#MeToo highlights the business risk of sexual impropriety

Organisations need to be proactive in tackling harassment in the workplace to avoid damage to their reputation.

The public fall from grace of a string of powerful men in the aftermath of #MeToo has proved without doubt that boardroom sexual impropriety is a major business risk to all organisations.

Laissez-​faire C‑suites may trust to luck they won’t be next, but many others have already taken action, says Sarah Henchoz, employment partner at law firm Allen & Overy.

“To excuse a sexual predator by saying he is a rainmaker, or coming up for retirement, no longer washes and may even be used to prove that a firm has deliberately colluded in unlawful behaviour.”

“Well away from the media spotlight, boards have been forced to terminate the contracts of those who have demonstrably crossed the line, some of them repeatedly and who therefore pose a significant risk for the future. I believe it is very likely that this trend will continue.”

As victims of sexual harassment become more willing to come forward, and to share their stories on social media when managers fail to respond adequately, there may be a temptation to silence them with hard cash.

However, Simon Rice-​Birchall, a partner at law firm Eversheds Sutherland, says non-​disclosure agreements (NDAs) are becoming heavily frowned upon.

“Following the settling of a claim against Harvey Weinstein with a large payout and toughly worded gagging clause, lawyers on both sides were severely criticised by a parliamentary committee and the Law Society,” he says.

“Paying hush money to victims allows sexual misbehaviour to remain hidden and inevitably paves the way for more wrongdoing. In my view, many lawyers will no longer wish to risk having their fingerprints on such agreements.”

Last year, a study by professional services firm PwC found that cases of chief executives being removed for unethical behaviour had increased by 36 per cent between 2012 and 2016 when compared with the previous four years.

When it comes to corporate sexual impropriety as such, under-​reporting remains a significant problem, says the Equality and Human Rights Commission.

“Our work in this area has shown the real barriers that stop victims speaking out, including a fear of reprisals, the potential impact on their career, a lack of clarity about who to go to or the feeling that that they won’t be taken seriously,” says a spokesperson.

“Research has shown that around half of women experience sexual harassment at work yet only a fraction report it.”

The Commission has already called for a mandatory duty on employers to take reasonable steps to prevent such behaviour, describing this as “a necessary first step towards transforming workplace cultures and ensuring there are consequences for any employers that fail to protect their staff”.

For the many firms that prefer to be on the front foot in the post #MeToo world, there is much still to do in terms of mitigating the risk to revenue and reputation.

“We see many clients resetting their cultures and reaffirming their corporate values from the top down and this is happening in a way which goes well beyond mere legal compliance,” says Ms Henchoz.

Yet despite the recent outbreak of beefed-​up diversity policies and mandatory training on how to spot and combat sexual harassment – for all levels, including the C‑suite – she fears the next wave of accusations can’t be far away.

“Organisations need to be ready before they get an allegation because, in the real world, it may only be a matter of time before that happens.”

“Whether you believe a harassment claim is serious or not, you need to prepare for how you will manage it, particularly if it becomes high profile, never forgetting that all your people are innocent until proved guilty.”

Virginia Matthews is an award-​winning writer for newspapers and magazines specialising in business, education and people management issues. A former marketing editor and consumer editor at the Daily Telegraph, her work appears in The Financial Times, Times, Telegraph, Director and in specialist business titles.