Predictors of the Adoption of LGBT‐Friendly HR Policies

• DOI: http://doi.org/10.1002/hrm.21622
• Author: Benjamin A. Everly,Joshua L. Schwarz
• Published date: 01 March 2015
• Date: 01 March 2015

Human Resource Management, March–April 2015, Vol. 54, No. 2. Pp. 367–384

© 2014 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI:10.1002/hrm.21622

Correspondence to: Benjamin A. Everly, School of Business, Management, and Economics, University of Sussex,

Falmer, Brighton, BN1 9SL, United Kingdom, +44 (0)1273 678141, E-mail: b.everly@sussex.ac.uk.

PREDICTORS OF THE ADOPTION

OF LGBT-FRIENDLY HR POLICIES

BENJAMIN A. EVERLY AND JOSHUA L. SCHWARZ

Employment discrimination against lesbian, gay, bisexual, and transgender

(LGBT) individuals remains a persistent problem not addressed by federal

and most state equal employment opportunity laws in the United States. De-

spite this lack of regulation, a growing number of organizations are voluntar-

ily adding sexual orientation and gender identity to their nondiscrimination

statements, providing domestic partner benefi ts, sponsoring affi nity groups,

and establishing other “LGBT-friendly” policies. This article incorporates in-

stitutional theory and organizational demography to explore the antecedents

to these policies to understand why some organizations seek to be at the

forefront of this trend while others do only the minimum to embrace this ele-

ment of diversity. The analysis of a sample of Fortune 1000 fi rms reveals that

state law dealing with gay rights in non-employment-related areas for the

state where each company is headquartered, the number of women serving

on each fi rm’s board of directors, and whether other companies in the same

industry have adopted progressive policies are all related to company policy

toward its LGBT employees. Sexual orientation of employees by industry

does not seem to infl uence company policy. © 2014 Wiley Periodicals, Inc.

Keywords: diversity, gender diversity, organizational demography, board of

directors

Introduction

On July 16, 2012, Dan Cathy,

president and chief operating

officer of Chick-fil-A, a growing

fast-food chain in the United

States, publicly affirmed his posi-

tion against same-sex marriage in an inter-

view with the Baptist Press after coming under

criticism for donating money to organiza-

tions opposed to same-sex marriage (Blume,

2012). After Dan Cathy’s public proclamation

against same-sex marriage and donations to

antigay organizations, a frenzy of activity

developed, with opponents of same-sex mar-

riage organizing a Chick-fil-A Appreciation

Day and supporters of same-sex marriage

vowing to boycott the restaurant chain. With

the media’s spotlight centered on Chick-fil-A,

many have wondered whether the contro-

versy surrounding Chick-fil-A’s policies to-

ward LGBT individuals will positively or nega-

tively impact the restaurant’s bottom line.

Although there is increasing support of

equal rights policies such as gay marriage and

allowing same sex couples to adopt children,

lesbian, gay, bisexual, and transgender (LGBT)

individuals still experience discrimination in

368 HUMAN RESOURCE MANAGEMENT, MARCH–APRIL 2015

Human Resource Management DOI: 10.1002/hrm

While federal and

state governments

have been slow to

adopt overarching

antidiscrimination

laws, some

individual

organizations have

been more amenable

to adopting LGBT-

friendly HR policies,

especially when

the organizations

have a realistic

understanding of

the costs associated

with such policies.

Campaign releases a report in which they rate

hundreds of the nation’s largest employers on

their treatment of gay and lesbian workplace

issues. This report, called the Corporate

Equality Index (CEI), contains scores from 0 to

100 for each firm that is surveyed. By analyz-

ing the CEI score and stock market perfor-

mance data, Wang and Schwarz found that

companies that increased their CEI score by

adopting policies and programs that are more

inclusive of gay and lesbian employees were

more likely to experience an increase in their

stock market performance in the following

year (Wang & Schwarz, 2010). The authors

speculate that this effect may be due to “a

more satisfied, committed, motivated and pro-

ductive workforce …” in firms with high CEI

scores, which is consistent with prior research

on the performance of “Best Companies to

Work For” and documented positive effects of

other diversity management practices (Wang

& Schwarz, 2010, p. 209). It is also likely that

firms with high CEI scores will have a recruit-

ing advantage over other firms and could thus

attract higher quality human capital.

Given that a positive association was

found between adopting LGBT-friendly HR

practices and firm stock performance, one

might wonder why more organizations do

not adopt these policies. There are many

possible answers to this question, including

fear of boycotts because of appearing pro-gay

(Raeburn, 2004), not having a clear under-

standing of the costs and benefits involved

in adopting certain policies, or simply not

being in favor of equal rights for LGBT

employees. Although there are many poten-

tial reasons why some companies have not

fully embraced progressive policies for these

employees, there is little empirical evidence

to suggest what factors contribute to orga-

nizational decisions to adopt LGBT-friendly

policies (Chuang, Church, & Ophir, 2011). To

help fill this gap and extend previous work

in this area, the current study draws on both

institutional theory (DiMaggio & Powell,

1983) and the demographic characteristics of

organizational decision makers (Wiersema &

Bantel, 1992) to examine which factors are

most likely to influence firms’ decisions to

adopt LGBT-friendly HR policies.

the workplace (Croteau, 1996; Myers, 2000;

Ragins, Singh, & Cornwell, 2007; Taylor,

2002). A growing body of research demon-

strates that not only does this discrimina-

tion lead to negative outcomes for the gay

and lesbian employees, such as lower levels

of job satisfaction and psychological well-

being (Griffith & Hebl, 2002), but it also has

negative impacts on organizations’ finan-

cial performance (Johnston & Malina, 2008;

Wang & Schwarz, 2010). However,

despite the negative consequences

of discrimination, few policies are

in place in the United States on

a national or state level to pro-

tect the rights of gays and lesbi-

ans in the workplace (Jahanian

& Tannenwald, 2007). While fed-

eral and state governments have

been slow to adopt overarching

antidiscrimination laws, some

individual organizations have

been more amenable to adopt-

ing LGBT-friendly HR policies,

especially when the organiza-

tions have a realistic understand-

ing of the costs associated with

such policies (Raeburn, 2004). For

example, when an average organi-

zation makes health care benefits

available to domestic partners of

employees, the average percent-

age of employees who use the ben-

efit is only about 1 percent of the

entire workforce (Raeburn, 2004).

Organizational Policy

Toward LGBT Employees

Despite the concern of some share-

holders and executives that adopt-

ing LGBT-friendly HR practices would cause

the organization to waste money on “unneces-

sary” spending, recent research suggests that

adopting LGBT-friendly HR policies actually

has a positive effect on firm stock performance

(Wang & Schwarz, 2010). In their study, Wang

and Schwarz collected stock market perfor-

mance data from hundreds of companies that

were also surveyed by the Human Rights

Campaign (HRC). Each year, the Human Rights