PRESIDENT REAGAN is being urged to weaken enforcement of affirmative action programs for federal contractors. The proposition has divided the Cabinet, stalling action. But if President Reagan still is trying to make up his mind, here's a message from the business community: Go slow.
Although business has major problems with the implementation of the program, it now supports the basic principles of affirmative action as implemented under Presidents Kennedy, Johnson, Nixon, Ford and Carter.
The reasons why corporations are not interested in seeing those principles weakened have more to do with business than with civil rights. Business -- led by the National Association of Manufacturers -- sees that its own self-interest requires affirmative action. And if the Reagan administration thinks American business will thank it for weakening affirmative action enforcement, then the administration isn't listening to what businessmen outside the Beltway are saying.
The government's present affirmative action program requires companies doing business with the federal government to have written affirmative action plans including goals and timetables to increase the employment of qualified minorities and women where they are "under-utilized." Press reports indicate the administration may no longer require goals and timetables and might even prohibit their voluntary use as a management tool.
There are at least 10 good reasons why business, while seeking administrative reforms, might take a position that voluntary goals and timetables should continue to be allowed and government should have some kind of mandatory program:
1 Changing Labor Market:
Women and minorities will be 75 percent of labor force growth between 1990 and 2000. Employers without plans to eliminate barriers to hiring or promoting those groups will be cut off from a major part of America's labor force.
C.W. Parry, chief executive officer at Alcoa, recently sent a memo to all employes noting that Alcoa's "best prospects for survival and growth lie in our skillful selection of the best individuals" from a "broad- based talent pool that includes women and minorities."
2 Minimizing Risk of "Reverse Discrimination" Suits:
In a recent survey of chief executive officers by the management consulting firm for which I work, 95 percent indicated that they will use numbers as a management tool to measure corporate progress whether the government requires them or not. However, once the government requirements are gone, there would be a risk of so-called "reverse discrimination" suits alleging that employers have gone too far with affirmative action.
The continuation of a responsible and balanced government program that sanctions goals and timetables will make it less likely that such suits will be successful, according to National Association of Manufacturers President Alexander Trowbridge.
3 Compatibility with Management:
The use of goals and timetables and other numerical measures to track the employment of minorities and women is consistent with how corporations deal with all important areas.
In recent meetings with more than 150 companies, the consistent question we were asked was "If we can't count, how can we measure? If we can't measure, how can we manage?"
William McEwen, director of equal-opportunity affairs at Monsanto Co. in St. Louis and chairman of the human resources steering group of the NAM, told a House of Representatives subcommittee in July that "business . . . sets goals and timetables for every aspect of its operations -- profits, capital investment, productivity increases and promotional potential for individuals. Setting goals and timetables for minority and female participation is a way of measuring progress and focusing on potential discrimination."
Senior corporate officials clearly recognize that managers must be measured on all of the things they are expected to do.
A survey of more than 200 major companies found 76 percent saying they used "voluntary internal numerical objectives to assess (equal employment opportunity) performance." One-fourth of the companies said that incentive compensation plans for managers include equal employment objectives and that performance against those objectives can affect incentive payments positively or negatively. By 1988 more than half the companies predict they will be basing incentive pay in part on EEO performance.
4 Use of Numbers as a Defense:
One proposal might eliminate the possibility that businesses could use goals and timetables even voluntarily or point to progress in minority and female employment as part of the evidence in defending against discrimination charges, although the Supreme Court has emphasized the appropriateness of such a defense. Employers clearly want to use their progress as a defense and to be able to avoid further government investigations of their activities if they have done well, as measured by the numbers of minorities and females they employ.
At the same time, the program does not require any quotas. The goals and timetables program is a flexible one that business can live with. Ralph P. Davidson, board chairman of Time, Inc. told Congress that at "no time (was his company) subject to anything resembling 'quotas' (and that they) weren't presented with rigid, predetermined statistics for the hiring of women and minorities." He said that the government never tried "to dictate a final, inflexible result."
5 State and Local Government Programs:
Historically, large companies opposed federal regulations pleading states' rights. However, today they prefer the uniformity of a single federal regulation, even if the companies don't always like all the details, to having to meet a multiplicity of state and local regulations.
One national financial services company presently has affirmative action programs with 60 local jurisdictions, each of which calculates its requirements differently.
Recently, NAM President Trowbridge has noted that if states and cities believe the federal program is inadequate, it could lead to a proliferation of "conflicting and complicated standards" that "are bound to cost more ultimately and result in less effective programs." Trowbridge has called for reforms in the federal program without amending the underlying executive order. The NAM believes that such amendments would be "ill-advised," in part, because they might trigger such state and local action.
