Eli Lilly: Managing Workplace Diversity and Coping with the Accusations of Racial

Discrimination

According to the companys management, Lilly was committed to promoting diversity at the
workplace. Yet it was facing some serious allegations of racial discrimination from a number of
its former and current African American employees. In light of the case study, discuss how Lilly
can ensure that present and potential employees and other stakeholders view the companys HR
practices as being equitable.

Racial discrimination is the practice of letting a person's race or skin color unfairly become a
factor when deciding who receives a job, promotion, or other employment benefit. It most often
affects minority individuals who feel they have been unfairly discriminated against in favor of a
Caucasian (or white) individual.

There also have been cases where whites have claimed that reverse discrimination has occurred
that is, the minority received unfairly favorable treatment at the expense of the white
individual (more on that later).

The two distinctive sides in this ongoing battle are discrimination vs. performance. When
employees do not get what they perceive as their legitimate dues, or feel shortchanged in any
manner, they are more often than not, likely to ascribe it to discrimination of some kind,
particularly if they belong to a suitable group. Companies, or employers, on the other hand,
mostly point to lack of performance as the only factor for discriminating against any
employee.

Companies claim that performance is the sole criteria for advancement; employees feel that a
perceived lack of performance is in fact a pretext for discrimination. It is also a fact that most
cases of alleged discrimination case will always lie in that grey zone between completely true
and completely false. Depending on the statistic under consideration, discrimination will either
be perfectly obvious or utterly nonexistent. Hence the need to view every case on its own merit.

Viewing the companys policies as being equitable

Lilly is a company that prides itself on treating all its employees fairly and with respect. The
company claims that it does not tolerate discrimination which it believes is contrary to its code of
ethics. So why does it continue to be dragged into discrimination related controversies including
massive class action suits? Could it be that Lilly is a victim of its own policies which aims to
create a liberal environment at the workplace? Or is it possible that many employees are
jumping onto the lawsuit bandwagon merely because they belong to a minority group and they
sense an opportunity to make a profit on the side? How many of those who have joined the class
action suits are really the aggrieved parties? How many are along just for the ride?

These questions are for the courts to decide. On the other hand, is it possible that despite their
best efforts, Lilly has not been able to translate its policies into good practices, which means
discrimination does exist at some level or another within the company. Exploring this line
further, it is also possible that Lilly has not been able to project its clean image sufficiently
well. There are a number of things that Lilly can do to make its HR policies effective and
sustainable.
 Eli Lilly: Managing Workplace Diversity and Coping with the Accusations of Racial
Discrimination
Lilly must take any allegations of unfair treatment very seriously. All allegations must
be internally examined systematically in an open and transparent manner. There
should be no attempt to sweep the dirt under the carpet. The evaluating committee or
team should comprise members from a cross section of various groups within the
company. All investigations need to be follow through appropriately, for example,
with a written apology and formal counseling for the employees involved.

Creating a position of senior vice-president responsible for diversity management that

reports directly to the CEO, would be the first step in this direction.

While this is being done primarily to reduce the number of cases that end up in
litigation, by providing acceptable responses to employees who allege discrimination,
it is also interesting to note that Lilly can also utilise the stray cases that do end up in
law courts as platforms for showcasing how effectively the company implements its
HR policies.

(In 2000, Atlanta-based firm, Georgia Power, was presented with a racial
discrimination lawsuit. The CEO of Georgia Power not only vowed swift and
effective action against any employee involved in harassing others but demonstrated
tolerance for the possibility of the problem having existed, and he quickly expressed a
sense of concern for the targets of the alleged discrimination.)1

Victims of alleged discrimination claim that the companys minority-friendly policies

are rarely applied. The above step of a thorough in-house investigation of every
complaint will go some way in dispelling this notion. This will also assist the senior
management in correctly evaluating if the policies are being rigorously implemented
at the grass root levels.

