Toshiba Gender Discrimination: Personal Networking to Reduce Turnover

Introduction: The Toshiba Gender Discrimination Lawsuit

Electronics giant Toshiba Corp.'s American business unit faced a class-action lawsuit over how it paid and promoted women. The law firm Sanford Wittels & Heisler brought a $100 million gender discrimination lawsuit in federal court in Manhattan on behalf of a potential class of 8,000 women working for Toshiba in the United States.

Sanford Wittels & Heisler had earlier represented the class of litigants in a long-standing case against Novartis's U.S. unit brought by women in its sales force. That lawsuit settled for $175 million in July 2010, following a $253 million jury verdict.

The lawsuit against Toshiba alleges that Toshiba America Inc. regularly failed to pay women equal salaries and bonuses, intentionally segregated women into lower pay-grade positions, and showed favoritism toward men for promotion. A human resources manager in Toshiba's U.S. nuclear power business served as the lead plaintiff, and was on a leave of absence at the time of filing. A Toshiba spokesman declined to comment.

The complaint came just months before the U.S. Supreme Court was expected to hear argument in a 2001 discrimination case on behalf of as many as 1.5 million female employees at Wal-Mart Stores Inc.

My hypothesis is that Toshiba could have avoided this lawsuit and the attendant bad publicity if it had engaged in personal networking communications with its employees — specifically: (a) originating; (b) dialoguing; (c) exercising; and (d) implementing.

Personal Networking as a Preventive Strategy

Let us examine the key areas of personal networking and how Toshiba could have used them to avoid this negative outcome — namely, a lawsuit worth hundreds of millions of dollars.

For originating, we must first identify who the stakeholders are within the organization. For Toshiba, these clearly include workers, management, customers, and shareholders. However, when defining those stakeholders, management failed to distinguish between male and female workers. Female workers felt excluded from the personal networks shared by workers and management, and robust personal networks — had they been in place — would have benefitted the company enormously.

A personal network is a collection of human contacts known to an individual, with whom that individual interacts at regular intervals to support certain activities. Personal networks are generally mutually beneficial, extending the concept of teamwork beyond the immediate peer group. The phrase is most often encountered in the workplace.

Personal networking involves developing and maintaining such a network, usually over an extended period of time. It is generally encouraged by large organizations with the aim of improving productivity, and a number of tools — many of them IT-based and reliant on Internet technologies — exist to support the maintenance of these networks.

Toshiba is known to have extensive personal networking groups. However, at least according to this lawsuit, women did not benefit from them.

Dialoguing is a general communications technique used to establish what is occurring in a given situation. Ideally, it is bidirectional: both the facilitator and the employee work together to identify the real issue and move closer to understanding the true nature of a conflict. Based on the facts alleged in the lawsuit, Toshiba did not use its dialoguing capabilities to discover the underlying conflicts that were undermining the effectiveness of its personal networks.

Toshiba could have employed a number of well-established exercises to verify that its dialoguing with female employees was working effectively. For example, executives could have insisted that obfuscating language be avoided when discussing issues of lower pay and lower performance-grade expectations for female employees. They should also have identified and addressed filters that were preventing a clear view of the conflict. Encouraging female employees to develop a narrative — an exposition explaining how they felt they were being treated unfairly — would have surfaced these concerns before they escalated into litigation.

Finally, had Toshiba implemented the techniques of dialoguing and exercising described above, it would most likely have avoided the lawsuit altogether.

Toshiba's failure to leverage personal networking contributed to high turnover, dissatisfaction among female employees, and, ultimately, the lawsuit. The proposed solution draws on guidelines discussed by a former Toshiba human resources executive who was quoted in the press.

Proposed Solution to Toshiba's High-Turnover Problem

According to Michael Lenzner, managing partner of The Lenzner Solution, a human resources consultancy, a good first step is to survey employees to gauge what issues matter most to them and what will make them remain with an employer over the long term.

"Companies will see what the going rate is in order to attract, retain, and motivate their employees," said Lenzner, who has 25 years of experience as a human resources manager, including time at Toshiba.

While working across various organizations, Lenzner repeatedly needed to verify that employer wages were actually competitive. "Most employers simply don't know what their competition is doing. I wanted to understand the current trends and I wanted to know if employee turnover was related to pay and benefits," he said.

This information becomes a critical learning tool for employers like Toshiba, Lenzner noted, because the regional job market is always affected by new developments.

Beyond pay surveys, Toshiba needed to actively incorporate women's concerns into its existing personal networking infrastructure. As discussed above, dialoguing is a general communications technique designed to surface what is genuinely occurring in a given situation. Because Toshiba did not apply this technique to discover the originating conflicts affecting its female workforce, those conflicts went unaddressed until they culminated in formal legal action. Integrating women's voices into the networking system from the outset would have been a straightforward corrective measure.

Conclusion

Toshiba's problems with insufficient networking contributed to high turnover, dissatisfaction among female employees, and, ultimately, a costly lawsuit. Had the company applied the four-step personal networking framework — originating, dialoguing, exercising, and implementing — it would likely have identified and resolved the pay and promotion inequities long before they reached federal court. The fast food industry's success in reducing turnover through employee engagement and targeted benefits programs demonstrates that these strategies work in practice. Toshiba, and corporations facing similar challenges, would do well to embed these networking principles into their human resources management systems as a proactive, rather than reactive, approach to workplace equity.