COLE AND DANHOF: Chipotle Makes DEI Move Rife With Negative Consequences

Wikimedia Commons/Public/Mjs92984, CC BY-SA 4.0

Font Size:

Chipotle shareholders in June again voted on pay packages that rewarded executives for meeting DEI goals. But this year, there was a change: following efforts to convince companies to drop the practice, Chipotle switched from rewarding leadership for increasing workforce diversity to rewarding them for reducing turnover of existing minority workers. This may sound like a step towards ending discriminatory employment practices, but it’s actually a big step back.

The goal, in Chipotle’s own words, is to “improve the retention rate of our diverse employee workforce relative to those who are non-diverse.” Note the word “relative.” Chipotle doesn’t simply want to keep minorities around longer; it wants to keep them there longer than their non-minority counterparts.

How do you do that?  Make sure the minorities already at Chipotle don’t leave, get rid of the non-minorities, or both.

Neither is a good look.

We’ll take the second one first: Firing non-minorities. Don’t believe it could happen? Just look at Novant Health, who was sued for this exact reason. The suit notes that, in one group, there were seven white male senior vice presidents in 2018, to two in 2019, to one in 2020, to zero in 2021. Some were fired without explanation, other than coded language that the company wanted more “flair.” “You can’t fire only the white guys,” ran the Wall Street Journal headline after the $3.7 million verdict dropped.

And it’s not the only one. IBM’s Red Hat was sued in May for allegedly firing 21 white males for missing DEI targets. And Disney recently got in hot water after an SVP was recorded saying “there’s no way we’re hiring a white male” for certain jobs.

The common denominator? All three companies tie executive pay to DEI goals geared towards increasing the proportion of diverse workers relative to those who are not. Money, it turns out, is a powerful motivator. And for some Chipotle execs, there’s more than a quarter-million dollars cash on the line.

The Supreme Court has long held such discrimination illegal. In Wygant v. Jackson Board of Education (1986), a school district adopted affirmative action in hiring. But then the layoffs came. To preserve diversity, some white teachers were laid off despite having more seniority. They sued and won.

As one judge explained, it is illegal to “discharge whites and hire blacks until the latter comprise[s] a suitable percentage of the workforce,” even to promote diversity and provide role models to kids. It’s equally illegal when execs do it to line their own pockets.

Trying to “improve” relative retention rates is also problematic. It creates two castes of workers: One favored, one not. When review time comes, who’s more likely to get the praise heaped on, and who’s more likely to get honest, critical feedback? When handing out assignments or promotions or paid time off, who is the boss more likely to disappoint? No rational manager will make a minority employee work Christmas Eve when his own year-end bonus is on the line.

Chipotle’s policy makes one group virtually untouchable. Late to a shift? Refuse to work nights or weekends? The register’s a few dollars short? Will the manager be able to do their job with diversity retention targets lurking in the back of their mind? Certain workers become indispensable for all the wrong reasons.

Such differential treatment is, again, illegal. The Civil Rights Act outlaws discrimination not just in hiring or firing, but in any “terms, conditions, and privileges” of employment — scheduling, promotions, time off, disciplinary write-ups, transfers, mentoring and training programs included. Everyone is supposed to be treated equally. All the time. When they’re not, it creates a toxic work environment for everyone.

But here’s the real kicker: Chipotle’s policy will likely hurt the very people it’s supposed to help.

Put yourself in a hiring manager’s shoes. You have two candidates: One you can fire freely if things don’t work out; another that comes with strings attached, strings that wield powerful leverage. You need to treat this worker delicately. Make sure they’re happy. If they quit, your boss won’t get their bonus and you could be out of a job. Given that choice, which candidate seems more attractive?

It’s time for companies like Chipotle to stop this nonsense. No more racial hiring quotas. Or retention targets. Or executive pay incentives. Then we can all go back to enjoying our barbacoa burritos without the bitter taste of discrimination.

Matt Cole is the CEO of Strive Asset Management, and Justin Danhof is Strive’s Head of Corporate Governance.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller.