from INSIGHT BUSINESS published by USC's Center for Management Communication
www.marshallinsight.com © copyright 2006 by USC Marshall School of Business. All Rights Reserved.
by Brent Clermont
ABSTRACT: Stakeholders at major companies would benefit from adding nondiscrimination clauses for sexual orientation to company policy as well as recognizing and providing benefits such as health care for partners in committed gay relationships. Such changes would make companies more profitable, employees more efficient, and ultimately could lead to tolerance and acceptance of homosexuality.
Reverse Directions: Political vs. Corporate Culture
At a time when the United States Federal and State governments are attempting to (and largely succeeding at) passing constitutional amendments in support of discrimination by preventing homosexual couples to be married, company leaders have a unique opportunity to move in the opposite direction. And companies have. Today, over “40 percent of the Fortune 500 companies offer health-care benefits to domestic partners,” both homo- and heterosexual (NPR).
While 40 percent marks a good start, much more needs to be done to promote gay rights. What’s best – companies and homosexuals can enter a mutually beneficial relationship where each group stands to gain in its particular interests. Companies stand to profit financially from including pro-gay standards as policy; gays stand to profit by gaining acceptance and tolerance in the workplace. A change which may, in the long run, pave the way for political acceptance and recognition.
Profitability: The Bottom Line
Pro-gay company policies can add to the company’s bottom line. While some businesses, especially those with strong religious influences, may be run with a specific moral agenda in mind, most ultimately operate for profit. Publicly held companies are more dependent than others upon working for profit to insure stockholders’ continued investment and commitment to the company.
Three effects of pro-gay company policy will serve to bolster the bottom line. First, such policy will increase the productivity of homosexuals in the workplace. Whether companies know it or not, like it or not, chances are most businesses have a homosexual on the payroll. The unique issue with homosexuality that differentiates it from racism is that you cannot see someone’s sexuality as you can see someone’s skin color. Therefore, some people may assume all co-workers to be heterosexual, which is unlikely.
Office place research finds that when an employee’s ability to focus is impaired, that ultimately translates into lower productivity and a lower bottom line (Melymuka). For homosexuals in many states, the distraction with the potential to impair focus is the knowledge that they could be fired or held back based on their sexual orientation. A lesbian worker for Eastman Kodak found “closeted gays spend a lot of energy monitoring their own conversations” (Melymuka). Between carefully choosing pronouns and trying to conform stereotypically to one’s gender, time, energy, and focus are being exhausted on tasks other than work. Productivity and the bottom line suffer.
Simply including a clause against discrimination based on sexual orientation in a company’s (most likely already existent) anti-discrimination policy eliminates the concern over job security and unnecessary stress on closeted gays. While not having a written anti-gay discrimination policy does not mean that the company discriminates against homosexuals, having a policy can provide a comfort and further economic benefits to the employees and employer.
A second benefit that pro-gay policy would have on the bottom line is earning the gay dollar, sometimes referred to as the pink dollar. Homosexuals have recently been recognized as a large, previously untargeted group to advertise to and profit off of. In fact, the label DINKs is used to represent gay partners with buying power. DINKs stands for dual-income, no kids – a common situation in many gay relationships. These relationships are compared to a traditional heterosexual couple where the woman takes the fulltime role of supporting her children. Companies benefit to realize that “purchasing decisions are not made in a vacuum. A gay professional will probably choose a product or service by a company that exercises gay-positive corporate citizenship…” (Penteado). A company that provides health care to committed partners and refuses to discriminate based on sexual orientation will easily beat out a company that ignores or has ambiguous policy regarding homosexuals. The Human Rights Campaign website has a feature allowing people to search corporate gay policies in deciding which companies to support.
The third impact a company’s gay policy can have on the bottom line is the potential for a boycott or non-support for companies who do not support their gay employees. An example of such an instance comes from the Pride Foundation, a gay rights group that owns a large share of stock in Wal-Mart (Kershaw). The Pride Foundation met with Wal-Mart requesting that “sexual orientation” be included in its anti-discrimination statement, a change which was ultimately made and partly influenced by that meeting (Kershaw). The potential ramification for Wal-Mart not altering the statement was the loss of a major shareholder. While such a loss would not jeopardize Wal-Mart in the long run, it would have an immediate impact on the bottom line for the store, in addition to generating negative P.R. for the company.
Boycotts also come from consumers who refuse to support companies without explicit support for homosexuals via an anti-discrimination policy and/or other benefits. Again, a boycott may not cause much harm to a company, but it may give other companies that
gays do support a competitive edge, with higher profits and quicker growth. After Colorado passed an anti-gay amendment, a gay-led boycott cost the state $40 million (Porter). A group called Boycott for Equality organized a boycott in October to strategically withhold the gay consumer dollar, which significantly cut down on the $1.4 billion gays contribute to the economy daily (“Equality”). As Eastman Kodak found, having pro-gay policies makes their “products more appealing to the 15 million domestic gay consumers, who tend to be brand-loyal” (Henneman). The gay consumer base will likewise be brand disloyal to anti-gay or indifferent brands.
Better Employees
Companies who provide gay-friendly policies also stand to benefit from better relationships with employees and better employees themselves. As we’ve already seen, such policies can affect productivity in the workplace. Other areas that benefit from support for gay workers are in employee retention, getting the best employees, and generating a supportive, tolerant environment for all workers, not just homosexual ones.
