|Forbes, Dec 15, 1997 v160 n13
Damned if you do, damned if you don't.
(plaintiffs' attorneys push 'diversity' training lawsuits)(Industry Overview)
Abstract: Workplace diversity training programs are now a $10 billion
unregulated industry. Companies feel squeezed between a
decline in legal acceptance for affirmative action programs,
lawsuits over past hiring practices, and demands that
company-wide diversity sessions be included in court
Full Text: COPYRIGHT 1997 Forbes Inc.
CHICAGO-BASED printing giant R.R. Donnelley & Sons Co.
is defending itself in a big racial discrimination suit. Among
the evidence in the plaintiffs' file: A black worker was
forced to sit through four showings of a movie depicting
lynchings in the Old South.
"To me, that just sounded disgusting," says H. Candace
Gorman, the Chicago lawyer representing a potential class of
3,500 black Donnelley employees. There was also the
questionnaire that asked for responses to such statements as
"It is a fairly well established fact that blacks have a less
pleasant body odor than white people" and "One of the main
characteristics of Puerto Ricans in the United States is their
sexual looseness and immorality."
The handiwork of a freelance racist in a white hood? Not at
all. Donnelley's sin was that it instituted a companywide
"diversity training" program. The $6.6 billion (1996
revenues) company had established the training as an outgrowth
of the settlement of a previous discrimination lawsuit in
1993. The purpose of the movie showings and the questionnaires
was to make white employees confront their alleged racism.
Multiple jeopardy is just one of the pitfalls of diversity
or "sensitivity" programs, which Training magazine figures are
now used at half of the 136,605 U.S. companies with over 100
employees. By one estimate, $10 billion a year is being
shelled out trying to change attitudes and putatively prepare
these companies for multicultural work forces and
marketplaces. That figure doesn't include the lost time that
employees spend at the sessions.
This full-speed-ahead approach in the private sector occurs
even as the preference regimes known as affirmative action
increasingly meet resistance in the public sector. Many
companies come to this game under duress. It's not enough for
them to shovel out millions of dollars to settle
discrimination or harassment lawsuits or settle with the Equal
Employment Opportunity Commissionor some other federal agency.
More often, the plaintiffs' lawyers also demand that a company
do penance by forcing every employee through some kind of
sensitivity-training program, even tying management's
compensation--or careers--to achieving diversity goals. Bank
of America's head of diversity, Valerie Crane, freely admits
that failure to toe the corporate diversity line contributed
to the ouster of several high-ranking executives. To call this
a reign of terror is in some companies to exaggerate only
"These cases are very important not so much for the money
but also because they change the landscape of the American
work force," brags James Finberg of San Francisco's Lieff,
Cabraser, Heimann &Bernstein. Finberg was co-counsel in a
case where Home Depot had to shell out $65 million to women
who were allegedly denied promotion, plus $22.5 million in
attorney fees, and it was ordered to institute diversity training into the bargain. "This
settlement is going to help them get better people in sales
and management positions, which means they will have higher
revenues and less turnover." Thank you, Mr. Finberg, for your
Home Depot isn't commenting on the settlement, other than
to deny any wrongdoing. And even though the lawsuits were
filed against the company's West Coast division, the
plaintiffs' lawyers are forcing diversity training on the entire company. Many of
Home Depot's managers have already been through diversity training. The lawyers twisted that fact
around to imply that management should have known better
before allegedly discriminating.
Washington, D.C.'s Cohen, Milstein, Hausfeld &Toll were
co-lead plaintiffs' attorneys in the $176 million settlement
imposed on Texaco last year. That firm's Cyrus Mehri brags:
"What we're trying to do is change the corporate culture to
make it much more open for people of different backgrounds so
there is a fair and objective career development system that
benefits all employees at Texaco." It has done so in part by
forcing people who have already undergone "sensitivity
training" to undergo much more of it.
Emboldened by its success at Texaco, Mehri's firm is going
after others in the oil industry. "These guys have a cowboy
mentality when it comes to civil rights laws, and they've been
off the hook," Mehri proclaims, warming up to the task.
Corporate America isn't afraid of the Equal Employment
Opportunity Commission, he says. "With some exceptions, this
has been an area that has been grossly unenforced. There's
been a lot of people bringing individual suits, but they don't
really get at the corporate culture."
The EEOC itself, through which many discrimination cases
pass before they are pursued in the courts, says it has no
policy forcing diversity training in settlements with corporate
violators. But corporate defense lawyers say they're seeing it
more frequently. Merril Mironer, head of labor and employment
practices at New York's Rosenman &Colin, says he's
negotiating a settlement with the EEOC in a disability bias
case in which the agency is demanding sensitivity training as
well as cash to the employee. "The EEOC is very big on that,"
"It used to be they wanted money and maybe you'd consider
whether to place the individual in the next job vacancy. Now
they're into this training business. That's their newest
thing. They told me they won't agree to a settlement in this
case [unless the employer pays for diversity training]."
All this creates moneymaking opportunities for armies of
quacks. With thousands of consultants calling themselves
diversity trainers, and peddling videos, simulation games,
CD-ROMs and so on, qualifications range all over the place.
