Culture trumps policy: Mitigating #MeToo at the bank

Online lender Social Finance stomped onto the banking scene last year when it announced its application for a banking charter. The banking industry vowed to stop the Silicon Valley company — then led by CEO and co-founder Mike Cagney — from cutting into its turf, yet nothing seemed to stand in the path of Cagney and his SoFi juggernaut.

Then former SoFi employee Brandon Charles filed a lawsuit accusing the personal finance company and its leader of creating a toxic work environment. Charles alleged he was fired for reporting sexual harassment to managers, according to a story in the New York Times. Cagney himself was accused of a slew of sexual improprieties and resigned last September. SoFi’s charter application was pulled and has not been refiled.

Thus Mike Cagney joins the list of once-powerful men brought down by their own sexual misdeeds: Harvey Weinstein, Matt Lauer, Roger Ailes, Bill O’Reilly, Sen. Al Franken, the list goes on.

Repercussions from the #MeToo movement and the heightened awareness around workplace sexual harassment will leave no industry unaffected. Experts say waiting for a problem to emerge before designing a solution is a poor strategy. Rather, community banks that want to avoid tarnishing their brands are well advised to review their handbooks and training to ensure legal compliance and best practices regarding workplace conduct. More importantly, they should take a clear-eyed look at company culture from top to bottom to see if it actively fosters respect or tacitly endorses problematic behaviors.

What constitutes ‘harassment?’

Sexual harassment is a loaded term, and it has a precise definition: it’s a form of discrimination that occurs when unwelcome conduct of a sexual nature affects an individual’s employment or job performance or creates a hostile work environment, according to the Equal Employment Opportunity Commission. It falls into two broad categories: quid pro quo harassment, when employment decisions are made conditional on sexual favors, and a hostile work environment, in which the discriminatory words or action of coworkers seriously impede an employee from doing their job (the law prohibiting sex-based discrimination in the workplace, Title VII of the 1964 Civil Rights Act, applies to all employers with 15 or more employees).

Carolyn Chalmers, a Minnesota attorney who has represented both sides in sexual harassment cases, pointed to a landmark case against a Washington, D.C., bank – the first on sexual harassment heard by the Supreme Court – which set the stage for how sexual harassment claims are handled today.

Meritor Savings Bank v. Vinson was a 1986 case in which the court unanimously recognized that sexual harassment in the workplace was a violation of Title VII. It established that a hostile work environment – as well as more explicit quid pro quo harassment – was a violation of the law.

“If I were designing training for bank CEOs, I would encourage them to read this Supreme Court decision,” said Chalmers, who has also worked as a consultant on sexual harassment and assault prevention. “I’d tell them, ‘You might think this only affects the entertainment industry, but this landmark case in sexual harassment was against a bank.’”

James Olney

What’s a bank to do?

There are two main considerations when looking at sexual harassment – how to prevent it from happening to begin with, and what to do in the unfortunate situation that it does happen.

The rise of the internet and social media has created a two-pronged increase in possible harassment claims and suits, said James Olney, a former plaintiff’s attorney who now works as a consultant with Associated Benefits and Risk Consulting, a subsidiary of Green Bay, Wis.,-based Associated Bank.

The internet allows people to realize that what they experienced was harassment – as well as what steps to take next – but it can also create an echo chamber for disgruntled former employees looking for a way to hit back at their ex-employer. “Responding to an EEOC investigation is an enormous amount of work,” Olney said. “It’s often a lot cheaper to settle than to pay a well-heeled lawyer to represent you and win,” even if the case has dubious merit.

There are two things a bank should consider when looking at its response to a claim of harassment, Olney said. It should make sure its policies and handbooks conform to the current legal requirements, especially when it comes to protected categories. At the same time, a bank will want to make sure its approach is more robust than a mere legal minimum.

“Make sure you emphasize a welcoming culture, and push forward that cultural message to the employees,” he said. “Frequently, things like a handbook are written by employment attorneys who might have a tin ear to cultural nuances. They’re legally sufficient but probably don’t reinforce the cultural atmosphere you want to create.”

This is where tailoring and an awareness of culture come in, for the training offered as well as what’s in the handbook. “Training on the market, which is often ‘one size fits all’, is ineffective and sometimes counter-productive because people don’t see themselves in the training,” Chalmers said. “They see generalizations about workplace culture that don’t relate to their workplace.”

Besides that focus on culture, the bank also will want to make sure it articulates that employees who report are free from retaliation as well as explaining how to report. What companies should seek to have is a zero barrier approach to reporting, Chalmers said, which removes impediments and makes reporting as easy as possible.

Finally, a bank could consider adding an anonymous ethics hotline from a third party. This move is a little trickier, Olney said, because it might increase false complaints. On the other hand, it opens an avenue for employees who fear retaliation or lack of response, especially if they’re complaining about a high-ranking coworker or supervisor.

Amanda Young

Des Moines, Iowa-based Bankers Trust establishes its standards from the beginning. “We absolutely do let new employees know that we’re going to have a more-than-legal requirements approach to sexual harassment responses,” said Amanda Young, senior vice president of human resources at the $4.3 billion bank. That means establishing a welcoming culture of trust and respect for all employees as well as rigorous policies and procedures.

