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Too many founders have learned the hard way that weak people practices can expose their employees to risk, their company to costly legal jeopardy and leave their reputations indelibly stained.
Today’s employees are seeking values-driven companies and come with a deeper understanding of their rights. If your HR shop isn’t screening applicants with an eye toward culture or speaking frankly with you about the impacts of key hires, your ability to shepherd your organization toward future success will be impaired.
Worse, if your HR head has not been trained to act impartially or empowered to intercede quickly, it can result in systemic problems that prevent victims from finding justice. This pushes victims to seek other remedies, which show up daily in viral callouts and highly publicized court cases.
Beyond unflattering headlines, many startups can see their financial value decimated just as they were taking off. If it’s not attorneys’ fees and settlement costs, it’s lost customers and potential partners due to the negative coverage. Even if a lawsuit exonerates your company, the mere accusation can come at a price, and extended court battles can expose sensitive internal company dealings.
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To prevent this, you must focus on how to set up a respected and experienced HR team that is empowered to handle misconduct allegations from the start, even if it involves someone from your executive team. It is on you to create a culture that supports calling out, investigating, and punishing workplace misconduct — be it harassment or discrimination, bullying or any other unlawful action.
When setting up your HR department, here are three steps to help you avoid misconduct from arising in the first place — or, if it does arise, to ensure it is dealt with quickly and consistently.
1: Hire experienced HR leaders who share your company’s values
It can be difficult for HR staff to discern which aspects of a grievance are true and which ones aren’t. Add in a power imbalance like those that occurs between a manager and a subordinate, and HR may find itself not only caught between two employees but between higher-ranking staff who want the problem to simply go away. If you have not hired HR professionals with the experience to navigate the necessary conversations and evenly enforce the rules, you may be held liable for any wrongful acts that follow.
As a founder, you must prioritize hiring HR executives who are strong and principled leaders. When interviewing potential candidates, ask them how they would handle tough allegations and what processes they would utilize to ensure fair outcomes for all parties. Based on their answers, you want to ensure they see eye to eye with your company’s values. You may also want to seek out experienced HR chiefs who have handled tough employee accusations before.
After hiring the right talent, you need to make clear that they have the authority and the responsibility to handle all misconduct allegations equally, no matter who is accused — even if it’s someone on your executive team.
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2. Create protocols that protect victims and your company, not the accused
A National Women’s Law Center study found that as many as 70% of those who report harassment face some form of retaliation. And 37% noted that nothing happened to the harasser after the complaint. But even when the company is engaged, many will still farm out the process to outside investigators and attorneys. This, too, lends itself to a predictable pattern and usually concludes with a benign acknowledgment of the complaint followed by language indicating that the company took all steps required by law to resolve the complaint. What this really means is that they took as little action as possible to avoid liability.
Unfortunately for these companies, there are many experienced attorneys watching and waiting for this. They know that there is likely to be damaging information in investigative reports and will use the discovery process to gain leverage for their client. This can be prevented if the company takes appropriate action from the beginning.
This requires, first, conducting a fair and neutral investigation. This doesn’t require hiring an outside firm. A victim’s claims can often be verified by interviewing key staff and reviewing written communications and other records.
Second, if the accusations are deemed to be true and serious, take swift action to hold the offender accountable. In many instances, that means terminating his or her employment.
To ensure your process of investigating and ruling on a case is respected by all parties, it should be based on protocols that treat all accusations equally. This will ensure everyone involved — from the HR team to the executives, to the accuser, to the accused — has the same rights and responsibilities.
3: Empower HR to let go of toxic employees, even if they are high-performing
Proper handling of an allegation is rarely an issue when a low-level employee commits an offense. If an hourly worker engages in misconduct, companies can often be counted on to take appropriate action. But when it’s a highly-valued officer, decisions may be weighed against the perceived value the employee brings to the company. This reflects a misunderstanding of the true costs of these individuals.
An abusive person in a management position can cost more than many realize through high employee turnover and productivity problems. Half of employees who leave their jobs do so, at least in part, because of bad managers, and replacing employees costs a company as much as 50% of the person’s salary. In terms of productivity, one study found that teams with toxic managers yielded 27% less revenue per employee than well-managed teams.
A similar effect can be measured for public companies. When a high-level official of a publicly traded company gets called out for wrongdoing, the hit to the company’s stock price can cause the rapid loss of millions or even billions of dollars in market cap.
Protecting these abusive employees isn’t just wrong. It’s costly and potentially fatal to your business. This is why it’s important to make clear to your HR department that it has the power to terminate employment for any employee based on the results of a fair investigation, even if they are high-ranking or high-performing.
You may think none of this applies to you or that accusations will never occur in your company, but the numbers tell a different story. 60% of U.S. workers have experienced or witnessed workplace discrimination and, unfortunately, 40% reported being retaliated against after speaking up.
In every one of these cases, the company has exposed itself to potential liability. Increasingly, law firms are looking out for opportunities to step in on behalf of these victims. You can protect your company and your employees by doing exactly that — protecting them, not the accused.