As conversations around diversity, equity, and inclusion (DEI) shift in the corporate world, small businesses face new challenges and opportunities. The recent decision by Google and Home Depot to withdraw sponsorship from Toronto’s Pride parade—just before Pride Month—highlights a growing trend: major organizations are re-evaluating their public commitments to DEI initiatives. For small businesses, this changing landscape brings both risks and the need for renewed focus on core values and cultural fluency.
The Ripple Effect of Corporate DEI Rollbacks
When large companies pull back from high-profile DEI events, it sends a signal throughout the business community. Smaller organizations may feel justified in scaling back their own DEI efforts, especially if they’re already stretched for resources. However, HR leaders must recognize that such moves can have lasting negative impacts on employee engagement, innovation, and even profitability.
Pullbacks from DEI are often driven by shifting political climates and external pressures. But for small businesses, deprioritizing DEI can mean missing out on the benefits of a diverse and inclusive workforce—such as improved creativity, better problem-solving, and stronger connections with customers and communities. It may also have implications for attracting young talent that generally tends to be more values driven than financially motivated when seeking employment.
Unique DEI Challenges for Small Businesses
Unlike large corporations, small businesses often lack dedicated DEI budgets or staff. Common hurdles include:
- Limited resources for formal programs or training
- Lack of awareness or understanding of DEI’s business value
- Resistance to change among leadership or staff
- Difficulty attracting diverse talent due to smaller reach
- Inadequate or informal HR policies
Despite these challenges, small businesses can make meaningful progress by integrating DEI into their core business goals, leveraging community partnerships, and prioritizing inclusive hiring and retention practices.
The Imperative of Cultural Fluency
As the conversation shifts from “checking the box” on diversity to creating real impact, cultural fluency becomes a must-have skill for managers and organizations. Cultural fluency is the ability to understand, communicate, and effectively interact with people across cultures and identities. It goes beyond representation; it involves enabling teams to truly benefit from diverse perspectives.
Research shows that organizations with high cultural fluency outperform their peers in innovation, financial results, and employee retention. For small businesses, developing cultural fluency means:
- Providing training for managers on cross-cultural communication
- Encouraging open dialogue about differences and inclusion
- Embedding inclusive practices in everyday operations
- Actively seeking feedback from employees to improve the workplace culture
Why Values-Based Leadership Matters Now
The loss of major sponsors for Pride Toronto is a wake-up call for all organizations. It underscores the importance of values-based leadership—standing by commitments to equity and inclusion, even when it’s not the easy or popular choice. Small businesses, in particular, can differentiate themselves by fostering workplaces where everyone feels seen, heard, and valued.
Conclusion
As attitudes toward DEI evolve, small businesses must decide whether to follow the trend of pullbacks or double down on building inclusive, culturally fluent workplaces. The business case for DEI remains strong, and the risks of disengagement, turnover, and missed opportunities are real. By prioritizing cultural fluency and values-driven leadership, small businesses can not only weather the current climate but also position themselves for long-term success.
Written by: Tiffany Leung, Partner, Consultant