Workplace sexual harassment may be committed by individuals, but if and when harassers feel able to freely engage in misconduct without fear of being caught or punished, that’s a problem for the whole organization. Specifically, it speaks to a culture challenge; the organization may have policies in place designed to prevent and stamp out sexual harassment, but victims don’t feel secure in reporting because the culture discourages it. Because of that, senior leaders may not find out about a harassment problem as early as they could.
But if culture is part of the problem of sexual harassment, it is also a part of the solution—and a growing concern among directors and shareholders. In a recent blog post at the MIT Sloan Management Review, Patricia H. Lenkov, founder and president of Agility Executive Search LLC, and Denise Kuprionis, founder and president of The Governance Solutions Group, discussed some of the steps boards can take to actively manage culture so as to mitigate the extensive legal, financial, and reputational risks associated with sexual harassment. They offer up some questions directors should be asking in their dialogue with management about the organization’s policies and practices:
How do our current policies measure up to best practices?
Too often, the board does not read company policies or require human resources leadership to review policies and procedures annually to gauge the effectiveness of the reporting process. Directors may think this level of review is “stepping on management’s toes.” However, the board must determine whether the company’s current policies and procedures related to preventing workplace sexual harassment and discrimination are adequate. Asking HR how these policies are communicated and to define “best practices” is not crossing the management/board line. Directors should weigh in on whether the CEO and the management team are communicating the right message.
Do employees trust and use our procedures for reporting harassment?
While there are many methods and procedures organizations use for employees to report harassment or complaints, hotline calls to a company’s dedicated ethics line are a good example. Board directors sometimes utter a sigh of relief when they hear there have not been any hotline calls at their organization, but it’s a common misconception that few calls to the ethics line equates to a “good” company culture. In an open and trusting culture there are many calls — calls for how to handle a matter, calls for clarification, and, yes, some calls that report a potential problem. Informed directors ask how many calls are received in a given time period and require that calls be categorized. …
When it comes to making judgments based on large data sets, machines are often superior to humans, but many business leaders remain skeptical of the guidance produced by their organizations’ data analytics programs, particularly when it comes to talent analytics. That skepticism derives largely from doubts about the quality of the data the organization is collecting, but there is also a natural tendency among people who make strategic decisions for a living to reject the notion that an algorithm could do parts of their job as well as or better than they can.
While this may be true of executives and high-level professionals, some recent research suggests that most people are actually comfortable with the decisions algorithms make and even more trusting of them than of judgments made by humans. A new study from the Harvard Business School, led by post-doctoral fellow Jennifer M. Logg, finds that “lay people adhere more to advice when they think it comes from an algorithm than from a person”:
People showed this sort of algorithm appreciation when making numeric estimates about a visual stimulus (Experiment 1A) and forecasts about the popularity of songs and romantic matches (Experiments 1B and 1C). Yet, researchers predicted the opposite result (Experiment 1D). Algorithm appreciation persisted when advice appeared jointly or separately (Experiment 2). However, algorithm appreciation waned when people chose between an algorithm’s estimate and their own (versus an external advisor’s—Experiment 3) and they had expertise in forecasting (Experiment 4). Paradoxically, experienced professionals, who make forecasts on a regular basis, relied less on algorithmic advice than lay people did, which hurt their accuracy.
Our colleagues here at Gartner have also investigated consumers’ attitudes toward AI and found that these attitudes are more welcoming than conventional wisdom might lead you to believe. The 2018 Gartner Consumer AI Perceptions Study found that overall, consumers are not skeptical of the potential usefulness of AI, though they do have some concerns about its impact on their skills, social relationships, and privacy. The study was conducted online during January and February 2018 among 4,019 respondents in the US and UK. Respondents ranged in age from 18 through 74 years old, with quotas and weighting applied for age, gender, region, and income.
Sticky Note Post It Board Office
One major consequence of our increasingly digital society and economy is that the next great business idea really can come from anywhere. Companies are increasingly taking this lesson to heart and looking for ways to solicit ideas from their entire community of employees, not just those formally dedicated to the development of new business. Last week, Digiday’s Max Willens took note of this trend in the media, observing the innovative techniques publishers are using to generate product ideas, such as a “Shark Tank”-style competition Politico tried out last summer:
Politico joins other publishers that are turning to their own employees to develop new revenue ideas. Before it was acquired by Meredith last fall, Time Inc. ran a similar internal competition that attracted nearly 60 submissions from employees. The Globe and Mail in Toronto and New York Daily News have run their own accelerator programs for years. Those programs have resulted in The Globe and Mail’s Workplace Awards, a profitable award and events program, and an ad-viewability tool at the Daily News.
Finding new sources of revenue has become a top priority for publishers everywhere. But in these cases, the goal is also to instill entrepreneurial thinking in a mature industry.
This concept is being tried in many industries, not just publishing. In our recent and ongoing research at CEB, now Gartner, we’ve seen many organizations turning to their employees through these types of ideation programs—some of which are much more effective than others. As you might imagine, inviting entire workforces to generate ideas can result in a certain amount of idea or information overload. The more interesting solutions we’ve seen guide employees to focus on and share the most helpful kinds of ideas, creating a sort of self-filtering mechanism.