6 Avoiding Inflexible Federal Legislation:
Employers are concerned that Congress might freeze the present program into law and thus deny flexibility to alter the regulations. Rep. Augustus F. Hawkins (D- Calif.), chairman of the House Education and Labor Committee, has pledged legislative action should the executive order be weakened. He would probably get bipartisan support in both houses. Sen. Robert Dole (R-Kan.) urged the president not to weaken the new executive order and congressmen and senators of both parties have written him strong letters supporting a similar position.
7 Employe Morale and Productivity:
Companies who have made significant progress in hiring minorities and women would have morale and productivity problems if their employes believe that the federal government is reducing its commitment to affirmative action, particularly if they believe that business pressure led to such a change.
For example, IBM now has 30,000 minority employes and 30,000 women who would not be there if the company's percentage of minority and female employment was the same as it had been in the early '60s. Such a company needs its employes to think affirmative action is being eliminated like it needs a corporate hole in the head. In fact, IBM's chief executive officer, John Akers, just issued an IBM-style, 16- page report on its affirmative action program with statistics and a description of the company's programs to achieve these gains. Similar reports have been issued by others: Schering-Plough, Philip Morris, Exxon, AT&T, Westinghouse and Chemical Bank to mention just a few.
The Alcoa memo noted that Alcoa would continue its programs "whatever the government's eventual position." In a similar vein, Davidson, of Time, Inc., told a House Judiciary subcommittee this week that "when press reports indicated that (the presidential order on affirmative action) might be weakened or watered down, Time, Inc. issued a statement (that) 'should this happen, we want to assure you we will maintain our affirmative action program. We have been well served by that program, including the setting of internal hiring and promotion goals for minorities and women . . . .'"
8 Faith in the Legal System:
Corporations have a vested interest in our legal system and citizen faith in that system. Laws prohibiting discrimination were preceded by demonstrations by those who had no faith that we could solve our problems by law. President Kennedy wanted to achieve civil rights under law. The late Republican Sen. Everett M. Dirksen (R-Ill.) spoke of "an idea whose time had come" and helped achieve Kennedy's dream of getting the problem out of the streets and into the courts. Employers may argue with how government regulations are applied but they would rather have these arguments occur in a legal framework than in the streets.
9 Third Party Pressures:
If faith in the ability of the legal system to increase employment opportunities were to fade, we may not see marches in the streets again, but we will certainly see increasing pressure on employers from outside the legal system. Already, private civil rights organizations have substantially increased their demands for affirmative action plans or fair share agreements outside the context of government requirements. Most employers would prefer to deal with the government, even when perceived as slightly misguided, than to negotiate the details of how they do business with a wide variety of competing private groups whose standards are not subject to judicial review.
10 Management Flexibility -- The Deregulatory Issue:
This is perhaps the most important reason employers favor continued use of voluntary goals and timetables and even support appropriately crafted mandatory ones. NAM president Trowbridge made the point when he pointed out that retaining flexible goals and timetables as a measure of good faith compliance to ensure progress would "give business the necessary guidelines to ensure compliance with federal mandates," and pointed out that "absent such guidelines, individual enforcement officers will be left with decisions as to what comprises compliance with affirmative action."
The present rules mandating goals and timetables were adopted by the Nixon administration, in part at the request of business, in essence as a deregulatory move in the area of employment discrimination and affirmative action.
Under pre-Nixon programs, there were major confrontations with government investigators concerning the adequacy of specific details in corporate affirmative action programs. The Nixon pro-business, deregulatory approach was to adopt goals and timetables as an objective measure of corporate progress and thus eliminate many of the arguments about the adequacy of specific programs. In fact, in the lead Supreme Court decision approving race-conscious affirmative action using numbers, the court said that such approval was given in part because of this deregulatory aspect. The court noted that to allow appropriately circumscribed race-conscious affirmative action would permit employers to comply in accord with "traditional management prerogatives" and was consistent with the congressional desire to implement anti-discrimination requirements in a fashion that would "avoid undue federal regulation of private businesses."
It would be ironic indeed if an administration known for its deregulation program and its desire to help business were to go in the exact opposite direction in dealing with affirmative action. The president ought to think twice before eliminating a program begun under a Republican president with business support and originally implemented by George P. Shultz when he was Secretary of Labor.
The president ought to think twice before eliminating an objective numerical measure and substituting bureaucratic examination of the details of employers' practices to see if they meet government standards. He ought to think twice before doing something that might lead to a proliferation of competing and uncontrollable pressures on business from state and local governments and civil rights groups; and he should certainly think twice before taking a step that much of his own business constituency believes is ill- conceived.