Exxon's Employment Policies Are Bad for Business

ExxonMobil (NYSE: XOM  ) claims that it is committed to "having a workplace that is free from any form of harassment or discrimination" so it can foster an environment that empowers all employees to perform optimally. But, in fact, Exxon's policies put it at a competitive disadvantage against rivals that can better attract employees from traditionally marginalized groups.

But do its current policies do a good job of achieving these goals? I think not. And nearly 20% of Exxon's shareholders agree with me. Here's why I think they're right.

Shareholder challenge
In a proposal in Exxon's 2013 proxy statement, the New York State Common Retirement Fund calls on the company to "amend its written equal employment opportunity policy to explicitly prohibit discrimination based on sexual orientation and gender identity."

In fact, 2013 was the 14th year in a row that shareholders pushed for such changes.

Exxon's board asked shareholders to reject the proposal. In its response, the board stated  that the company's policies as a whole make it clear that "no form of discrimination or harassment in the workplace will be tolerated." Thus, they claim there is no need for the "Harassment in the Workplace" policies to explicitly state that LGBT (lesbian, gay, bisexual, transgendered) individuals are protected under Exxon's policies.

Here's why I think they are wrong.

Insufficient protections
In its shareholder proposal, the New York State Common Retirement Fund argues that "corporations that prohibit discrimination on the basis of sexual orientation and gender identity have a competitive advantage in recruiting and retaining employees from the widest talent pool."

I believe they're right. Companies that protect LGBT employees from discrimination arguably have a greater ability to recruit highly qualified individuals belonging to these groups, and to foster an environment where they can work as productively as possible.

Thus, a failure to protect these employees arguably puts Exxon at a competitive disadvantage against companies like Chevron (NYSE: CVX  ) , Shell Oil (NYSE: RDS-A  ) , and BP (NYSE: BP  ) which, according to the Human Rights Campaign, all offer better protections and benefits for LGBT employees.

To genuinely protect individuals that are particularly vulnerable to discrimination, I believe companies need to adopt company-wide policies that make it clear they are protected. In fact, there is some suggestion that Exxon already understands this, as its "Harassment in the Workplace" policy explicitly prohibits "harassment based on race, color, sex, religion, national origin, citizenship status, age, genetic information, physical or mental disability, veteran or other protected status."

The absence of explicit protections for LGBT individuals is notable here, given that such individuals are particularly vulnerable to discrimination. As pointed out by the shareholder proposal, a 2009 survey finds that "44% of gay and lesbian workers in the United States reported an experience with some form of job discrimination related to sexual orientation." Also, "an earlier survey found that almost one out of every 10 gay or lesbian adults also stated that they had been fired or dismissed unfairly from a previous job, or pressured to quit a job because of their sexual orientation."

Also, I believe that other policies at Exxon foster a culture that represents LGBT individuals as second-class citizens. For example, the company refuses to offer extended benefits to same-sex couples unless they are required by law to do so. In fact, when Exxon acquired Mobil in 1999 and XTO Energy in 2009, it eliminated the LGBT protections and benefits offered by those companies.

If these moves don't send a message that Exxon has little interest in preventing discrimination against LGBT employees, I don't know what does.

The Foolish takeaway
For these reasons, I believe shareholders have a financial incentive to continue pushing for better LGBT protections at Exxon. I also think investors thinking about purchasing the stock should consider how Exxon's failure to make these changes may affect its long-term ability to compete effectively with industry peers.

Read/Post Comments (14) | Recommend This Article (4)

Comments from our Foolish Readers

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  • Report this Comment On June 12, 2013, at 11:45 AM, prginww wrote:

    If I am straight, and I am hired by Exxon, I will not go to work with a big sign around my neck advertising that I am straight. I will simply go to work, and do what I am supposed to do, that is, work! I will not face discrimination, because I did not get hired to promote my sexuality, but to work. Now, if someone chooses to promote their sexual preferance in the work place, then they should expect a reaction from their fellow workers.

  • Report this Comment On June 12, 2013, at 12:11 PM, prginww wrote:

    I don't work for Exxon and I don't know the culture there, so I will have no opinion on whether this needs to be added.

    I just want to respond to stavros52:

    I am gay and completely agree with you. I do NOT advertise that I am gay and I, personally, have never had an issue. I just do my job.

    BUT I do know people/friends that have just worked at their jobs and never advertised their sexual preferences. They were discovered out on their personal private time and were them discriminated against and were actually fired.

    It can happen, even if you work hard and keep your work life and personal life separate.

  • Report this Comment On June 12, 2013, at 12:13 PM, prginww wrote:

    A large majority (81%) of the shareholders voted to defeat this measure. Exxon profits are up again. It shows they will not be dictated to by the liberal spineless wonders who follow marching orders and abandon morality.

