2017 has been a year of reckoning when it comes to sexual harassment in the workplace. From the tech sector to politics, media, and entertainment, many powerful men have been exposed as serial sexual harassers, with records of misconduct sometimes years or decades long, and lost their jobs, were cut by sponsors, or had their projects canceled. In the business world, senior leaders and HR departments have been concerned with how this awakening may affect their organizations, but many business leaders are afraid to look into the issue because they don’t know what they might find. Are people in the company afraid to report harassment? Has anyone been committing misconduct and getting away with it?
While companies struggle with these challenges, several startups are developing technologies to make it safer and easier for employees to report experiences of sexual harassment, as well as for employers to respond to these reports.
Montreal-based startup Botler.ai is launching a chatbot to help employees in the US or Canada determine whether they have experienced sexual harassment. Khari Johnson of Venture Beat reports that the bot uses natural language processing based on a data set of over 300,000 court cases to determine if harassment has occurred and if there may be cause for legal action. If the user determines that he or she would like to report the incident to HR or law enforcement, the bot is also able to write up an incident report. This is a particularly helpful feature for victims as one major acknowledged barrier to sexual harassment reporting is the trauma of having to retell their story (and relive the incident) over and over again.
STOPit is an app that allows employees to anonymously report a wide variety of transgressions, from harassment to bullying, unethical business practices, and more. They can also provide video and photo evidence and begin a dialogue with “report managers” within the organization to either provide additional evidence or to chat further.
Volkswagen has been undergoing a massive process of cultural change since the 2015 emissions cheating scandal that cost the German automaker billions of dollars and severely damaged its reputation. Changing the culture of a huge company is no small feat, of course, and CEO Matthias Müller has spoken candidly about the challenges the company has faced in that process. In a recent interview with the Wall Street Journal’s William Boston, Müller touches on how the change is going.
The company now holds its board responsible for legal compliance and integrity, he tells the Journal, and has changed many of its processes. New board members are subject to compliance checks to ensure they are above suspicion, and the leadership is to engage more people in dialogue to build trust throughout the organization. Some of the changes involved in Volkswagen’s transformation have included replacing German with English as the language of business at large-scale management conferences and increasing the number of women in leadership positions.
A key challenge is repairing Volkswagen’s reputation, Müller explains, as parts of the company did indeed engage in criminal behavior, which casts a pall over the entire organization. That kind of damage can’t be repaired overnight. Large enterprises like his also have a tendency to move slowly, he acknowledges, but he would like to accelerate the pace of change as much as possible.
Volkswagen’s experience at carrying out a major culture overhaul in response to a crisis carries some lessons for other organizations, which overlap with some of the insights we at CEB (now Gartner) have uncovered in our research into the multifaceted challenge of culture change.
Late last month at the Workplace Stack Exchange, a question-and-answer site for professionals about workplace ethics and etiquette, an anonymous programmer posed an intriguing question: “Is it unethical for me to not tell my employer I’ve automated my job?”
The employee, writing under the pseudonym Etherable, had been hired as a programmer for a job that turned out to amount to little more than “glorified data entry”; within a year, Etherable had figured out the organization’s legacy software system enough to write a program that has been doing most of their work for them for the past six months:
Now the problem is, do I tell them? If I tell them, they will probably just take the program and get rid of me. This isn’t like a company with tons of IT work – they have a legacy system where they keep all their customer data since forever, and they just need someone to maintain it. At the same time, it doesn’t feel like I’m doing the right thing. I mean, right now, once I get the specs, I run it through my program – then every week or so, I tell them I’ve completed some part of it and get them to test it. I even insert a few bugs here and there to make it look like it’s been generated by a human.
The question took off on the Workplace thread and was shared on Hacker News and Reddit. At Quartz, Keith Collins rounded up some of the most interesting responses:
In the past few years, CEOs have become substantially more likely to be removed from their positions due to ethical misconduct or scandals, even though the number of CEOs dismissed for such reasons remains quite low overall, according to a new study by Per-Ola Karlsson, DeAnne Aguirre, and Kristin Rivera of PwC/Strategy&. At Strategy+Business, the authors lay out their findings and discuss their implications:
Globally, dismissals for ethical lapses rose from 3.9 percent of all successions in 2007–11 to 5.3 percent in 2012–16, a 36 percent increase. The increase was more dramatic in North America and Western Europe. In our sample of successions at the largest companies there (those in the top quartile by market capitalization globally), dismissals for ethical lapses rose from 4.6 percent of all successions in 2007–11 to 7.8 percent in 2012–16, a 68 percent increase.
Our data cannot show — and perhaps no data could — whether there’s more wrongdoing at large corporations today than in the past. However, we doubt that’s the case, based on our own experience working with hundreds of companies over many years. In fact, our data shows that companies are continuing to improve both their processes for choosing and replacing CEOs and their leadership governance practices — especially in developed countries.
Instead, Karlsson, Aguirre, and Rivera suspect this increase to be related to changes in the business environment that make unethical behavior at the top of the corporate pyramid more likely to come to light and amplify its reputational risk. They identify five specific trends driving this change:
In the Wall Street Journal, Lou Gerstner, the former CEO of IBM and RJR Nabisco, puts his finger on why organizations’ efforts to build an ethical culture so often fail to match words with deeds:
What is critical to understand here is that people do not do what you expect but what you inspect. Culture is not a prime mover. Rather it is a derivative. It forms as a result of signals employees get from the corporate processes that structure their work priorities. Compensation is one of the most important of these processes. If the reward system pays a premium for one kind of behavior, that’s what will determine employee behavior—regardless of the words enshrined in the value statement. …
Look at who gets the atta-boy and atta-girl treatment at corporate meetings. Is it the leaders in meeting financial targets—or is it those who raise concerns regarding marketing programs that give priority to corporate goals at the expense of true customer needs?
And those sincere expressions of commitment to diversity by the CEO? Obviously helpful. But what really matters is which programs suggested by the HR department—such as executive coaches, neutral-gender parental leave and others—actually get through the budgeting process. Believe me, the budget process is almost as powerful as the compensation process in shaping corporate culture.
This last point is particularly powerful, and reminds me of something we’ve found in our work here at CEB on enterprise leadership and enterprise contribution: To generate desired behaviors and outcomes, organizations need to remove barriers to them and create institutional support for them, not just add them to the competency list or performance review. Incentives won’t help much if employees don’t have the resources required to fulfill those objectives.
I’d also argue that trying to reinforce culture through compensation is a bit of a minefield that has to be walked very carefully.
In the wake of the recent scandal over employees creating fake accounts for customers in order to meet aggressive sales targets, Wells Fargo has come under pressure to claw back the incentive rewards of certain executives, particularly Carrie Tolstedt, who led the unit where the alleged misconduct occurred and who retired in July. According to a Bloomberg analysis, the bank could claw back about $17 million in unvested shares from Tolstedt, but not the cash or stock she already owns. At a hearing on Tuesday, members of the Senate Banking Committee pressed CEO John Stumpf to commit to clawing back executive compensation, including perhaps his own—Stumpf said that was for the bank’s board of directors to decide.
Washington Post columnist Jena McGregor takes note of this demand and asks whether Wells Fargo could actually meet it:
Corporate governance experts and executive compensation consultants say that under Wells Fargo’s own clawback provisions, it appears the bank could make a case for taking back executives’ pay. For instance, according to company filings, one thing that could trigger the bank to recoup executive awards is “misconduct which has or might reasonably be expected to have reputational harm to the company.” Says Johnson: “Sure, they can apply [the provisions]. The question is, should they? To do that you need to have the facts. It takes a fair amount of teasing out what really happened.”
Divesh Sharma, a professor of accounting at Kennesaw State University who studies clawbacks, says that if the bank decides to claw back any executive pay, “they’ll be opening themselves up to potential litigation. Clawing back is interpreted as a sign of something going wrong.”
Wells Fargo announced this morning that it was eliminating its product sales goals after revelations that employees had created millions of accounts without customers’ authorization cost it $185 million in fines from the Consumer Financial Protection Bureau and $5 million in refunds. The bank also fired 5,300 employees for opening fake accounts. The sales goals, which pushed employees to “cross-sell” at least eight financial products to each customer, are believed to have played a role in the scandal by giving them an incentive to cheat.
In remarks to the Wall Street Journal on Tuesday, the bank’s CEO John Stumpf “defended the firm and the efforts it had taken to stop the behavior”:
“There was no incentive to do bad things,” Mr. Stumpf said in an interview with The Wall Street Journal. He called the conduct that led to last week’s settlement with federal and local authorities “not acceptable,” adding that the bank doesn’t “want one dime of income that’s not earned properly.” …
He later said through a spokeswoman that when the bank falls short “I feel accountable and our leadership team feels accountable—and we want all our stakeholders to know that.” Rather, Mr. Stumpf said that some employees didn’t honor the bank’s culture. “I wish it would be zero, but if they’re not going to do the thing that we ask them to do—put customers first, honor our vision and values—I don’t want them here,” he said. “I really don’t.”
To Bloomberg View’s Matt Levine, this looks like an example of an ostensibly smart sales strategy gone horribly wrong: