#SMEToo: Smaller firms shouldn't be complacent about executive scandals

Harassment and its fallout are not the exclusive preserve of high profile corporations.

by Alexandra Mizzi
Last Updated: 30 Aug 2018

This has been a vintage year for executive firings.  From Netflix to Barnes and Noble, there has been a spate of senior staff parting ways with their employers, and an increasing tendency for dirty linen to be washed in public rather than the old-school method of a discreet press release about an executive 'spending more time with their family' or 'succession planning'. 

The amplifying effect of social media and the #MeToo campaign seems to be a major driver of corporate strategy in this area: high-profile businesses must be seen to take action quickly against perceived transgressors or risk major reputational damage in the time it takes for a tweet to go viral.

Smaller, less newsworthy businesses may consider themselves fortunate to be able to deal with executive misbehaviour more discreetly.  There is often a temptation to hush up allegations of misconduct against senior executives, particularly if they are seen as high performers.  But increasingly that approach is no longer commercially or legally viable (if it ever was).

When faced with allegations that an executive has made discriminatory comments or harassed a colleague, it may be possible to keep the situation out of the public domain by offering the victim an agreed exit under a settlement agreement with confidentiality terms. But this is fraught with risk.  Conversations with the victim about leaving the business are unlikely to be 'without prejudice' (i.e. off the record) and could easily give the victim grounds for a victimisation claim (i.e. being forced out because s/he complained of harassment or discrimination). 

Victims are often reluctant to sign up to confidentiality terms which they perceive as oppressive, and trying to go too far can easily backfire – the heavy-handed confidentiality agreement which Harvey Weinstein's former PA signed did not reflect well on the people who required her to sign it.  

But most of all, failing to take decisive action against a misbehaving executive sends a terrible message about the type of behaviour which the business condones and could make it much harder to defend any future claims involving similar allegations against the executive.  If #MeToo has taught us anything, it's that harassment is rarely a one-off offence.   

The removal of Employment Tribunal fees (the Supreme Court ruled them to be unlawful last summer) has eliminated one key barrier to bringing claims. Further, the fact that employment tribunal judgments are now all published online on an easily-searchable database makes it easy for potential claimants to see details of previous claims (even if the claim didn't succeed).

The online world has multiplied the ways in which a business' reputation can be damaged.  Employees use sites like glassdoor.com to get insider information on a business and, while sites often vet reviews for potentially defamatory content, it's not uncommon for allegations to be referred to, however obliquely.  

Then there is the way that social media can massively increase an allegation's reach. It's true that smaller businesses might not attract quite the same level of media scrutiny as, say, Amazon or Netflix. But that doesn't mean they won't aren't vulnerable to a social media pile-on – and they are much less likely to have the resources or expertise to respond swiftly and effectively.

In our experience, well-run SMEs are learning swiftly from real-life case studies like the Netflix controversy and taking the opportunity to implement a zero-tolerance approach to workplace harassment and discrimination, from the top down.  Although this can be a painful adjustment, it's better for staff, better for the company's reputation – and better for business.  

Alexandra Mizzi is a senior associate at Howard Kennedy.

Image credit: fitzcrittle/Shutterstock


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