Board Members + Investors.

Maintaining a workplace environment free of discrimination, sexual harassment and other misconduct is critical to both the short-term productivity and long-term health of a business. Reports of sexual harassment can have material negative effects on an organization's  ability to create an impact - not to mention its valuation. 

The primary obligation to manage these risks on a day-to-day basis falls to executive leadership. But investors and board members as their fiduciaries play a major role when it comes to setting the tone.  

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The Role of Good Governance

Sexual harassment reports to the Maine Human Rights Commission have more than doubled in recent years. The Equal Employment Opportunity Commission estimates that 75% of sexual harassment incidents go unreported. In addition to the human cost of workplace harassment, there is a significant economic cost for both victims of sexual harassment and businesses.

Imagine the impact on organizations in Maine if we used our broad spheres of influence to create transparency and require accountability around issues of sexual harassment. Imagine the impact we could have on shaping healthy and inclusive workplaces. ​​

​In order to achieve this vision, we as:

Investors need greater transparency into sexual and gender-based violence (SGBV) risks within our current portfolios and must hold the organizations we invest in accountable for reducing them. As investors we must also develop appropriate SGBV screening requirements in due diligence for prospective investments.

​​​Board Members (fiduciaries who act on behalf of investors/funders) must actively manage the possibility that SGBV can evolve into material financial and operating risk for the organizations we advise. As trusted agents, we must engage and incent management to create a safe, healthy workplace for all employees. 

 To achieve this kind of transparency and accountability we must consider our role in shaping and auditing:

• training for investors, the board and senior management
• strategies for creating healthy cultures that prevent unwanted behaviors,
• policies that protect employees,
• reports and indicators that track implementation of policies,
• employee surveys/board visits to assess and track cultural health, and
• board and employee composition as it relates to diversity.

While individual perpetrators of sexual and gender-based violence (SGBV) are unarguably guilty of crimes, we believe companies that enable such behavior either unwittingly or through negligence are also culpable for its persistence. Therefore we believe it is incumbent upon investors to...hold companies accountable for, demand greater transparency on, and incentivize companies to minimize SGBV."                                                                                 
-Cornerstone Capital Group

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The Law

​Sexual harassment is a violation of state and federal law and includes unwanted sexual advances, requests for sexual favors, or other verbal or physical conduct of a sexual nature which threatens job security, working conditions, or advancement opportunities. Sexual harassment is gender-neutral and orientation-neutral. It can be perpetrated by any gender against any gender.

​The two major categories of sexual harassment addressed within federal and state law include quid pro quo harassment and harassment which creates a “hostile work environment.” ​​It is important to know that for employers to be held liable, they must be notified of the harassment, or be deemed that they should have been aware of it.

Quid pro quo harassment is when a job, promotion or other professional benefit is conditioned on the individual’s submission to sexual advances or other conduct or when such benefits are denied because the individual refused to submit to sexual request(s).

A hostile work environment is created when unwelcome verbal, physical or visual conduct is severe or pervasive, and creates an intimidating, hostile, or offensive work environment or interferes with work performance. Employees may experience this kind of sexual harassment even if the offensive conduct was not directed toward them.

Some Examples: 
Examples of sexual harassment include:

• Making sexually explicit or derogatory comments or jokes, either out-loud or via email
• Inappropriate touching or groping
• Questions about sex life or relationships
• Sexually suggestive looks, leers, noises, gestures
• Pictures, cartoons, screen savers
• Forwarding sexual material via e-mail or text
• Texting sexually explicit text or images

factors that contribute to harassment

Research indicates there are a range of factors which can significantly increase the likelihood of sexual harassment in the workplace. Some are common and/or inevitable features in the start-up (and/or small business) environment:

• ​Significant Power Disparities: Though power disparities exist in most workplaces, significant disparities can create additional risk. High status employees, board members or investors may be emboldened to exploit lower status employees who may fear the possible ramifications of making a report.[i]
• Young Employees: The presence of young employees, particularly in their first or second jobs, can increase the risk of harassment. In addition to contributing to the problem of power disparities, these employees may be less aware of laws and norms and may lack the self-confidence to challenge inappropriate conduct.[ii]
• "High Value" Employees: Another risk factor includes enterprises where some employees are considered particularly valuable – the person with the big ideas, the “rainmaker,” or the one with a strong relationship with a primary investor. These employees may believe the rules don’t apply to them, and management may be reluctant to discipline them.[iii] Similarly, other employees may be reluctant to make a report against a high value employee.
• Homogenous Employees: Sexual harassment of women is more likely in workplaces in which employees are primarily male. Many start-ups fall into this category. One study showed a “huge” gender disparity at start-ups in the tech sector, with 80% of technology employees being male.[iv] Men in start-ups are often in positions of power. Start-ups are predominantly founded, run and staffed by men: in 2017, women-led companies received only 2% of all venture capital funding in the U.S.[v] Workplaces which are predominantly one race (usually white) can also be a contributing factor. ​
• Isolated and/or Decentralized Workplaces: Harassment is more likely when employees are physically isolated, have few opportunities to work with others, and/or where there is limited communication between levels of the organization – employees to management to board. In these situations, there are fewer “eyes on” and harassment can go unchecked. Given Maine’s geographic and economic range, start-ups are as likely to spring up and “go it alone” in a small town or rural area as they are to arise in the urban centers.   
• Alcohol Consumption: Workplace cultures that allow or encourage alcohol consumption as part of enterprise norms have an increased risk of sexual harassment.[vi]

[i] Feldblum & Lipnic. (2016). U.S. Equal Employment Opportunity Commission Select Task Force on the Study of Harassment in the Workplace Report. Retrieved from: https://www.eeoc.gov/eeoc/task_force/harassment/upload/report.pdf
[ii] Ibid
[iii] Ibid
[iv] https://www.theatlantic.com/business/archive/2014/12/statistically-speaking-what-does-the-average-startup-look-like/384019
[v] http://fortune.com/2018/01/31/female-founders-venture-capital-2017/
[vi] Samuel B. Bacharach et al., Harassing Under the Influence: The Prevalence of Male Heavy Drinking, the Embeddedness of Permissive Workplace Drinking Norms, and the Gender Harassment of Female Coworkers, 12 J. Occup. Health Psychol. 232 (2007).

TRAINING & AWARENESS

Maine law requires sexual harassment training for employers with fifteen or more employees as well as additional training for supervisors. However, all organizations, regardless of size, should follow best practice (and risk reduction) and provide in-person, anti-sexual harassment training for all members of the board, management and staff, during employee on-boarding and on a yearly basis. Organizations should also consider including employees of contractors or vendors who are regularly on-site, or alternatively should request that such training be provided by the third-party entity. Effective training should not be simply focused on avoiding legal liability, but must also create a culture of respect that starts at the top.

• Training should be tailored to the specific risks and needs of the enterprise. Ensure that your organizational risks are reflected in your training and that examples of harassment are the kind of the issues employees might face within your business structure.
• Find a good trainer. Management should ensure that the trainer has experience providing sexual harassment training, has good references, understands your business and is willing to tailor the training to address your concerns and policies.
• Create buy-in. Ensure all levels of management are present at the training in order to demonstrate the enterprise’s commitment to a workplace free of harassment.
• Training should include guidance for victims including documentation of incidents, telling the harasser to stop (if it feels safe and comfortable to do so), and the local resources available to support them.
• Training should provide guidance to empower bystanders (others in the workplace) to step up on behalf of an employee who is being harassed.
• Separate training should be provided for individuals responsible for taking reports. Training for people who will be taking reports should include how to make the individual reporter feel comfortable; how to gather initial facts; how to create and maintain good documentation; how to assure against retaliation; and what to do next.
• Train management and supervisors separately, preferably in a follow-up session, regarding their role and responsibilities in prevention and the consequences to the enterprise of their conduct and/or their inaction when they know or should know that harassment is occurring. 

Get Help With Training

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Conduct a Basic Audit

Policies establish trust and provide clear actions to keep an organization's culture healthy and productive. As a board member or investor, you can do a basic audit of your organization's anti-harassment policies by asking the questions below.

1. Does it have a clear and simple explanation of prohibited conduct, with examples ?
2. Is there a clearly described process that provides multiple accessible avenues for making complaints?
3. Is there assurance that the employer will protect the confidentiality of harassment complaints to the extent possible?
4. Does it outline a process for prompt, thorough, and impartial investigations of complaints?
5. Is there a strong assurance that employees who submit complaints or provide information related to them (witnesses and others who take part in an investigation), will be protected against any retaliation?
6. Is there assurance that the employer will take immediate and proportionate corrective action when it determines that harassment has occurred?
7. Does it outline how the employer will respond to behavior that may not be legally actionable harassment but that may lead to it if left unchecked?
8. ​What process should be followed if senior management, a board member or investor is the source of the problem? 
9. How is sexual harassment training approached? When was the last time each level of the organization (from the line through the board) has received training? How are you monitoring the effectiveness of the training?

To the extent you are uncomfortable with any of the answers, it is time to evaluate the organization's approach to prevent, detect and respond to sexual harassment.

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Other Resources

More on the importance of good governance and management with regard to sexual harassment from some of the leading investors and researchers in the world. 

Learn More