Sexual harassment allegations have dominated headlines over the last six months with fresh controversies and misconduct cases emerging almost daily, and now the fallout is making its way from the gossip pages to the boardroom as concerns of impact on bottom line rise up the corporate agenda.
The Harvey Weinstein scandal which rocked Hollywood has quickly spread to other sectors including technology, media, law, politics and financial services, and shows little sign of slowing; lawyers in the employment practice at Squire Patton Boggs made it a top trend for the next 12 months.
“Given the recent publicity around sexual harassment claims, including Harvey Weinstein, Don Burke and other high profile figures, we expect to see an increase in sexual harassment complaints across workplaces in 2018,” the firm said.
Victims are finding their voices, and those firms who either ignored the problem or had no systems in place to deal with it are reaching for their wallets. From admitting they shouldn't have let it happen in the first place, some companies are now understanding they can not put a price sum on the true cost, as it can forever tarnish their brand.
In the US, high profile media figures such as Bill O’Reilly and the now deceased former Fox News chairman Roger Ailes were forced out of their positions following allegations, and it also emerged that their companies had already paid out millions in compensation.
A dawning realisation for many businesses is that not only are their current policies and procedures to deal with such matters wholly inadequate, but such instances will also hit profits when revelations crystallise.
O’Reilly was a top draw for Fox News, and senior executives had advance notice of the sexual harassment charges but did not drop him until advertisers actually began to pull out.
A question also hangs over the future of The Weinstein Company, despite it sacking its shamed co-founder, which may not survive if the #MeToo movement anger translates to universal boycotts of its productions at the box office.
In the UK, the Presidents Club scandal exposed by the Financial Times has dragged London’s financial services elite into the ongoing controversy, triggering allegations of sexual assault and harassment at a secretive annual dinner held at the Dorchester Hotel in London’s Mayfair on January 18.
The club was closed as public anger grew over the scenes from inside filmed via a hidden camera, and some of the attendees then became targets as social media stoked calls for their businesses to be avoided as punishment.
Senior staff may be exposed to claims of breach of fiduciary duty following sexual harassment lawsuits perpetrated by executive officers or other employees of the company, lawyers warn.
Boards must also consider financial risks not directly tied to payment of civil damages or to legal and remediation costs related to sexual harassment.
“There are numerous incidents of allegations where executives have been accused of sexual harassment and other misconduct, and the companies have seen their stock price fall or lost advertising revenue, customers and business opportunities,” said Francesca Odell, partner at Cleary Gottlieb.
In the UK, the message from financial regulators could not be clearer; “tone from the top” and “conduct is key” are two familiar refrains from the Financial Conduct Authority who are increasingly looking at behavioural analytics as a measurement tool when considering enforcement action.
Later this year, the Senior Managers Regime code of conduct, which currently only applies to the top bankers, will be extended to all regulated financial institutions in the UK, and will also usher in a raft of cultural changes.
Rolleen McDonnell, lawyer at Brahams Dutt Badrick French, said that training on what constitutes harassment will undoubtedly “surprise” employees, such as the broad definition that is not limited to sexual instances.
“While there is a line to be drawn between taking a robust stance on harassment and employees having fun, there is no reason why disciplinary and harassment policies should not remind staff that they are expected to uphold certain standards of behaviour in all interactions with their colleagues, and to behave and drink responsibly,” said McDonnell.
Lawyers say firms cannot shirk from asking themselves tough questions about their policies and procedures and how they may need rewriting to confront sexual harassment and other forms of misconduct in today’s workplace.
“Sexual harassment related allegations are rapidly changing perceptions concerning harassment and abusive behaviors,” said Cleary Gottlieb partner Arthur H. Kohn. “Companies across all industries are responding by developing strategies for tackling harassment in the workplace and minimizing risk by implementing strong policies, procedures, and complaint systems.”
Does the senior management team communicate the message that harassment of any type will not be tolerated?
Experts say serious thought should be put into who is in charge of conducting investigations, and the resources they have.
Does your firm have real-time compliance monitoring, with tailored scenario algorithms set up to trigger the kinds of alerts that would highlight these problems before they escalate?
Sexual harassment has quickly become a business risk on par with serious white collar crime, and having systems and controls in place to monitor it is going to be vital.
#MeToo is here to stay and the way that top businesses tackle the issue will be judged and have impact for many years to come.
Behavox is the people analytics company that amplifies human intelligence within your enterprise by extracting knowledge from vast seas of structured and unstructured employee generated data. This can generate never-before-seen, laser focused insights into daily employee activity, performance and conduct, helping you weed out a potential "Harvey" from within your midst.
Behavox is already working with clients who are users of its scenarios in this area and these are extremely accurate at identifying the following conduct: excess peer pressure; racism; harassment; sexual misconduct; inappropriate language/insults; workplace stress/complaints where employee feels threatened or vulnerable.
Behavox employs Natural Language Processing, entity resolution (classifying 'people' or 'organisations') and sentiment analysis to highlight these particular behaviors.
Given the speed at which the modern news cycle moves, and the 24/7 aspects of social media, a story can go viral in minutes, impressing the need for real-time compliance. The #MeToo hashtags were retweeted around 500,000 times in the 24 hours following the original tweet by singer Alyssa Milano asking people to share their examples of harassment.
As more victims are prepared to come forward, firms must ask themselves if they can handle the pressure and deal with the financial and reputational risks that will undoubtedly follow if they are not willing to continually and forensically review their business culture.
Behavox runs regular roundtables for compliance professionals as part of its Compliance Community service in New York and London where peers get to share their knowledge and experience of market practice confidentially. Anyone interested in attending should email firstname.lastname@example.org
Disclaimer: This content is intended to provide general information in summary form on legal and regulatory topics, current at the time of publication. It does not constitute legal advice and should not be relied upon as such.