Topics:   Business Ethics,Compliance,Corporate Governance,Corporate Social Responsibility

Topics:   Business Ethics,Compliance,Corporate Governance,Corporate Social Responsibility

August 7, 2018

In the Wake of #MeToo, How Can Boards Address Workplace Sexual Misconduct?

August 7, 2018

The statistics are startling. Eighty-one percent (yes, 81 percent) of women have experienced some form of sexual harassment or assault in their lifetime, according to survey results published earlier this year by nonprofit Stop Street Harassment. The survey also found that 43 percent of men reported having experienced sexual harassment or assault.

Another report from crisis consulting firm Temin and Company finds that over the past 18 months, 417 high-profile individuals—mostly business leaders and executives—have faced allegations of sexual harassment and/or other misconduct. (We reported on this in our recent NACD Weekend Reader e-newsletter, available to NACD members.) Some of those allegations relate to events that happened years ago, but the broader #MeToo movement has been credited with empowering victims to speak up about their experiences.

And while attention has obviously—and rightly—been on victims and alleged abusers, focus is increasingly being placed on the board’s role in ensuring that companies are conscious of the risk to employees, customers or clients, and other stakeholders. Companies large and small across industries are grappling with how to ensure that corporate culture is healthy and intolerant of sexual misconduct—even (or, rather, especially) when the accused is a senior corporate leader.

Traction From the #MeToo movement

The WomenCorporateDirectors’ Global Institute in May presented a panel discussion called “How the Board Can Address Sexual Harassment and Other Tough Issues—And the Special Role Women Directors Can Play” to discuss the board’s oversight role in the #MeToo era. Davia Temin, a panel participant and president and CEO of Temin and Company, attributed the traction of the #MeToo movement—particularly in corporate America—to greater receptiveness to and legitimization of accusations. This, she suggests, is due to the increased number of women in newsrooms (as editors and reporters) and boardrooms.

Some directors, though, might be concerned about whether allegations made against company employees are valid. They’re not alone. A Pew Research Center poll released earlier this year found that 31 percent of poll respondents say that women making false claims is a major problem related to workplace sexual harassment and assault. Many reports, however, suggest that only 2 to 10 percent of sexual assault accusations when investigated are found to be false.

There are two “eureka” moments when it comes to understanding the dynamics around sexual harassment in the workplace, according to Ceree Eberly, another panel participant who is a board member at Qualfon Corporation and chair of Gartner’s CHRO Global Leadership Board. First, many victims of harassment (including sexual and other forms of harassment) often felt socially excluded from others in their work environment—e.g., not fitting into the so-called boys’ club. Second, sexual harassment is a form of abuse of power. When allegations of sexual misconduct emerge, boards should be alert as to whether an employee used their power or rank as a means to manipulate others.

NACD recently published its Director FAQ: Risk Oversight—Sexual Misconduct, a brief that offers board-level guidance related to oversight on this issue. The brief describes:

  • The current state of board oversight on sexual misconduct-related issues
  • The investigation process—should the board be involved?
  • The board’s role in confronting the problem of sexual misconduct in their organization

The current state of board oversight on sexual misconduct-related issues

One challenge to overseeing risks related to sexual misconduct is that boards seemingly have limited insight into company culture beyond the C-suite, according to the 2017─2018 NACD Public Company Governance Survey. Eighty-seven percent of respondents reported having a good understanding of culture at the C-suite level. When it comes to understanding the so-called “mood in the middle” and the “buzz at the bottom,” however, just 35 percent and 18 percent, respectively, understand culture at those levels.

It is, then, even more important for the board to take an active role in understanding culture at all levels of the organization—to understand what sorts of behaviors or attitudes have been normalized, what is tolerated, and whether company policies around misconduct apply even to high performers or business leaders, as they should.

The investigation process—should the board be involved?

When the board is deciding whether or not it should be involved in investigations into allegations of sexual misconduct, it’s important to consider:

  • The seniority of the accused (if the accused individual holds a position of power, the board will more likely need to be involved in the investigation);
  • The severity of the allegations; and
  • The pervasiveness of such misconduct throughout the company.

If the board is not leading the investigation into misconduct, Eberly said it is important that the board have oversight into the investigation to help ensure that the issue is properly addressed and that the CEO does not unduly override recommended action steps to protect a high-performing employee.

(Fortune 500 board committee chairs offer guidance on board-led internal investigations in the NACD research brief, Effective Practices for Internal Investigations Led by the Board.)

The board’s role in confronting the problem of sexual misconduct in their organization

The board should address sexual misconduct at the company because the issue—and its implications—lie at the intersection of oversight of corporate culture, compliance, ethics, and risk.

The NACD FAQ details several practices to help boards confront the problem of sexual misconduct:

  • Familiarize yourself with the company’s existing policies and procedures around sexual harassment, ensuring that these policies are up to date and reflect a standard of zero tolerance for sexual misconduct.
  • Perform an audit of open harassment cases, as well as an audit of any closed or sealed cases from the past three to five years (or further back, if deemed appropriate).
  • Take a pulse of the company’s work environment and culture.
  • Review and strengthen internal reporting systems.
  • Discuss a crisis response plan with management.
  • Promote an inclusive and diverse culture.

“Make sure there is a code of conduct in the employee handbook. Say what is considered dating. Is it allowed, and how does it differ from sexual harassment?” said Mei-Mei Tuan, managing partner and founder at Notch Partners, LLC (an advisory firm connecting private equity clients with C-suite executives) and a board member at the Bancorp, at the WomenCorporateDirectors’ Global Institute panel. “Have a confidential hotline. Don’t let folks sweep it under the rug. Pick your battles, but when you do, use your voice to stand firm even if you’re standing alone.”

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