Communication Fairfax. Corporate Racial Discrimination This Memo

¶ … Communication

Fairfax.

CORPORATE RACIAL DISCRIMINATION

This memo is in response to your concern regarding racial discrimination in the corporate world. I have studied the two cases, namely that of Texaco and Denny's. This study has revealed the meaning of corporate racial discrimination, its consequences, the response of the firms that are allegedly practicing it and the methods of fostering corporate diversity.

Understanding Corporate Racial Discrimination

Racial discrimination is referred to any set of actions that discriminate on the basis of race, color, cast or creed. Discrimination usually can takes place against ethnic minorities such as African-Americans, Asian-Americans etc. In the corporate world, racial discrimination can take the form of categorizing employees, customers and suppliers on the basis of their race, cast, color or creed by treating them in a relatively negative way as compared to other races. In dealing with employees, racial discrimination takes the form of receiving low priority over people of other races when it comes to selection, recruitment, training, promotion or compensation. A person belonging to a low-priority race might meet all the prerequisites or criteria for a job but he might not be employed primarily because of his racial difference. Similarly, if an employee is entitled to receiving adequate training at the expense of the firm but he is not granted it on the basis of his race, that employee is being racially discriminated against. Moreover if an employee belonging to an ethnic minority group, is due to receive promotion but some other person with lesser or equal qualifications gets promoted instead, the firm is discriminating against the employee with the hidden reason usually being race or color. In addition to the above, a firm may also discriminate against an employee if it fails to pay him on the same rate that it pays to his counterparts or give him a low salary package altogether because of the employee's racial difference.

The customers are discriminated against if other customers are given preferential treatment over them because they belong to different races. The suppliers might be discriminated against if the firm does not choose minority vendors even when approached by them. Moreover a firm may pointedly ignore the minority suppliers by not purchasing from them and instead buying from elsewhere because of the supposed racial difference. Racial discrimination can be explained through the examples of Denny's and Texaco Inc. At Denny's, a food service chain in the United States, racial discrimination was rampant. The organization usually discriminated against the African-American race within the context of customers and suppliers. Though there were not any written racist policies but the racist culture was pervasive in the organization primarily due to the employers' ignorance to the matter. As a result different outlets practiced against racial discrimination customers in different ways. For instance, some restaurant managers asked for identification as a condition for getting food served. In some outlets, restaurant operators asked the customers to pay as they ordered before the food was served. Yet few others simply ignored the African-American customers once they had ordered by serving other customers first even if they had arrived late and it was not their turn to be served (Segal, 1999). Hence customers who belonged to races other than African-American were given preferential treatment. Lastly, several African-American customers at Denny's also complained that they were literally locked out of Denny's establishment as seen approaching. In addition to the customers, the suppliers or vendors also reported that they felt discriminated against since they belonged to the African-American race and hence did not get business from Denny's even when they approached the firm.

Denny's, however is not the only example. Texaco, the oil supply chain, suffers from racial discrimination too. At Texaco, racial discrimination has been practiced through employees who have reported several complaints. On a closer inspection, it was revealed that employers at Texaco routinely made derogatory remarks against African-American employees. Moreover it was noticed that the firm continued to hire African-Americans for menial jobs within the firm. They were very few African-Americans in the roles of authority; in fact a survey that compared Texaco with the oil industry revealed that at Texaco white senior managers and the African-American ones were in a proportion of 80 to 1. In addition, the Equal Employment Opportunity Commission found out that African-Americans who wanted promotion were recruited at pay packages that were considerably low than what their white counterparts received (Economist, 1996). The EEOC also discovered the trend that the minority employees were promoted after they had put in twice the amount of time their white counterparts had put into one job level.

Consequences of Discrimination

In 1993, six U.S. Secret Service agents who happened to be African-Americans went to Denny's for breakfast. After waiting for a considerable period of time and complaining to the manager, when they still not get served, they filed a class-action race-discrimination lawsuit against Denny's. Not only did the management at Denny's had to respond to this lawsuit but they were further forced to deal with the myriad complaints and lawsuits that followed this event. As a consequence of racial discrimination that was being practiced at Denny's, the firm had to pay $54 million to 294,000 discriminated customers and their lawyers (Rice, 1996). Furthermore, Denny's was obliged into signing a decree with the U.S. Justice Department where the firm agreed to publicize non-discriminatory policies and retrain existing employees about the same. Moreover the firm's outlets came under the constant supervision of the Justice Department, for the following seven years, where they would be judged continually for any evidence of racial discrimination.

Texaco suffered legal action, bad publicity and boycott of its products because of its practice of racial discrimination. In 1994, six African-American employees filed a $520 million lawsuit against Texaco on behalf of 1500 other minority workers. In addition to this, there was a nation wide outrage regarding Texaco's treatment of its minority workers (Eichenwald, 1996). This resulted not only in ruining the goodwill of the firm but also in public boycott of Texaco products which in turn reduced the firm's share price in the stock market. The general public gave up on using Texaco credit cards and buying from independent Texaco dealers. As a result, the price of one share of Texaco dropped two points from 99 to 97 following the boycott.