(IBM has established individual employee task forces for almost every group that is
employed by the huge company, including men, women, blacks, Hispanics, Asians,
Native Americans, gays and lesbians, and disabled persons. The groups, which are
established at many of the company's offices, meet regularly to discuss diversity and
workplace concerns.)2

Lillys The Red Book which is a code of business conduct, provides direction for
conducting business which is consistent with the companys values, legal obligations
and policies. The Red Book summarises the companys global company policies that
apply cross-functionally to all employees.

The Red Book covers a vast range of situations in which the employees find
themselves in the course of a working day and offers helpful and practical tips on
suitable behaviour in a range of circumstances and situations. Yet, the book makes
only a passing reference to its anti-discrimination policies and devotes a surprisingly
small amount of bandwidth to this subject.

1
When Firms Fail to Learn: Perpetuation of Discrimination in the Workplace; Erika James & Lynn Wooten
2
Racial Discrimination; www.amswers.com
Eli Lilly: Managing Workplace Diversity and Coping with the Accusations of Racial
Discrimination
This is something the company needs to attend immediately if it does wish to be
accused of paying only lip service to its major HR policies.

The company needs to conduct periodic self-audits to review its pay and promotion
practices in relation to gender, race and national origin with a view to identifying and
fixing disparities.

Train managers on Equal Employment Opportunity (EEO) practices. Proper training

is one of the methods that should be used to assure a non discriminatory work
environment. Training can begin with an easy to understand Equal Opportunity
Employment Policy set forth by the company. This will give an employee all of the
resources they should need to achieve a non-discriminatory work environment. On-
going training opportunities for employees and management of Lilly should
encompass things like; proper language, attitude displayed, advancement within the
company, minimum requirements needed for their job description and performance
evaluations.

(Lilly needs to take steps to ensure that the training programs it adopts are appropriate
and serve the purpose for which they are intended. Or else, it could lead to an
unfortunate situation like that of the publishing giant R.R. Donnelly & Sons that was
sued in 1998 because elements of its training program were deemed discriminatory.)

Develop multiple grievance addressal mechanisms.

Formal reporting mechanisms where all cases of alleged racial discriminations are
reported at annual performance reviews and possibly developing KPIs to monitor the
successful implementation of anti-discrimination policies.

Lilly needs to have in place a clearly defined and articulated NO TOLERENCE

policy against discrimination of any kind. To enforce this policy rigidly, if the
company needs to terminate an employee on this issue over the first offense, it should
not hesitate in doing so.

Lilly needs to avoid falling into the trap of adapting defensive routines when faced
with image threatening events. These could include reactions such as, denying the
problem or, justifying company behaviour. The company needs to instead approach
the issues with an open and embracing attitude that will demonstrate its willingness to
accept that the problem exists, while sending clear signals that it is taking proactive
steps to prevent recurrence in future.

Monitor compensation practices and performance appraisal systems for patterns of

potential discrimination. Make sure performance appraisals are based on employees
actual job performance. Allow employees, without negative consequences, to have
their appraisals reviewed and corrected when appropriate.

Lilly should consider having a system in place where any and all knowledge gained
from being involved in alleged discrimination cases can be effectively disseminated
Eli Lilly: Managing Workplace Diversity and Coping with the Accusations of Racial
Discrimination
throughout the organisation. By restricting the knowledge to HR or Legal
departments, the various line managers are being deprived of crucial learning
opportunities. Managers then fail to learn for themselves how to handle future
discrimination challenges.

Any and all strategies devised to eliminate or reduce the occurrence of workplace
discrimination need to be consistently implemented over the long term. If real and
positive results are obtained with these strategies, there will no longer be any need to
actually demonstrate the existence of effective policies. The results will speak for
themselves.
 Eli Lilly: Managing Workplace Diversity and Coping with the Accusations of Racial
Discrimination

There was a perception among a number of employees at Lilly that the company was promoting
diversity at the cost of its performance by hiring, grooming, and promoting under-qualified
minority employees. How can Lilly combat this perception?

Reverse Discrimination is legally defined as a term used to refer to the exclusion of a member
of a majority class not commonly discriminated against, to compensate for the traditional
discrimination against a minority member.

