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How's Your Inclusiveness Rating?

The Corporate Equality Index has emerged as the scorecard of choice for measuring GLBT-friendliness.

Sunday, March 2, 2008
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Software engineer Paula Easton spent years at Raytheon deeply closeted about her sexual orientation. Then one day she heard then-senior executive Bill Swanson deliver an inspiring talk.

"He talked about respecting and accepting the different ERGs [employee resource groups], including the gay and lesbian community," says Easton, a 25-year employee. Swanson, CEO since 2000, "talked about [how being gay] was not a choice, but a way of life. The hairs stood up on my skin and my mouth fell open."

"It changed my whole outlook on Raytheon," the Waltham, Mass.-based, $20.3 billion firm in the traditionally conservative defense industry, says Easton. Indeed, she added, "It changed my whole life." Shortly afterward, she came out at work. Easton is now president of the company's Gay, Lesbian, Bisexual, Transgender and Allies group.

It's that welcoming environment, underpinned by GLBT-inclusive policies and practices, that enabled the 73,000-employee Raytheon to chart 100 percent on the Corporate Equality Index. This scorecard, fashioned by the Human Rights Campaign Foundation, has emerged as the national barometer for gauging large firms' GLBT-friendly workplace measures.

The Washington-based foundation awarded 195 companies a 100-percent score (on a scale of 0 to 100) on the 2008 CEI, a whopping 41-percent gain over 2006. Just 13 firms achieved a perfect score in 2002, the index's first year.

At a time of escalating boomer retirements and white-hot competition for talented employees, many say the 100-percent CEI rating and accompanying inclusion on the HRC foundation's "Best Places to Work for GLBT Equality" is a critical recruiting and retention advantage. These firms also benefit from featured treatment in the foundation's popular national buyers' guide distributed to GLBT consumers.

"Companies don't want to have a CEI score beneath their competitors," says foundation spokesman Eric Bloem. "Given the very competitive nature of the job market now, companies don't want to give employees or potential employees any reason not to work there. They need to produce an inclusive environment so that all employees feel comfortable and safe in the workplace. And companies recognize that the [CEI] scores speak very loudly to GLBT people purchasing their products and services."

Rush to Inclusiveness

One indicator of the CEI's popularity: Five of the top 10 Fortune 500 companies scored 100 percent. Another indicator is how the 519 CEI-rated mostly Fortune 1000 and large law firms are striving to improve their ratings. Kate Karasmeighan, chief of staff at the National Gay and Lesbian Chamber of Commerce, which represents about 1.4 million GLBT-owned U.S. businesses, calls the index the "standard" for judging how companies treat GLBT employees.

"The CEI process is filled with integrity and that's a big reason why it has so much respect within the LGBT [some transpose the "L" and "G"] community," says Karasmeighan. "And that's why it's so important for companies to pay attention to their CEI score."

The index consists of five scoring criteria that examine a host of GLBT-inclusiveness measures: Does the company prohibit discrimination based on sexual orientation and gender identity and/or expression? Does it provide at least one transgender wellness benefit? Does it offer a range of benefits for domestic partners, including health and dental insurance and several "soft" benefits? Does it have an employer-supported employee resource group or a companywide diversity council? Does it engage in respectful advertising, marketing or philanthropy involving the GLBT community?

If companies earn all possible points in these five scoring criteria, they receive a perfect score of 100 points. However, points can be deducted if companies take actions undermining GLBT equality. (See accompanying story for further explanation of CEI scoring criteria.)

The company making the biggest jump to 100 percent was Newell Rubbermaid Inc., the $6.2-billion Atlanta-based marketer of consumer and commercial products. The 22,500-employee firm recorded a 15 percent CEI rating in early 2006.

When Jackie Parker, Newell Rubbermaid's inclusion and diversity vice president, first shared the company's plan to boost its CEI score, an HRC foundation official was pleased but skeptical. The foundation also counsels firms and provides resources for increasing those scores.

"[The foundation] thought I was crazy [proposing such a fast pace to achieve a perfect CEI score]," says Parker.

But the mirror-the-marketplace business case Parker and the compensation and benefits committee crafted for NR's senior leaders was compelling. It was also advantageous for competitive reasons for the company to quickly post a 100-percent score, even with significant room for improvement in its GLBT-inclusive policies.

"There's a war for talent out there," says Parker. Hiring and retaining GLBT workers is important, since many are educated and, thus, especially coveted.

