Diversity Aside, Does it Pay to Search for Gays

When Ohio legislators passed an anti-gay-marriage law in February that also barred state agencies from providing benefits to same-sex partners, it wasn’t only gay activists who protested. Some of the most insistent opposition to the bill came from companies such as Nationwide Insurance and Limited Brands, Inc., which operates The Limited, Victoria’s Secret and Bath & Body Works stores. The employers weren’t motivated so much by the conviction that gays deserved equal rights as by a more pragmatic concern. They worried that the negative ambience fostered by the law might hinder their recruiting of gay talent.

    Take, for example, NCR Corp., the old-line Ohio company that made the first mechanical cash register in the 1880s, and has since grown into a global supplier of computer technology to food warehouses and retail stores. “We’re based in Dayton, but we’re competing in a global marketplace, not just for sales but also in hiring and retaining employees,” says NCR spokesman John Hourigan. “Because of that, we see workplace diversity as an imperative.”

    Hourigan, who is careful to use the politically correct term “GLBT”–short for gay, lesbian, bisexual and transgender–touts NCR’s efforts to create a workplace that’s attractive to gay job candidates. Not only does the company offer benefits for same-sex partners and an anti-discrimination policy, but it also has a company-sanctioned “resource group” of gay employees who are encouraged to communicate any concerns directly to management.

    To make sure that potential job applicants get the message that the company is gay-friendly, its Web site touts the 2003 “Outie” award that NCR received from Out & Equal Workplace Advocates, an activist group, and the company’s second-straight perfect 100 rating for equality from the Human Rights Campaign, a gay organization in Washington, D.C. NCR has even sponsored a gay-pride parade in Dayton to increase its visibility in the gay community.

Profits and performance
    NCR’s efforts are just one sign of a subtle but growing trend in the business world. Companies are making a deliberate effort to market themselves to potential hires as gay-friendly. In some cases, they’re actively recruiting gay and lesbian talent–by advertising in gay publications, participating in job fairs run by gay professional and student groups, and utilizing job-search engines at Web sites such as Gay.com and GayWork.com.

    Some turn to a Los Angeles-based recruiting firm, McCormack and Associates, whose strong links to the gay community are its calling card. Companies aren’t necessarily investing huge amounts of money in such efforts–running a corporate visibility ad on the popular Web site GayWork.com, for example, may cost as little as $6,000 a year–but analysts say the eventual return on investment may be substantial. That’s because companies see gay employees as a particularly valuable resource for tapping into the gay consumer market, which numbers more than 14 million consumers and is projected to wield more than $607 billion in purchasing power by 2007, according to MarketResearch.com, in Rockville, Maryland.

    It’s not that companies are simply out to hire more gay workers. Rather, they don’t want to lose out on desirable job candidates who happen to also be gay, says Daryl Herrschaft, director of the Human Rights Campaign’s WorkNet program on gay workplace issues. “Companies don’t really care about sexual orientation. They care about profits and performance. But they know that GLBT people do care about companies’ policies. If a company has partner benefits, for example, they tend to see it as an indication of how friendly the workplace is going to be toward them.”

    Since by the most generous estimates only 10 percent of the population is gay, it’s likely that gays amount to a similarly small fraction of the nation’s workforce. However, that fraction may contain a disproportionately high number of desirable job candidates, since research suggests that gays tend to be better educated and more successful professionally than the population as a whole. A 1996 study by Simmons Market Research Bureau found that 48 percent of gays had college degrees and 22 percent possessed advanced degrees, more than three times the proportion in the overall U.S. population. Seventy percent worked in professional and managerial jobs. Moreover, the gay population tends to gravitate toward major urban centers, so it’s more likely that a job applicant in New York or Chicago or Los Angeles will turn out to be gay. When Richard Florida, a Carnegie Mellon University professor and visiting scholar at the Brookings Institution, amassed a list in the late 1990s of cities with the hottest high-tech sectors, he noticed that the list closely matched one that a CMU graduate student had compiled of places with the highest concentration of gays.

