Gay in Corporate America (Fortune Classics, 1991)

July 10, 2011, 5:30 PM UTC

Every Sunday, Fortune publishes a favorite story from our archive. New York recently became the sixth U.S. state where gay couples can legally wed. Marriage equality continues to be a struggle in many states and in other parts of American life, including the workplace. Corporate America has taken steps to make life more equal for its gay employees, but many still aren’t offered the same benefits as the rest of their colleagues. About 58% of Fortune 500 companies extend domestic partner coverage to employees with same-sex partners, according to the Human Rights Campaign. But factoring in a broader mix of companies, the numbers decline. According to a Kaiser Family Foundation survey, only about 20% of small companies offered coverage in 2009, while 36% of bigger companies with more than 200 employees provided coverage. We turn to December 1991 for a look at being gay in corporate America and how business attitudes were evolving at the time. Have things really changed in 20 years?

Homosexuality, once a career-destroying secret, is coming out of the closet in corporate America. Anxious and alienated, but unwilling to remain so, gay men and lesbians are rapidly forming employee groups like the one whose huge banner greeted all those on their way to the elevators at Levi Strauss’s San Francisco headquarters in June: LESBIAN AND GAY EMPLOYEE ASSOCIATION CELEBRATES PRIDE WEEK. Similar groups, many blessed by management, exist at companies ranging from AT&T to Xerox. Says Al Lewis, a planning manager at Xerox who is active in his company’s gay employees’ organization: “Official or unofficial, there’s a group in every large company in the U.S. Most are closeted, like the groups at Hughes and TRW. The president of the company may not know, but they’re there.”

For gay rights activists the workplace has become the frontier, and that has important implications for your company. Yes, your company. No one knows how widespread homosexuality is. Alfred Kinsey’s classic 1948 studies suggest that about 10% of American adults are homosexual, a figure that more recent surveys support. As to where they work, ‘forget stereotypes. According to a survey of 4,000 gay men and lesbians conducted by Overlooked Opinions, a Chicago market research firm, more homosexuals work in science and engineering than in social services; 40% more are employed in finance and insurance than in entertainment and the arts; and ten times as many work in computers as in fashion.

The new activism picked up steam in October after California Governor Pete Wilson vetoed a bill that would have banned workplace discrimination against homosexuals. He had supported it earlier, but backed away after an ugly outcry from the right. Gay activists across the country were stunned, and many determined to press their employers to do what scared or hostile solons would not. On the agenda: making discrimination according to sexual orientation as impermissible as discrimination according to race, age, or gender; promoting “diversity training” to encourage workplace tolerance; and lobbying for benefits that heterosexuals enjoy, mainly health insurance for partners.

Mostly, gay men and women of U.S. companies want to be as open about their private lives as anyone else at the office, without fear of being taunted, passed over, or axed. Says John Wofford, a lawyer who works for Endispute, a mediation outfit in Cambridge, Massachusetts: “We don’t need affirmative action we’re already here. We need the freedom to be visible.” Adds Linda Marshall, who used to supervise oil-field construction projects and now helps top executives at a Houston petroleum giant prepare speeches and technical papers: “I don’t run up and down the halls and tell everybody I sleep with women. But it’s a waste of my time to have to have an alternate personality.” Jack Sansolo, the Los Angeles-based president of the advertising agency Hill Holliday.Connors Cosmopulos, asks the fundamental question: Why is it that “corporations are so nervous about things that don’t matter”?

Consider Eric Nilson, 31, the top-grossing broker and investment adviser in the Cleveland office of one of America’s five biggest brokerage houses-which did not want to be named in this article. “I’ve always been out of the closet,” says Nilson, who at 25 became the youngest vice president ever appointed by his employer. “Within a month of my arrival I think my boss had figured it out.” And he never seemed to mind. The two men, together with Nilson’s lover and his boss’s wife, go out to dinner several times a year.

But it’s a different story when Nilson attends conventions of his company’s President’s Council, a club for its top brokers. Then, says Nilson, “I see rampant homophobia. When I’ve brought a woman because my lover couldn’t go, my social acceptance has been far stronger. When 1 go with Jeffrey, it’s as if the seas part when we walk into the room. We’re left by ourselves during cocktail hour.”

