Businessweek Archives

Texaco Was Just The Beginning


News: Analysis & Commentary: DIVERSITY

TEXACO WAS JUST THE BEGINNING

Expect more civil rights tangles with Corporate America

It was perhaps the first big aftershock of Texaco Inc.'s diversity debacle. On Dec. 2, Jesse Jackson led a clamorous protest outside R.R. Donnelley & Sons' Chicago headquarters, showing support for a suit brought by minority workers who were fired when Donnelley closed a printing operation. "We're willing to demonstrate and litigate," Jackson said.

Donnelley denied wrongdoing and said it would contest the discrimination charges in court. But employers elsewhere increasingly face similar public attacks. Flush from their landmark settlement of Texaco's racial-discrimination charges, major civil rights groups are sharpening their focus on corporate diversity programs. Some promise more confrontation, more litigation, and more boycotts. "The Texaco incident does have the potential to catalyze the civil rights movement into a more aggressive campaign," says Wade Henderson, executive director of the Washington-based Leadership Conference on Civil Rights.

CONFRONTATION. Corporate activism isn't an unknown tactic for the civil rights movement. Jackson's Rainbow PUSH Coalition has happily pursued clashes with business for two decades. And the National Association for the Advancement of Colored People negotiated an important discrimination settlement with Flagstar Cos.' Denny's Inc. restaurant chain in 1993. For the most part, though, mainstream groups have tended to shy away from such battles, dedicating resources instead to lobbying and shaping legislation.

Texaco gave those organizations a taste of the exposure and leverage that direct confrontation can achieve. Faced with intense media scrutiny over tape recordings of senior executives discussing black employees in pejorative terms, the oil company agreed to settle an unrelated discrimination suit by paying out $176 million, including $35 million to fund an unprecedented task force of outsiders empowered to shape personnel decisions affecting minorities.

The remarkable accord was a tonic for rights groups that have lost considerable ground in the public-policy arena. On Election Day, California voters approved a proposition that would bar state and local governments from using gender or race-based employment preferences. In Congress, Rep. Charles Canady (R-Fla.) plans to reintroduce legislation to limit preferences in the federal government. Affirmative action is losing ground in the courts, too: In mid-November, for example, the Boston school board dumped a quota system for applicants to its selective public high schools after a federal judge indicated he likely would rule the strategy unconstitutional.

Activists understand the trend. "We've been spiraling down at a rapid rate" since the defining civil rights victories of the 1960s, says Celes King III, chairman of the Congress of Racial Equality of California. "Now, we are having to change direction. The bottom line is in commerce, and we have got to deal where the action is."

"BULLETPROOF." King says more antibusiness actions are likely, although he has none planned. Henderson is more cautious, indicating that boycotts will remain "activities of last resort." Rather, rights groups will attempt to use the Texaco case as ammunition in less draconian battles for preserving affirmative action in the workplace and in awarding contracts. Still, NAACP President Kweisi Mfume supports a continuing boycott of Texaco. And officials of the Columbus (Ohio) Urban League on Nov. 25 vaguely threatened a boycott against United Dairy Farmers, a retailer being sued by two employees for discrimination.

Employers under fire say the Texaco episode won't determine their responses. "We're not a Texaco, in a lot of ways," says Alan M. Lirtzman, United Dairy Farmers' human resources director. But they acknowledge that the race dynamic is changing. To avoid costly and embarrassing clashes, companies likely will hew to existing affirmative-action policies. The Texaco case "reaffirmed for us the approach and direction we've taken," says Eileen C. Farrar, senior vice-president for human resources at Unum Life Insurance Co. of America. Indeed, "so long as they meet current goals and timetables, [corporations] feel bulletproof," remarks Gerald A. Reynolds, a legal analyst with the conservative Center for Equal Opportunity.

The continued weakening of affirmative action, however, threatens employers' safe haven. Preference programs allow them to point to credible progress on standardized measures. Lacking that yardstick, they could become vulnerable to a chaotic give-and-take with activists. Says Reynolds: "What corporate chieftains don't understand is, they can't win that game." Many civil rights groups, he says, won't be satisfied until they get a workforce that reflects the demographics of the general population.

Will rights groups scrap a tradition of quiescence to get that? Not overnight. After Texaco, though, they appear emboldened to change course.By Keith H. Hammonds in New York, with bureau reportsReturn to top


The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus