It’s common for executives to ignore, underestimate, or pay lip service to Equal Employment Opportunity (EEO) and Affirmative Action (AA) regulations. Unfortunately, many feel it’s easier this way.
Taking compliance regulations seriously means actively looking for problems, bringing them to light, and dealing with them directly — the antithesis of the traditional business approach to mitigating potential legal exposure. AA and EEO compliance, specifically, means confronting systemic racism and implicit bias aggressively at a moment when both matters are hot-button issues. No company wants to be discriminatory, but few want to confess publicly to finding instances of those problems in their operation — especially senior leadership desperate to avoid bad PR.
Ignoring AA/EEO compliance seems like the path of least resistance, but any compliance officer can tell you that ignorance of the rules isn’t a sound strategy. Furthermore, any real efforts to increase and encourage diversity in the workplace must have executive buy-in to have any hope of succeeding. Actual change comes from the top,but it’s up to compliance officers to demonstrate the benefits of a compliance program.
The Business Case for Diversity and Inclusion
All explanations for why executive buy-in is often lacking with regard to diversity and inclusion boils down to one thing: the business case. If executives make something a priority, it’s typically because they see some advantage in acting fast or some risk in doing nothing. With diversity and inclusion, it’s harder to see how aggressive action or serious investment fit into the business strategy.
At least, that’s the assumption. Leaders think it’s impossible to meaningfully quantify the amount of money and heartache that could be saved by implementing strong AA/EEO compliance programs and not being cited for violations or having to settle discrimination claims. But that’s objectively false.
The Department of Labor publishes all financial settlements it collects from companies that violate EEO and AA regulations. In 2019 alone, the agency collected more than $40 million in settlements from companies that discriminated based on race, color, religion, sex, sexual orientation, gender identity, national origin, disability, or veteran status — $16 million more than it had ever collected before. In this way, executives can clearly see the cost of neglecting AA/EEO compliance. Less quantifiable but potentially even more costly is the brand damage of being publicly identified as a discriminatory company.
To put the risk of downplaying EEO/AA regulations into perspective, consider the story of a client I recently worked with that chose to furlough its EEO compliance department at the outset of COVID-19 — despite an ongoing DOL audit. The company assumed its in-house counsel and an outside attorney could handle things without incident. On the contrary, a lack of experience led to a whole raft of damages and triggered years of extra monitoring by the DOL. The company stands to spend at least$1 million over the next five years to correct this mistake, which was entirely caused by a lack of executive buy-in around the importance of strict compliance.
This is an extreme example of a common attitude: that compliance is secondary. If companies want to have any hope of avoiding expensive damages and irreparable harm to their reputations, this attitude needs to change.
Making Compliance a Top-Down Priority
One way to improve executive buy-in is to make someone in the C-suite responsible for diversity and inclusion efforts. Having a “chief diversity officer” sitting at the table ensures those considerations factor into every major decision the company makes.
In conjunction with professional compliance officers and the legal department, that executive can begin to make the case that diversity in the workplace is a priority. They can point to mountains of anecdotal evidence showing that diverse organizations attract better talent, produce more innovation, and enjoy a healthier culture. Advocates can also use the argument outlined above to make the business case to executives unconvinced by the “soft” benefits of a compliance program. The right approach should highlight every advantage and address every objection. When done correctly, an EEO/AA program is one of the best tools a company has to mitigate its potential legal exposure with regard to employment discrimination. A strong case can and should be made that a healthy EEO/AA program provides a broader, stronger base from which other departments can grow their revenue contributions with diverse talent, fresh ideas, and a culture that encourages innovation. What executive wouldn’t want that?