The Cost of Failing to Change: Echoes From the ‘Boom-Boom Room’ — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

The Cost of Failing to Change: Echoes From the ‘Boom-Boom Room’

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in Discrimination and Harassment,Hiring,Human Resources

Investment bank Smith Barney, a division of Citicorp, confirmed last week that it agreed to pay $33 million to about 2,500 current and female brokers to settle a gender discrimination lawsuit. The settlement was announced by the U.S. District Court in San Francisco.

The $33 million is in addition to the $18 million the firm paid to settle a 1997 discrimination lawsuit alleging that female brokers were sexually harassed in the brokerage’s infamous "boom-boom room," a basement space in a Smith Barney branch in Garden City, N.Y. The female employees said that men harassed them with fraternity-house antics in the room. And brokers who didn’t go to the room claimed they were passed over for promotions, steered away from lucrative accounts and denied pay raises.

Under that 1997 settlement, the company agreed to change hiring and promotion criteria and institute sensitivity training. Apparently it didn’t take. In 2005, female brokers filed another complaint alleging promotions and pay were based on past performance, including the period during which the discrimination occurred. Unless practices changed, the brokers alleged, they could not emerge from the "boom-boom room’s" shadow.

Apparently, what failed to occur at Smith Barney was a real culture change.

Investment banks do tend to be testosterone-laden environments. At the same time Smith Barney was dealing with the original class-action suit, Merrill Lynch faced a similar suit from 900 of its female employees. Fellow investment bank Morgan Stanley settled gender discrimination suits in 2004, 2005 and 2007.

The lesson is that cultures do not change easily—either in the world or the workplace. Cultural change is a monumental effort, but one that ultimately can be valuable for more than just the litigation it avoids.

Cultural change consultants note that, like any initiative, the effort must have top-level support and an energetic champion to push it through. Often, the change will be painful, leading to the departure of some and the arrival of new blood that, by definition, will play by different rules.

The trick is helping the work force see change as an opportunity, not a threat. That is perhaps the toughest idea to sell. On the other hand, going back to the "boom-boom room" is not a realistic option either.

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