A specter is haunting corporate America: sexual harassment.
Forget being miffed over MiFID II, daunted by data security, or panicked over product liability. The next Big Crisis that will be keeping investor relations officers awake at night is sexual harassment, and it’s coming fast. IROs are well advised to be prepared, cautions Evan Pondel, president of IR and public relations firm PondelWilkinson. Based in Los Angeles, Pondel had a front row seat as the crisis hit Hollywood. “The shoe has yet to drop for the corporate set,” he observes. “But it’s coming, and IROs need to lock arms with their HR and legal counterparts to get ready for the day when a major shareholder calls and asks just exactly what the company’s harassment policy is and how many complaints were recorded in the last 12 months.” And once that day arrives, Pondel contends, a new era will begin.
The U.S. Equal Employment Opportunity Commission maintains that one in four women is sexually harassed at work. A November 2017 MSN poll ups that number to one in three, and a Wall Street Journal/NBC survey released about the same time puts it closer to 50 percent. Take your pick — it’s pervasive.
So when investors start popping the question, what’s an IRO to say? Forget waving the harassment policy or pointing to the quarterly training videos that employees endure. These are showpieces that permit companies to check the box on their business insurance forms, according to John Frehse, a senior managing director and labor strategist at consulting group Ankura. “The challenge is transparency. Companies struggle with creating a reporting vehicle since harassment is clearly a negative event,” he says. Firms must be prepared to disclose what reporting mechanisms and investigative procedures are in place.
In July 2017, 25 prominent institutional investors formed the Human Capital Management Coalition, premised on the link between employee well-being and creation of long-term shareholder value. Members include California’s two massive state public pension funds (CalPERS and CalSTRS), Legal & General Investment Management, Segal Marco Advisers, and others. Together they represent $2.8 trillion in assets. They’re lobbying for greater disclosure of workforce metrics beyond what’s currently required of public companies — basically, employee head count. Their wish list includes information on workforce demographics, culture, health and safety, productivity, and compensation and incentives, among other things. The coalition filed a rule-making petition with the Securities and Exchange Commission, urging it to require that listed companies open up on these fronts.
Meanwhile, firms declaring “we have zero incidents” become less credible by the minute. Attorney Milton L. Williams has worked all sides of harassment cases: as deputy general counsel at Time Inc., as a partner on the plaintiff side, and now defending corporate clients at Walden Macht & Haran. “Too many companies don’t focus on the issue until it becomes a problem,” he says. “Clearly, being proactive requires additional resources. Thus some companies are to slow to embrace proper measures.”
As sexual harassment has been prevalent in corporate life for decades, why would it surface now? It all started with Bill — Cosby, that is — says crisis management consultant Davia Temin, founder and head of Temin and Co. The Cosby affair demonstrated the powerful effect of victims breaking out of their “silos of silence and shame,” despite the risk of wrecking their careers. She describes what’s coming for corporate America as a “tsunami,” fortified by years of suffering and accelerated by social media.
Katherine Crowley, a career coach and co-author of Working with You Is Killing Me, has studied workplace bullying and contends that “the gags are off.” Bystander intervention is becoming a “crowdsourced means of forcing change.” This goes beyond “If you see something, say something” to speaking up if you hear something as well. Crowley posits the central challenge for corporations: “How do we make it safe to report and investigate these situations for the victim, the perpetrator, and the reporting bystander?”
She has counseled individuals that were falsely accused, but experts say fake claims are rare. Attorney Anne Clark of Vladeck, Raskin & Clark reports that in her 24 years in labor and employment law, she’s never had a client who was found to have sought action against an innocent co-worker. “Women don’t come forward on a whim,” she explains. “They are fearful and embarrassed.” Many of Clark’s potential clients decide against legal action after hearing what the process entails, and instead seek employment elsewhere.
The corporate world is at a “come to Jesus” moment, as consultant Temin puts it. Companies that step forward and make clear what is not acceptable in the workplace demonstrate to investors that they are serious about the “s” in their environmental, social, and governance platforms. Declaring that the issue is “complicated” isn’t going to cut it — especially for Wall Street firms. After all, are these not the guys — and women — behind reverse exchangeable securities and leveraged exchange-traded funds?
Don’t Be Weinstein Co. 2.0: See ten simple steps for corporate executives from reputation and crisis management expert Davia Temin, president & CEO of Temin and Co.