Are Lawsuits the Right Way to Achieve Gender Equality in the Workplace?

By Nicki Gilmour, Founder and CEO of The Glass Hammer

Theglasshammer.com is in Norway this week reporting on gender parity and how Norway  is working to achieve critical mass for women in leadership positions. Legislation resulting in quotas has furthered progress there, read us next week to see the full findings. Back on home turf, we have media speculation that a gender discrimination lawsuit against Goldman Sachs may become a class action suit stating that Goldman Sachs promotes all men over all women categorically.

I would like to point out that Goldman Sachs was the first company to back the launch of The Glass Hammer and was also the first large financial firm to create internal women’s advancement programs – including the Returnship and annual events like Brokering Change – Multicultural Women on Wall Street. Let’s not pick one bank to crucify, when it is the industry that needs to re-evaluate its appeal to female talent. Instead, let’s make sure that we give credit to companies who are making progress towards critical mass and fair systems to keep women in the game at a time when we are dwindling in numbers.

I believe that very little can be gained from litigation in the workplace and class action suits were surely invented for a different purpose (think Erin Brockovich). Does it actually change the treatment of women in the workplace? Does it advance the mission of creating a meritocracy? In my opinion, no, it achieves neither of these objectives.

Litigation is not the way to change hearts and minds, as lawsuits are mostly bad for everyone, except lawyers, and the collateral damage runs deep against the individual in their future career. I think the impact is vastly negative, as these types of suits lead managers (the majority of which are men) to hire, develop and promote fewer women. It engenders a feeling of hopelessness, that no matter what they do, they are at risk of being sued. The most interesting aspect of the allegations (read the court document here [PDF]) is that there are at least 4 separate issues. I believe each should be addressed individually and not compressed into the one lawsuit.

Sexual Harassment/abuse should never be placed beside a complaint about unfair pay. Compensation structures, the lack of transparency around fair pay, and performance measurement in regards to promotion are all quite different topics that have nothing to do with one human attacking another.

Solution Number One: Compensation Transparency

Most Wall street firms need to improve their systems around tracking fair pay for equal jobs and consider how performance evaluations can lead to unconscious bias for recommending promotional tracks. The recent Catalyst report, Women’s Earnings and Income [PDF], reveals that women, on average, earn about 77% of what men earn. Female MBAs start a step behind on the pay scale earning on average nearly $5000 less in their first year after graduation.

This has nothing to do with having children or taking time out. Apples for apples, women are paid less for no other reason than they are women. But because most firms don’t make it policy to track (or at least make public) data regarding pay, promotion, or performance reviews on a large scale, it easy to to continue this cycle of inequality. If they were required to publish this data alongside gender, then perhaps we would see that pay gap shrink.

This is a topic that most companies have not cracked in its entirety, but some firms are making progress. If you consider retention an indicator of fair pay, then it may be worthwhile to consider that the percentage of senior women at Goldman Sachs is actually above the industry average, according to Jacki Zehner, Goldman’s “youngest woman and first female trader“ to be made partner, who writes:

“The lawsuit cites the following Goldman statistics as evidence of gender discrimination: Women are 29 percent of vice presidents, 17 percent of managing directors, 14 percent of what Goldman calls partners, and four out of 30 people on the management committee.

In fact, these numbers are among the best of any major Wall Street firm, and any large corporation in general.”

Zehner, went on to point out her excellent research piece produced in conjunction with the National Council for Research on Women called “Women in Fund Management: A Roadmap to Critical Mass and Why It Matters.” The 40-page report identifies the many barriers to women’s achievement in the financial industry, including gender discrimination.

Sexual Harassment is a Serious and Separate Issue

Pay structures aside, if we turn our attention to the sexual harassment and racial abuse stated in this specific case, what is really interesting is the battle that firms have on their hands with developing reporting systems for complaints that work more effectively for all concerned.

Human dynamics can interfere with the process of dealing effectively with the complaint. Ms. Chen’s boss knew that a team member had assaulted her, yet he seemingly didn’t want to know and therefore keep it to himself. When Ms. Chen said it out loud, he had to escalate it as per HR procedure only. The boss’s desire to protect a buddy from termination was apparently stronger than the threat of his own career being ruined. In his eyes, probably, his buddy did nothing more than make a pass at a female team member on a drunken night. The nature of what went on makes it impossible for either the victim or the boss to feel like reporting the complaint will result in a winning situation.

Anonymous reporting mechanisms can make it easier to report grievances. Dealing with sexual harassment should result in a frank and punitive conversation, however few firms are equipped to handle it without it getting messy.

The NYPD call it assault when there is a physical attack by strangers… so why should it be okay for your co-worker to accost you?

Changing the Culture

Codes of conduct that are engrained into corporate culture are more effective than HR policing. We tell people to be their authentic selves… and sadly, these chaps are being their authentic selves at the strip club, and it’s accepted as a jolly night out for them. Hmm, I think we need to start there. Women have a sense of what goes on “after hours” in finance and are choosing not to be a part of the industry because of it.

Litigation doesn’t change behaviors of individual bad apples who want to bully and harass people, and that goes beyond women as, lets face it, abusive people do it to anyone if they think they can away with it. Codes of conduct are understood and practiced daily. Picking the right leaders who can shape the culture by expressing to individual staff that disrespectful behaviors have consequences. Leaders who can walk the walk, as well as talk the talk.