Moreover, she says, a perfect CEI score signified "best in class" and featured NR in the foundation's 2008 Buying for Equality Guide. The purchasing power of the GLBT community is enormous; it is estimated the community will spend $723 billion in 2008.

"The GLBT population is a big and loyal consumer segment for us," says Parker, who launched and oversaw the index's initiative. "We want to connect our products to every demographic."

Perhaps the biggest hurdle for corporations remains just getting comfortable enough to discuss GLBT issues. In NR's case, an initial challenge was adopting domestic-partner benefits, which were proposed by the company's compensation and benefits committee with research provided by Parker.

Once educated about the case for equality, senior leadership quickly signed on -- a necessity, consultants say, for any workable diversity and inclusion strategies. It helped that benefit costs weren't excessive. Domestic-partner benefits vaulted the company's score from 15 percent to 55 percent.

With those benefits secured, "you take advantage of the momentum" for pursuing other GLBT-inclusive policies, says Parker. She shepherded several other initiatives -- among them, offering diversity training on sexual orientation, adding to the EEO policy a ban on discrimination based on gender identity and/or expression, and company participation in a nationally prominent GLBT dinner and a conference -- that enabled the company's CEI rating to jump from 55 percent to 100 percent.

Significantly, she says, the five CEI scoring criteria (see sidebar) provide an easy-to-grasp and comprehensive road map for NR senior executives to follow. "We were starting out of the gate [relatively] clean, so we had an opportunity to create a program the way it should be," she says.

But not everyone counsels a rapid run-up in scoring. Some suggest GLBT-friendly practices and policies should be steadily woven into the fabric of the corporate culture. Otherwise, they warn, backsliding may occur. For example, Bentonville, Ark.-based Wal-Mart Stores Inc., the nation's largest private employer, witnessed its 65-percent score drop to 40 percent in 2008.

"It's possible to make huge jumps [in the CEI score] from one year to the next," says Andres Tapia, chief diversity officer at Hewitt Associates, a Lincolnshire, Ill.-based 100-percent CEI firm that provides HR consulting and outsourcing. "But it takes an incredible amount of heavy lifting and focused commitment. The question I'd ask is whether [a 100-percent CEI score] is sustainable." Tapia also believes it's difficult for corporations to "fake" their way to perfect scores because adopting GLBT-inclusive policies prompts real change in workplace cultures.

At General Mills, the Minneapolis-based $13.4 billion manufacturer and marketer of Betty Crocker, Pillsbury and many other consumer food products, the company's GLBT-inclusiveness isn't CEI-driven, says Kelly Baker, vice president of diversity. The company's 100-percent score, she says, is the result of long-standing GLBT-friendly internal and external efforts.

"If firms are doing continuous work on diversity," says Pete Bye, president of MDB Group, a Livingston, N.J., diversity consultant, "the awards will come."

Nonetheless, Baker is "very proud" of General Mills' perfect CEI score, attained in 2005 with input from Betty's Family, the company's GLBT affinity group. Baker calls Betty's Family a "wonderful partner" that assigned priority status to the CEI and helped pinpoint other GLBT leadership initiatives. For example, General Mills contributes to the HRC Foundation and co-sponsors the Twin Cities Pride Festival.

General Mills' CEI score is highlighted during the 28,000-employee company's campus recruiting. "We know this is the kind of thing candidates are looking for," says Baker. Many GLBT and straight job seekers consider the CEI score a proxy for the kind of progressive workplace culture they favor.

"Having differences in our organization makes a difference for us, a consumer products company," says Baker. "We live and die off of innovation and we fundamentally believe you get better innovation when you have different points of view and different people around the table . . . . That's why we focus on this and why it continues to be a strategic priority and imperative for us."

Taking on a Taboo

Not surprisingly, firms pursuing index ratings are more aggressive than most large companies in offering GLBT-inclusive policies and practices. For instance, nine in 10 CEI-rated firms offer domestic-partner health insurance; by comparison, a 2007 Society for Human Resource Management survey of 500-plus employee firms showed 43 percent offering that benefit.

Still, the number of rated companies that adopted policies and benefits involving gender identity and transgender issues might surprise many.

"If you look at the trend lines for that [gender identity and transgender] category, the jump is really remarkable," says the foundation's Bloem. "It is happening a lot quicker than with [acceptance of] sexual orientation."

These advances are especially significant when put in context: In at least 30 states, gays and transgenders can still be fired simply for their sexual orientation. In other words, no protection has been written into law in those places.

