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Teaching Note Reference No. CSR0008-1 This teaching note was written by Vineetha Ravipati under the direction of Sumit Kumar Chaudhuri, Icfai Business School Case Development Centre. It is only an illustrative orchestration of this case study. It is never meant to limit the learning outcomes. Copyright 2007, Icfai Business School Case Development Centre No part of this publication may be copied, reproduced or distributed, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or medium electronic, mechanical, photocopying, recording, or otherwise without the permission of Icfai Business School Case Development Centre.
Availability
1 Learning to Lead
Teaching Note
Teaching Note
Teaching Objectives
The case has been structured to understand and analyse: Gender inequity in the corporate world Pay discrimination among men and women Gender discrimination law suits against Merrill Lynch Initiatives taken by Merrill Lynch to curb gender discrimination.
Teaching Note
Assignment Questions
I. II. human beings often hold biases based on color, religion, ethnicity, age, disability and gender.1 In the light of this statement, discuss different forms of discrimination in the corporate world. From Wall Street to Wal-Mart, women are paid less for doing the same job as men.2 Why do you think men and women in the corporate world get different pay packages? Give reasons in support of your answer.
III. Why was the case of E. Hydie Sumner a trendsetter for gender discrimination lawsuits against Merrill Lynch? IV. What initiatives did Merrill Lynch adopt to reduce discrimination-related grievances? Do you think these measures were adequate and appropriate? V. How can gender discrimination be dealt at the workplace? Can it be through change in the organisational culture or in the employee attitudes? Give reasons in support of your answer.
VI. Today, Merrill Lynchs employees are no longer required to go through mandatory arbitration for settling their employees claims. (page 2, para 1 of the case study). Do you think under such circumstances, there is a possibility of false allegations against the company? How can a company proactively prepare to reduce the risk of fake lawsuits?
Teaching Plan
The Teaching Note as well as the Structured Assignment for the case follow a specific Teaching Plan that has been highlighted in [Annexure (TN)-I].
Case Analysis I. human beings often hold biases based on color, religion, ethnicity, age, disability and gender. 3 In the light of this statement, discuss different forms of discrimination in the corporate world.
Discrimination means treating someone unfairly or unfavourably based on class or category, rather than individual merit. This term usually refers to unfair treatment against any individual during recruitment, hiring, promotion, transfer, wages and performance measurements. The different forms of discrimination that can be observed in the corporate world are: Age discrimination occurs when an employee uses age as a determining factor in a job-related decision. Discrimination on the basis of age is largely seen in the corporate world. Joanna Lahey, an economic professor at Texas A&M, observed that firms are 40% more likely to interview a younger job applicant than an older job applicant4 Disability discrimination occurs when the disabled are treated unfavourably due to their physical shortcomings Racial discrimination is a practice where a person is treated differently based on race, religion, colour and national origin. It usually refers to unfair treatment of minority groups
1 2 3 4
Wadhwa Vivek, The True Cost of Discrimination, http://www.businessweek.com/smallbiz/content/jun2006/sb20060606_087038.htm?chan=search, June 6th 2006 Burk Martha, Workplace Discrimination, http://www.hilary.com/career/discrimination.html The True Cost of Discrimination, op.cit. Ageism, http://en.wikipedia.org/wiki/Age_discrimination
Teaching Note
Gender discrimination is the practice of letting a persons sex become a deciding factor for job, promotion or any other employment benefit. It mostly affects women who are unfairly discriminated against men.
Even though women have entered the workforce in droves in the past generation, and it is generally agreed that they add enormous value, organizational definitions of competence and leadership are still predicated on traits stereotypically associated with men: tough, aggressive, decisive.5 According to you, what are the reasons for gender discrimination at the workplace? The reasons for gender discrimination are: Sex-stereotyping, which categorises specific roles for each gender, has been accepted in all societies across the globe The in-built differences in the body mechanisms of men and women is one of the reason for gender discrimination, as certain types of work can be done better by men Social setup, culture, religion, geographical conditions, economic setup, moral standards and education level of the society are some of the major determinants Role of tradition and conventions which emphasises that men play a pivotal role in the smooth functioning of a family
II.
