Discrimination: A Last Century Practice That is Bad for Business

Discrimination: A Last Century Practice That is Bad for Business

As we have recently learned from Donald Trump’s brash, insulting, and inaccurate remarks about immigrants, money can buy a lot of things but apparently not manners or tact.  Not even if you are a billionaire!

Trump’s remarks hit a little too close to home. First, my humble immigrant roots rang an alarm. Trump’s remarks are concerning and outdated. Independent of one’s party affiliation and political ambitions, how can someone of such high profile and public image be so last century in his thinking?! Second, my legal training rang an even greater alarm. After all, discrimination at workplaces or places of public accommodations may expose businesses to costly lawsuits when protected categories of employees, potential employees, or the public are involved.

Of course, one’s personal sensibilities regarding discrimination may not be persuasive to everyone. And, antidiscrimination laws are a compliance risk that most businesses manage at least to some extent. Nonetheless, discrimination can be costly to a business for at least the following three reasons:      

  1. Bad performance and negative impact on productivity. Discrimination and hostility in the workplace lowers productivity and prevents employees from performing their job function. It also increases absenteeism, lowers productivity, and diminishes employee motivation, commitment, creativity, and risk-taking.
  2. Talent recruitment and retention. Talented and skilled employees are valuable to employers and come from diverse backgrounds. Thus, hiring based on job-relevant characteristics (as opposed the arbitrary ones) is instrumental for any business to thrive. Moreover, retaining good employees is important for any business’s continued success. A tolerance for discrimination undermines the productivity of a company’s existing work force and leads them to become disengaged, isolated, and looking for work elsewhere. The turnover-related costs of finding replacement candidates alone are just too high.
  3. Alienating consumers and clients increases marketing and communications costs. Consumers and customers often react to a company’s discriminatory practices by taking their business elsewhere. Discriminatory practices will also increase marketing and communications costs as the company tries to retain its market share after the negative publicity associated with an allegation of discrimination.

There are many compelling business reasons for companies and their leaders to shed outdated discriminatory practices. Such practices should not be part of modern business because they negatively affect productivity, talent acquisitions and retention, and customer demand for a product. 

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