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What Makes a Company More Likely to Protect LGBT Rights?

Matt Palmquist

Matt Palmquist is a freelance business journalist based in Oakland, Calif.

 

Bottom Line: Attracting new employees and doing right by its current workforce aren’t the only factors that lead a company to adopt LGBT-friendly HR policies.

During the past year, the debate over whether certain workplace rights should be guaranteed to lesbian, gay, bisexual, and transgender (LGBT) employees has moved from the court of public opinion to the U.S. Supreme Court. Most equal-opportunity laws at both the federal and state levels fail to address LGBT discrimination. The state governments of Indiana and Louisiana, among others, have generated a media firestorm with their attempts to limit businesses’ responsibilities to LGBT employees.

Taking matters into their own hands, a diverse range of major corporations — including giants Apple and Walmart — have started voluntarily providing benefits for domestic partners and introducing other policies that specifically address the rights of LGBT employees. These moves have been praised as socially responsible and good for business. Indeed, recent research suggests that companies implementing LGBT-friendly policies see positive effects on their stock returns and attract a wider range of qualified employees.

But attracting new employees and doing right by its current workforce aren’t the only factors that lead a company to adopt LGBT-friendly HR policies, according to a new study of Fortune 1000 firms. The authors analyzed corporate data alongside annual reports from the Human Rights Campaign’s Corporate Equality Index. The authors also gathered information about whether states housing the firms’ headquarters had laws on the books by late 2012 that focused on 12 LGBT-friendly policies, including hospital visitation privileges for same-sex partners, adoption and marriage rights, and workplace antidiscrimination regulations.

Surprisingly, the sexual orientation of employees within an industry had no noticeable influence on corporate policy. The inducement for change seemingly derived more from external sources.

Firms that were headquartered in states with progressive gay rights laws tended to extend more safeguards to their LGBT employees. And this pattern applied to companies that had enacted policies from the early 2000s onward — they didn’t jump ahead of legislation, but they consistently reacted when prompted to do so by changing laws, evidence that the shifting political environment regularly influences the stance taken by leading firms on cultural and social issues.

Companies with more women on their board were also more likely to enact LGBT-friendly standards, and the influence of these women has grown over the past decade or so. As female directors’ tenure increases, so does their eagerness to advocate for progressive HR policies, the authors write.

Companies with more women on their boards were more likely to enact LGBT-friendly standards.

Finally, firms whose industry competitors had enacted LGBT-friendly practices tended to follow suit. Presumably wary of the costs and potential contentiousness of the new policy, these companies often waited until a few rivals acted or until so many competitors followed suit that they had to change their stance or risk being left behind.

Source: “Predictors of the Adoption of LGBT-Friendly HR Policies,” by Benjamin Everly (University of Sussex) and Joshua Schwarz (Miami University), Human Resource Management, Mar./Apr. 2015, vol. 54, no. 2

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What Makes a Company More Likely to Protect LGBT Rights?