From Wall Street to Wal-Mart, women are paid less for doing the same job as men.6 Why do you think men and women in the corporate world get different pay packages? Give reasons in support of your answer.
Discrimination plays a significant role in the pay gap between men and women in the corporate world. The difference in remuneration between men and women having similar qualifications and working in the same environment has been observed since the 1960s. [Exhibit (TN)-I]. Pay discrimination among men and women is present in jobs across the corporate ladder. [Exhibit (TN)-II]. According to the US Census Bureau, in 1999, women earned only 72 cents for every dollar that men earned7 NAFE Salary Survey on 20 different industries in 2005 stated that women earn lower pay, for the same work, when compared to men It has been alleged by the female employees of Wal-Mart that they are paid lower than their male counterparts Starting salaries for male graduates are 7% higher than those of female graduates8 Women working 41 to 44 hours per week earn 84.6% of what men earn for working similar hours. Women working more than 60 hours per week earn only 78.3% of what men earn in the same time.9
5 6 7 8
Meyerson Debra E. and Fletcher Joyce K., A Modest Manifesto for Shattering the Glass Ceiling, Harvard Business Review, January-February 2000 [Ref. No. 9624] Burk Martha, Workplace Discrimination, op.cit. National Committee on Pay Equity, http://www.pay-equity.org/info-Q&A-Act.html Tyson Laura DAndrea, New Clues To The Pay And Leadership Gap, http://www.businessweek.com/magazine/content/03_43/b3855062_mz007.htm?chan=search, October 27th 2003 Lips Hilary M. The Gender Wage Gap: Debunking the Rationalizations, http://www.womensmedia.com/new/Lips-Hilary-gender-wage-gap.shtml
Teaching Note
$14
Median Hourly Wages ($2000)
1970
1980
1990
2000
2010
$40
First through third quarters only
30
Men Women
20
10
10 20 Lowest paid
30
40
50 60 Wage Percentile
70
80
90 95 Highest paid
Teaching Note
Do you think pay discrimination on the basis of gender should exist? Discrimination in pay should be based on: Nature of job Performance of the job Personal attributes that enable a person to do the job.
Most employees would be happy to get different salaries depending on these job-realted factors. However, this is not the case. Discrimination in wages usually occur because of different wage level policies for female and male employees. The Civil Rights Act states that it is unlawful to discriminate against any individual on the basis of race, colour, religion, sex or national origin.
III. Why was the case of E. Hydie Sumner a trendsetter for gender discrimination lawsuits against Merrill Lynch?
E. Hydie Sumner, a broker at Merrill Lynchs San Antonio (Texas) office, filed a lawsuit against the company alleging harassment by her supervisor. It was also alleged that the company discriminated its female employees in terms of training and support, unequal pay and unfair dismissal. The company appointed a panel of arbitrators who recognised that Merrill Lynch engaged in systemic discrimination against women by denying them promotions, paying them less, and subjecting them to sexual harassment and retaliation. On April 19th 2004, Sumner was awarded $2.2 million, which was the biggest monetary compensation ever made by Merrill Lynch. This was also the first case when the company accepted that systematic discrimination against women existed at Merrill Lynch. What allegations did Stephanie Villalba bring against Merrill Lynch? How did the company defend itself? Stephanie Villalba, who was the first woman to become one of the board of directors at Merrill Lynch International Bank, accused the organisation of sexual discrimination, victimisation, unfair dismissal and unequal pay. She complained that her manager harassed her by passing indecent comments and insulting her verbally. She alleged that the people whom she recruited received higher pay than her. She also complained that she was not paid bonuses and was forced to quit the job without any reason. Merrill Lynch denied her allegations of unequal pay and unfair termination and attributed them to her low performance. The company agreed that she was paid less when compared to her colleagues, due to her poor performance. The company also stated that she was asked to quit because of the losses in her region, not due to her gender. So many variables affect bonus awards that it is practically inevitable that employees doing comparable work in different parts of ML will receive different levels of total compensation.10 (page 6, para 3 of the case study). Do you agree with this statement? Give reasons in support of your answer. Traditionally, pay systems for employees were characterised by standardisation across all sectors. With globalisation and increased competition, firms are forced to adopt compensation-based pay systems. Nowadays, most of the employees are paid salaries plus incentives. These incentives are usually calculated depending on their role and performance. Incentives usually depend on various factors like:
10
Calian Sara, Sexism in city under fire, http://www.afr.com/articles, June 18th 2004
As a result, organisations that offer incentive-based pay systems, pay differently for different jobs. This leads to different people receiving different amounts of incentives based on their performance.