Then why bring him? Why don’t gay men and women keep the subject to themselves? Some closeted executives ask the same questions. But, argues a lesbian who is a midlevel manager at American Express, “straight people bring their personal lives to work all the time. They just don’t think they do.” Co-workers show pictures of the family’s trip to Maine or brag about how little Suzy got into MIT. If your work is suffering because you’re going through a rough divorce, the boss says he understands. But no one at American Express knew about it when this manager helped her girlfriend cope with her father’s death.

Asking gay men and lesbians to check their private lives at the door leaves a part of your company’s work force isolated and afraid. In surveys, about two-thirds say they have witnessed some form of hostility toward gay people on the job, and discrimination on the basis of sexual orientation is still legal in much of the U.S. So most hide. Some even cower. Take, for example, a gay vice president who runs a multimillion-dollar piece of a major office-equipment maker in Chicago. “I’d like to be the CEO of this company,” he says. He figures he can forget that dream if his sexual orientation becomes known. So he brings women to company social functions, his lover never phones him at work, and he says he knows no other gay employees at the company. (With a work force of several thousand, his company probably employs several hundred who are gay.) What bothers him most, he says, is that he has no way of knowing how scared he should be of what others would think.

Does such anxiety make employees less productive? Says Brian McNaught, a consultant on this issue to AT&T and other companies: “My basic premise is that homophobia takes a toll on the ability of 10% of the work force to produce.” But just try measuring the productivity of a group when most won’t identify themselves.

It’s easier to show that a diverse workplace attracts and retains talent. Says Russ Campanello, head of human resources at Lotus Development: “We have people-serious technical contributors who came to us because of our reputation for diversity.” When Ken Theriault, a senior consultant at Alexander & Alexander, the benefits consulting firm, was wooed by a competitor, he worried that it might not tolerate his homosexuality. “I watched the building for a while to see what kind of people went in and out, and there were few black faces,” he says. “Then, while waiting between interviews, I read the firm’s phone directory, and few names suggested a Jewish background.” When the offer came, he turned it down.

More and more homosexual executives have decided to stop hiding. One reason: The shroud of secrecy does not wear as well as it used to. Says Steve Rabin, 36, a top executive in the Washington office of Ogilvy Adams & Rinehart, the public relations division of Ogilvy & Mather: “There’s now a well-known reason few being 35 and single apart from ‘unlucky in love’ or ‘something awful that happened in the war.’ ” Many younger people, used to the relative tolerance of college campuses, refuse to start hiding afterward.

The most important reason for waning secrecy is probably AIDS. You might think the epidemic would make gay men more secretive, and for some it has done so. Says B. J. Stiles, executive director of the National Leadership Coalition on AIDS: “They’re afraid that if they’re seen to be gay, a lingering winter cold could end their careers.”

But for many the disease’s devastation has had the opposite effect. Silence=Death, the motto of the activist group ACT-UP, expresses a widespread conviction that the epidemic can be contained and conquered only if those afflicted and their loved ones speak out. Gay executives like Stephen Herbits, executive vice president of Seagram and an important figure in Republican Party circles (he acted as Defense Secretary Dick Cheney’s chief civilian talent scout), play major roles in AIDS fund raising. The need to support education, research, and care has caused some gay businessmen to decide that life is literally too short to spend in the closet.

Moreover, the almost universal experience of volunteering-the overwhelming majority of the 100-plus gay people FORTUNE interviewed for this article do AIDS-related charitable work-has ended the isolation that confined many gay professionals. Before he started working for the finance committee of an AIDS group, says Martin H. Tannenbaum, 38, a vice president for product development at Merrill Lynch, “I was wondering if there were· any other gay or lesbian people who had made the choice to excel in business. It was very exciting suddenly to do work at a high professional level and be able to let my guard down.” The experience contributed to Tannenbaum’s decision to stop trying to pass for straight.

But isn’t candor dangerous? In some companies it certainly is. When Jeffery Collins, second in command of a Shell Oil subsidiary, accidentally left a document in a copying machine that discussed rules for safe sex at a party he was attending, Shell not only fired him but even made up phony records to show that he was dismissed for reasons other than his sex life. A California judge in June ordered the company to pay Collins $5.3 million in damages. (Shell is appealing the verdict.)

