The end of affirmative action at colleges poses new challenges, and risks, in corporate hiring

Even before the Supreme Court’s ruling on affirmative action policies in college admissions, the nation’s top business leaders expressed concern over how the decision could affect their own diversity goals and hiring practices. 

Major companies, including Apple, General Electric, Google, Salesforce and Starbucks, argued “racial and ethnic diversity enhance business performance” and filed a brief in support of Harvard University and the University of North Carolina, the two schools at the center of the case, reaffirming the importance of student-body diversity on college campuses.  

The businesses said they “depend on universities to recruit, admit, and train highly qualified, racially and ethnically diverse students to become the employees and business leaders of the future.”  

Now that the Supreme Court has struck down race-conscious admissions, employers could face challenges in how they find diverse talent. While the ruling is focused on university admissions and does not mandate changes by employers, experts say it is still likely to affect hiring and retention practices. On top of that, the ruling could create legal uncertainty for businesses that promote diversity in their recruitment practices.

And while it’s unclear what formal legal implications, if any, the ruling could eventually have for corporate practices, some Republican officials have argued the basis for the decision could apply to employers’ diversity hiring efforts.

A group of 13 Republican attorneys general suggested in the wake of the ruling that companies’ diversity, equity and inclusion, or DEI, programs could be considered unlawful discrimination. Several Democratic AGs later pushed back on that interpretation, saying it was wrong.

The court’s decision “will likely hamper the efforts of colleges and universities to enroll diverse student bodies, and I think unfortunately, narrow the pipeline that employers have relied on in the past to identify candidates for a diverse and inclusive workforce,” said Jocelyn Samuels, vice chair of the bipartisan Equal Employment Opportunity Commission.

In the wake of the ruling, many fear universities could become less reliable sources from which to recruit diverse talent.

“It will shrink the diverse talent pool for hiring, advancement and leadership, and it could set a precedent for challenges to workplace diversity initiatives,” according to Lorraine Hariton, president and CEO of global nonprofit firm Catalyst.

“That will be the first and immediate consequence,” said Donald Harris, associate dean and equity, diversity and inclusion liaison at Temple University School of Law.

Real-world examples already back up that prediction.

After the University of California eliminated affirmative action in 1996, the share of underrepresented groups fell 12% in the years that followed. When the University of Michigan banned race-conscious admissions, Black undergraduate enrollment at the school dropped nearly by half from 2006 to 2021, according to the Urban Institute. 

“Employers are not going to be able to recruit the same diverse employees if they rely on the same methods,” said Stacy Hawkins, a vice dean of law at Rutgers University.

Companies can still find ways to fulfill DEI commitments, according to Kim Waller, senior client partner at recruiting firm Korn Ferry’s organizational strategy and DEI practices arm.

Businesses can emphasize training and promoting internal talent for more senior roles, she said, rather than turning to more traditional hiring pools such as universities, since current employees already know the culture and the organization. Some companies are looking at investing in internship programs, she added.

However, Waller noted that demographic changes could bring a shift to the makeup of colleges, as more than half of the U.S. population under age 16 is nonwhite or Hispanic, according to the U.S. Census Bureau.

“When you think about the demographics shift … there’s a talent pool that’s going to be educated,” Waller said. “The only question is where.” 

Business leaders also fear that restrictions on college admissions will ultimately have a negative effect on how the U.S. fares on the global stage.

Ahmad Thomas, CEO of the Silicon Valley Leadership Group, a business association that was part of the amicus brief in support of upholding affirmative action, said the Supreme Court’s decision “undermines business competitiveness at a time of significant economic volatility and broader societal discord.” 

Thomas worries that the prospect of less diverse higher education institutions will be a competitive disadvantage to the U.S., because he says strong diversity and inclusion efforts drive business outcomes. He fears it will have a chilling effect on high school students from marginalized backgrounds who might have considered applying for science, technology, engineering and mathematics, or STEM, programs, but now feel they may receive less consideration from top schools.  

“I think it is incumbent upon our educational institutions to continue to find ways to holistically evaluate applicants,” Thomas said. “Because if we are not able to continue to uplift and drive equitable outcomes in our classrooms, our pool of diverse STEM talent, it’s not going to be trending in the direction it needs to and that is a significant concern for me.” 

And despite recent strides in diversity, many minorities are still underrepresented, particularly at the top of organizations.