  • Report this Comment On June 12, 2013, at 12:17 PM, prginww wrote:

    The LGBT bullies are out in force again. Tolerance, the once purported goal, is not longer acceptable. The brow beaters will now accept nothing but everyone at every level fully condoning their behavior as acceptable and moral. As a libertarian, I could care less how they live their lives. But forcing me to say that it is not sinful will probably, eventually, find me guilty of violation some hate speech code and tossed in jail. Liberty had a great run, America. Too bad you couldn't hold on to it.

  • Report this Comment On June 12, 2013, at 12:20 PM, prginww wrote:

    @Stavros52 - you may not wear a sign around your neck, but any spousal or family pictures you have instantly advertise your orientation. Basic conversation "outs" you as well. Gay people are not typically wearing signs to work either. They should not feel the need to censor pronouns when discussing life outside of work when their straight counterparts do not have to. They should not feel the need to hide pictures, etc... Its a sad fact that there are still a large number of homophobes out there who would terminate a homosexual merely for being homosexual, regardless of job performance. These American, law-abiding citizens should not have to worry about that in a civilized, professional environment.

  • Report this Comment On June 12, 2013, at 12:51 PM, prginww wrote:

    LGBT will do everything to brainwash the peoples' mind but it will fail eventually just as it failed in the past and in olden times. This attempt has been going on for thousands of years and had been stopped in its tracks countless of times.

  • Report this Comment On June 12, 2013, at 12:53 PM, prginww wrote:

    I doubt Exxon will have trouble recruiting qualified workers. Their non-PC policy may even attract some.

  • Report this Comment On June 12, 2013, at 1:06 PM, prginww wrote:

    1) Who here thinks that making this change would actually have any substantive effect on anything?

    2) I would be incredibly insulted if someone tried to do this under the name of some group that I am a part of. "No discriminating against anyone" is a much better policy than, "No discriminating agianst anyone, and also no discriminating agianst LGBTs which apparently are not a subet of the group 'anyone'."


    You're not much of a libertarian if you get all butthurt over people who own shares of a private company trying to effect change on said company without any government involvement.

  • Report this Comment On June 12, 2013, at 1:20 PM, prginww wrote:

    I am only interested in dividends,not social policy.i have no problems with gays. I don't invest because of them! Exxon could improve their dividends,instead of building up the company,like when the invested in Reliance Motors,and Toledo scales!

  • Report this Comment On June 12, 2013, at 1:34 PM, prginww wrote:

    @truth3, what does this even mean? "LGBT will do everything to brainwash the peoples' mind but it will fail eventually just as it failed in the past and in olden times."

    @Frogman13 & @Stavros52, this isn't about finding qualified employees or just going about one's business and do the job they are hired to do. This is about a talented LGBT employee who could potentially be considering offers from Chevron or XOM and declining XOM's offer knowing they don't explicitly prohibit descrimination based on who they are attracted to. The impact to XOM's bottom line is probably minimal, but as a shareholder, don't you want the company to maximize profits?

  • Report this Comment On June 12, 2013, at 2:20 PM, prginww wrote:

    I hope that Exxon holds their ground. And as someone already stated, their stand is probably attracting employees, investors and customers. We now buy our gasoline exclusively from Exxon stations. I hope our little bit helps.

  • Report this Comment On June 12, 2013, at 3:30 PM, prginww wrote:

    Wow, just more factless drivel. So Exxon does not offer same sex beneifts it just follows the law so therefore they are at a competetive disadvantage in the work place.

    Let's turn this around and accept that they DO discriminate and since they are the number 1 revenue producing corporation in the world then discriminating againt the LGBT crowd is VERY SUCCESFUL.

    Why we cater to such a small segment of our society helps only lawyers, and I have no doubt that there are hundre3ds of very succesful LGBT employees already working at Exxon

  • Report this Comment On June 12, 2013, at 4:23 PM, prginww wrote:

    Not sure why this article got posted on MF. It seems to come with a thinly desguised agenda. Obviously the current policy of XOM has not had any real, measurable effect on earnings, as was mentioned in several comments above. Let's keep the articles focused on investing and leave the politics and social agenda to other sites.

    . . . . just sayin', I really don't care what M. Joy Hayes thinks about XOM policy unless it can be proven to somehow matter for an investor . . .

  • Report this Comment On June 12, 2013, at 5:04 PM, prginww wrote:

    "no form of discrimination or harassment in the workplace will be tolerated"

    That sounds like plenty for me. Some of the nicest people I know are gay.

    Are gay people in XOM being discriminated against or something for this shareholder challenge to continue?

    Yes I'm Long XOM

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