Ann Quenin believes she was canned from a high-tech company after her boss learned she is a lesbian. She had been at the company just a· few months, and a month before had received a glowing performance review. When her boss summoned her to his office that day, Quenin recalls, “I thought he was calling me in to talk about stock options.” Instead he said her volunteer activities for an AIDS organization were taking too much of her time and asked her to resign: Quenin is now working at Lotus, which last year honored her for the same volunteer work. Years afterward she can barely bring herself to talk about the episode. “It was my dream job,” she says.

A man who makes several hundred thousand dollars a year buying and selling commodities in the raucous pits of the Chicago Mercantile Exchange, capitalism’s equivalent of playing football without a helmet, says that if his fellow traders knew he was gay they “would destroy me-they’d refuse to trade with me, they’d renege on trades, they’d lie.”

Most gay and lesbian executives who have done it find the fear of coming out is worse than the reality. Says Sansolo: “You expect people to behave worse than they do. When I do good work, the fact that I’m gay becomes irrelevant. We have not had trouble with clients on account of it.” A couple of years ago, Maria Chmaj, 30, a vice president of finance at Bank of America, changed her mind about staying in the closet at work. “I put my partner’s picture on my desk. That was a big deal for me.The funny thing is, nobody’s ever asked me who she is.”

Sansolo is convinced partof the solution to gay-bashing is for homosexual men and women to be more open. Says he: “Familiarity breeds respect, not contempt. I look for funny or unthreatening ways to remind people I’m gay.” Once when he and other senior executives were chatting in CEO Jack Connors’s office at the end of the day, the boss asked, “Who wants a beer?” Sansolo was the only refusenik-he hates the stuff. “Well, Jack,” Connors said, “we’ve got a whole bar here. You want a cocktail?” Came Sansolo’s reply: “Sure-give me a rum fuzzy.”

For his Ph.D. dissertation at the University of Pennsylvania, James Woods has studied the coping strategies of more than 100 gay men in corporate life, ranging in age from 21 to 68 and in rank from a man four months out of college to the CEO of a large pharmaceutical company. Woods has identified three main groups: counterfeiters, who fabricate heterosexual identities (sometimes to the point of marriage); integrators, who are known to be gay; and the biggest group, avoiders. Avoiders hope the question won’t come up. They won’t lie, but they might mislead. They don’t join the gang for a drink after work. Ask how their weekends went, and they’ll answer, “Okay, didn’t do much.” If you stop to think about it which avoiders pray you won’t-you realize you know nothing about them.

Above all the avoider is afraid that once you know he’s gay, you’ll never again be comfortable with him. He may be right. Paul Kowal thinks he may have lost his mentor at a large direct-marketing company by revealing his homosexuality. Says Kowal, now head of a database marketing firm that bears his name: “He stopped trying to fix me up with women, and the fag jokes stopped but he pulled back from mentoring me too.”

Gay executives also fear a “glass ceiling” beyond which known or suspected homosexuals cannot rise. In a 1987 survey by the Wall Street Journal, 66% of major-company CEOs said they would be reluctant to put a homosexual on management committees; while attitudes may have changed since, there’s no evidence of a revolution. Says the lesbian manager at American Express: “There are very senior people who’ve been spotted at gay places. They’re in the closet. The message is clearly ‘Being out is not the road to success.’ ”

Though several CEOs of major companies are reputedly gay, none approached by FORTUNE was willing to be interviewed on or off the record. A vice president of a large specialty retailing chain is convinced that he bumped his head on the glass when he ran a $60 million-a-year division of Marshall Field in Chicago. He was not made a vice president although others with comparable responsibility were. Was it because he is gay, or were his socks too loud? Says a closeted vice president of Tandem Computers in Cupertino, California: “At upper levels there’s so much that’s discretionary-bonuses, stock options, grade levels. There isn’t any way to come out and say, ‘You’re discriminating against me.’ ”

The glass ceiling costs both gay people and their employers. Says Chmaj of Bank of America: “I haven’t moved any slower than anybody else up to this point. But I’ve always assumed that after I reach a certain level I won’t be able to move up because I’m out.” The same belief contributed to the decision of another B ofA vice president, Ted Liebst, to leave the bank in 1988. Liebst was an avoider then. He recalls: “If I had had aspirations of being a senior VP-and I did-I would have had to face the question of what to do in social situations with spouses. Bank policy is to be indifferent, but at top levels the standards by which you’re promoted become incredibly subjective. There’s a lot to be said for the perfection expectation: If we can pick from a thousand people, why pick one who by someone’s standards is less than perfect?”

