Today, age and gender discrimination are evident in the American workplace. Both women and older workers are disproportionately shut out when it comes to hiring decisions, promotions and fair compensation.
Beyond how treatment affects workers, discrimination always has a negative effect on the company where it occurs, in the way of a damaged reputation and ultimately lost revenue. Losses from negative press cost U.S. businesses about $537 billion a year.
The scope of the discrimination problem is fairly acute. In the case of age discrimination, one 2017 study found there was a 30 percent gap in the callback rate between men 29-31 years old and 64-66 years old when applying for a sales position.
For women, the gap expanded to 36 percent. Another study from the Social Security Administration and the National Institute on Aging found among over 2,000 adults over age 50, half were forced to leave their jobs at some point due to layoffs (business closing, job satisfaction or early retirement). Of workers who left their jobs involuntarily, only 10 percent ever found another job at the same level or pay grade.
This is alarming considering that the percentage of the population considered “aging” is rapidly increasing. By 2020, 17 percent of the U.S. population will be over 65. Presumably, as people live longer, they will need to support themselves for longer as well.
When it comes to gender discrimination, according to Pew Research, women are twice as likely as men to have experienced it at work. A McKinsey survey of more than 70,000 employees show entry-level female employees are 18 percent less likely to be promoted. Additionally, only 32 percent of women felt that a diversity of voices was represented in company decision-making, and only 34 percent felt that disrespectful behavior toward women at their companies was often or always addressed quickly.
This continues despite data that shows companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their industry medians.
As noted above, the cost of the reputation hit that ensues once a company is exposed as having discriminated against applicants or employees is substantial. The largest cost can be lawsuits, which can leave the company liable for (in some cases) millions of dollars. However, there are intangibles which can sap the life of a company over time, all because of a few consequential incidences.
For example, Corporate Responsibility Magazine found that 76 percent of job seekers – even if unemployed – are unlikely to accept a job offer from a company with a bad reputation. 50 percent of applicants said they would only accept a job from a company if it came with a significant pay increase. Also, 93 percent of current employees said they would consider leaving their current job to work at a company with a better reputation.
Consider the mammoth costs of employee turnover – which can increase if a company must hire candidates in the face of bad press. One incident in which United Airlines refused to pay for a musician’s guitar that a luggage handler damaged led to a 10 percent decrease in stock value after the man uploaded a song about it on YouTube.
It also may hurt a company like WeWork who’s facing two lawsuits for gender and age discrimination ahead of its potential IPO. The company is already losing money and may inspire wariness in investors in addition potential and current employees.” A similar fast-growth startup with a reputation for discrimination and toxic culture, Uber, can demonstrate its costs to a company’s long-term financial prospects.
So how can companies avoid these pitfalls?
- Review all job descriptions in job postings to make sure they are not “targeted” toward one group or demographic; for instance, many job postings are written in ways that seem more compelling to younger people or a specific gender.
- Institute diversity training and ensure employees are educated about negative impacts of stereotypes. It’s important that employees are aware of potential biases, so they can consciously overcome them.
- Analyze evaluation criteria to verify it is clear, objective and fair. The same rules should always apply to everyone and promotions are awarded based on measurable achievements.
- Be transparent about diversity across age, gender and other categories for hiring practices. Publish breakdowns of this information across employee demographics and salaries to be sure you’re holding yourself accountable.
- Confirm if all discrimination complaints are evaluated seriously and resolved with utmost equity and speed. Employees should be educated about their rights and options if a complaint should arise.
Company value sinks or swims with its reputation, and crisis management is an uphill battle. To stay proactive and profitable, safeguard a healthy and positive company culture with a zero-tolerance policy on discrimination. Talent is the greatest asset and treating your workforce with dignity will pay dividends
Vladimir Sidorenko is Founder and CEO of Performia CIS, an international personnel management consulting company. Created in 2001, they specialize in effective solutions to personnel problems and technology for hiring productive employees and contributing to higher profits for companies. Performia International is headquartered in Stockholm, Sweden and Performia CIS (Commonwealth of Independent States) is located is Moscow, Russia.
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