From the October 1997 issue of Entrepreneur

An anonymous note filled with racial hatred shows up on an employee's desk. A worker persists in making sexually explicit "jokes" in front of co-workers. Another employee's language is sprinkled with cruel comments about workers of certain ethnic groups. What do you do? And don't say it can't happen in your company.

"These incidents are very common," says Ann Mennell, an employment-law attorney with Foley & Lardner in Milwaukee. Just as there is still plenty of bigotry in our communities, there are volumes of race and gender hostilities in the workplace.

"Prejudice still exists, and it shows up frequently in businesses," agrees Louis Penner, a psychology professor at the University of South Florida in Tampa, who has extensively researched bigotry and sexism in the workplace.

Learning to deal with these issues is critical to creating a workplace that is comfortable--and therefore productive--for employees. An all-too-common reaction, and one that often creates bigger problems down the road, is shrugging off such incidents. "That's the usual managerial response: They ignore the behavior and hope it goes away. But it rarely does," says Cindy Berryman-Fink, a professor of communications at the University of Cincinnati and author of The Manager's Desk Reference (Amacom Books).

Beyond the psychological damage your negligence may cause, burying your head in the sand can cost your business big bucks. "Employees are ever more aware of their legal rights," says Mennell. "And more and more lawsuits will be filed in cases where workers claim to have been harassed on the job."

Higher Source

An employee who feels victimized can lodge his or her complaints against your business fairly simply. Typically all that's involved is a visit to a state or federal civil rights or Equal Employment Opportunity (EEO) agency, where the employee fills out a short complaint form. Government officials then launch an investigation.

Defending a small business even at this stage can cost well into five figures. But if the matter results in a formal lawsuit, the costs can skyrocket. "A defense against even a simple complaint can cost a business more than $100,000 in attorney's fees," says Mennell. In some cases, legal fees and damages together could well exceed $500,000.

Even if workers, not company officials, are the perpetrators of race or gender hatred, you're not off the hook. As the business owner with the apparent power to control your employees, you are ultimately responsible. "Employers typically say `But I didn't ask or order my employees to do these things, and I personally disagree with what they did.' But there is no legal protection in that argument," says Dawn D. Bennett-Alexander, an associate professor of employment law and legal studies at the Terry College of Business at the University of Georgia in Athens and author of Employment Law for Business (Irwin). "If an event happens in the workplace, it's attributable to management."

Letting hateful attitudes infiltrate your business can hurt more than you may think. "Instances of hate affect many people in the workplace, not just the obvious targets," says Nancy Hauserman, a professor at the College of Business at the University of Iowa in Iowa City. One nasty crack that receives minimal attention from management can get half your work force stewing, not only creating low morale and an unpleasant work environment, but also severely cutting productivity.

Finding A Solution

Exactly how should you deal with these issues before big troubles flare? Step one is to put in writing a zero-tolerance policy in your organization, says Berryman-Fink. That means telling employees that any acts of bigotry or prejudice will be immediately addressed by management.

Extend the policy to minority- or gender-bashing jokes as well. Can comedy be construed as bigotry? Absolutely, warns Mennell. "One offensive joke probably wouldn't be seen by a jury as creating a hostile work environment," he says, "but a jury certainly can decide that enough jokes do in fact create a hostile work environment."

The bottom line: You have to stifle offensive jokes as quickly as you do inappropriate comments. "If a worker makes a racist joke and you overhear it, immediately say `That's inappropriate. You can't say that here.' Never let such remarks slide," says George Ferrell, an Ann Arbor, Michigan, business consultant who specializes in EEO issues.

What about anonymous messages? When messages are scrawled on walls, clean them up immediately, says Ferrell, who has consulted with businesses facing this problem. When the messages are aimed at one particular employee, investigate who did it. Even if you never find out who the perpetrator is, your investigation demonstrates your sincerity in stamping out this behavior while also discouraging repetition.

Another step, one taken by many Fortune 500 companies but rarely by smaller businesses, is to build into every employee's review a section on diversity. Since discrimiation is a legal issue that employers can be sued for, it is important to determine how able each employee is to work with customers and co-workers of different ethnicities, races, nationalities or genders. "By including this in the evaluation process, you get a chance to deal very directly with workers on [legal] issues of race, ethnicity and gender [discrimination]," says Ferrell.

Lastly, as the boss, your best policy is always to model good behavior regarding diversity. This is especially crucial if your business finds itself in court. "Most juries will find even one remark by an owner to be indicative of company policy," warns Mennell. A jury might ignore a couple dozen slurs uttered by hourly workers, in other words, but when the boss speaks, it counts, even if it's only one casual remark.

Time For Action

Take those steps, and you've gone far toward ridding your workplace of any expressions of bigotry--and toward protecting yourself against lawsuits. But that's not enough for you to breathe easily. "Most court cases arise either because a manager did nothing or stepped in quickly and then stepped out without doing any follow-up to make sure the behavior actually stopped," says Hauserman.

Cindy Lindsay, an organizational psychology professor at the California School of Professional Psychology in Los Angeles, outlines a multi-step response to a hate-motivated incident. As soon as possible after the incident, sit down one-on-one with the offending employee and:

  • review the company policy on diversity
  • explain why the comment or action was offensive
  • clearly state what types of comments and actions are offensive
  • outline for the employee the conduct expected in the future.

Don't expect this one session to effect a cure. "It can take a lot of reminders to get an employee to modify his or her behavior," says Berryman-Fink. Make clear the risks this employee runs: "Ask [whether] it's worth losing [his or her] job just to keep saying a certain word."

Will you change your workers' attitudes? Not likely, according to Ferrell, but his message is nonetheless upbeat: "We won't change what a person says at a bar after work, but we can impact how he carries out his job in the workplace. We won't change attitudes, but we can manage behaviors--and that's your responsibility as an employer."

Contact Sources

Foley & Lardner, (414) 297-5813, amennell@foleylaw.com

G. Ferrell & Associates, 251 Mulholland, Ann Arbor, MI 48103, (313) 663-1230.