Red Hat parent IBM drops DEI hiring incentive, erases diversity from new annual report
Facing legal challenges and White House pressure, IBM has ditched a corporate policy which considered diversity hiring when calculating executive pay.
In its latest annual report, released this week, the large Triangle employer and owner of the Raleigh software giant Red Hat also stopped using the word “diversity” after including the word multiple times in recent yearly reports.
“It’s important to underscore that diversity is not a metric for compensation,” IBM spokesperson Sarah Minkel told The News & Observer in an email Tuesday.
In early 2021, months removed from the murder of George Floyd and a summer of social justice protests, IBM began sharing overviews of its “diversity, equity and inclusion efforts.” That year, the global technology company also added “a diversity modifier” which influenced executive compensation, crediting managers whose hiring efforts better reflected the diversity of their communities.
But in its 2024 annual report, IBM doesn’t use “diversity” at all. There is no “diversity and inclusion” subsection nor mention of the “diversity modifier.” It is the first time IBM didn’t have “diversity” in its annual report since 2016.
IBM isn’t alone in pivoting from diversity, equity and inclusion language and practice. Since President Donald Trump’s election victory, Bank of America, Goldman Sachs, Amazon, Meta, Target and Walmart are among the corporations to have reserved DEI initiatives.
On his first day in office, Trump signed an executive order ending “diversity, equity, inclusion and accessibility mandates” in the federal government. “We’ve ended the tyranny of so-called diversity, equity and inclusion policies all across the entire federal government,” the president said during his March 4 joint address to Congress. “And, indeed, the private sector and our military. And our country will be woke no longer.”
Like many large tech companies, IBM counts the U.S. government as a client. According to its website, the company has federal contracts with the federal General Services Administration, National Institutes of Health and the U.S. Army.
Headquartered in New York State’s Westchester County, IBM maintains a significant presence in the Triangle. An early tenant of Research Triangle Park, it today is the seventh-largest employer in Durham County (the company declined to share its local headcount). IBM’s Triangle ties deepened in 2019 when it acquired the prominent Raleigh open source software provider Red Hat.
Diversity hiring policies at Red Hat and its parent have come under attack over the past two years. In December 2023, the law firm America First Legal filed a federal civil rights complaint against IBM, the day after a leaked video from 2021 showed IBM CEO Arvind Krishna and Red Hat CEO Paul Cormier describing their efforts to achieving a more racially diverse staff.
America First Legal was headed by Stephen Miller, a Duke University graduate who now serves as Trump’s deputy chief of staff for policy. Then in May, the law firm represented a white former Red Hat employee who sued the Triangle software company, alleging its goals to achieve a more racial and gender diverse workforce contributed to his 2023 layoff. This case is ongoing.
According to the claim, Red Hat aims to have women make up 30% of its global staff and people of color comprise 30% of its U.S. workforce by 2028. According to demographic data on the company’s website, 72.6% of Red Hat’s U.S. staff is white.
‘Just throwing DEI away’
In December, the conservative think tank The Heritage Foundation filed a shareholder resolution challenging IBM’s diversity policies. “IBM ought to be recruiting employees without regard to race, gender, religious beliefs or political affiliation, and empowering its many managers/executives to make decisions regarding recruitment and promotion in the same nondiscriminatory manner,” the resolution read.
As recently as Jan. 29, The Heritage Foundation demanded “greater transparency” from IBM regarding its DEI initiatives.
“IBM has a longstanding commitment to equal opportunity and fostering an inclusive culture,” Minkel said. “Discrimination of any kind has absolutely no place at IBM.”
Political momentum has swung against corporate diversity initiatives since IBM introduced its compensation diversity modifier in 2021. Some DEI proponents don’t know if it’ll swing back.
“I think a lot of companies are just throwing DEI away,” said Yvonne Jackson, founder of the Chapel Hill-based corporate culture consulting firm SocialEDG.
Avoiding this precise three-letter term does not bother Jackson, who said “DEI” has “been sullied.” But she argued something important is lost when employers don’t acknowledge their workers’ differences.
“The more that their identity essentially is totally ignored, that’s going to have an impact on your company,” she said. “And down the line, what does that impact? It impacts money.”
NC Reality Check is an N&O series holding those in power accountable and shining a light on public issues that affect the Triangle or North Carolina. Have a suggestion for a future story? Email realitycheck@newsobserver.com
This story was originally published March 12, 2025 at 12:48 PM.
