The Impact On Organizations Post Trump's DEI Executive Orders

Forbes

19 hours ago

The Impact On Organizations Post Trump's DEI Executive Orders getty
A major change in U.S. policy is forcing many organizations to rethink their commitment to diversity, equity, and inclusion. In January this year, President Donald Trump signed two executive orders that formally reversed federal DEI mandates. These orders directed agencies to dismantle internal DEI offices, eliminate DEI training programs, and withdraw equity-focused funding, calling such efforts 'discriminatory' and 'ideologically driven.'
For over a decade, DEI has influenced the way teams are built, people are supported, and communities are included in decision-making. It drove innovation, improved team performance, and helped people from overlooked backgrounds feel seen, heard, and included.
Trump's new orders push back against DEI, replacing it with 'merit-based' hiring, raising concern about what's lost in the process. The shift left many teams unsure of how to move forward, especially those who've built their culture around inclusion. Organizations are reassessing policies, directing legal and cultural shifts, and working to preserve inclusive values even as federal priorities move in a different direction.
Trump's move to dismantle DEI efforts began with two executive orders signed within days of taking office, setting off immediate ripple effects across federal agencies and beyond. These orders marked an aggressive reversal of long-standing federal policies , affecting not just government operations but also private contractors who rely on government partnerships.
Executive Order 14151, titled "Ending Radical and Wasteful Government DEI Programs and Preferencing," directed the termination of what it calls "discriminatory programs" going by the name of diversity, equity, and inclusion. The order instructed agencies to shut down DEI offices, cancel equity-centered grants and contracts, and eliminate DEI performance requirements for employees, contractors, and grantees. Federal agencies were given broad mandates to dismantle these programs "to the maximum extent allowed by law."
Executive Order 14173, "Ending Illegal Discrimination and Restoring Merit-Based Opportunity," took a different approach by revoking several prior orders focused on equal employment opportunity and workplace diversity. This order directed agency heads to submit reports by May 20, 2025, identifying "the most egregious and discriminatory DEI practitioners" in their sectors and outlining specific steps to deter DEI programs that might constitute illegal discrimination.
A third order, Executive Order 14281, signed in April, aimed to "eliminate the use of disparate impact liability in all contexts to the maximum degree possible." This targets a legal theory that holds employers liable for policies that disproportionately affect protected groups, even without intentional discrimination.
The administration frames these changes as a return to "merit-based" hiring, arguing that identity-focused practices are discriminatory and unlawful. However, the orders don't define "illegal DEI," creating uncertainty for organizations trying to understand what's permissible. This ambiguity has prompted many companies to scale back or completely eliminate their DEI programs, even as legal challenges to the orders work their way through the courts.
The effects of Trump's executive orders are moving beyond policy changes into measurable workplace outcomes. A July 2025 survey from resume.org , of 965 U.S. companies with active DEI programs before November 2024, reveals the tangible consequences organizations are facing.
The numbers show immediate shifts in hiring and retention patterns. One in five companies has eliminated DEI initiatives entirely, with 74% citing the changed political climate as their primary reason. Among companies that cut programs, 57% report hiring fewer people from underrepresented groups. The decline is particularly pronounced for women of color (37% decrease), LGBTQIA+ candidates (33% decrease), and men of color (33% decrease). By comparison, only 12% reported decreased hiring of white men.
The workplace culture impacts are equally significant. Nearly half of the companies that reduced DEI efforts report declining employee morale, while 36% struggle with retention of diverse talent. Leadership representation has also shifted, with 30% noting fewer people of color in leadership roles and 24% reporting fewer women in leadership positions.
Perhaps most concerning, 18% of organizations report increased incidents of workplace discrimination or bias following DEI program cuts. 25% acknowledge reputational damage, suggesting the changes extend beyond internal operations to external perceptions.
The survey reveals divided opinions among business leaders about these changes. Some view DEI elimination as removing divisive elements, with one respondent noting it "restored a sense of fairness." Others express disappointment, with leaders describing the loss of "safe spaces" and being worried about being "worse off as a company."
These patterns suggest the executive orders have created a ripple effect that extends across public agencies, private companies, nonprofits, and educational institutions. The changes are reshaping not just policies but fundamental aspects of how organizations attract talent, build leadership, and maintain workplace culture.
The executive orders affect government agencies, federal contractors, private companies with federal funding, nonprofits, and educational institutions tied to federal grants. Even organizations without direct contracts are experiencing ripple effects as partners and industry peers adjust policies to comply.
Organizations that eliminated DEI programs report widespread morale issues. Employees who valued these initiatives feel abandoned, making them more likely to seek opportunities elsewhere. Recruitment has become more challenging, particularly with younger workers, while unclear communication about policy changes has damaged internal trust.
Companies that cut DEI programs are losing employees , especially women, black professionals, and other underrepresented groups who prioritize inclusive workplaces. Hiring for these groups has slowed, and fewer younger candidates are applying. Internally, trust has weakened, opportunities feel less equitable, and problem-solving has suffered due to reduced diverse perspectives.
Without DEI initiatives, companies struggle to attract diverse talent. Skilled candidates who value inclusion often bypass employers that don't demonstrate clear commitment to equity, intensifying competition for talent in an already tight market.
Stepping away from DEI can damage both public perception and internal culture. Externally, organizations may appear out of touch, hurting brand image and stakeholder trust. Internally, the absence of DEI structures can allow bias or discrimination to go unchecked, weakening morale and creating unsafe work environments.
Some companies, like Meta and McDonald's, have scaled back DEI programs amid political pressures. Others, including Costco, Apple, and Microsoft, maintain their inclusion commitments. Cutting DEI risks backlash from progressive employees, investors, and customers, while maintaining programs may provoke conservative opposition. Organizations must navigate these competing pressures, particularly as black consumers' buying power is projected to nearly double by 2030, underscoring the business case for inclusion.
The Trump administration's executive orders have created significant uncertainty for organizations across all sectors. Federal agencies are intensifying enforcement of civil rights laws, potentially creating legal risks for companies that maintain DEI programs. This has left businesses facing a difficult decision. Some are dismantling programs to avoid potential scrutiny, while others are maintaining their diversity commitments despite the political shift.
Organizations don't have to navigate these changes blindly. Clear, honest communication with employees and stakeholders helps maintain trust during this transition period. Companies should continue focusing on essential practices like fair hiring, equitable career development, and respectful workplace policies, regardless of what these efforts are called. Legal reviews of existing programs can help identify potential compliance issues while preserving inclusive practices.
The key is balancing political realities with organizational values and goals. Companies that stay committed to inclusion, even if they rebrand their approach, can continue attracting diverse talent and driving innovation. Those that abandon these efforts entirely risk losing valuable employees and damaging relationships with customers and stakeholders who value diversity.
Success requires both flexibility and strategic thinking. Organizations that communicate transparently, review their policies carefully, and maintain inclusive cultures will be better positioned to weather this period of change while keeping the benefits of diverse, engaged teams.