How the affirmative action ruling impacts corporate America

AboveBoard | Jul 12, 2023

Understand the effects of the latest SCOTUS ruling on business and beyond.

Affirmative action as we know it is over, curbing advancements toward equity and diversity in higher education and corporate America alike.

The latest U.S. Supreme Court ruling in Students for Fair Admissions, Inc. (SFAI) v. President and Fellows of Harvard College and SFAI, Inc. v. University of North Carolina et al. rejected affirmative action, ending decades of race-based affirmative action policies and programs that have helped propel underrepresented groups forward in education and in the workplace.

For more than 50 years, affirmative action has contributed to diversity at colleges and universities and within professional ranks. How are the two linked? American businesses "rely on the nation's schools to educate and train their future workers," prominent American businesses said in a brief to the Supreme Court.

As such, corporations have a vested interest in diversity efforts that advance access and opportunity to all, particularly those who have been historically excluded in certain professions or institutions.

Though the Supreme Court ruling may not directly impact American businesses, it does make them vulnerable to legal challenges in addition to undermining the rationale behind critical diversity, equity, and inclusion policies and programs. 

Ahead, we'll define affirmative action, offer a summary of the SCOTUS affirmative action ruling, and outline the impact of the Supreme Court rulings on businesses and the future of the workplace.

Let's get started.

What is affirmative action?

Affirmative action programs and policies vary widely depending on the organization. Generally speaking, affirmative action can be defined as "a set of procedures designed to eliminate unlawful discrimination among applicants, remedy the results of such prior discrimination, and prevent such discrimination in the future." 

In the context of higher education and the Supreme Court cases at hand, affirmative action refers to race-conscious admissions policies. (Note that racial quotas are specifically prohibited, per Regents of University of California v. Bakke.) Nine states have already banned race-conscious admissions, including California and Michigan, according to the New York Times. As a result, the number of underrepresented students at some of these institutions has plummeted and struggled to recover, possibly indicating how the Supreme Court ruling could impact other colleges and universities. "At highly selective liberal arts colleges, officials expect that the number of Black students could return to levels not seen since the 1960s," the Times reported.

As for corporate America, "employer DEI and affirmative action programs are governed by Title VII and other federal and state employment anti-discrimination laws," according to Bloomberg. Though the SCOTUS affirmative action ruling does not directly apply to businesses, "companies may be indirectly impacted by the decision, including through potential legal challenges to their programs."

Summary of the SCOTUS affirmative action ruling

With roots in the Civil Rights Movement and a 1965 executive order by President Lyndon Johnson, affirmative action—"a management tool designed to ensure equal employment opportunity," per the Code of Federal Regulations—has been especially beneficial to underrepresented groups of people, contributing to upward socioeconomic mobility, reducing intergroup prejudice, and boosting diversity in the professional ranks by way of diverse college campuses. Writing for the 6-3 majority, Chief Justice John G. Roberts Jr. acknowledged such outcomes as "commendable goals" but ultimately found that the colleges' admissions policies "lack sufficiently focused and measurable objectives warranting the use of race, unavoidably employ race in a negative manner, involve racial stereotyping, and lack meaningful endpoints… [and] cannot be reconciled with the guarantees of the Equal Protection Clause" of the Fourteenth Amendment.

Though the Supreme Court struck down affirmative action, it left the door open for applicants to discuss, and for universities to consider, "how race affected the applicant's life, so long as that discussion is concretely tied to a quality of character or unique ability that the particular applicant can contribute to the university."

In the dissenting opinion, Justices Sonia Sotomayor, Elena Kagan, and Ketanji Brown Jackson (who recused herself from the Harvard case due to conflict of interest) assert that the Equal Protection Clause "enshrines a guarantee of racial equality" in a society that "is not, and has never been, colorblind." 

"Although progress has been slow and imperfect, race-conscious college admission policies have advanced the Constitution's guarantee of equality and have promoted Brown's [Brown v. Board of Education] vision of a Nation with more inclusive schools," Sotomayor wrote. 

"Today, this Court stands in the way and rolls back decades of precedent and momentous progress," she wrote. "It holds that race can no longer be used in a limited way in college admissions to achieve such critical benefits. In so holding, the Court cements a superficial role of colorblindness as a constitutional principle in an endemically segregated society where race has always mattered and continues to matter."

How affirmative action benefits business

Next up, we'll dive into the effects rolling back affirmative action may have on corporate America as outlined in a brief submitted to the Supreme Court by dozens of major American businesses like General Electric, Google, and JetBlue Airways. These businesses represent a range of industries, including technology, finance, and healthcare, collectively employing "more than 4 million people worldwide."

Diversity boosts innovation, performance, and profits 

"Diverse workforces improve [their] business performance—and thus strengthen the American and global economies," the corporations wrote. Research has shown the link between diversity and innovation and as these businesses point out, diversity also "improves decision-making by increasing creativity, communication, and accuracy within teams." Ultimately, workforce diversity, specifically racial and ethnic diversity, "is essential to meet client needs, achieve business goals, and strengthen relationships both internally and with the communities" these businesses serve. And one of the main avenues to achieving workplace diversity? Diversity on college and university campuses.

Diverse colleges and universities contribute to diverse pipelines

The need for student body diversity at America's colleges and universities has only grown and will continue to, with affirmative action being one of the tools enabling higher education institutions to expand opportunities to historically underrepresented students, according to members of the National Education Association. America's businesses "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," major businesses wrote in their brief to the Supreme Court.

And diverse student bodies are more than a boon to underrepresented students. All students benefit from exposure to different viewpoints and life experiences; it's these encounters that prepare them to engage and ultimately lead in today's "increasingly global marketplace."

Diversity is bigger than business

Diversity is about more than the bottom line. The benefits of diversity, as well as racial and ethnic diversity, include "an increased ability to understand different perspectives and use that knowledge to think creatively; stronger awareness of the benefits of diverse groups; an increased ability to both join and lead diverse teams; and comfort interacting with diverse constituencies such as customers, suppliers, regulators, managers, teammates, clients, and more." 

Organizations like the American Bar Association and the Association of American Colleges have advocated for race-conscious admissions, saying that such programs or policies contribute to greater diversity within the profession, resulting in better care for patients and clients alike. Research shows that patient outcomes improve when they are treated by healthcare professionals of their own race. And in the legal profession, affirmative action policies offered an advantage to law schools as "a diverse bench and bar are critical to minimizing implicit bias among lawyers and 'inspiring greater public faith in the rule of law,'" the American Bar Association wrote in a brief to the Supreme Court. 

The benefits of diversity in these fields are just two examples of how affirmative action can serve to reduce or eliminate inequities where it matters most.

Drive change from the top with AboveBoard

Without the tool of affirmative action, corporate America will need to be even more intentional about how to advance diversity within its ranks. AboveBoard makes this possible by disrupting the traditional structure of the executive hiring process, enabling seasoned executives to expand their career opportunities and companies to diversify their leadership teams. Our primary focus is offering executive search services that are based in inclusion, transparency, and excellence.

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