Business Law Section Blog: Creating a Corporate Culture of Diversity and Inclusion in the #MeToo Era:

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  • Business Law Section Blog
    May
    28
    2019

    Creating a Corporate Culture of Diversity and Inclusion in the #MeToo Era

    Nadelle E. Grossman

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    Companies increasingly face lawsuits, organizational distrust, and reputational loss as women speak out about discrimination in the workplace. Nadelle Grossman discusses some of the latest high-profile discrimination cases, and offers tips for companies to be proactive in creating cultures of inclusion and fairness.

    This is the story of the mistreatment of women at Nike, according to several former Nike employees in their 2018 complaint filed against the company: 

    “At Nike, the numbers tell a story of a company where women are devalued and demeaned. For many women at Nike, the company hierarchy is an unclimbable pyramid – the more senior the job title, the smaller the percentage of women. The inequity for women at Nike starts before they do, with decisions about starting pay.
    But the story is not just about numbers. Women’s career trajectories are blunted because they are marginalized and passed over for promotions. Nike judges women more harshly than men, which means lower salaries, smaller bonuses, and fewer stock options. Women’s complaints to human resources about discrimination and harassment, including sexual assault, are ignored or mishandled. Male bad behavior is rarely penalized. For a woman to succeed at Nike, she must far outshine her male counterparts.”1

    In the complaint, the former employees allege that they were paid less than their male counterparts. One of the claimed reasons for lower pay was a policy of basing starting pay on prior compensation, in light of the fact that women have historically been underpaid. The plaintiffs also alleged that Nike’s forced annual ranking system led women to receive lower ratings than their male colleagues, which also led to women receiving less compensation.

    In addition, under Nike’s organizational talent planning system, a disproportionately low number of women were identified for promotion opportunities. It appears that Nike had a pattern of channeling women into jobs with low potential for advancement. Women were denied fair opportunities for promotion through these organizational processes.

    Nadelle Grossman Nadelle Grossman, Tulane 1999, is a professor of law at Marquette University Law School in Milwaukee, where she writes and teaches in the areas of contracts, corporate law, corporate governance, and securities law.

    The complaint also lays out how Nike’s human resources department failed to adequately respond to complaints made about these policies and practices as well as specific incidents of sexual harassment. Those complaints were ignored, in large part, because the process was captured by senior executives who, according to a New York Times exposé on the situation at Nike, “protected each other and looked the other way.”2 According to plaintiffs, ignoring the complaints helped reinforce the hostile work environment for women at Nike.

    As things stand now, pretrial, these facts are merely alleged. Yet even allegations of unfair treatment on the basis of gender – or the perception by a broad set of employees of biased treatment due to gender – can lead the court of public opinion to decide that problems exist with a company culture. That is, these alleged facts paint a picture of Nike as a company that failed to foster a corporate culture of inclusion or fairness toward women.

    Not Just One – No Coincidence

    Nike is not the only company facing claims of discrimination on the basis of gender.3

    Walmart is currently facing 19 cases of gender discrimination involving 150 women plaintiffs.4 In one of those cases, seven former employees have alleged that Walmart’s policies and practices led women to be paid less than men.5 In addition, the plaintiffs allege that Walmart has denied women employees equal opportunities for promotion to management and management-track positions.6 In another case against Walmart that hits close to home, the Equal Employment Opportunity Commission has alleged that Walmart discriminated against pregnant women employees who worked at a distribution center in Menomonie by failing to accommodate pregnant women.7

    Law firms are not immune from such discrimination claims. For example, the law firm Jones Day is confronting allegations of gender discrimination by six former female associates, who allege they were underpaid, did not have opportunities for advancement, and eventually forced out upon having children.8

    It is no coincidence that gender discrimination complaints are piling up. In the current era of the #metoo movement, women are finding their voices and speaking up about sexual harassment and unfair treatment on the basis of gender.

    Gaining Momentum

    There are other calls for more gender parity, apart from gender discrimination lawsuits. Proposals calling for disclosure of gender pay gaps are gaining momentum on proxy statements, though so far they have not been receiving majority support.9 California has even begun to require public companies with their principal executive offices in California to have one woman director on the board by the end of 2019, and up to three women directors by the end of 2021. This law was enacted in part to “improve opportunities for women in the workplace.”10

    With #metoo momentum building, it is essential for companies to be proactive in ensuring they have instituted workplaces where all employees are treated fairly and not discriminated against on the basis of gender, race, or other protected class.11 Not only might the failure to do so lead to legal liability, but it can also lead to organizational distrust and reputational damage.