When things go bad

Managers and supervisors should play an important role as a first line of defense, Chalmers said. “Sometimes it happens that the manager or supervisor will have inklings that people are in a consensual relationship or that this person is paying too much attention to the new intern. Don’t ignore those feelings!” she said. “Ask professionally and politely about the consensuality of the relationship, consider complications that can arise in the workplace and proceed from there.”

Such a conversation helps establish a rapport between manager and managed. It either allows the manager or supervisor to nip a problematic situation in the bud or sets up the appropriate framework should a consensual relationship turn sour down the road.

Setting up that kind of early intervention is crucial, not just for preventing sexual harassment in the workplace, but also creating safeguards in the event a disgruntled employee seeks an excuse to sue after they’ve left.

One of the worst things to do, Chalmers and others said, is to ignore the complaint altogether without investigating its validity. “If an employee feels they can tell somebody and they do and then the organization responds, that will often be the end of it,” Chalmers said. “The thing that drives people most to make complaints and say they’ve been treated unfairly is when the institution fails to respond.”

After that, keeping the complainant in the dark about the status of their case is a key source of institutional stumbles. “Hearing nothing just destroys the trust – and people who come forward are often dealing with a lot of anxiety,” she said.

The importance of that trust means finding the right person to handle such complaints is crucial. “When you’re looking for people who can receive complaints, you’re looking for people who are opinion leaders, who are well-liked,” Chalmers said, “and also importantly, people with good judgment about people.”

The person receiving complaints should be able to balance empathy for the complainant with a calm, rational ability to handle what is a very difficult subject. Then, whoever investigates should be specifically trained to do so without allowing prejudice about either the accused or the accuser to cloud the process. That could be an HR rep or someone from the board, depending on the situation. In an ideal scenario, or when allegations are leveled against senior management, it’s a neutral third party like an HR consultant or the organization’s employment counsel. Either way, it’s important to make sure they’re familiar with the legal aspects of sexual harassment as well as what questions to ask in their investigation.

“You want someone with a lot of emotional intelligence, a good listener,” Chalmers said. “Someone with empathy who will still be able to judge dispassionately and not jump to conclusions.”

Ultimately, whether the investigation reveals sexual harassment or not, the company should report its findings and the appropriate course of action taken to the complainant. Even if the alleged behavior is found to have occurred, but doesn’t meet the legal threshold of discrimination, the company should still take appropriate steps (coaching, retraining, discipline or termination) toward the offender to address it.

When management is the subject of an allegation, engaging an external investigator is important, but involving a bank’s board is also crucial. It’s their role to minimize risk, despite often being reliant on management for information on the organization’s performance and problems. That’s especially true for outside directors.

Board members must create mechanisms to listen to people who are trying to report wrong-doing, particularly if the accusations are leveled at senior management. With heightened scrutiny around board involvement and oversight, this access has become a business imperative.

Lyn Farrell

“Directors should push for and seek additional information proactively and reactively. This is particularly important if they hear something that doesn’t sound appropriate. If they become aware of something that looks odd or inappropriate, they need to rigorously follow up,” said Lyn Farrell, a senior advisory board member with Treliant Risk Advisors based in Washington, D.C. “This is hard because many board members get their seats because they know senior management. Board members must have corporate courage to question and challenge leadership.”

Culture is key

The difference between what legally constitutes sexual harassment and what is “merely” inappropriate or unprofessional behavior illustrates the importance of going beyond the bare minimum. While having robust policies and regular training is important, even more crucial is a company’s culture.

“We believe people bring their whole self to work, and if they don’t, you’ll have a less engaged, less-productive employee as a result,” Young said. “If people know they’re being listened to, and that appropriate action will happen, they’re more likely to speak up and say things that will be taken seriously.”

Establishing such a culture – more than having correctly-worded policies in the employee handbook – is what separates the best companies from those where standards slip. “A lot of individual practices become acceptable in certain parts of the organization. This can be problematic as it sets the tone for the balance of the organization.” Farrell said. “When you’re working in an organization, you quickly figure out what behavior gets rewarded and what behavior gets punished and then act accordingly, no matter what formal documents say.”

Even well-intentioned executives may be too invested in the story or message of an organization to pick up on the possibly unpleasant truths found at the rank-and-file level. “Leaders have to be invested in hearing from [workers] at all levels,” Farrell said.

Whether it’s a formal complaint, an anonymous call to an ethics hotline or a more casual interaction, companies need to be highly attuned to the ethical implications and blindspots of their culture. The allegations against Cagney and other SoFi managers provide a warning here. According to former underwriter Yulia Zamora – who has filed her own sexual harassment suit against SoFi – the company’s culture was that of a frat house, and managers and supervisors were key instigators.

“Nothing happens in a vacuum. I believe employees feel emboldened to do things they can get away with because of mixed messages or cultural norms that get established over time.” Farrell said.

Ultimately whatever policies or culture a bank embraces needs to have buy-in from every level, but particularly senior management. If it’s clear that those in power won’t tolerate sexual harassment or inappropriate behavior, and that they believe in fostering a culture of respect, everyone else will follow that lead.