One result: what scholar James Woods calls “entrepreneurial flight.” Liebst, for instance, became one of three general partners in an investment pool, InterMedia Partners, that buys and operates cable television systems. The group has raised more than half a billion dollars in only three years and delivers TV signals to 300,000 homes.

More often, says Woods, gay managers “cap their ambitions and watch the clock, or find a ghetto in the company.” After coworkers harassed her with insulting phone calls and left pornographic pictures on her desk, a lesbian at Pacific Gas & Electric transferred to a different office, doing different work, and retreated to the closet. Now, she says, “I just sit very quietly in my office and do my job. I am not interested in advancing. It’s just not worth it.” A young financial analyst at Du Pont changed jobs to get on a career path that won’t involve relocation. In his old job, he says, “I would have had to relocate or have my career limited by not moving-and I don’t think Du Pont’s ready to deal with the fact that I have to consider the needs of my long-term partner.”

Everybody needs a laughin’ place, and there have long been groups of professional gay men and women. In Los Angeles, the Tuesday Club comprises older gentlemen who introduce themselves by first name only’. The group has met for drinks every other week since the mid-1950s.

Such organizations have mushroomed in the past year or so. Not surprisingly, the largest are in New York and San Francisco. New York sports, an Advertising and Communications Network, a Bankers’ Group, a Publishing Triangle, a Wall Street Lunch Club, as well as groups for lawyers, physicians, and others. Together they are called simply the Network, and the Network’s annual Christmas benefit attracts as many as 1,000 people. Last Christmas the line to get in stretched so far that a Hill & Knowlton executive had to wait two hours. Inside, he says with a mixture of pride and disappointment, “you’d have thought you were at a corporate dinner for U.S. Steel.” Groups in America’s center are smaller and more cautious. Chicago’s biggest (membership: 600) has just worked up the courage to list its name in the city’s gay press but doesn’t want it to appear here. The name, like those of most gay business organizations, is one that wouldn’t cause problems if a nosy landlady saw it on a return address. (The group’s nickname for itself is Fruits in Suits.) In Houston, Linda Marshall has been active in forming a women’s group, which attracted 100 people to its most recent meeting.

Mostly the groups exist to give gay and lesbian professionals a chance to meet one another and swap business cards. Says a partner in a Chicago advertising agency: “I’ve brought in business through this network. And I’ve grown. I’ve been exposed to normal people-people with ambition, not people in bars.” Other groups have a more· activist agenda. Eliminating the obstacles that prevent or delay gay scientists from getting security clearances is one mission of the National Organization of Gay and Lesbian Scientists and Technical Professional and its militant cousin, High-Tech Gays.

Proliferating, too, are gay and lesbian employee groups within companies. Apple and Digital Equipment were among the first whose gay employee groups came out of thecloset, in the mid-1980s in both cases. Since then homosexual employees at AT&T, Boeing, Coors, Du Pont, Hewlett-Packard, Lockheed, Sun Microsystems, US West, and many other corporations have joined together for fellowship or to lobby top management on issues that are important to them. These include attacking overt workplace hostility, extending employee benefits to domestic partners, not just to spouses, and even little things like making sure that partners are welcome at company social events whenever husbands or wives are.

Some companies merely tolerate their groups; others actively support them. Lockheed management lets its Christian Fellowship use company facilities, but not its gay and lesbian association. By contrast, US West’s Eagles-“We’re going to soar high at US West”-is a keystone of its diversity training programs. At Digital, DECplus (people like us) members share news over an electronic bulletin board just like other groups such as manufacturing engineers. Xerox’s gay computer bulletin board might include a memo about legal rights of employees who test positive for the AIDS virus; a note cautioning members that it is less acceptable to be openly gay if they visit Rank Xerox, the company’s British arm; or a greeting from an employee new to the group.