Providing domestic partner health benefits creates a winning situation for both employer and employee. New York City’s weekly paper The Village Voice found this out in 1982 when it became the first company to extend health care to the committed partners of gay employees (Paster). This gesture made employees feel respected, which made them more loyal to the company, increasing the retention rate. Companies that do not provide such benefits risk higher turnover from gay employees who may work for them temporarily until an opening at a company that will provide their partners with benefits becomes available. A company that provides gay benefits forges a relationship with employees, a company that doesn’t is merely a paycheck for workers.
Leaders may be concerned that while there are some economic benefits to providing rights to gay partners, the cost of paying for healthcare for these partners will make such a policy change unviable. It doesn’t. Providing benefits to gay workers’ partners is cheap, “on average adding one to two” percent to employer’s benefit costs with “96 percent of firms…fac[ing] no additional costs” (Francis). Therefore, at almost no financial cost to make the policy changes, companies stand to profit from supporting the homosexual community.
A company’s tolerance policies also affect the quality of the workers they get. For gay workers who have been both with companies that do and do not offer partner benefits, working for a company that does not offer perks like domestic partner health care has become a “deal breaker” (NPR). A statement released by the Kodak Corporation says that “in order to have the best and brightest, they have to create and environment that respects all people, regardless of sexual orientation, race, family structure” (Henneman). Companies should want the best workers, not the most conformed, least controversial, homogenized workforce.
The benefits of a nondiscrimination policy and partner benefits extend to heterosexual employees as well. A reporter found that “even straight employees began asking about the benefits, viewing them as a barometer of a tolerant and open corporate climate, something many were looking for” (NPR). Companies that do not discriminate and provide partner benefits are telling the public that their employees matter to them and will be treated with equality and respect.
Ethical Considerations
While monetary and employee relations are a practical framework around which to build a corporate policy change, moral imperatives can offer further support in shaping policy. Why should one human be valued more than another? Why should a person’s future be determined by a factor unrelated to his or her ability to perform his job? It shouldn’t. Discrimination is unethical, as we have seen repeatedly in our past from the civil to the women’s rights movements—and it does not need to be repeated with gays. Our country is based on a claim that all people are created equal, a directive we should hold to when making decisions such as these.
Anti-gay, Anti-growth: The Cracker Barrel Example
The Cracker Barrel Old Country Store chain provides a case study in the dangers of denying gay rights to employees and openly discriminating against them. Cracker Barrel’s policy was to fire all homosexual employees; the chain’s statement specifically calling for the firing of any employee “whose sexual preferences fail to demonstrate normal heterosexual values” (Oleck).
While the policy discriminating against gays did not have much of an impact in the traditionally conservative south, problems arose as the chain started to push north. Protestors staged sit-ins, investors threatened action against the company, and ultimately the CEO of Cracker Barrel removed the policy discriminating against gays (Oleck).
The Cracker Barrel example goes to show that companies who discriminate against homosexuals openly or behind closed doors may be limiting their future growth.
Conservative Backlash
Another fear companies may have comes from potential conservative responses to pro-gay policy. While the potential for boycotts from pro-gay groups exists for companies that do not offer gay benefits and nondiscrimination to employees, the potential also exists for conservative groups to boycott companies that do support gay rights.
I contend that any such conservative backlash is not only unlikely, but would be short-lived. In 2000, General Motors, Ford, and Chrysler (the “Big Three automakers”) extended health care benefits to same sex partners (NPR). Today, many people are unaware of the Big Three’s pro-gay policy and would not associate the car manufacturers with the change. Companies can make simple changes to their policies that will not negatively affect their business.
Future Progress
Companies should add nondiscrimination clauses for sexual orientation and provide partner benefits. Such a change would upset relatively few people and benefit major stakeholders. Such positive changes will create a better social environment that could lead to greater tolerance and support the common good of human beings, regardless of their sexual orientation.
Works Cited
“Analysis: Companies Offering Benefits to Domestic Partners.” Weekend Edition Sunday. Natl. Public Radio. Washington, D.C. 28 Nov. 2004.
“Equality by Boycott.” The Advocate 28 Sept. 2004: 22.
Francis, David R. “The Dollars and Cents of Gay Marriage.” Christian Science Monitor 30 Aug. 2004.
Henneman, Todd. “Acceptance of Gays, Lesbians is a Big Part of Kodak’s Diversity Picture.” Workforce Management 83.13 (2004): 68-70.
Kershaw, Sarah. “Wal-Mart Sets a New Policy that Protects Gay Workers.” New York Times 2 Jul. 2003, late ed.: A1.
Melymuka, Kathleen. “Sexual Orientation is a Bottom-Line Issue.” Computerworld 35.30 (2001): 36.
Oleck, Joan. “Bad Politics.” Restaurant Business 91.9 (1992): 80-3.
Paster, Howard. “The Federal Marriage Amendment is Bad for Business.” Wall Street Journal 5 Oct. 2004, eastern ed.: B2.
Penteado, Nina. “The Many Shades of Pink.” Marketing 109.40 (2004): 17.
Porter, Jay and David Smith. “Yes, Virginia, There is a Boycott.” The Advocate 20 Jul. 2004: 16.
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