For example, board directorships filled by Black candidates increased more than 90% from January 2019 to January 2023, reaching 2,190 seats. That represents just 8.3% of board positions, according to data from ISS Corporate Solutions, a corporate governance advisory firm, which studied 3,000 companies.

To deal with the prospect of a less diverse talent pipeline from elite universities, businesses may need to get more creative about how they recruit new workers to maintain their diversity hiring initiatives.

“We’ve been urging companies to change their recruitment efforts for years,” said Alvin Tillery, a political science professor and director of Northwestern’s Center for the Study of Diversity and Democracy.  

Hiring managers should ramp up recruitment efforts at historically Black colleges and universities, or HBCUs, and other minority-serving institutions, as well as large state universities, he said. 

“The pathway to CEO is not necessarily an elite university,” Tillery said. 

Other approaches may include partnerships between businesses and universities that help develop students from diverse backgrounds.

“I think companies would be wise to identify those institutions that do a good job and partner with them,” said Carey Thompson, Gettysburg College’s vice president for enrollment and educational services. “I see that as a plus in a self-interested sort of way, but I also think it’s good for higher education.” 

Adam Kovacevich, founder and CEO of center-left tech industry coalition Chamber of Progress, predicted that companies may have to consider looking at a wider swath of colleges and other career prep paths that they might not have focused on before. 

“It may prompt many companies to reassess their biases about which schools they recruit from,” said Kovacevich, whose group counts Apple, Google and Meta among its partners. “Recruiting from universities that have had affirmative action admissions policies has been kind of almost a shortcut for companies.” 

Thomas, of the Silicon Valley Leadership Group, suggested that the development of a diverse talent pipeline might include investing earlier on in children’s education in disadvantaged communities, at the grade school or high school level, or creating partnerships with HBCUs and community colleges with paths to the workforce. 

But he also made clear he doesn’t consider the need for new approaches to be a silver lining. 

“I think this is an opportunity where the ability of government to drive positive impact is limited. So in the sense that our private sector has an opportunity to do the right thing and set a direction and course for society, that responsibility we take extremely seriously,” Thomas said. “But in no way do I believe that’s a silver lining — that it’s incumbent upon the private sector to do the right thing here.”  

Despite decades of pushing for equality, both women and racial minorities still fall far short in terms of representation and pay compared with their white male colleagues, according to the Economic Policy Institute.

Increasing diversity in workplaces became a bigger corporate priority for many companies following the murder of George Floyd in May 2020.

At the time, the nation’s largest corporations in the Russell 1000 announced far-reaching initiatives to promote more diversity, equity and inclusion within their ranks, pledging more than $50 billion to these advancement programs. 

However, during the last year there has been a “step back” in terms of diversity hiring, said Reyhan Ayas, a senior economist at Revelio Labs, a workforce data and analytics firm. “There’s a big difference between having DEI officers and having diverse hires,” she said, adding that it will likely take several years to know the full impact on hiring of the Supreme Court admissions ruling.

“This work is cyclical,” said Northwestern’s Tillery. “It’s boom or bust, and we are heading to a period in our culture where if you don’t do this work, it’s permanent bust.” 

In statements following the ruling, companies including Amazon, Airbnb, Google, Microsoft and Salesforce reaffirmed their commitments to diversity and inclusion in their workforces. 

Both Kovacevich and Thomas said businesses still have a strong incentive to increase diversity in their ranks — noting it’s both the right thing to do and good for business.

“At this point, companies are not going to turn back on their commitment to diverse hiring pools, diverse candidate pools, and their belief that generally having a diverse workforce is a good thing and it helps them be more in tune with a diverse customer base,” said Kovacevich.

“There’s a business imperative here to transform Silicon Valley companies and to, I believe, catalyze change across the entire business landscape of our nation,” said Thomas. “There’s an opportunity that our companies are taking very seriously to be that beacon, not just from a business competitive standpoint, but, I also believe, from a moral imperative standpoint.” 

Some businesses, however, could find their hiring practices suddenly under new scrutiny. 

Although the equal protection clause embodied in Title VI of the Civil Rights Act doesn’t apply to private employers, “there will undoubtedly be lawsuits attacking private firms’ efforts with diversity,” said Temple’s Harris.

“This case is just the beginning,” Harris said. ”If you are an employer highlighting your diversity efforts, are you putting a target on your back?”