Tesla's Turning Point: Rethinking DEI & Leadership
Tesla once again made headlines earlier this month for its continued legal struggles related to racial bias and harassment, when the EEOC said in a federal court filing that the lawsuit the agency filed in September 2023 is not duplicative of two other pending racial discrimination cases against Tesla.
For years, Tesla has struggled with high-profile lawsuits related to racial bias and harassment, including several class actions and individual claims by workers alleging the company tolerates racial discrimination and harassment, as well as legal rulings awarding damages to plaintiffs for Tesla's failure to prevent a hostile work environment and racial slurs against employees.
These events track with Tesla’s DEI Aniline scores: since 2021, Tesla’s DEI score has been both relatively low - about 50% below the transportation manufacturing industry average - and on an overall downward trend.
Tesla’s scores are particularly low in several DEI subtopics: race/origin, gender, fairness, and inclusion. On race in particular, Tesla’s score has stayed about 60% below the industry average since 2021.
“I can't believe this is the 21st century in the United States of America and racism is still in existence, even in a visionary company like Tesla." - Employee review
Against this backdrop, Tesla CEO Elon Musk has garnered widespread media attention for his pointed criticism of diversity, equity and inclusion (DEI) programs in the workforce, most recently for his high-profile debate with Mark Cuban.
Musk’s comments suggest a view of DEI defined solely by practices like race-based hiring. But DEI - both as a concept and a practice - is multifaceted, and Aniline’s employee perception data suggests that in practice it has little to do with affirmative action style policies. Instead, companies whose employees report positive DEI experiences also describe a culture of respect and transparency, with opportunities for advancement, effective communication with mechanisms for addressing employee concerns, and leadership that demonstrates genuine care for employees. Aniline's multifaceted scoring matrix encapsulates these sentiments, reflecting the wide variety of employee sentiments around DEI.
Moreover, a detailed analysis of Aniline’s Tesla scores reveals a close relationship between the behavior of the company’s leadership and its employees’ DEI perceptions. This suggests Elon Musk’s public attitude toward DEI may not be doing him any favors among his employees, particularly amid Tesla’s ongoing legal issues.
“Great place to work but the antics of Elon Musk get really old.” - Employee review
Tesla’s low DEI scores not only incur reputational damages for Musk among his employees - they are also likely costing the company in other ways. DEI is a critical driver of a variety of important business outcomes. Diversity and inclusion are correlated with greater profitability and improved financial performance, and more positive DEI experiences are consistently linked to improvement in outcomes such as adaptability, productivity and retention.
DEI & Leadership: Closely Linked
DEI and leadership scores are closely linked.
A time series analysis of Tesla’s DEI and leadership scores shows that one particular aspect of leadership - behavior - drives subsequent changes in its DEI score. In Aniline’s scoring methodology, behavior is defined as how employees perceive attitudes, decisions, and guidance from management personnel.
This means employee perceptions of Tesla leaders’ behavior one month significantly impacted subsequent DEI scores the next month. This analysis suggests that increasingly negative perceptions of leadership behavior at Tesla are subsequently pulling its DEI score down.
Indeed, according to Aniline’s generative AI partner (named Annie), the major DEI-related concerns employees describe at Tesla revolve around actions taken - or in many cases not taken - by leadership. Annie has identified indications of discrimination, particularly towards Black employees, based on reports that leadership does nothing to address racial harassment. With employees reporting a lack of responsiveness and support from Tesla's HR department in addressing diversity and inclusion issues, Annie can make inferences about how this creates a significant barrier for employees facing these issues. Employees also describe instances of favoritism, which Annie correctly identifies as leading to unequal opportunities for advancement.
It stands to reason that different aspects of leadership would impact how employees experience DEI differently across different companies. The Aniline data set enables us to identify specifics at any given organization. Indeed, looking at Tesla’s peer automotive competitors, we find:
At Toyota North America, leadership behavior actually positively impacts subsequent DEI scores, in addition to the trust and executives scores.
At BMW group, trust and vision scores positively impact DEI scores.
At both Ford Motor Company and Rivian, executives and vision scores positively impact DEI scores.
Cultivating Respect: A DEI Blueprint for Tesla
So, what are companies with better scores in DEI and leadership doing right, and what could Tesla’s leadership do to improve its scores? We asked Annie to summarize what top-scoring companies in Tesla’s industry are doing in the areas of leadership and DEI. Here is what she found:
Employee-Centric Management: Employees at top-scoring companies note that their management cares about employee welfare and development, which also boosts morale and job satisfaction metrics in addition to DE&I scores.
Supportive and Inclusive Environment: Based on employee reviews, an inclusive environment emphasizes teamwork, collaboration, and a supportive culture. Employee feedback shows this is built through things like celebrating diversity, employee involvement in decision making, emphasizing teamwork and collaboration, and demonstrating respect for employees through things like flexible work arrangements and prioritizing employee welfare.
Opportunities for Growth: Employees at top scoring companies say their employers provide accessible opportunities for professional growth, training, and development, and that this promotes equity in career advancement.
Effective Communication and Accessibility: Employees at top-scoring companies describe approachable management and effective employee feedback mechanisms, which they say fosters transparency and trust.
Diverse Workforce: Employees at top-scoring companies describe a diverse workforce in terms of nationality, race, ethnicity, age, experience, and cultural backgrounds.
Powered by these big data insights, we asked Annie to identify the main actions Tesla could take to improve DEI outcomes for employees. Annie’s specific recommendations for Tesla align closely with the practices listed above, including:
Create a safe and inclusive workplace culture by implementing policies and procedures to address discrimination and harassment, creating safe mechanisms for employees to voice concerns, and celebrating diversity through events and initiatives.
Increase transparency by including employees in decision making processes, as well as clarifying promotion practices and compensation decisions.
Create opportunities for employees to advance professionally by promoting from within and investing in employees’ professional development.
Develop a comprehensive DEI strategy, including investing in DEI training and regularly reviewing and updating DEI policies.
Equality, Not Exclusion: Tesla's DEI Clarified
Annie's analysis, informed by Aniline's comprehensive employee review data, suggests a pivotal redirection for Tesla leadership’s approach to Diversity, Equity, and Inclusion (DEI). These recommended practices are not about implementing affirmative action or making demographic-based distinctions, but rather about instilling a culture where every employee is treated with equal respect and consideration.
This approach, distilled from the practices of industry leaders, advocates for a universal application of respect and support, irrespective of an employee's background. It emphasizes addressing the individual concerns and needs of all team members, and prioritizing their welfare and professional development.
By adopting these principles, Tesla can foster an environment of inclusivity and growth that benefits every member of the organization equally. This not only aligns with ethical practices, but also drives broader business success. Research indicates that a diverse and inclusive workforce fosters creativity, innovation, and market adaptability, driving improved financial performance. For Tesla, prioritizing DEI could mean unlocking new levels of productivity and competitive advantage, demonstrating that inclusivity can truly be a catalyst for corporate excellence.
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