Lawyer claims “sexual” entertainment rife in Australian executive circles

What would you do if an employee came to you, complaining of repeated sexual harassment by the CEO or managing director?

Would you be prepared?

Michael Harmer, chairman and senior team leader of Harmers Workplace Lawyers, told HC that too many Australian businesses still considered sexually-connected corporate entertainment – such as taking clients to strip clubs – to be acceptable practice, which could lead to a sexually hostile working environment and give rise to sexual harassment complaints.

Having such a business culture created a huge challenge for HR.

“The best thing that HR can do is to make sure there is pre-consideration of what’s going to happen if there was to be, for example, alleged sexual harassment involving a very senior member of the firm. You don’t want to be dealing with that massive crisis in your organisation without having given it a lot of forethought and without having generated a tremendous degree of consensus around how that situation would be managed. The worst thing you can do is be dealing with that scenario for the first time with inadequate preparation whilst in the midst of it because that’s where some very serious mistakes can be generated.”

He said it was important to have robust and clear policies and procedures and responses to such scenarios, by way of an emergency response procedure – “in the same fashion that you have an emergency response procedure if there was a bomb threat or a fire or some other major safety concern – you need to cater for this massive risk to the business, which is very real and which has been faced by many businesses across the Australian business community”.

Harmer said high-profile sexual harassment cases rarely made it into the public eye because organisations wanted to avoid a public and potentially damaging situation like the one that retail giant David Jones found itself in when former publicist Kristy Fraser-Kirk sued the company and former CEO Mark McInnes for sexual harassment.

“Most of these matters are dealt with on an extremely discreet basis. They’re dealt with professionally and CEOs are moved on and if it’s well managed, from the corporate point of view, no one’s the wiser. But that’s very hard to do unless there’s this very strong predetermination of what is the process that is going to be followed,” said Harmer.

“It becomes a matter of corporate governance and legal risk management at a very high level and the best thing HR can do in terms of the sort of sexually hostile work environment that might feature involvement with generating revenue, particularly with sales-based staff, through any number of sexually-connected forms of corporate entertainment, is to sound very strongly an awareness of just how much trouble the company could get into in this area, just how damaging to the brand it could be, how many laws could be contravened and why it’s extremely important to have this predetermined approach and a consensus amongst all the senior people that it is something that’s very serious and will be dealt with seriously throughout the organisation.”

In terms of prevention, he said it was important to make sure the leadership lived its commitment to the code of conduct.

“It’s that living the code of conduct as opposed to turning a blind eye when contravention is by a top earning individual that is extremely difficult.

“It's the turning of the blind eye because of the revenue generated that is a massive problem that confronts HR. In our property, finance, accounting and legal sectors, there's turning of a blind eye and the utilisation of sexually-charged corporate entertainment to enrich relationships and generate the revenue is still very prevalent. We've had a number of cases in recent years where very senior partners or senior executives indulging in this conduct have crossed the line such that female members of staff become part of the entertainment for either the clients or the executive.”

Once there was a commitment to corporate cultural reform, the issue of alignment was key, said Harmer.

“Every part of the business, from consultation with staff at all levels, policies, codes, contracts, engagement material, job specifications, KPIs, targets, appraisals – they all have to be aligned and genuinely utilised to achieve the objective of stamping out this sort of conduct.

“If they're not, for example if you have remuneration system that rewards someone who's a bully and a sexual harasser with bonuses because they deliver to the bottom line and doesn't significantly, in a holistic sense, penalise that individual because they won't modify their behaviour, you've got a misalignment. The issue of alignment is key in achieving cultural reform.”