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Four Reasons Smart Companies Work toward LGBT Inclusiveness


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By Melissa J. Anderson

According to a new report released by the Center for American Progress, workplace discrimination costs US companies $64 billion a year – and, it suggests, a hefty portion of that is to do LGBT discrimination.

The report, The Costly Business of Discrimination, cites a 2011 study by the National center for transgender Equality and the National Gay and Lesbian task Force, which says 42 percent of gay individuals say they have experienced some form of employment discrimination, and that transgender workers experience even more. In fact, the CAP report says, “they had experienced an adverse job outcome such as being fired, denied employment, or not receiving a deserved promotion because of their gender identity.”

And lost workers are costly to employers for a number of reasons, the report says – being branded as a company that harbors LGBT discrimination can do a lot of damage. Here’s why smart firms work to build inclusiveness.

1.  Losing Workers is Expensive

Even on the individual level, if an employee leaves a company due to discrimination or an uncomfortable environment, it can cost that company a lot.

In fact, one employee can cost upwards of $200,000 to replace, particularly if they are high performers. The report says, “to replace a departing employee costs somewhere between $5,000 and $10,000 for an hourly worker, and between $75,000 and $211,000 for an executive making $100,000 a year,” according to a study by Gail Robinson and Kathleen Dechant in Academy of Management Perspectives.

2. Inclusive Firms Attract the Best Employees

When a company gains a reputation for having an environment hostile to LGBT workers, it becomes harder for that company to recruit and attract quality talent.  “Understandably victims of employment discrimination will discourage others from seeking employment with the offending employer,” says the report.

New workers are less likely to seek out a firm as an employer of choice, and will be drawn to companies that have an inclusive culture, giving those companies the competitive edge.

3. Discrimination Harms Productivity

Citing a study by Benjamin A. Everly, Margaret J. Shih, and Geoffrey C. Ho in the Journal of Experimental Social Psychology, the report suggests that, LGBT discrimination causes productivity to decrease for LGBT and straight employees. It says:

“Controlled experiments have shown that hostile work environments for gay and transgender workers can also impact the productivity of their straight and nontransgender counterparts as well. When gay and transgender workers are unable to bring their full selves to work due to a discriminatory work environment, it is likely that the job performance of their straight and nontransgender peers also significantly suffers.”

At a time of economic uncertainty, companies can’t afford to harbor discrimination, it adds. “America’s economic crisis is aggravated when employers allow personal prejudice to trump their businesses’ financial interests.”

4. Loss of Market Share

Finally, the report points out, companies can’t afford to lose LGBT customers and their straight allies.

“Gay and transgender individuals have a cumulative buying power of nearly $1 trillion. In 2007 gay consumers spent $660 billion on goods and services. In 2011 that number was projected to rise to $835 billion, a 21 percent increase in just four years. More broadly the gay consumer market has a sizeable footprint worldwide and accounts for 6 percent of all sales across the globe.”

Not only is this demographic loyal to companies that support LGBT issues, it’s also often actively avoids buying from those that don’t. Additionally, the report explains, when companies don’t employ LGBT individuals  or value their contributions, they lack the expertise necessary to tap into this lucrative market successfully.

By creating inclusive workplaces, companies gain a competitive edge from every angle – saving money, boosting productivity, increasing market share, and attracting and retaining the best people.

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