    Popular recruiting wisdom holds that gays are concentrated in certain well-compensated, high-status fields such as investment banking, law and management. “You get to dress well and eat well in those professions,” jokes recruiting consultant Joseph McCormack. “That’s a lot more fun than, say, working on software all night and eating from vending machines.” Nevertheless, research by Louis Thomas, an associate professor of management at the University of Pennsylvania’s Wharton School, suggests that gay workers are distributed evenly across economic sectors. Thomas has found that 13.4 percent of gays work in education–one reason why Ohio State University president Karen A. Holbrook appealed to Ohio Gov. Bob Taft not to sign the anti-gay-marriage bill. Another 7.3 percent work in health care, 7.1 percent in business consulting, 6.4 percent in government positions, 4.7 percent in manufacturing, 4.6 percent in insurance and legal work, and 4.2 percent in finance and accounting.

    Corporate recruiters, however, are still grappling with finding the best approach to reaching a group whose members don’t all necessarily want to be singled out. “A generation ago, being out of the closet was still anathema at a lot of companies,” McCormack says. “Gay workers basically were looking for a place where they would be left alone, without harassment.” While concern about privacy is still felt by many gays, the latest generation entering the job market also contains many individuals who’ve been out since high school and are less reticent about their orientation. It’s not uncommon, recruiters say, for job applicants to ask about a company’s partner benefits or nondiscrimination policies.

“Brand loyal”
    Nevertheless, those who have studied gay employment issues say that a company’s reputation for tolerance remains of crucial importance to applicants. Wharton’s Thomas says his research indicates that gay employees are likely to stay with an employer with gay-friendly policies, even if offered more money by a competitor. “GLBTs tend to be brand loyal,” says HRC’s Herrschaft. “They make purchasing decisions based on their perception of a company’s attitudes. It’s the same thing with jobs.”

    That makes it imperative for corporate recruiters to market their company as a gay-friendly brand. Participating in gay job fairs and conferences is one route. In April, two dozen companies–including such big names as Ford Motor Co., Sun Microsystems, Citigroup and Morgan Stanley–will be participating in Reaching Out MBA, a recruiting and networking conference put on by gay students at the University of Southern California and the University of California at Los Angeles graduate business schools. Another possibility is the assortment of gay-oriented Web sites such as GayWork.com in Santa Monica, California, which maintains profiles of nearly 20,000 job-seekers. More than 1,100 companies, including Microsoft and Capital One Financial Corp., the McLean, Virginia-based credit card giant, have posted company profiles on the site. “It’s a way for a company to let everyone know that it’s making the outreach, that it wants to be a comfortable place,” says the site’s founder, media consultant Matthew Skallerud.

Creating a buzz
    Some companies have found, however, that the most effective way to reach gay talent is through employee referrals and contacts. NCR, for example, has received tips on possible hires from employees who participate in its GLBT resource group, a company-sanctioned internal organization that advises management on gay workplace issues. About half the companies in the Fortune 500 have established such groups, according to Out & Equal executive director Selisse Berry.

    IBM, widely regarded as one of the most effective recruiters of gay talent, has gone a step further, using its gay resource group as an asset in both recruiting and marketing its products. Spokesman Jim Sinocchi says IBM sees both types of outreach as synergistically serving the same strategic goal–that is, marketing IBM wares and services to a gay market segment with an estimated $500 billion in purchasing power. “The nature of the gay community is strong networks, based on personal contacts, that extend through peer companies and customers,” he says. “What we’re trying to do is create a buzz, to make people want to spend their money with IBM–or to work here.”

    IBM relies on its group of gay employees not just for referrals, but also to spread the word about the company’s policies and workplace culture. IBM has 600 employees receiving partner benefits, as well as 25 openly gay executives in key positions throughout the company. In particular, Sinocchi says, IBM aims to be attractive to gay candidates who are looking for a workplace in which they can fit in and be open about their orientation. “Sometimes, gay people looking for jobs aren’t out yet, but maybe they’re hoping to find a place where they have a chance to come out, or where if people find out that they’re gay, it isn’t going to hurt their career at all. So we’re selling IBM as that sort of place.”

    Emphasizing gay employees’ opportunity to be out in the workplace has additional benefits for a company once they’re on the job, says the Wharton School’s Thomas. “GLBT employees are more likely to stay with employers that offer such policies and benefits even if they are offered a higher salary from a firm that does not offer these benefits and policies,” he says. “This of course lowers firm retention and recruiting costs.”