” their old offerings with the latest corporate catchphrases and buzzwords. However, DDI’s Creedy believes that Badenoch’s “snake oil” remarks will force consultants to show more integrity and separate themselves from their negligent peers peddling unproven remedies.

MindGym’s Black also believes HR consultants who don’t have the evidence to back up their claims will be sifted from the market. “The data will differentiate the real thing from the fake, from proven versus puff,” he says.