Male-dominated Governance and #MeToo

Midsection Of Woman Standing With Blackboard saying #MeToo Against Pink Background

According to the Canadian Board Diversity Council, only 22.6 per cent of all FP500 board seats were held by women in 2017. In 2016, The Toronto Star reported that women made up only 12 per cent of all board seats on TSX-listed companies. Of the 677 companies reviewed, 45 per cent did not have a single female director, meaning nearly half of the companies had all-male boards.

The story is similar in the United States. According to a report by 2020 Women on Boards, a non-profit organization working toward improving gender diversity on corporate boards, women held 19.8 per cent of board seats of companies in the 2017 F1000, a list of the largest U.S. companies ranked by total revenue. The percentage was similar for S&P 500 companies—where a Catalyst study found 2.8 per cent of S&P 500 companies had no women directors at all, and 24.6 per cent only had one woman on their board.

While these statistics are disheartening to some and perhaps surprising to others, they are particularly relevant in the context of the #MeToo movement, which brought to the fore problems and issues with sexual harassment and assault that have, for the most part, been swept under the rug.

We now know just how ubiquitous those issues are. Last year, Stop Street Harassment, a non-profit organization, released a commissioned report on sexual harassment and assault. According to its data, 81 per cent of women and 43 per cent of men in the United States reported experiencing some form of sexual harassment or assault in their lifetime.

While not all sexual harassment happens in the workplace, the study found that for 38 per cent of the women who reported experiencing sexual harassment or assault, this was the case.

Perhaps not surprisingly, the incidence of sexual harassment and assault is highest in male-dominated workplaces. The Pew Research Center found that of the women who say their workplace is mostly male, 49 per cent report a problem with sexual harassment; the percentage is distinctly lower—39 per cent—for women who work in mostly female workplaces.

Sexual harassment is not the only form of gender-based wrongdoing that occurs in the workplace: gender discrimination is likely even more pervasive and more tolerated. And, like sexual harassment and assault, gender discrimination is more prevalent among male-dominated companies. According to Pew Research, 37 per cent of women who say their workplace is mostly male report that they have been treated as if they were not competent because of their gender; 35 per cent of women who work in majority-male establishments say they earned less than a man who was doing the same job.

There is never a good time to face sexual harassment and discrimination problems; however, boards must be having tough and sensitive discussions now. They need to be informed, attentive, and realistic about the frequency of these problems, and they should be advocating a zero-tolerance policy.

So, mostly male workplaces tend to have a higher incidence of sexual harassment. What about companies with mostly male boards? Is there any interrelation between companies with mostly male boards and sexual discrimination or harassment?

To get answers, we need look no further than some of the highest-profile sexual harassment cases. The Weinstein Company had a nine-member all-male board. CBS, with its Les Moonves scandal, actually had three women on its board, but they represented only 21 per cent of the directors.

Of course, not all mostly male boards are identical, just as gender challenges and harassment are all distinct and personal. However, these problems have burgeoned in organizations without gender-diverse leadership on the board or in management.

Given the preponderance of mostly male or all-male boards, directors need to be asking what they can and should be doing to pre-empt and prevent #MeToo-type situations in the companies that they govern. Further, what should be done if such an unfortunate event does take place?

Here is some advice on where to start:

DIVERSIFY: Diversity has been shown time and again to be good for business and excellent for bottom-line financial results. Boards with female directors—who are there not just for tokenism or compliance—are taken seriously and respected. This message is a start. More than this, however, gender-diverse boards look at sexual harassment and discrimination through a different lens, at the very least because there are assorted people in the room. The conversation necessarily changes with gender-diverse boards, and stereotypes and biases begin to decompose.

EXAMINE CULTURE: We know that boards do not manage. We know they are not involved in the day-to-day activities of the organizations they serve. But culture transcends management structures, and boards of directors must be fully versed in the culture of the company on whose board they serve. Culture impacts everything, especially the way a company’s people are treated. What is now referred to as “bro culture” in many organizations can normalize certain attitudes, conversations, and behaviours that not only allow problems to perpetuate, but also allow silence about them to prevail. Attempting to prevent sexual discrimination and harassment without first considering culture is like trying to fly blind. Considering culture is the first step toward understanding problems in order to rectify them.

CONDUCT VULNERABILITY ANALYSIS: Human-capital risk is part of enterprise risk management. As such, this falls under the purview of the board. More specifically, human resources and compensation committees (depending on what structure the board has in place) need to put gender discrimination and harassment risk on the agenda. The Conference Board of Canada has listed 21 human-capital risks by significance. The top three were (1) shortage of critical skills within the company’s workforce, (2) compliance and regulatory issues, and (3) succession planning and leadership. While sexual discrimination and harassment could fall into any of a number of categories, it was not considered to constitute its own risk category. It is time to bring this topic out into the open, discuss it, and identify it as a risk in and of itself. Only once this is done can boards begin to understand their vulnerability and exposure to the wreckage that these issues can cause. Incidentally, reputation risk is a huge consideration as well. The damage to reputation caused by allegations of sexual harassment or discrimination can be enormous.

REVIEW POLICIES AND PROCEDURES: Once a board has undertaken the first three steps, it must examine and evaluate policies and procedures. Ask management for specifics from human resources and compliance. Evaluate what is already in place and what was established so long ago that it is no longer even relevant. For example, offensive behaviour must be clearly defined, but what is deemed appropriate and acceptable evolves over time; policies must be re-evaluated and updated accordingly. In June 2018, the National Review reported that Netflix “banned workers from looking at each other for more than five seconds as part of its new anti-harassment rules.” Could this even be conceived of five years ago?

ESTABLISH BOARD NOTIFICATION RULES: As we know, and as previously mentioned, boards should generally not be involved in the day-to-day running of the business. That said, policies must clarify what details boards need to know about sexual harassment and discrimination, and when. Policies should establish what detail or situation is too small to merit board attention and, conversely, what requires the board’s guidance and how urgently. Certainly, if the sexual harassment problem involves the CEO, the board must be involved immediately.

BUILD RESPONSE PLANS: As in many things, the best defence is a good offence. Nonetheless, sexual misconduct can still occur, and boards may be called on to respond. The appropriate response will depend on the level of the offender, the type of issue, and the pervasiveness of the problem. Boards must have access to information, and promptly. Because directors are not employees of the organization, it can be easy to overlook or avoid the need to communicate with them. This must be acknowledged and planned for. In generating a response plan, time can be of the essence. Conferring with human resources, legal, compliance, and even public relations will be important. It is critical to take control of the situation to the extent possible. This will include managing the messaging both internally and externally.

There is never a good time to face sexual harassment and discrimination problems; however, boards must be having tough and sensitive discussions now. They need to be informed, attentive, and realistic about the frequency of these problems, and they should be advocating a zero-tolerance policy.

Boards composed entirely of men or even primarily of men are likely to be hampered by homogeneity of experience. Gender diversity can help mitigate groupthink, but for some boards, this may take time to implement. In the meantime, even for boards with gender diversity, the outlined action items can go a long way toward mitigating problems that arise.

The key in all cases, of course, is to face the reality of the business environment and ask the tough questions so that as a board, you don’t have to say #UsToo.

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