    Becoming Proactive

    To avoid claims of discrimination and harassment, perhaps the most important first step is to create a corporate culture of fairness and inclusion. In other words, employees, customers, suppliers, vendors, investors, and everyone else associated with a business must see fairness and inclusion as the way the company does things.

    Thus, those values must be adhered to at all times, including:

    • when top executives are selected (to determine if they value inclusiveness and fairness);

    • when executives communicate with employees and others (to ensure they acknowledge and demonstrate a value on diversity, inclusiveness, and fairness);

    • when directors are selected (to ensure the nominating committee considers the benefits of having people of different skills, backgrounds, experiences, and perspectives on the board);

    • when internal policies are adopted and enforced (to ensure they avoid unintentionally compounding past discrimination and affirmatively support inclusion and fairness);

    • when and how employee compensation is set (to ensure inclusiveness and fairness are rewarded);

    • when promotional standards are set (to ensure biases do not impose additional promotional hurdles on some employees);

    • when future leaders are identified (to ensure people of all backgrounds are sponsored and receive equal opportunities for leadership); and

    • when training programs are designed and implemented (to ensure they adequately train employees in how to protect themselves and others from unfair treatment).

    In addition, for the values of inclusion and fairness to truly permeate an organization, there must be confidential processes in place to allow the reporting of departures from those values. Moreover, values expressed through policies must actually and consistently be enforced.

    Fairness and Inclusiveness for All Employees Maximizes Potential

    Only through consistent enforcement will employees of all backgrounds feel that their voice are respected, and trust organizational processes to protect them from any discrimination or harassment that they might suffer.

    It is not easy to set a culture of inclusion and fairness, starting with a tone from the top of intolerance for any discrimination. But that is what companies must do to create a corporate culture that fosters equity and fairness for women and for others.

    Only once a company has that type of corporate culture in place can it maximize the benefits that people of all different backgrounds, skills, life experiences, and perspectives bring to the business, in addition to reducing the risk of litigation on the basis of sexual harassment or discrimination.

    Want more insight into the problems associated with gender diversity in the #metoo era? Attend the Business Law Section’s CLE program, “Corporate Governance in the #MeToo Era – Adding Value by Adding Women,” at 8 a.m. on Friday, June 14, 2019, at the State Bar’s Annual Meeting & Conference in Green Bay.

    Endnotes

    1 Cahill v. Nike, Inc., No. 3:18-cv-01477 (D. OR. 2018), at 3.

    2 Julie Creswell, et al., “At Nike, Revolt Led by Women Leads to Exodus of Male Executives,” The New York Times, April 18, 2018.

    3 While the examples included in this post all relate to discrimination against women, the same discriminatory behaviors can also be directed at others on the gender spectrum, such as transgender individuals. This posting largely focuses on discrimination against women, though many of the suggestions discussed below could also be applied to others on the gender spectrum.

    4 Sue Reisinger, “Walmart Faces New Round of Gender Discrimination Suits Based on 2001 Dukes Complaint,” Corporate Counsel at Law.com, May 14, 2019.

    5 Forbes v. Wal-Mart Stores, Inc., No. 9:17-cv-81225-RLR (S.D. FL. 2017), at 13-17.

    6 Id. at 18-23.

    7 Equal Employment Opportunity Commission v. Wal-Mart Stores East, L.P., No. 18-cv-00783 (W.D. WI.), at 1.

    8 Tiffany Hsu, “Jones Day Law Firm is Sued for Pregnancy and Gender Discrimination by 6 Women,” The New York Times, Apr. 3, 2019.

    9 Sue Reisinger, “Median Gender Pay Proposals So Far Lose Proxy Votes but Gain Momentum,” Corporate Counsel at Law.com, April 25, 2019.

    10 California Senate Bill No. 846, Corporations: boards of directors, Oct. 1, 2018.

    11 The harassment and discrimination women face can often be compounded for women of color.





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