There's the Center for Justice & Social Change, a St.
Louis outfit that in addition to providing "cultural diversity
seminars" and instructions on suing your boss also offers a
$24 program on repairing lousy credit. Or the Mawasi Co. of
Akron, Ohio that teaches something called "African Centered
Rites of Passage. "If you'd like to sensitize the homophobics
on your staff, there's Brian McNaught, the "godfather of gay
sensitivity training," or Dave Pallone, a gay former baseball
umpire who lectures on diversity between appearances on the
talk show circuit.
Actors who'd otherwise be working the dinner theater
circuit are cashing in on the diversity racket. Typical is an
Aptos, Calif. troupe called TransFormance Theatre, whose
clients have included Hughes Aircraft, GTE and
Hewlett-Packard. The troupe is run by Jonathan Rosen, a
self-described teacher of transcendental meditation and "wind
energy expert," and its brochure promises that "once you have
glimpsed into the deeper nature of your co-workers, it will be
very difficult to engage in stereotyped behavior toward them."
A marketing manager forced to endure American Express'
diversity training says one exercise involved
continually crossing and uncrossing his arms in an unusual
way, supposedly to teach him about different ways of looking
at things. Costs of this nonsense can range from a few
thousand dollars for a daily training session to $50,000 for a
"cultural audit" of a company.
With 27 years of experience, Elsie Cross is about as close
to an established professional in the field as one gets. Cross
has been working with Johnson &Johnson for over 10 years
now, and with Corning for some 12 years--and is only halfway
through. The firm starts by scrutinizing data on employee
retention, jobs held by minorities and women and whether
they're in the "profitmaking part of the corporation." There
are also surveys of minorities and women on their perceptions
of how they're "treated" by the company.
"The people in the organization need to be educated about
the stereotypical belief that if we are women or minorities
then we cannot contribute like white males," Cross asserts.
"We want to free white men who now want to work for a
corporation that can deal with work and family issues.
Embedded in the culture of the corporation are rituals that
perpetuate sexism, discrimination and racism."
Like many of the practitioners in this field, Cross is a
black woman who says she bumped up against institutional
discrimination early in her working career. And what's the
cost of her advice? Don't ask. If you do, she won't tell. We
do know she reportedly charges companies as much as $500,000 a
year. "I don't want to talk about annual revenues," she snaps.
Ironically, much of the nonlegal imperative for seeking out
the diversity industry is based on the misinterpretation of
the Hudson Institute's influential 1987 Workforce 2000 report,
which predicted the increasing presence of women and
minorities in the workplace. This inspired the belief that
women and minorities would soon become the majority. That
wasn't what the report said. It said only that women and
minorities would become an increasing component of the net
inflow of new workers, but that the base would still largely
be white males. In a new follow-up report, Workforce 2020, the
authors regret the "diversity entrepreneurs" who exploited the
But what's the harm? Plenty. So much diversity training has gone awry that there's now a
cottage industry of trainers who go into companies to mop up
the messes created by other diversity trainers. Seattle
consultants Hellen Hemphill and Ray Haines have parlayed the
dissatisfaction into a book, Discrimination, Harassment, and
the Failure of Diversity Training, and a new business of fixing
the mistakes caused by others.
"There's a large amount of backlash related to diversity training," says Haines. "It stirs up a
lot of hostility, anguish and resentment but doesn't give
people tools to deal with [the backlash]. You have people come
in and talk about their specific ax to grind."
Stephen Paskoff's Atlanta firm, Employment Learning
Innovations, has been called in on diversity-training mop-up missions. He believes
training should focus on rules of civil behavior rather than
trying to change people's beliefs. In other words, people who
violate existing rules don't need their heads checked; they
need to be told that they're breaking laws, however much they
disagree with them. "The underlying, factual allegations that
add fire to these lawsuits are behaviors that are out of
control in the workplace," he says. "What we do is identify
the kinds of behaviors the laws are designed to manage and
focus on that without a lot of social theory."
A few courageous companies have told the diversity industry
to stuff it. One was the politically incorrect Hooters
restaurant chain, with its well-endowed waitresses and their
cheeky assets. The EEOC butted in even before discrimination
complaints were filed by men seeking to become "Hooters
girls." In 1995 the bureaucrats demanded the chain contribute
$22 million to a fund to be distributed to male "victims" of
Hooters' hiring policies and provide training to teach
employees "how to be more sensitive to men's needs."
The company fought back with ridicule, says Michael McNeil
of Hooters. The EEOC backed off, but Hooters still had to fork
over $3.75 million in damages and attorneys' fees to the
plaintiffs--four years after the suit was filed. At least it
avoided getting into the mess Donnelley finds itself in:
Damned if it doesn't, damned because it did. Says Michael
Delikat, head of the employment law department of New York's
Orrick, Herrington &Sutcliffe: "There's not much quality
control out there in terms of diversity consultants. It's not
like you need a degree or there's a board of standards. A lot
of people who claim to be diversity consultants don't really
know what they're doing. They can come in and create a problem
or provide a catalyst for problems that coalesce in a
lawsuit." Just ask the chagrined folks at Donnelley.