Sexual Harassment: A Cost You Can Cut
from
Summer 2001
by Mary Stowell
Two landmark sex discrim-ination cases in the late 1990s—one
resulting in a multimillion-dollar series of payouts by Smith Barney in
1997 to settle a class-action suit, followed by Merrill Lynch’s equally
expensive settlement in 1998 over similar charges—sent a clear signal
not only to Wall Street but to all of corporate America that sexual
harassment and discrimination are not OK.
As the plaintiff’s counsel in both cases, I am amazed at how many companies didn’t get the message. Although the details of individual settlements are confidential, the cost to each brokerage firm in terms of legal fees, administration, internal changes, and payouts to plaintiffs easily exceeded $100 million. Despite the financial toll, not to mention the adverse publicity surrounding such cases, corporations are still provoking thousands of discrimination and harassment suits every year. In 2000, for instance, more than 25,000 sexual harassment and discrimination charges were filed with the Equal Employment Opportunity Commission.
To head off expensive litigation and the negative impact it might have on your company’s image, as a board member you would be well advised to take a hard look at your company’s procedures to prevent sexual discrimination and, more important, to find out how well they are being implemented. It is worth noting that most corporations being sued already have in place policies aimed at providing equal opportunity and banning sexual harassment. Ford, Texaco, Home Depot, Mitsubishi Motors, and MetLife, for example, all have such policies—and all have been hit by multimillion-dollar sex discrimination suits within the past few years.
The problem is that in many companies the policies and procedures to prevent discrimination and sexual harassment are not being systematically communicated to the workforce or rigorously enforced by management. Board members need to be more proactive in ensuring that this is done.
How? First, you can encourage the boss to become directly involved by informing all top management that stamping out discrimination is a corporate priority. The CEO should make it clear that implementation and enforcement of sex discrim-ination policies will be considered in the evaluation and compensation review of each manager and division head, and that violators will be penalized or fired. He or she should also remind managers that fairness in the workplace goes beyond the obvious issues of sexual harassment and equal pay for equal work to include more subtle demands, such as equal promotion and training opportunities for women and minorities.
In addition, the CEO or a high-level emissary should be directed to visit every company plant or facility to carry the message of equal opportunity. That person should also do firsthand research, including interviews with female and minority employees at all levels to get their feedback on how well the program is being implemented.
Such efforts can make a difference. Since its settlement, for instance, Smith Barney has made major strides in the area of female equality in the workplace, in part by including as a component of managers’ bonuses their success in recruiting and promoting qualified women.
A recent statistical analysis prepared at the direction of my law firm showed that the percentage of women employees in higher-paying positions at Smith Barney jumped dramatically between 1994 and 1999. During that time the number of women serving as branch managers more than doubled, from 10 to 25.
Even more significant is the rise in the number of female brokers: Women comprised 35% of broker trainees in 1999, up from just 12% in 1994. Smith Barney has learned a lesson that all corporate executives and directors would do well to heed: The best protection against being sued for discrimination is to make certain it doesn’t happen.
Mary Stowell is a partner at Stowell & Friedman, a Chicago law firm.
