If eliminating sexual harassment and discrimination in the workplace is not already on the list of board action items, our youngest generations plan to put it there – and quickly.
Much has been written about how millennials will affect the modern workplace. The memos, blogs and video testimonies now toppling corporations are likely just the tip of the iceberg. The post-millennial generation might make an even larger impact. Just look at the demonstrations following the mass shooting in Florida. I note this to showcase the fervor of the people who will increasingly be applying for jobs in the coming years. These young people have been told they can change the world, and they believe it. When those in regulatory and organizational authority fail to demonstrate an appropriate response, they appear unlikely to simply go away quietly. And for that, we should be grateful.
This appetite for fueling change has led us to a tipping point on the issue of discrimination and sexual harassment and, of course, given rise to movements like #MeToo and NAVEX Global’s “You Can’t Delegate Ethics.”
It makes it more important than ever for boards of directors to understand that they can’t delegate ethics on the issue of harassment. Given the clear activism we’re seeing in young people, directors need to think even bigger and include matters related to diversity, inclusion and corporate culture. These aren’t just social justice issues; these are fiduciary responsibilities with very real consequences for shareholders. Just ask members of Wynn’s board of directors what happened to their stock after that scandal. The question of “when to disclose misconduct” is far from the right question. For boards, it should be finding ways to prevent it.
Culture is Part of Today’s Fiduciary Responsibilities
We’re well past the point where companies can ignore the financial burdens of a huge reputational hit. And members of boards have a fiduciary duty to prevent financial setbacks.
With that in mind, board members need to know the answers to the following four questions about their organizations:
-
Do our employees feel safe and able to speak their minds?
-
Do our employees feel heard?
-
Do our employees feel decisions are made fairly?
-
Do our employees feel that the decision-making process is transparent?
To be able to answer these questions and to see problems before they wreck a company, directors should make sure they’re getting all the information they need. Too often the compliance-related reports they receive are limited to the volume of reports from employee hotlines. Those numbers are essential, but that data isn’t enough. Boards need to understand, with help from their compliance leaders, how compliance program data integrates with other data points such as employee retention, employee engagement and employee experience, and other metrics indicating organizational health, and tracks back to the questions above.
The Right Decisions Need the Right Information
Program data needs to be supplemented with content from benchmark reports, synopses of employee attitudes, rehashing of off-the-cuff remarks and an overview of the general sentiment imbuing the organization. The new generation of “employee engagement” is now “employee experience” and data about employee attitudes can be public before anyone inside knows. Given this, when it comes to getting the full picture of an organization’s culture regarding discrimination and sexual harassment, board members need to ask for more information, and sooner.
If I were a board member, I’d ask that a team from ethics and compliance, finance, strategy and human resources work together to create a robust report delivered regularly to directors, noting cultural risks and integrating insights from across the organization. The board should be able to see broad patterns to make proactive decisions when it comes to company culture. My experience is that very few companies do this – though those with HR committees are more likely to at least be in the ballpark.
Without the necessary information, boards could unknowingly allow the creation of cultures that are in effect petri dishes for scandals down the road. And if boards are worried about the fallout of those kinds of problems now, just wait until the next generation of workers charges in.