What are the Effects of Discrimination in the Workplace? Tips for Employers

Posted on Thursday, 30th Nov '23

Duane Jackson by Duane Jackson

Workplace discrimination hurts both employees and their employers. Employees who experience discrimination are likely to lack motivation, become less productive, and feel less engaged overall. Meanwhile, discrimination in the workplace can lead to legal issues for organisations and result in expensive court battles.

Despite progress being made to eliminate workplace discrimination around age, gender, race, disability, and other characteristics, it is still present throughout the world of work. Every industry has seen examples of workplace discrimination over the years. According to research, it costs the UK economy around £127 billion every year, while a basic lack of diversity policies, procedures, and human resources are often cited as core reasons behind this ongoing challenge. Organisations that ignore workplace discrimination run a serious risk of legal action and the cost associated with reputational damage.

So how can businesses help eradicate workplace discrimination and implement inclusive and diverse working environments for all employees? By gaining a deeper knowledge of the causes and effects of discrimination in the workplace, employers can take action to prevent it from happening now and in the future.

What does workplace discrimination mean?

Workplace discrimination is the act of treating an individual differently or unfairly because of their protected characteristics or who they are. ‘Protected characteristics’ refers to personal attributes that are protected by law from workplace discrimination. Discrimination can occur for many reasons including race, gender, or age, and can manifest itself through direct actions like verbal abuse or indirectly through exclusion and other forms of abuse and victimisation.

In the UK, it is against the law to treat an individual unfairly or less favourably in the workplace because of a ‘protected characteristic’. The Equality Act 2010 sets out nine protected characteristics:

  • Age.
  • Gender.
  • Race.
  • Disability.
  • Religion or belief.
  • Marriage and civil partnership.
  • Sexual orientation.
  • Pregnancy and maternity.
  • Gender reassignment.

What are the four types of workplace discrimination?

Workplace discrimination can be both direct and hostile, but also subtle. It can be motivated by personal prejudice or an organisation’s procedures such as hiring processes and promotion opportunities. For example, recruiters with a prejudiced mindset might avoid offering jobs to a certain demographic. Regardless of the cause, workplace discrimination is highly determinantal for the victim and their employer.

An individual can be discriminated against in the workplace in four main ways:

1. Direct discrimination

When an individual is treated unfairly or differently from other work colleagues because of a protected characteristic. An employee who has been denied promotion based on their gender is an example of direct discrimination.  

2. Indirect discrimination

When an organisation’s policy or procedure aimed at treating employees equally is less fair to certain individuals with protected characteristics. For example, a company may require all employees to work on Saturdays. However, this is a form of indirect discrimination as it does not consider those with religious beliefs who observe the Sabbath every Saturday.

3. Workplace harassment

Where an individual experiences unwanted behaviour linked to a protected characteristic that offends, harms, and creates a toxic working environment. Racial harassment where an employee makes offensive comments about a colleague’s ethnicity is a form of workplace harassment.

4. Victimisation

The unfair or prejudicial treatment of an individual or individuals following the raising of an official complaint about an organisation. Any individual who suffers workplace discrimination is likely to be negatively impacted in several ways. For example, an employee suspects their team leader of misconduct and reports it to HR. However, the whistleblower then suffers negative consequences and victimisation because of their actions such as being labelled a troublemaker or excluded from certain tasks.  

What are the negative effects of workplace discrimination?

Discrimination in the workplace is detrimental to both individuals and organisations for a variety of reasons. It drains morale, damages productivity, and can lead to significant costs for a business. Not only that, but workplace discrimination causes employee disengagement which, according to a study, costs the global economy a staggering $7 trillion in lost productivity each year.

The consequences of discrimination in the workplace include:

Reduced productivity and lower morale

Discrimination not only has a financial impact on an organisation, but it also harms productivity and employee morale. It can seriously damage motivation, commitment, and loyalty to a business. Employees who experience discrimination are also likely to become dissatisfied and experience a drop in their performance. This can stifle creativity, lead to regular absenteeism, and mean lower output and profitability for the employer.

Discrimination is also one of the leading causes of staff disengagement which can hurt a company’s bottom line. It’s estimated teams that are highly engaged deliver 20% more sales than teams with low engagement, highlighting the need for diversity, equality, and inclusion across all business departments. It could even deliver larger profits to your business over time.

