Skip to Content (Press Enter)

Can LGBT Policies Change Firm Performance?

Share This:

Do policy changes supportive of LGBT employees enhance corporate performance?

A recently completed study led by a Cal State Fullerton business faculty member has found positive results to that question.

“Previous studies have shown that such policies supportive of lesbian, gay, bisexual and transgender individuals are important to human resources, such as in recruitment and retention,” said lead researcher Shaun Pichler, associate professor of management in Cal State Fullerton’s Mihaylo College of Business and Economics. “Studies also indicate that LGBT-supportive policies are viewed positively by investors.

“But we took a different approach and explored if a corporate firm actually sees better firm performances as a result of such policies.”

Pichler led a team of researchers from Texas Tech, University of St. Thomas, University of South Florida and University of Colorado at Denver to study more than 1,000 corporate firms that have adopted LGBT-supportive policies — namely domestic partner benefits and non-discrimination policies.

“It is the first study to systematically document the performance-enhancing benefits of such policies — supporting what many business leaders, think tanks and policy experts have been suggesting for some time now,” said the researcher.

“We found that such firms outperform their competitors over time in productivity, firm value and profitability. Moreover, when firms discontinue these policies, their performance decreases,” said Pichler.

The researchers found that companies saw higher levels of firm value and profitability regardless of whether the firm was located in a state with and without anti-discrimination legislation, but higher levels of productivity were mitigated in states with anti-discrimination legislation.

“This could suggest that employees do not feel they benefit as much from a firm’s adoption of supportive policies when there is already protective legislation in place,” explained the scholar, adding, “It is currently not illegal to discriminate on the basis of sexual orientation federally.”

In addition, the researchers found that such policies have an even bigger effect in the area of research and development, which the researchers believe could be due to such firms having a greater need for highly-skilled employees.

“It is estimated that there are approximately nine million LGBT individuals living in the United States, accounting for about 12 percent of the workforce,” explained Pichler.

“From a stakeholder perspective, as more firms implement LGBT-supportive policies, a company’s decision not to adopt such rules may send a signal to potential employees that the firm is not socially responsible when it comes to anti-discrimination and support for diversity,” he added.

Such findings, the researchers believe, have important implications for theory and research on LGBT issues in organizations, for human resource managers and for policy makers.

“Do LGBT-Supportive Corporate Policies Enhance Firm Performance” is scheduled for inclusion in an upcoming issue of Human Resource Management. An online version of the study can be found on the Social Science Research Network.