The Ways Discrimination Negatively Affects Businesses

High-profile discrimination settlements have cost large corporations hundreds of millions of dollars. While your small business is unlikely to be forced to pay an amount that extreme, discrimination can still have a significant impact on the bottom line. The financial effects of discrimination go way beyond cash liabilities -- the impact on internal workforce productivity, your ability to retain and recruit staff, and even your perception among customers can all be negatively affected by discriminatory practices.

Job Satisfaction and Motivation

Discriminatory practices affect the job satisfaction of all employees -- not just those who are discriminated against. Promotions, bonuses and benefits should be awarded based upon the candidate's qualifications and performance on the job. If an employee consistently sees promotions being given on the basis of gender, race, age or other discriminatory factors, his drive to advance within the organization or perform to the best of his ability is negatively affected.

Commitment, Loyalty and Turnover

Staff who observe regular discrimination are more likely to leave the business, increasing your turnover levels. Although some involuntary turnover -- firing poor performers, for example -- is beneficial for the business, if your company's voluntary turnover is high you are probably losing skilled, competent workers. Recruiting and training replacements is costly to the organization and affects productivity. If an employee believes there is no future for him within the organization, he will be less invested in the job. Although he may not have found another position, the fact he doesn't intend to stay permanently means he is less committed and loyal to the business than someone who plans a long-term career with the company.

Reputation and Recruitment

Discriminatory practices affect your company's reputation within the community it serves. Discrimination may affect clients directly if your company provides inferior service to a certain group of people based upon particular demographic criteria, such as race. But customers can also be indirectly discriminated against. For example, if the entrance to your store is only accessible with steep steps, you are unintentionally preventing disabled customers from accessing the services you provide. Don't underestimate the effect of unhappy employees on your reputation and recruitment success. Disgruntled workers will complain to their family and friends -- who may take their business elsewhere. Savvy jobseekers will research the company before applying, and a workplace facing several discrimination lawsuits, or a company with employees who openly voice their dissatisfaction, will have a chilling effect on your recruiting abilities and cause the top candidates in the industry to look elsewhere.

Liability

Discrimination isn't just a bad practice -- it's illegal, and covered by extensive federal legislation such as Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act and the Genetic Information and Nondiscrimination Act. State regulations may also provide direction for employers on the prevention of discrimination. Responding to a discrimination complaint is time-consuming for managers. Because small businesses may not have someone on staff who is experienced in these issues, it can also mean hiring an attorney to investigate and draft the response -- directly affecting the bottom line even if the charge itself is ultimately dismissed.




SOURCE: smallbusiness.chron.com