For example, management positions traditionally filled by members of the white race would be
filled by African Americans, Asians, or Hispanics to the exclusion of any white candidates, even
if the latter had seniority or were better qualified.

In USA, such circumstances broadly arise out of the implementation of Affirmative Action
principle which has been initiated to try and right the wrongs done to all minority groups who
have historically suffered some loss of privilege (adverse impact) due to discrimination.

Reverse discrimination creates a situation where a white (or more particularly a white male, if
gender bias is factored in) does not get something because of affirmative action, that they
probably would have got without affirmative action.

Metaphorically speaking, we can not have a situation where we are constantly robbing Peter to
pay Paul. If our aim is to create a perfect system, where justice is truly (colour) blind, then this
situation is clearly untenable.

In the case of Ricci v. DeStefano, U.S. Supreme Court has recently given a judgment in favour of
the plaintiffs, essentially ruling that the so called reverse discrimination is in fact discrimination
by another name and can not be condoned in the name of affirmative action.i

Several approaches have been used in the past in USA to create a harmonious and acceptable
method to implement Affirmative Action. One approach is to use the Delicate Balance
strategy, where victims of past discrimination are helped without creating undue pain for new
victims (i.e., whites). The emphasis here is on using race as a factor in decision-making without
making it the factor.

On the other side, there are proponents of the No Preferential Treatment strategy which argues
that all race-conscious policies are wrong and that emphasis should be placed on equal
opportunity for individuals rather than on forcibly providing opportunities for specified groups.

Diversity seeks to create employment systems that are based solely on merit regardless of
gender, race, culture, nationality, class, religion, or any other non-job-related criteria. At this time
now, Lilly is faced with a situation where it needs to project an image, or create a perception, that
it does not promote diversity at the cost of performance. This means that performance continues
to be the single largest factor (not necessarily the single factor) for taking all decisions related to
employee hiring, compensation, career advancement, and other HR policies that impact
employee welfare in some way or another.
 Eli Lilly: Managing Workplace Diversity and Coping with the Accusations of Racial
Discrimination
While this appears to be counter-intuitive when seen in light of Americas Affirmative Action
policies, it is in fact genuinely possible to create the right balance between promoting the interest
of minority while ensuring that a merit-friendly work environment exists at all levels in the
organisation.

Some steps that Lilly needs to take are:

At the organisation level:

o Create a Super Committee under the leadership of a Senior Vice-President, with

representation from a cross section of race, gender, religion, nationality and other
groups. This committee will lay down policies, and ensure their effective
implementation, related to all hiring, compensation, promotion and other HR
issues.

This committee will not only perform an advisory role, but will in fact be
responsible for any discrimination infractions. For example, the performance
bonuses of the committee members will be adversely affected with the number of
discrimination cases alleged in a year.

The committee members will be rotated half yearly while the SVP will be
replaced annually. The idea is to keep the committee fresh and functional at all
times without giving any opportunity for sub-groups or clicks to form within the
committee.

At Hiring level

o The criteria for hiring should be carefully set by the committee such that no
particular group is, advertently or inadvertently, eliminated or disadvantaged.
Thereafter, selection should be made purely on merit.

(Affirmative action does not imply that race should be given preference over
merit in the hiring process. Affirmative action in fact attempts to create a level
playing field where minority groups are given equal opportunity to apply for jobs)

At annual performance review level

o Lillys current method of conducting annual performance reviews, and setting

compensation levels for next year, is quite complex. Presumably Lilly follows this
method in order to eliminate bias to a large extent by creating a mathematical
relationship between performance appraisal results and eventual compensation.

Like all other existing methods though, the system is not really perfect. Where it
fails is the fact that disproportionately high weightage is given to the opinion of
the immediate supervisor (quite a rational approach, but still, it is the opinion of a
single individual).
 Eli Lilly: Managing Workplace Diversity and Coping with the Accusations of Racial
Discrimination
This is where the super committee as above will come in. All borderline cases
should be reviewed by this committee such that the opinions of the committee and
the supervisor are given 50:50 weightage in arriving at the final threshold for
performance.