The most important function of such groups-and the reason many companies encourage them-is to provide a way for gay employees and management to find one another. Companies have long valued the help of employee groups in dealing with problems of race and sex discrimination. Says Tom Gordon, a Philadelphia consultant who has offered diversity training for two decades to such clients as Exxon and Philip Morris: “Gay and lesbian issues belong right up there with race and gender. You can be killed for being gay.” Odds are that there are almost as many gay employees in the work force as there are blacks, but most of them will be invisible. Hence the need for groups, says Kim Cromwell, manager of diversity programs at DEC: “You need a point of contact.” Members of Levi Strauss’s employee organization prepared a video for the company to use in its diversity training, in which they, their parents, and their managers discuss their relationships.

The idea: to work together to “demystify” homosexuality, help straight employees feel comfortable working alongside openly gayones, and cleanse the workplace of offensive jokes and insults. AT&T has offered homophobia workshops since 1987; 3,000 workers have attended. In the gatherings, employees get a chance to express their feelings including hostility-about homosexuality. They receive accurate information to replace myths they may have swallowed, such as that homosexuality is “curable” or that gay men are sexual predators. Says Brian McNaught, who runs the workshops: “Ignorance is the enemy here. If we can raise the information level, we can lower the anxiety level.” At US West, all top managers, including CEO Richard D. McCormick, have attended similar workshops.

Winning the battle against prejudice isn’t easy. Employees of Pacific Gas & Electric are required to attend workshops in sensitivity to diversity, but after a photograph in the company newspaper showed gay and lesbian employees marching in San Francisco’s Gay Pride parade in June, the company’s electronic bulletin board erupted with dozens of mostly hostile messages, which eventually provoked a fingerwagging memo from human resources vice president Russell Cunningham. Lotus’s Quenin, who has spoken at workshops there and at Polaroid,says that homosexuality is “far and away the scariest” diversity issue, provoking the most intense discussions because it’s about sex and touches on religious beliefs, and even well-educated people remain misinformed on the subject.

These programs cost money. At Levi Strauss, where managers are appraised partly on support ofworkplace diversity, the bill for education on these matters is “in the millions of dollars,” says Mike Giannini, manager of equal employment opportunity programs. Are such efforts worth it? Gay and lesbian corporate types, being corporate types, frame the issue in economic terms and argue that a workplace in which employees are comfortable being themselves is more productive.

At a FORTUNE 500 chemical company in the East, there’s a woman, a Ph.D. chemist, who has been told that she can go far. She cries when she talks about how afraid she is to let it be known that she is a lesbian. Ironically, she says, her employers, who value marriage and family life as a sign of stability, have no way of knowing–and might be appalled if they knew-that she has a partner of four years who is trying to have a child. Says she: “I’d leave in a second to go to a company that was more open. I’ve promised myself that I’ll be out to my next employer.”

Think not just of the potential losses to a company, but also of the potential gains. Gay students at business schools pay attention to a company’s reputation. Says Douglas Plummer, president of the Gay and Lesbian Student Association at Harvard business school: “Companies like Xerox and AT&T are becoming much more appealing. I know students who actually turned down higher salaries to go with companies that aren’t homophobic.” Railroads, oil companies, automakers, and metal benders generally have a reputation for “imposing heterosexuality,” says Donald Wert, associate administrator of the Regent Hospital in New York, a psychiatric hospital that offers alcoholism and drug-abuse programs for gay people. The Harvard group, with about 30 dues-paying members (out of 1,600 in the B-school student body), has an annual dinner in New York with the school’s Gay and Lesbian Alumni Association at which members get a chance to learn where it’s safe to be gay and where it’s not.

Jonathan Rotenberg, who will receive his Harvard MBA in June, sees a huge opportunity in the emergence of a community of openly gay men and women who lead conventional middle-class lives. The idea: to create an organization loosely modeled after the American Association of Retired People. Rotenberg figures it could build a membership of five million by offering a package of services (group discounts, for example) at a reasonable price-and use its resources to educate people to help overcome homophobia. He’s working up a strategic plan.

It’s a tall order, but don’t put it past him. Rotenberg, 28, made the front page of the Wall Street Journal at age 19 as the founder and CEO of the Boston Computer Society, the world’s biggest personal computer users’ group. BCS became so important that it was where Apple introduced the Macintosh to the public, Lotus first showed off 1-2-3, and John Sculley and John Akers first said howdy to one another. An industry magazine once named Rotenberg one of the 25 most influential executives in the personal computer business, and a local paper dubbed him one of Boston’s ten most eligible bachelors (“Confirmed, I might add,” says he).

