While policy changes and advocacy for transgender rights from large corporations often make the news, transgender individuals are just as likely to work for small and medium-sized businesses (SMBs). It is therefore imperative that HR leaders and all-sized companies make an effort to build inclusive company cultures.

Here are four simple, yet effective steps to create and maintain an inclusive and welcoming workplace for transgender employees.

1. Building the right culture starts at the top

Developing the right corporate culture is the most crucial thing an employer can do to be welcoming. As always, it starts with leading by example. If an executive, founder, or other company leader promotes inclusion and support of transgender employees, other employees are more likely to follow suit.

Related: Ruling: Civil Rights Act protects LGBT workers

At the very least, they are much less likely to actively discriminate. Creating such an inclusive culture can be backed up by a handbook policy that has a clear, no tolerance policy on bullying, harassment, or discrimination of any kind. Employees should contact their HR team if their employee handbooks need to be updated.

As a best practice, employers should require every employee to read and agree to the handbook annually so that they know what’s expected of them.

Sensitivity training can also help with instilling the right company culture. A 2015 university study highlighted that providing education on the experiences of transgender individuals increases acceptance. It’s important to note that the study also found that some participants remained hostile after being educated.

This demonstrates how crucial building this kind of inclusive culture along with compliant workplace policies can be, as it would help discourage employees from taking actions that make the workplace less supportive to transgender employees.

2. Respecting names and pronouns

As part of the hiring process, all employers should ask new or prospective employees what they prefer to be called. This will allow transgender (as well as other) employees to be called by their preferred name and pronouns in work communications.

It’s crucial to note that for the purposes of compliance, legal names must be presented to the IRS, Department of Homeland Security, or other agencies based on the correct legal documentation the employee presents at the time of hire.

For the purposes of every day interaction, however, make it clear that employees should be addressed by the name and pronoun that matches their gender identity.

3. Protecting privacy and health information

Strict confidentiality when it comes to gender and medical information on transition status is paramount to supporting an organization’s transgender employees. Similar to any other private health, personal life, or employment matter, the birth-gender and transition status of an employee should be handled with the utmost discretion.

Information about either should not be released without advanced written permission from the employee and only for lawful purposes that relate to the individual’s employment.

Related: Few employers offer transgender-inclusive health care

4. Allowing for freedom of appearance

Company dress codes should adhere to standards that are gender-neutral. They should apply equally to all employees and should not be contingent on gender-identified stereotypes.

For example, requiring females to wear skirts or dresses and high heels while allowing males to wear flat shoes and pants have opened companies to controversy and accusations of discrimination. However, a dress code requirement that prohibits tennis shoes and blue jeans is much more gender-neutral in nature.

Transgender acceptance mitigates risk to your business

Implementing and following best practices for transgender-friendly workplaces can also reduce the risk of discrimination or harassment claims and lawsuits.

Such claims can disrupt business productivity, damage a company’s reputation, lead to public boycotts, and linger long enough to scare off customers and quality employees. Ultimately, a workplace that doesn’t protect transgender employees may be a threat to that company’s bottom line.

Furthermore, building a non-discriminatory workplace also means building an accepting, all-inclusive work environment that may lead to better employee retention, morale, and productivity.

Inclusiveness creates a stronger workforce; and the best ways to make transgender employees feel welcome are building the right culture, respecting names and pronouns, protecting privacy and health information, and allowing for freedom of appearance.

By implementing the steps above and baking them into their company culture, employers can create dynamic and welcoming workplaces that attract and retain a diverse and dedicated workforce.