Supporting LGBTQIA Staff in the Workplace

According to PwC, with up to 85% of a company’s costs tied up in people, stakeholders are looking to allocate investment dollars to better understand how management sees the company’s strategic and operational requirements. What is clear is that human capital management, which includes diversity, equity, and inclusion (DE&I) efforts, better increases productivity and thus profitability of a company and its employees. The more investment a company makes in its employees, the better chances of its productivity and success.

Part of effective human capital management is advocating for the inclusion of lesbian, gay, bisexual, transgender, queer, intersex, and asexual (LGBTQIA) employees. An organization’s investment in all of its employees really matters—and critical to strengthening a company’s culture and building resilience in an ever-changing landscape is ensuring the sustainability of a safe culture for LGBTQIA persons.

There’s growing recognition of the importance of a safe culture competency in the workplace, both from an employee perspective and at the organizational level, to achieve better DE&I. Some organizations have established a safe cultural competency via legislation/mandates, accreditation standards, and service training programs. A safe cultural competency is ultimately a set of diverse behaviors, attitudes, and policies that can come together inside an organization to continuously work in cross-cultural situations and a methodology to achieve them to support all employees. According to a U.S. Chamber of Commerce report, 76% of companies that instituted inclusive practices saw increased employee engagement and a 53% improvement in employee retention.

To build this identified safe culture, it’s imperative that organizations use voluntary self-identification programs (VSIPs) with internal controls to help measure their progress toward diversity goals during and after the talent acquisition process. Without effective VSIPs, companies can face real challenges related to economic uncertainty, employee burnout, and disconnection in remote or hybrid work environments.

The lack of these VSIPs is taking a toll. There’s currently no LGBTQIA identification benchmark in the workplace. Today, an estimated 4%-10% of the U.S. population—11 million persons—are LGBTQIA, but 88% who are employed aren’t directly identified in the workplace. According to a recent study from the UCLA Williams Institute, 62% of LGBT are people of color and under 34 years old.

In addition, based on a study of more than 3,000 current and former U.S. accounting professionals from underrepresented backgrounds by IMA^® (Institute of Management Accountants), the California Society of Certified Public Accountants (CalCPA), and the International Federation of Accountants (IFAC), about one in five LGBTQIA respondents are leaving the accounting profession due to inequitable and exclusive experiences.

Companies need to establish critical protocols for LGBTQIA employee voluntary self-identification in the workplace in order to help recruit, retain, and better connect to LGBTQIA communities in the United States.

DE&I Solutions

If companies want to move forward with inclusion of LGBTQIA persons, they need to create a VSIP infrastructure so that these employees can begin to be counted in company disclosures like the U.S. Equal Employment Opportunity Commission (EEOC) EEO-1 Component 1 report, which is used for better human capital impact investing. Consequently, management accountants can play an important role in helping companies create VSIPs and support disclosure reports, as they do with financial statements, by including management to better connect LGBTQIA employees to allies and mentors for a more diverse workplace. As a direct result, VSIPs can expand dialogue at all management levels (including LGBTQIA mentors and allies) around diversity goals and help create programs that support diverse employees by connecting to underrepresented groups. Doing so keeps and attracts current and future LGBTQIA employees by measuring through a VSIP for better DE&I management. 

The EEO-1 report provides information on race and ethnicity linked to various job categories but doesn’t include employee information related to LGBTQIA, disabled, and veteran employees. It can, however, be used as a best practice as a possible human capital public disclosure framework that may be mandated by the U.S. Securities & Exchange Commission and the U.S. federal government (the largest employer in the country). To do so, a company must set up a VSIP to connect LGBTQIA persons in the workplace to account for better human capital management and enhanced value.

Another way to advance DE&I efforts is to expand LGBTQIA board membership in companies. The Association of LGBTQ+ Corporate Directors estimates that on average, 0.6% of all seats of publicly listed companies are occupied by voluntary self-identified LGBTQIA persons. With half a percentage of all seats, LGBTQIA people are the most underrepresented group on U.S. boards, according to ISS Corporate Solutions, Inc. and Spencer Stuart. Out Leadership reported that, “Few, if any, Fortune 500 boards ask for LGBTQ+ metrics in their annual Director & Officer Questionnaire, and less than 0.4% of directors in the Fortune 500 are LGBTQ+.”

By having LGBTQIA board representation, top management is perceived to be supportive of LGBTQIA efforts, including VSIPs, and it indicates the company has mentors and allies for LGBTQIA persons inside the organization. By having mentors and allies, connections and networking can help to increase LGBTQIA employee retention.

Executive Order

In January 2023, the White House released two reports required by the June 2022 Executive Order 14075: Advancing Equality for Lesbian, Gay, Bisexual, Transgender, Queer, and Intersex Individuals: Federal Evidence Agenda on LGBTQI+Equity and Recommendations on the Best Practices for the Collection of Sexual Orientation and Gender Identity Data on Federal Statistical Surveys. Critical to these efforts is the establishment of ensuring privacy and confidentiality that includes safeguarding the privacy of employees who choose to voluntarily self-identify as LGBTQIA.

Within the Federal Evidence Agenda on LGBTQI+ Equity report are the following critical elements needed for data information guidelines collecting LGBTQIA, disabled, and veteran sexual orientation and gender identity (SOGI) data on company forms and other administrative contexts:

• Ensure relevant data is collected and privacy protections are properly applied (ensure LGBTQIA self-voluntary identification isn’t used against them in any adverse manner);
• Prevent adverse legal actions against using the data against intent for VSIP purposes;
• Make responses voluntary;
• Rely on self-attestation; and
• Be consistent and intentional in efforts to collect and house such information within said entity.

The Biden administration has issued recommendations to agencies on collecting self-reported statistics on sexual orientation and gender identity under the 2022 executive order. The Federal Evidence Agenda on LGBTQI+ Equity report lists considerations for including such items on surveys, collecting and reporting the information, and safeguarding the data. Once an LGBTQIA employee has voluntarily made a disclosure to human resources or the appropriate office within a company, the most successful policies provide for ongoing communication between the employee and the employer. The executive order sets a “floor” in terms of protection against discrimination on the basis of sexual orientation or gender identity.

Once a VSIP has been created, organizations can then better develop mentorship and allyship programs that connect LGBTQIA employees with senior leaders or experienced professionals who can provide guidance and support. Companies can foster allyship within the organization by encouraging employees to be supportive advocates for LGBTQIA colleagues and ultimately connect to outside LGBTQIA communities for enhanced business development opportunities.

For more on this subject, check out the Count Me In podcast Ep. 193: Diversifying Global Accounting Talent: Actionable Solutions for Progress.