Companies have begun to pursue the gay market openly. “Common sense tells you it’s sensational,” says Hill Holliday’s Jack Sansolo, who counts the ways: (1) a large number of people (2) who, because few have children, have more disposable income than others earning the same amount and (3) who are on the edge of society and therefore more likely try more new things. A 1988 Simmons study of subscribers to eight gay magazines showed that their household income averaged $55,000 ($23,000 more than the national average), and they were three times more likely than the average American to hold professional or managerial jobs.

For most consumer goods companies, the problem is how to reach that market. Most of the gay press depend on tacky advertising from phone-sex services. Asks Sansolo: “You think I’d tell clients to advertise next to a 900 number? Give me a break.” But liquor and soft drink companies, banks, airlines, and others have advertised there, sponsored gay sporting events, or taken ads in the programs of gay choral performances.

One man who has tapped the gay market is Eric Nilson, the wildly successful Cleveland broker. Says Nilson: “Probably 40% of my revenue is gay related. It’s a wonderful market niche.” Nilson began specializing in estate planning for gay couples when he and his lover realized that few lawyers knew anything about the particular problems involved. He finds new clients by lecturing on the subject aboard gay cruises in the Caribbean each winter, trading the winter winds off Lake Erie for the zephyrs off Eleuthera. Many gay couples, Nilson points out, “like the idea of having a gay broker they don’t have to hide from. I’m also damn good at what I do.”

So is Christopher Street Financial, a gay-owned and gay-oriented brokerage in Manhattan, where revenue has grown an average 15% a year over the firm’s decade of existence. Says CEO Ted Eastwick, a Lehman Brothers alumnus: “Clients come in here and let down as much hair as they want. They can bring in a lover, they can bring in three lovers. They can bring in the wife, the children, and the lover. And they do. Believe me, they do. Not an eye is blinked here. Try doing that at Merrill Lynch or Dean Witter–it’s Katie, bar the door!”

Hundreds of employers, including dozens of FORTUNE 500 companies, have pledged not to discriminate on the basis of sexual orientation, but gay and lesbian executives are under no illusion that they will soon win mainstream acceptance in corporate America. The organizers of a conference on gay and lesbian workplace issues held this fall, who sent invitations to CEOs and human resources directors at 9,400 companies, received one reply-not on let human resources directors at 9,400 companies, received one reply-not on letterhead- that began: “To all the fags, gays, homos, and lezzies. Do not mail me any of your fag shit lezzie homo paperwork to my business.”

Charming stuff, and it won’t go away easily. Sansolo and others expect serious improvement in the workaday lives of gay men and lesbians to come through the confluence of four forces. First is corporate leadership, meaning visible CEO support for workplace diversity and diversity training. Second is the U.S. military’s slowly changing attitude. Gay executives believe it is a key to overcoming homophobia, as it has been in the struggle against racism. Pentagon files contain more than a dozen recent memos discussing whether to change the ban on homosexuals in uniform, and Defense Department studies have concluded that gay men and lesbians are no more likely to be security risks than anyone else. According to Lawrence Korb, a Brookings Institution fellow who was Assistant Secretary of Defense for manpower in the Reagan Administration, field commanders would prefer a rule that simply forbids hanky-panky in the trenches, no matter who’s doing what with whom. Both Korb and gay Congressman Barney Frank, a Democrat, expect the ban to change after the 1992 election, whoever wins.

Third is the continuing growth of grassroots homosexual groups within corporations and across industries-organizations that will not only press for acceptance but also embody gay market power-Last is simply the determination of the gay men and women of corporate America to be themselves. “Gay professional people need to take a stand,” says Eastwick. Tor Taylor, 35, a project leader at Del Monte Foods and the vice president of Bay Area CareerWomen, San Francisco’s 1,550-member lesbian business group, agrees: “One way I can make the world a better place is to help people understand that there’s nothing to be afraid of from lesbians and gays. To show them, ‘Here I am, this funny, warm person that you like, and I happen to be a lesbian. I’m bourgeois. I have a house in the suburbs. I drive a Saab.’ ”

She goes on: “I haven’t met many lesbians way up the corporate ladder. But I have every naive hope and expectation that I will be one of them one day.”

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