Despite Cutback Fears, 65% of HR Leaders Report Bigger DEI Budgets in 2023

Speculation around the decline of diversity, equity, and inclusion (DEI) programs due to economic conditions has been debunked by a new report. Capterra's DEI Cutbacks Survey of 445 HR leaders found that over half (58%) claim their companies are placing even higher importance on DEI this year than in previous ones. Only 8% of those with a dedicated DEI budget experienced any reductions this year.

"We found an overwhelming sense of resilience among organizations regarding their DEI initiatives," says Brian Westfall, principal HR analyst at Capterra. "The economy not tanking certainly helped, but HR leaders also tell us the affirmative action decision by the Supreme Court definitely played a role. If entry-level workers with college degrees become less diverse, the impetus falls on companies to seek out and hire diverse talent."

In fact, 86% of HR leaders agree that the Supreme Court's decision puts more pressure on employers to improve and monitor DEI. A majority (69%) say their company is investing more money in both DEI training and DEI software this year than it did in 2022, while 67% say they're investing more in dedicated DEI headcount and diversity recruiting resources.

Of the 96% of HR leaders who have dedicated DEI software or HR software with DEI features, a majority say they use their software to administer DEI training modules (55%), track progress towards DEI goals (50%), or manage employee resource groups (50%). But many also use their software to get feedback on their DEI programs or report DEI metrics.

However, only 30% of HR leaders believe that DEI initiatives are secure during an economic downturn, so laying down the foundation for permanency is essential. DEI software and a comprehensive talent management suite have proven to be a valuable investment for HR departments striving to make progress on a variety of DEI goals.

"DEI programs are doing well now, but that doesn't mean they'll stay intact if a recession actually happens," says Westfall. "HR leaders who want to promote DEI need to do the work now to cement their program's standing in the organization and convince executive leadership that DEI investments should be spared from deep spending cuts."

Consistency in communication is crucial when advocating for DEI programs. Over half (53%) of HR leaders whose companies share DEI communications at least once a week through channels like intranets or social media strongly agree that company leadership won't sacrifice DEI in tough times, compared to just 22% of HR leaders who share DEI communications at least once a month.

The full report provides recommendations to help HR leaders secure DEI functions, including maintaining rank-and-file employees, disseminating DEI goals from the top down, and consistently communicating both internally and externally.

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