Getting sued comes with an unexpected upside for companies: It can improve their gender and racial equality, according to a new report.
... [+]have made payouts
In the study, Elizabeth Hirsh of University of British Columbia and Youngjoo Cha of Indiana University analyzed 171 high-profile lawsuits filed against publicly traded companies from 1997 to 2008 and examined whether the verdicts and settlements led to measurable gains in gender and racial diversity in managerial representation. Hirsh and Cha compared the percentage of women and minorities before lawsuit and three years later.
When the lawsuits required companies to develop specific diversity goals for hiring and promoting women and minorities and made executives or department managers accountable for the goals, gains were larger than lawsuits that didn’t mandate policy changes or only asked for what the researchers called “symbolic” policies. They found that policies like diversity training or making people aware of Equal Employment Opportunity practices didn’t have an impact and, in some cases, decreased diversity.
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