By Shirley A. Davis, PhD

Director of Diversity and Inclusion Initiatives
Society for Human Resource Management

As the old saying goes, “all good things come to an end.” In this, the last installment of the series “What Keeps Diversity Professionals Up at Night,” I focus on the subject of legal risks and reputational damage. Over the past year, I’ve outlined a total of ten things that keep diversity professionals up at night. I deliberately positioned this article to conclude my series because of the obvious…if all of the other challenges mentioned in previous articles are addressed and effectively implemented, it minimizes the exposure to litigation and, thus, the reputational damage that follows is decreased.

Until a few years ago, diversity in the workplace was primarily defined by race and gender. However, today diversity is recognized as the collective mixture of differences and similarities, such as individual and organizational characteristics, values, beliefs, experiences, backgrounds, preferences, and behaviors.

This includes the obvious: race, gender, national origin, sexual orientation, age, religion and ethnicity. But it also includes the less obvious characteristics such as family status, military experience, disabilities, socio-economic status, language, thinking styles, education, and much more. This is important, since the Bureau of Labor Statistics estimates that women, immigrants, and people of color now make up 70 percent of new entrants to the workforce.

However, with this shift in talent pool demographics, far too many companies still don’t fully embrace diversity and inclusion in their sourcing, recruitment, development, engagement, and retention strategies, policies, and most importantly, their practices. Often, there’s a disconnect between the company’s policy statements and their actual practices. Take, for example, the number of organizations that continue to appear on ‘best practice’ lists—for diversity, for working women, for Hispanics, for African Americans, etc.—that still experience a tremendous amount of employee disengagement, attrition, dissatisfaction, and complaints. It becomes more obvious why this issue keeps diversity professionals up at night when we look at the number of lawsuits, settlements, and complaints filed and/or settled each year by the EEOC.

As recently as March 2008, the EEOC released a report that revealed that, over the previous 10 years (1997-2007), major race and gender discrimination lawsuits cost U.S. corporations $2.3 billion in settlements alone. According to that same EEOC annual report, in FY2007, there were almost 83,000 claims filed, with:

  • Over 40,000 race-, gender-, and retaliation-related;
  • 19,103 age discrimination claims;
  • 17,734 disability discrimination charge filings;
  • 2,880 religion-based discrimination charge filings.

Lawsuits are time consuming, embarrassing, and a huge distraction to executive/senior leadership. They can be expensive in settlement costs, inside- and outside-counsel fees, and can bring a decline in stock price. They also have other impacts: reputational damage; employee morale; employee productivity; turnover; customer acquisition and retention; and other monetary liabilities. Additionally, settlements in the form of a Consent Decree may also be intrusive. Plaintiffs’ attorneys may request company files, document reviews, routine site visits, and interviews with complainants—sometimes this goes on for years. They involve required training and improvements to job posting processes, recruiting, selection, performance management, compensation, mentoring, career development, and succession planning.

The good news is that, while no one is immune to such lawsuits, there is a lot that can be done to reduce the likelihood of being a target and of having to make a major settlement. It all boils down to creating a strategic diversity and inclusion management plan that is integrated into the business strategy, embraced by senior and middle management, properly communicated and effectively implemented across the organization.

For additional strategies and tips on how to minimize legal risks and reputational damage, and how to build an effective diversity strategy, refer to the previous articles in this series “What Keeps Diversity Professionals Up at Night” or reach out to me at [email protected].

Shirley A. Davis, PhD, is Director of Diversity and Inclusion Initiatives for the Society for Human Resource Management in Alexandria, Virginia. She can be reached at [email protected].