To oust or not to oust?
As the wave of heightened awareness around workplace sexual misconduct continues to sweep across the country, the challenge companies face in balancing their public reputations against the desire to retain top talent (and follow some level of due process) is becoming increasingly apparent.
The latest possible case study: Athletic behemoth Nike Inc. this week announced the seemingly abrupt departures of two top-level executives. While the firm has not alleged any misconduct — sexual or otherwise — on the part of its former C-suite occupants, news of their exits coincides with the leak of an internal memo from CEO Mark Parker acknowledging a crackdown on inappropriate workplace behavior.
For decades, misconduct by top-level corporate talent — if acknowledged at all — has often been swept under the rug. But as the pendulum swings in a new direction — undoubtedly helped by movements such as #MeToo and the pervasive and swift backlash that has come to define the social media generation — companies are feeling the pressure to address allegedly inappropriate behavior and to do so swiftly. But whether that action is always appropriate can be difficult to discern, according to Linda Vogel, strategic legal counsel focused on employment law and former chief legal counsel for Aerosoles.
“Companies now want to show and [create] a cultural environment that [demonstrates] that they are sensitive to [misconduct] issues and are taking affirmative steps,” Vogel explained. “In their desire to show that they’re being proactive and not ignoring these issues, companies are sometimes taking extreme measures to avoid the bad publicity of not doing anything or not acting. … Terminations are sometimes warranted, but sometimes they are probably happening without a thorough investigation.”
In the current climate — while the rights of victims are always a priority — often a “hint of bad behavior,” according to Vogel, is causing some companies to react aggressively, which could also carry some risks.
“If the accused absolutely contends that there’s no [misconduct] there, they can turn around and sue for defamation, loss of income and loss of reputation,” Vogel explained.
At the same time, there’s the competing financial risk of consumer boycotts and similar actions should news of misconduct become public before a company can get out in front of it.
“For a company, a good way of handling this might be to put the accused on probation or suspension until an investigation is conducted — but because of social media, there isn’t a lot of time between the time these charges come up and everything being put out there on social media,” Vogel said. “Companies just don’t have time to make a considered decision. They’re now opting to take the risk of replacing the talent — it’s hard to get back a reputation once it’s been damaged. And consumer boycotts are expensive.”
In the case of Nike, market banter around how brand president Trevor Edwards’ exit may have disrupted the firm’s succession planning illustrates that — despite public discourse that leans toward protecting victims of workplace misconduct — shareholder value remains a top concern for corporations. Still, that could easily be offset by a shift in where consumers choose to spend their dollars.
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