The Confederation of British Industry (CBI) has been rocked in recent weeks by a series of accusations of misconduct.
In March, The Guardian published allegations against then director general Tony Danker. A month later, the newspaper published another article saying that more than a dozen women who worked for the business membership organisation had approached it claiming they had been sexually harassed by colleagues.
Outside lawyers were brought in to investigate and after concluding the first part of their report, Danker was fired, with Rain Newton-Smith taking on the unenviable job of reforming and resuscitating the trade body.
Members were already becoming concerned, with the UK Government winding down its engagement with the lobby group. The final straw came last Friday, with a second allegation of rape and a new allegation of stalking against CBI staff.
Within hours, insurer Aviva announced it would cancel its membership, starting a mass exodus of major British companies, with the CBI responding by suspending all policy and membership activities.
On Monday, CBI president Brian McBride made a series of promises of reforms, with changes set to be discussed in June at a member meeting.
In an open letter, McBride salso made frank admissions about failings uncovered in the investigation.
"We failed to filter out culturally toxic people during the hiring process; we failed to conduct proper cultural onboarding of staff; some of our managers were promoted too quickly without the necessary training and to properly react when [our] values were violated.
"In assessing performance, we paid more attention to competence than to behaviour, our HR function was not represented at board level, which reduced escalation paths to senior levels of the company…. and we tried to find resolution in sexual harassment cases when we should have removed those offenders from our business."
Speaking to the BBC on Thursday, Newton-Smith said: “I’m not going to talk about individuals or individual circumstances and I think you’ll appreciate why I can’t do that - but what I can do is talk about (how) when I did see things, I acted on them and I supported staff who needed to raise them.
“I think that’s absolutely critically important - and look, to be honest, I wouldn’t be coming back into this job if I thought there were things that I had done or hadn’t done or hadn’t acted thoroughly on.”
Speaking to Sky News, she added: “I think what’s really hard coming into this job as a leader is I’ve got a staff and people who are broken, and I need to lean into the fact that I was here when some of these allegations took place.”
A zero-tolerance approach
Keystone Law’s employment partner Michelle Last reiterated the point that sexual harassment or assault at work is never acceptable and employers should take a zero-tolerance approach.
"Unfortunately, too many employers fail to take proper action, meaning victims either must carry on working with the perpetrator or leave their job.
“The inactive employer ultimately pays a price too - they are seen as colluding in covering up sexual harassment and assault, resulting in serious reputational damage, departing employees and potential employment tribunal and personal injury claims," she continued, noting that companies have policies in place to handle such claims properly, with all senior staff fully trained on what the appropriate procedures are.
“As a matter of good employee relations, where possible, employers should offer employees training on matters such as bullying and harassment prevention, employee relations best-practice, mental health awareness and employment law.
"The fact is, very few employers do so and so the CBI was not isolated in this," Last stated. "Cultures which place a low emphasis on employee wellbeing and enable toxicity, will generally be the least likely to offer this sort of training or support."
At this stage, token gestures are too little too late for the CBI, she argued, given the seriousness of the allegations.
"There can be no other conclusion than that the CBI leadership enabled toxic individuals to flourish at the expense of dozens of women.
"Engaging a law firm to carry out an independent review and dismissing a few token perpetrators might seek to give the impression action has been taken, but many of those who remain in the organisation will have been involved in the culture that allowed this conduct to occur."
Implementing systems and processes
Fudia Smartt, employment law partner at Spencer West, stated that no-one - including senior management - should be treated as being above reproach.
"The implosion of the CBI shows that if a toxic culture is left unchallenged, it will ultimately lead to increased legal risk, reputational damage, and potential career ruination for those accused of sexual misconduct.
"Had there been a 'speak up' culture at the CBI, where staff felt able to raise their concerns, these issues could have been raised in real-time and out of the public eye," she continued, adding that: "Staff will only raise concerns if they feel safe to do so."
Employers need to have robust whistleblowing policies in place which make clear that staff should not be subjected to any retaliatory conduct staff and all staff - but particularly managers - should be trained on how to deal with complaints in a sensitive manner.
The provision of confidential helplines or mailboxes can assist where staff feel uncomfortable to raise concerns directly.
"Had the CBI invested in its culture by tackling inappropriate behaviours at the outset, training its staff on appropriate behaviours and creating an environment where staff felt safe enough to raise concerns, its implosion would not be dominating the news headlines," said Smartt. "It provides a cautionary tale for businesses everywhere on why ensuring a healthy workplace culture is of paramount importance."
Recruiting for 'cultural fit'
Jane Amphlett, head of employment, and Alex Mizzi, legal director at law firm Howard Kennedy, suggested that while recruiting for 'cultural fit' increasingly has a bad name - and can easily slide into groupthink and discrimination - it's not always malign.
"Although questions need to be framed carefully, it's legitimate to ask candidates questions about their approach to diversity and inclusion in the workplace, to ensure that they understand its importance.
"For managerial hires, it could be very illuminating to ask how they would handle a complaint of harassment made against a senior colleague."
Amphlett and Mizzi pointed out that many organisations have senior staff whose ability to make money could lead to questionable behaviour being overlooked - but this approach ignores the substantial risks that harassment, bullying and other forms of misconduct can create for a business; whether legal, financial or reputational.
"By focusing only on short-term financial gain, businesses may be storing up a crisis for the future, as when staff see that such behaviour is tolerated, it undermines their faith in the organisation's ability or willingness to deal with complaints fairly," they noted, adding that this can encouraging people to bring employment tribunal claims or go to the media.
"Although McBride rightly gave no further details of the 'resolutions', too often it is the employee who raises a complaint who ends up leaving a business and employers may consider that a settlement agreement with confidentiality provisions will best protect the business' reputation.
"But this is often a short-sighted and naïve view," argued Amphlett and Mizzi. "In the wake of the #MeToo movement, the egregious use of NDAs has been revealed in the film industry and many other sectors."
Businesses which rely on hushing up complaints are likely to be failing to scrutinise and address the behaviour of senior managers accused of wrongdoing. They can also make it harder to identify patterns of complaints against particular staff.
"Even if the business survives the immediate aftermath of a scandal, which for the CBI appears to be hanging in the balance, the fallout of this toxic culture will continue to be felt.
"Businesses need to recognise that it is not only customers (or members) who will leave in droves: employees increasingly want to work for companies that are aligned with their values."
Repair and rebrand
Ben Gallagher, co-founder of strategy consultancy firm B+A, noted that 'broken beyond repair' is how one business leader described the CBI brand.
"Given the scale of the CBI’s problems, and the trauma and distress caused to those impacted, the observation may at first seem correct - but the statement forgets the brief nature of news cycles and ignores the possibility for a brand or company to grow and learn from a crisis," he commented.
"It’s not easy, but it is absolutely possible to repair a damaged brand’s reputation - what’s needed is a leadership team willing to undergo some deep introspection and a put in place a clear, values-based strategy to build the organisation back better."
Gallagher pointed to previous reputational disasters - in 1997, Nike’s use of low-cost and unethical labour led to rallies and consumer boycotts; the Tesco horse meat scandal resulted in weeks of negative headlines in 2013; and when Samsung’s Galaxy Note 7 handsets blew up, the brand was collateral damage.
In response to these PR nightmares, Nike adopted a code of conduct for its plants, implemented a factory auditing system and is now a leader in social sustainability; Tesco invested over many years to rebuild establish the quality and value perception of its brand to regain customer trust; and Samsung took quick and definitive action, recalling and replacing devices while admitting it messed up.
"Without doubt, Rain Newton-Smith faces huge challenges," said Gallagher. "She must overhaul the organisation’s culture, she must rebuild its reputation by setting it on a new course; and she must convince the membership that an old face - until earlier this year she was the organisation’s chief economist - can nevertheless bring fresh leadership and regain people’s trust."
Gallagher also warned that a jump to a rebrand, purely as a way to recover from a reputational crisis, is to misunderstand the process and purpose.
"So if the CBI aims to undertake a brand refresh or even a full rebrand, it will require depth and conviction - the operational structure of the business, its products and services and its communications will need to change in order for it to actually re-brand itself."
Don't miss the latest headlines with our twice-daily newsletter - sign up here for free.
