After more than three years in the courts, Bank of America will pay $39 million to settle a gender bias case in its Merrill Lynch brokerage operation. The women who brought this suit allege executives at the brokerage favored male employees by giving them the more lucrative deal opportunities, the choice clients, and more frequent promotions and raises, and that women who complained experienced retaliation.

The firm's history with minority employees is far from stellar. In the 1970s, the firm settled a suit and agreed to make its workforce more diverse; these initiatives were never fully implemented. In the 1990s, Merrill paid over $250 million and agreed to give women brokers an equal chance at success; and just this week, Merrill Lynch agreed to pay $160 million in a dispute with African-American brokers.

Merrill Lynch is in the news this week, but the firm is not alone in its unequal treatment of women and people of color. The courts have proven willing to seek equity in settlements, but the litigants are never truly made whole. The question then is: Can something be done to prevent litigation at the onset, to prevent the bias that led to the litigation in the first place?

The answer may be found in our business schools, institutions that can become models for equal treatment of women and people of color and laboratories for figuring out ways to help both Wall Street and Main Street see the need to be equitable.

This is precisely what Harvard Business School (HBS) has begun in its work on gender equity, and other institutions of higher learning should follow their lead. Here's what HBS's efforts have accomplished to date:

•More women are speaking up and participating in class;

•Women earn more academic awards and recognition than ever before;

•The deviation of grades based on gender has all but disappeared, and

•The atmosphere on campus has improved.

The process, however, has not been straightforward or without controversy. And there is much more to be done at Harvard. Furthermore, in addition to engaging in work to eliminate gender bias, HBS and additional institutions of higher education should engage in work to eliminate racial bias.

Harvard educates 900 business school students annually, all of whom will hopefully carry the gender equity message forward into the firms that hire them. But how do we extend this message to race and spread it faster, to more firms? What can business schools (in general) do to respond to pressing social issues around leveling the playing field, around making reward systems fair?

There are steps that we in higher education can and must take as the educators of this nation's — and the world's — next generation of leaders. We must lead the dialogue and initiatives, bringing together the firms, non-profits, and government agencies — our stakeholders — that hire our graduates. We must:

•Encourage stakeholders to "take stock" of gender and racial bias in their own organizations to understand what is actually occurring.

•Help stakeholders have the courage to see inequities.

•Develop programs to teach white men, the former majority in the workplace, how to handle a changing world, one that will no longer allow them to hoard opportunities and rewards.

•Challenge business students to imagine, and be prepared to create, diversity programs that are more substance than symbol.

•Teach our students not to tolerate inequities against any group within the workplace.

We must recognize modern gender and racial bias and move toward a true meritocracy. This means companies need to remove all gender and race-based obstacles to equal opportunity. A good starting point for change is improved, or at least more aware, higher education.

Andrea Giampetro-Meyer (agiampet@loyola.edu) is a professor of law and social responsibility at Loyola University Maryland's Sellinger School of Business and Management, and Karyl Leggio (kbleggio@loyola.edu) is dean of the Sellinger School.