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WORKPLACE: Summer 2005
Inclusive Policies are Good for Business, Microsoft Makes the Case Published, Summer 2005 What happens when a company steps directly into a social or cultural issue that is considered to be beyond its business purview? As Steve Ballmer, CEO of Microsoft, wrote in an April 22 e-mail to employees: “It’s appropriate to invoke the company’s name on issues of public policy that directly affect our business and our shareholders, but it’s much less clear when it’s appropriate to invoke the company’s name on broader issues that go far beyond the software industry.” Microsoft was asking these questions of itself, unexpectedly facing a hailstorm of disapproval on a non-software issue. Last year, the company issued a statement in support of a Washington State House Bill that would have made it illegal for private employers in Washington to discriminate on the basis of an employee’s sexual orientation. In the 2003-2004 season, the bill was referred to committee, and never voted on by the State Senate. The bill was reintroduced this year, and Microsoft chose to not re-issue its statement. Although Microsoft denied it, it was alleged that a local evangelical preacher had successfully placed pressure on the company to remove its support. Ballmer defended the company’s changed position by explaining that Microsoft had reoriented its policy priorities to be more directly tied to its business interests. He asked an interesting question in his April 22 e-mail: “When should a public company take a position on a broader social issue, and when should it not?” Each company, especially when it’s a leading company like Microsoft, must evaluate which areas of public policy it should be taking active public positions on. Companies regularly and unavoidably make subtle choices that influence important issues, from permitting their CEOs to remain in the all-male Augusta National Golf Club to having different labor and environmental codes depending on their region of operation. Even a company’s annual report that omits social and environmental issues is taking a stance on these topics. Microsoft’s recent experience is an illustration of a company stumbling in its efforts to determine which public policy efforts support corporate priorities and which fall beyond the company’s scope. Sexual Orientation DiscriminationCurrently, the largest American companies far surpass national and state legislation in taking a stand to protect the rights of gay, lesbian, bisexual, and transgender citizens. National LandscapeHarassment and discrimination on the basis of sexual orientation continues to be a real and pervasive problem in the United States and worldwide. According to the FBI’s “Hate Crime Statistics 2003,” of the approximately 7,500 hate crimes reported nationally in that year, 17 percent were based on sexual orientation. Of the 14 listed murders, six were attributed to sexual orientation. The national debate on the definition of marriage has thrown non-traditional families into the legislative and political spotlight. Same-sex marriage is currently allowed in Massachusetts, and six other states provide legal rights for same-sex relationships in some way. Meanwhile, according to the Human Rights Campaign Foundation (HRC), 17 states have modified their constitutions to prohibit same-sex marriage, with similar measures pending in 18 more states. Controversy over same-sex marriage should not be misconstrued as reflecting the broader view on sexual orientation discrimination, however. National public opinion polls consistently find more than three-quarters of the American people support equal rights in the workplace for gay men, lesbians, and bisexuals. For example, in a Gallup poll released in May 2005, 87 percent of respondents favored equal opportunity in employment for gays and lesbians. Sixteen states have laws against sexual orientation discrimination in private employment. An additional 11 have these laws in place to protect state employees. According to HRC, at the end of 2004, 173 states, cities, and counties prohibited discrimination in the private sector. However, Colorado’s governor recently vetoed a non-discrimination bill in his state, and the Washington bill that Microsoft found itself tangled up with failed by one vote. Workplace Environment Corporate policies are in stark contrast to current state and national legislation. Ninety-eight percent of the Fortune 100 and more than 80 percent of the Fortune 500 now include sexual orientation in their nondiscrimination policies. In addition, 83 Fortune 500 companies offer “spousal equivalency” benefits and 69 percent of the Fortune 500 offer domestic partner health benefits. Walden and other shareholders continue to play an active role in encouraging companies to broaden their nondiscrimination policies to prohibit discrimination based on sexual orientation. Walden withdrew resolutions at ALLTEL, Gentex, and Carlisle this year when these companies expanded their policies. Shareholders have undertaken their advocacy work believing that more inclusive workplaces support long-term shareholder value. Employment discrimination on the basis of sexual orientation is likely to diminish employee morale and productivity. Because state, local, and national laws differ with respect to employment discrimination, companies are likely to benefit from a consistent, corporate wide policy. This may enhance efforts to prevent discrimination, resolve complaints internally, and ensure a respectful and supportive atmosphere for all employees. Companies improve their competitive edge by joining those that guarantee equal opportunity for all employees. Clarity at Microsoft Discrimination on the basis of sexual orientation is not just a social issue, but must also be addressed by businesses. Walden wrote to Microsoft questioning its changing public stance shortly after the company’s rescission of support for the Washington bill was made public. And, perhaps swayed by the feedback of employees, investors, and stakeholders, two weeks after Steve Ballmer’s initial e-mail to employees, he sent out another. On May 6, he wrote: After looking at the question from all sides, I’ve concluded that diversity in the workplace is such an important issue for our business that it should be included in our legislative agenda. Since our beginning nearly 30 years ago, Microsoft has had a strong business interest in recruiting and retaining the best and brightest and most diverse workforce possible. I’m proud of Microsoft’s commitment to non-discrimination in our internal policies and benefits, but our policies can’t cover the range of housing, education, financial, and similar services that our people and their partners and families need. Therefore, it’s appropriate for the company to support legislation that will promote and protect diversity in the workplace. What may appear to be a strictly social issue has, upon closer inspection, real effects on business. Side box: Walden’s Nondiscrimination Advocacy Initiatives In the summer 2000 edition of Values, Walden team-member Ken Scott detailed the current state of the workplace for gay, lesbian, and bisexual employees. At that time there were at least 256 companies among the Fortune 500 that prohibited discrimination based on sexual orientation. There are now at least 410 that offer this protection.During the 2005 proxy resolution season, Walden successfully encouraged ALLTEL, Carlisle, and Gentex to broaden their nondiscrimination policies to include sexual orientation. We enjoyed similar successes in recent years with AIG, FedEx, Stryker, and other companies, often through the shareholder resolution process. We have worked to support, and been supported by, the effort and dedication of like-minded organizations such as the New York City Employees Retirement System, Pride Foundation, Trillium Asset Management, Calvert Group, F&C Asset Management, Needmor Fund, Community Church of New York, Unitarian Universalist Service Committee, and Swarthmore College. Together, we have successfully encouraged many companies, such as Wal-Mart, to adopt inclusive nondiscrimination policies. In addition, in recent years, Walden has documented first-time disclosure of inclusive policies at more than 50 companies, most of which are in the Fortune 500. We have shared the results of such efforts with Human Rights Campaign Foundation’s WorkNet team and other online databases. This documentation is important in identifying companies that have not adopted inclusive policies, and in building leverage to encourage such policy changes at companies lacking inclusive policies.
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