Articles
March 1, 2018

Advice For Boards in the Me-Too Era

Business NH Magazine

Elizabeth Rattigan, Director and Chair | Labor and Employment

Many boards have struggled when complaints of sexual harassment directed at senior executives or high profile individuals in their organizations occur or when such complaints go public.

One recent example is the Humane Society of the United States. In February, 2018, public complaints of harassment were made against its then CEO, Wayne Pacelle. Pacelle, by most reports, had been a charismatic individual who was very successful at building the non-profit into a national power-house combating many causes related to animals.

Although Pacelle denied any wrongdoing, female senior leaders at the nonprofit claim they gave warnings about workplace misconduct but their complaints were not heard. When allegations became public, the 31- member board voted to retain Pacelle as CEO and issued a statement that it was ending the inquiry into the allegations. Seven board members promptly resigned in protest of the board’s decision. The next day, faced with an uprising by staff and donors, Pacelle resigned.

In hindsight, it may seem clear that this was an obvious board misstep. In the days following the wave of ongoing high profile sexual harassment reckoning, how would your board measure up if faced with a similar dilemma? Boards of public companies have obligations to disclose harassment claims to shareholders in certain circumstances, which can negatively affect stock price and invite shareholder lawsuits. Even in closely held companies or non-profits, extensive media coverage can wreak havoc for the organization. Short of media coverage, the internal rumor mill can lead to disruption in operations, low morale, and cultural repercussions that haunt organizations long after the issue has been addressed. A lack of board action in some cases, whether perceived or actual, can intensify the problem.

If a sexual harassment complaint is lodged against a company’s CEO, the responsibility to oversee an investigation and take action lies directly with the board. In those circumstances, the duty of care imposed on directors requires that steps be taken promptly to address the situation. Depending on the size of the organization and the board, it is often advisable for the board to form a special committee, typically made up of at least three members of the board, with input from legal counsel and human resources as appropriate, which is authorized to oversee the investigation of the matter. A smaller committee rather than the full board allows more nimbleness to act in a timely manner and helps protect the organization’s confidentiality and attorney client privileges. To ensure a thorough and appropriate investigation, it is standard practice for a board to hire an independent outside investigator, which may or may not be the company’s regular legal counsel. A timely, fair and comprehensive investigation by an independent professional is critical in most situations involving a CEO. If an investigation substantiates the claims, the committee should be ready with recommendations for action (which may be subject to the final decision making of the full board). The board or its committee should also be prepared with a response team to manage messaging both internally and externally.

Apart from reacting to a complaint, boards can also take proactive measures to avoid claims. According to the EEOC’s Task Force on the Study of Harassment in the Workplace, an organization’s leaders must not only play a highly visible role in articulating which behaviors won’t be tolerated but also convey a sense of urgency about preventing harassment. This attitude starts at the board level.

Boards should ensure they are familiar with the organization’s anti-harassment policy and how their companies handle sexual harassment claims. There should be multiple channels for reporting complaints. In recognition of the fact that it is sometimes difficult for sexual harassment allegations against senior executives to reach the board, some organizations may benefit from instituting additional reporting options, such as, anonymous hotlines, neutral ombudspersons or mandatory reporting obligations for senior executives.

Boards benefit from live, interactive training on sexual harassment, just as an organization’s staff does. The EEOC recommends regular, interactive training tailored to an organization that includes, among other things, legal compliance, general workplace civility training and bystander intervention that helps individuals know how to take action if they witness harassment. Leaders such as board members are in a unique position to make a difference in the age of the Me-Too reckoning by promoting a sense of collective responsibility for maintaining a harassment-free workplace.

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