Amid growing public and investor concern about major British companies potentially overpaying their top executives, the UK government has been kicking around the idea of instituting a pay ratio reporting rule since last year. The government hinted in April that it would propose the regulation soon, and now it is here. The proposal, which Business Secretary Greg Clark is presenting to Parliament today, will require all companies with more than 250 employees to disclose the ratio between the pay of their CEO and their average or median employee, as well as to explain this difference, the BBC reports:
The new rules, as well as introducing the publication of pay ratios, will also require listed companies to show what effect an increase in share prices will have on executive pay, in order to inform shareholders when voting on long-term incentive plans. … Mr Clark said: “Most of the UK’s largest companies get their business practices right, but we understand the anger of workers and shareholders when bosses’ pay is out of step with company performance.”
The plans were welcomed by the Investment Association – that represents UK investment managers – as well as business lobby group the CBI and think tank the High Pay Centre. Chris Cummings, chief executive of the Investment Association, said investors wanted greater director accountability and more transparency over executive remuneration.
That investors are leading the charge for transparency on executive compensation is unsurprising; activist investors were also key proponents of the pay ratio reporting rule that came into effect in the US earlier this year. Shareholders are voicing greater interest in exercising their “say on pay” prerogatives, particularly after recent scandals in the UK over executives receiving massive bonuses, in some cases without company performance justifying them.
There are very few talent-related issues that generate as much attention as compensation—in particular, how compensation compares among all the various employees at an organization. Historically, companies have preferred not to share information about compensation out of fear that those who are on the bottom half of the compensation chart will become disappointed and disengaged when they learn that they are earning less than their colleagues. This fear has been a major factor in the business community’s objection to the CEO-employee pay ratio reporting rule that came into force in the US this year: When you publish the salary of the median employee, half your employees inevitably discover that their pay is “below average.”
This idea of hiding compensation for fear of disengaging employees is a relic of the past, however. The reality today is that employees can get a sense of how their compensation stacks up compared to their peers through a growing number of websites that share this information publicly, such as Glassdoor, PayScale, or Salary.com. In other words, employees can already find out how their compensation compares to others and are already talking about it; the question for senior leaders is whether they want to participate in or shape these discussions.
As technology has forced greater transparency in compensation, some companies have decided to actively manage the conversation by proactively revealing to their employees what their co-workers, managers, and senior leaders earn. The New York-based tech company Fog Creek Software is one such organization; eight months ago, it gave its three dozen employees a chance to see what their peers were making. On Bloomberg’s “The Pay Check” podcast this week, Rebecca Greenfield checks in with Fog Creek to see how it went:
Fog Creek’s chief executive officer, Anil Dash, believed … that salary transparency would shine a light on unfair pay practices and ensure things stayed that way. Dash, an entrepreneur, prominent tech blogger and prolific tweeter, is a rare, pro-union, tech CEO who also believes in the old-guard internet principle that information wants to be free. “Transparency is not a cure-all and it’s not the end goal, it’s a step on the way to the goal, which is to be fair in how we compensate everyone,” Dash said. …
The US National Labor Relations Board intends to take the first step toward creating a new regulation regarding the definition of “joint employers” for federal regulatory purposes by the end of this summer, NLRB Chairman John F. Ring wrote in a letter to three Senators this week. The letter to Democrats Elizabeth Warren and Kirsten Gillibrand, and Independent Senator Bernie Sanders, was in response to a letter the legislators had sent to the board chairman expressing their concerns about the board’s intent to introduce a new joint employer standard through the federal rulemaking process.
“A majority of the Board is committed to engage in rulemaking,” Ring wrote in the letter dated June 5, “and the NLRB will do so. Internal preparations are underway, and we are working toward issuance of a Notice of Proposed Rulemaking (NPRM) as soon as possible, but certainly by this summer.”
The joint employer standard, which refers to an organization’s liability for the work conditions of individuals employed by its contractors or subcontractors, was expanded considerably during the Obama administration, when the NLRB ruled in a 2015 case called Browning-Ferris that a company was to be considered a joint employer if it had “indirect” control over the subcontractor’s terms and conditions of employment or “reserved authority” to exercise such control. The board reversed that decision in the Hy-Brand case decided late last year, but vacated its Hy-Brand ruling in February after one member of the board who participated in that decision, William Emanuel, was found to have a conflict of interest.
Investors in Alphabet Inc., the parent company of Google, voted down all proposed resolutions at on Wednesday’s shareholder meeting, including one that would have made the compensation of senior executives partly dependent on the company making progress toward specific diversity and inclusion goals. The proposal was opposed by Alphabet management, Reuters reported on Wednesday, which sank the resolution as insiders have effective voting control of the company. Google co-founders Larry Page and Sergey Brin hold supervoting shares in Alphabet that enable them to defeat any shareholder resolution they don’t approve of. Google insists that its existing commitments to diversity are sufficient:
Eileen Naughton, who leads Google’s HR operations, said the company remains committed to an internal goal to reach “market supply” representation of women and minorities by 2020, which could help bring hiring in line with the diversity of the candidate pool.
Another resolution aimed at getting Google to provide investors more information about its efforts to moderate user-generated content on the platforms it owns, including YouTube, was also voted down on Wednesday.
The proposal related to diversity was put forward by the activist investment fund Zevin Asset Management and supported by a group of Google employees who have expressed concern about how committed the company really is to being an inclusive environment for everyone who works there. One of those employees, engineer Irene Knapp, addressed Wednesday’s shareholder meeting with a statement that stressed the urgency of addressing ongoing problems in Google’s culture: