There’s a great post by Heidi Moore on LinkedIn about why boards should view sexual harassment as a business risk, and deal with it that way.
Settlements with victims are a bad business proposition, Moore says. Non-disclosure agreements are bound to fail over time. But in the short term they give the sexual predator a feeling of invincibility.
That feeling of invincibility “means he will inevitably abuse more women than a company can ever find and pay,” Moore says.
“As a result, the potential fallout is nearly infinite,” Moore says.
Instead of paying off victims and depending on ineffective NDAs, boards should fix the problem.
Kick the offending executives out before they take everyone down with them. Set a firm, written limit on settlements-per-executive: three strikes and the executive is out — or preferably just one strike. Make sexual harassment a firing offense if you want to save the company.
She also recommends clauses in employment agreements to void golden parachutes and other severance payments for cases of harassment and assault.
Heidi Moore is an editor and writer. Her post “Harvey Weinstein shows sexual harassment is a big cost to businesses” is here.
Richard L. Cassin is the publisher and editor of the FCPA Blog.
Another possible consideration is to establish an accusation as a grounds for suspension. Companies can set up a mechanism to investigate the facts. Criteria can be established to identify when this conduct is a grounds for termination for cause, with the company reserving rights to prosecute civilly or criminally along with the wronged employee. The need for some re-examination of the presumption of innocence is needed. Companies found covering up should be denied D&O liability insurance and publicly exposed.
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