High legal fees and reduced resources

There is a very real risk that an employee with experience of workplace discrimination could launch a legal case against their employer. This is often a last resort by the employee who may feel that all other lines for complaint have been exhausted, and their grievances remain unheard.

Any litigation process is also likely to incur significant costs for the employer and damage their reputation. In addition, discrimination cases against a company make leaders spend time away that could otherwise be invested in key areas of the business.

When a business loses a discrimination case, it must pay damages or compensation to the individual. In 2021/2022 there were 200 cases of discrimination in the UK. This included a maximum award of £228,117 for a race discrimination case won by senior nurse, Michelle Cox, against NHS England and NHS Improvement Commissioning.

Reputation damage and high staff turnover

As already mentioned in this article, workplace discrimination has a demoralising effect on employees which can result in a rise in staff absences and sick leave. An individual experiencing discrimination could develop anxiety, stress, and other related health problems. Not only will this affect productivity, but it could also harm staff retention as unhappy employees are likely to search for another job elsewhere.

A business’s reputation can also be severely damaged when dissatisfied employees report discrimination in the workplace. It leads to scepticism with many questioning whether a company can be trusted to take the right course of action around ethics, integrity, and compliance. Reputation is a major factor in the marketplace, so reports of discrimination or legal cases could have dire financial consequences for any business’ reputation should the matter become public.

How do you eradicate workplace discrimination?

Gaining a thorough understanding of discrimination and its perception is the start of a better employee experience. It paves the way for a culture of inclusion, diversity, and equality. It helps create a happy workplace that supports development, personal goals, and career aspirations.

Leaders play a pivotal role in fighting workplace discrimination, and they can do this by highlighting inclusive core values in company policies and procedures. Any form of discrimination or inequality should be immediately addressed, and any employees responsible for causing discrimination should be held fully accountable.

Businesses must also ensure they have a clearly defined infrastructure in place for reporting discrimination that will encourage those affected and any witnesses to come forward. Taking these steps will help create an environment for progress, where structures and strategies are aligned with key company values around inclusion for all workers.

How should HR teams handle discrimination in the workplace?

All employers have a duty of care to protect workers from discrimination and promote an inclusive and diverse environment where employee wellbeing is prioritised. To achieve this, employers need HR teams to provide vital support around all discrimination issues.

To safeguard a business against discrimination arising from workplace policies and cultures, HR staff should take an unbiased approach to hiring processes while closely monitoring staff wellbeing.

The following steps will help HR teams deal with workplace discrimination:

Promote equal opportunities

HR departments play a vital role in promoting diversity, inclusion, and equality in the workplace. This starts with the hiring process and the addition of an anti-discrimination statement in all job adverts. Doing this ensures all applicants feel respected and welcomed, and that the company that’s hiring is committed to equal opportunities for all.

It’s also important for HR teams to ensure the application process is open and accessible to everyone, including disabled candidates. Therefore, clear instructions about the application and interview process should be provided so that extra provisions can be made for those with accessibility needs.

Offer training and promotion for all

A business that promotes diversity and inclusion must also ensure training programmes and promotion opportunities are open and accessible to all employees. An effective way to do this is to give employees all the information they need about their position and what is required including details of all company anti-discrimination policies.

When employees are required to complete training, they should be given ample time and opportunity to do so. Not only that, but HR should give employees plenty of opportunities to demonstrate their skills and abilities instead of jumping to conclusions based on past achievements and qualifications.

Implement an anti-retaliation policy

All employment actions within a business such as promotions should be conducted fairly, and it is the role of HR to ensure this is followed. An anti-retaliation policy provides clear reasoning behind the key decisions that affect all businesses while demonstrating strict anti-discrimination procedures were followed during every step of the process. Additionally, HR can educate and train managers in ways to identify retaliation in the workplace to create an inclusive, fair, and equal environment for all staff.

Is your business concerned by the effects of discrimination in the workplace?

Staffology’s HR platform helps businesses deliver equal opportunities for all and promote employee wellbeing through a positive workplace culture. From recruitment and onboarding to training and development plans, Staffology is here to protect your workers and help your business thrive. Get a free HR software demo today.

Duane Jackson, November 30th, 2023

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