The downside of this methodology are:

Increased beurocracy almost everything needs to be referred to the

committee

A sense of alienation among the line managers who will perceive the
committee as eating into their rightful authority

Increased loss of time and productivity if seemingly frivolous issues are

constantly escalated to the committee

Formation of the committee itself could create some issues if employees begin
to perceive committee work as an infringement on their time or resources
(much like how a lot of Americans view mandatory Jury duty as)

Yet this process has a good chance of working, and delivering results, if the management visibly
throws its weight behind it. The fact that the committee is headed by a SVP who reports directly
to the CEO, is a positive move. By making the committee members themselves answerable for
their performance, Lilly would have created an in-house, quasi-legal redressal mechanism, the
foundations of which are laid in principles of equality, transparency and meritocracy.3

Sensitisation training will play a big role if the process is to work effectively on a sustained
basis. A key factor here is the term reverse discrimination itself. The term is pejorative in nature
and tends to inflame passions and exaggerates the negative impact (of affirmative action) on
whites. A more neutral term, as suggested by Dr. Pincus, is reduced opportunity. Lilly should
utilise the training platforms to bring-in the softer terms in increasing use. 4 Of-course changing a
term will not change the situation dramatically at the grass root levels, but it will surely help to
take away the sting, and bring in a more accommodating environment, over a period of time.

3
(Word limit on this answer doesnt leave much scope for describing the finer details of how the committee will
function. Suffice to say though that a visibly transparent, merit based system is the answer to combating all
allegations of reverse discrimination at Lilly.)
4
It is much easier to talk to affirmative action skeptics when using the concept of reduced opportunity.
 Eli Lilly: Managing Workplace Diversity and Coping with the Accusations of Racial
Discrimination
References

1. Frost Illustrated News and Views of African Americans, www.frostillustarted.com

2. United States Court of Appeals For the Seventh Circuit No. 05-3771; LENA C.
BARRICKS, Plaintiff-Appellant, v. ELI LILLY AND COMPANY, Defendant-Appellee.

3. 2007 Business Litigation Express, Foley & Lardner LLP

4. Fighting racial discrimination in the workplace, Mark Butlar, www.helium.com

5. Racial Discrimination in the Workplace and What You Can Do About It;
www.associatedcontent.com

6. Preventing Harassment Discrimination in the Workplace; Supervisory Development

Core, Department of Employee Relations

7. When Firms Fail to Learn: The Perpetuation of Discrimination in the Workplace; Lynn
Perry Wooten, School of Business , University of Michigan, and Erika Hayes James ,
Darden School of Business, University of Virginia

8. Preventing Racism at the Workplace; Summary of a report prepared for the European
Foundation for the Improvement of Living and Working Conditions.

9. Research into the Impact of Affirmative Action on Whites; Dr. Fred L. Pincus;
www.adversity.net

10. Race Relations and Affirmative Action; Nova Scotia Human Rights Commission

11. Workplace News, Summer 2209; Schaffer Law LLC

12. You are not quite as old as you think: Making the case for reverse age discrimination
under ADEA; D. Aaron Lacey; SSRN
i
Back in 2003, the City of New Haven subjected candidate firefighters to a qualifying exam. Despite going to extensive
lengths to ensure that the exam was "race neutral," the results skewed dramatically along racial lines. African-American
candidates for Lieutenant and Captain positions passed at half the rate of white firefighters. Fearing that allowing the
results of the exam to stand could violate prima-facie rules of Equal Employment, (which hold employers in suspicion if
they promote one ethnic group disproportionately to another ethnic group), Mayor John DeStefano office's nullified the
results.

This action brought charges of reverse discrimination -- the 19 white firefighters and one Latino firefighter who had
passed the exam alleged that they had been denied opportunity based on the color of their skin -- in direct violation of
Title VII. Ironically, claimed the plaintiffs, in bending over backwards to ensure equal opportunity to African American
firefighter candidates, the city had in effect resorted to racial typecasting.

(www.employment-lawyer-blog.com)