IV.
What initiatives did Merrill Lynch adopt to reduce discrimination-related grievances? Do you think these measures were adequate and appropriate?
Merrill Lynch revamped its accounts distribution policy (refer Box 1 of the case study) while allotting accounts to ensure equal opportunity to all its employees The company created a new claim-resolution process for the settlement of employee grievances. The claim-resolution process has three stages: 1. In the first stage, employees submit the claims. Investigation is launched by Merrill Lynch and then the company determines whether it should make an offer for settlement 2. In the second stage, if the claim is not resolved, then the individual can take the claim for mediation 3. If the claim is still not resolved after mediation, then the employee can claim for non-industry arbitration.
The company also started a dispute resolution programme, which provides employees with a new binding, independent, non-industry arbitration forum. This also means that employees can approach the courts for settlement of claims.
V.
How can gender discrimination be dealt at the workplace? Can it be through change in the organisational culture or in the employee attitudes? Give reasons in support of your answer.
Companies shouldnt decide wages or promotion upon gender. Even hiring must be as unbiased as possible Employees should be made to understand the Equal Employment Opportunity Law Women employees need to be provided greater opportunities for fulfilling themselves They must be cheered to chip in their ideas and must be trained to suit various management roles, as is the case with men Companies should have proper grievance procedures to prevent discrimination or sexual harassment at the work place
Companies need to take these steps to curb gender discrimination in the workplace:
Teaching Note The success of these strategies depend on factors like: The legislative framework Commitment of the management Individual motivation Cultural values Mindsets.
Only when the society is ready to revise its orthodox attitudes about women, can any transformation take place. The instructor can wrap up the discussion with this question:
VI.
Today, Merrill Lynchs employees are no longer required to go through mandatory arbitration for settling their employees claims. (page 2, para 1 of the case study). Do you think under such circumstances, there is a possibility of false allegations against the company? How can a company proactively prepare to reduce the risk of fake lawsuits?
Additional Readings
Manda S. and Maldar N., Gender Discrimination in Corporate America (Case Study), Icfai Business School Case Development Center, 2005 [Ref. No. 705-014-1] Trentham Susan and Larwood Laurie, Gender discrimination and the workplace: an examination of rational bias theory, http://www.findarticles.com/p/articles/mi_m2294/is_n1-2_v38/ ai_20816289, January 1998 Wadhwa Vivek, The True Cost of Discrimination, http://www.businessweek.com/smallbiz/ content/jun2006/sb20060606_087038.htm?chan=search, June 6th 2006 Promoting gender equality in the workplace: Two company case examples, http:// www.emcc.eurofound.eu.int/content/source/eu04008a.html Morris Betsy, HOW CORPORATE AMERICA IS BETRAYING WOMEN, http://money.cnn.com/ magazines/fortune/fortune_archive/2005/01/10/8230967/index.htm, January 10th 2005.
Teaching Note
To analyse the negative 45 ramifications of gender discrimination lawsuits on companies and what possible measures can be taken to tackle it. 45
Contd...
Teaching Note
Gender Discrimination - Rattling Corporate America Types of discrimination in the US corporate Gender discrimination in US firms.
Gender Discrimination @ Merrill Lynch Allegations and lawsuits against Merill Lynch for gender discrimination E. Hydie Sumner lawsuit - The trendsetter Impact of the lawsuits on Merill Lynch - Initiatives taken by the company to tackle employee grievances.
Tackling the Menace of Gender Discrimination at the Workplace Proactive steps to be taken by companies to reduce the risk of false lawsuits What drives gender discrimination: organisation culture or employee attitudes?
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