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Furthermore, say industry experts, conservative activist groups sometimes target companies that demonstrate GLBT-friendliness. For instance, Ford Motor Co. endured a short-lived boycott in response to the automaker's GLBT-inclusive practices.

In part, Bloem credits the groundwork that firms, with foundation assistance, have already established on gay, lesbian and bisexual issues. It also helps that transgender issues are becoming more mainstream, cropping up on TV shows and in movies.

Yet gender identity and training policies, and transgender wellness benefits, are often the last GLBT category companies address. That was the case at Raytheon, which boosted its score from 86 percent to 100 percent in 2005.

Hayward Bell, Raytheon's chief diversity officer, characterized the company's incorporation of those measures as part of its ongoing "journey" involving diversity and inclusion. After it became the first aerospace company to achieve a 100-percent index score, several others quickly followed suit.

"We're competing for everything, customers and talent," says Bell. "We need to hire 10,000 engineers in the next five to 10 years just to sustain our level of growth. So we need to be as appealing as possible to attract talent."

The company's efforts are working.

"I know that the CEI score helps with [GLBT] recruiting," says Paula Easton, president of Raytheon's GLBT affinity group. She points to an affinity-group colleague, among others, who selected Raytheon because of the 100-percent rating. "The rating really does make a difference," she says. "People want to work here."

The flawless CEI score also contributed to a public-relations bonanza and the company winning the U.S. government's top contractor honor for demonstrating exemplary workplace diversity, saving Raytheon "hundreds of thousands of dollars" in otherwise mandatory audits, says Bell.

The rating also factors in exceptionally high morale among both GLBT and straight employees. In 1999, an employee survey ranked Raytheon's commitment to diversity in the 50th percentile of companies across a broad range of industries; it leapfrogged to the 94th percentile in 2007.

Confronting Opposition

While companies typically trumpet their perfect CEI scores, many are mum while they're pursuing them. But at Hewitt Associates, a 23,000-employee, $2.9 billion concern, striving for a perfect score was broadcast to employees. Hewitt's Tapia says that approach may not suit every firm.

"As strategists, diversity leaders have to weigh the level of resistance in the environment and how you would go about [achieving it]," says Tapia. "You may want to move toward 100 percent, but if you declare it, there could be so much [internal] resistance before momentum is built that it could be killed."

Lake many companies, Raytheon touted its CEI rating on its Web site as well as through press releases and other forums. But Raytheon stopped short of holding a celebration.

"We were appreciative of getting it, but we didn't want to make a party or celebration out of it," says Bell. To overemphasize the award might unintentionally slight other diversity groups. "GLBT is one of many groups we're looking to enfranchise and include."

MDB Group's Bye says the 100-percent CEI achievement doesn't mean all employees must suddenly accept and value GLBT orientations. But the status underscores a corporate value: We welcome input from everyone, which contributes toward increased productivity and innovation. For those struggling to embrace that philosophy, Bye says, coaching might help.

Bell couldn't recall receiving negative feedback after Raytheon's CEI announcement, nor had he heard of anyone quitting in protest. Yet he knows some employees oppose GLBT-friendly practices.

"People don't change their opinions when they show their badge and come inside the gate," he says. "But our point is clear: As an employee of this company, you are going to be respected, no matter what your sexual orientation is ... . If people don't show that respect, there will be consequences, or they can choose not to work here. That goes all the way to the top."

CEI's Future

Despite some misgivings about the index -- for instance, some argue a CEI criterion requiring firms to "engage in appropriate and respectful advertising, marketing and philanthropy" is too vague -- the HRC Foundation scorecard appears firmly rooted and will likely continue influencing corporate behavior.

Many 100-percent CEI firms, including General Mills, have taken steps beyond their workplaces to support GLBT concerns. The 48-member Business Coalition for Non-Discrimination Fairness favors a federal law providing employment protection on the basis of sexual orientation and gender identity. Baker recently testified before a U.S. House subcommittee on behalf of the bill.

The House passed a version providing protection for sexual orientation but not gender identity. As of December, the bill was awaiting movement in the Senate.

That progress encourages the HRC Foundation's Bloem. It convinces him that such measures, combined with escalating competition for skilled employees, means more large companies will pursue 100-percent CEI scores.

"We've had outstanding success since we started the CEI scoring [in 2002]," he says. "I see no reason to believe that number of [100-percent CEI-scoring] firms won't continue growing."

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