Corporate Boards Should be Demanding Management Answer These 5 Questions About Company Culture Toxic cultures of rampant harassment and exclusion result when boards are so focused on profit that they don't care how the money is made.
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In what continues to be an ongoing vicious news cycle for the tech space, Social Finance (SoFi) recently announced its chairman and CEO Mike Cagney will step down following a lawsuit that includes alleged sexual harassment on the part of himself and other executives.
Cagney, who has led SoFi fast and furiously in the swift Silicon Valley environment, is yet another executive who pushed an inclusive and compliant workplace to the wayside. Just look at the last 90 days of the consequential fall-out from major tech companies where workplace compliance and inclusivity took a back seat:
In June, Uber released the recommendations of an internal investigation conducted by former U.S. Attorney General Eric Holder about the company failing to eliminate sexual harassment and reckless workplace behavior. Dave McClure, founder of prominent venture capitalist firm 500 Start Ups, resigned in July from his CEO position following revelations of sexual misconduct. And in August, former Google employee James Damore penned a 3,000-word internal memo on the failures and pitfalls of the company's diversity efforts that went viral.
How is it possible these companys' boards of directors were missing clues, and even major red flags, that company culture was so toxic as to allow these types of incidents to become engrained in the company's culture and management style? Board members should be asking their organizations the following five questions to ensure environments of inclusivity:
1. Is the leadership team operating with a high level of professionalism and integrity? Do they value diversity and inclusion?
This seems like a basic question, however it's one that must be prioritized within organizations to ensure integrity amongst leaders and mitigate a risk leadership profile. For example, characterizing Cagney and team's governance at SoFi as a "frat house" paints a disorderly and divisive complex, with little to no value placed on diversity and inclusion from the management team. If the management team members are personally committed to a work place of inclusion and integrity, those values are much more likely to be driven down throughout the employee ranks.
2. Do legal and HR have a seat at the table in making key strategy, organizational and business decisions?
When organizations are in situations where there is a potential for major legal risk, such as firing employees, investigating complaints or setting company priorities, a key question to ask is if HR and legal teams have a seat at the table in the leadership team and board's decision-making process. HR should be reframed to go beyond talent recruitment and employee engagement, and into a more robust function that supplements the role legal plays for a more holistic, inclusive approach in workplace compliance.
3. Does the company have published policies, processes and trainings so employees easily understand what type of behavior is unacceptable and what to do if they have a problem?
Policies, codes of conduct, and trainings are not just a "check the box" for organizations. They send a strong message about what is acceptable workplace behavior and how seriously management should take its enforcement. Board members should be looking to see if organizations have policies and processes in-place to address employee relations issues. For instance, quality training may have mitigated the situations that created a hostile work environment at SoFi.
Similar to my point made before about giving HR a seat at the table, companies should also consider less formal channels for employee issues, such as hotlines, to ensure compliance and inclusion is met at all levels.
4. What is the company's strategy to create a diverse and inclusive environment on the board and in the office?
Inclusive communities have higher levels of engagement, employee productivity and retention and therefore are a risk mitigation strategy for compliance or HR issues. My rule of thumb is that diversity begets diversity -- a diversity strategy must include the entire employee life cycle -- from recruiting to talent development, promotions and compensation, to exits.
Diversity in employee ranks are table stakes today for a company's long-term success. As the saying goes, diversity is being invited to the dance, but inclusion is being asked to dance.
5. Does the board have oversight and access to management, so as to be informed about the company's internal controls and policies and when the same are violated?
Ultimately, for governance best practices, corporate boards must be populated with people who have a high level of integrity, and who care not only about revenue, but how that revenue is generated. If the organization is like one such as SoFi, planning to employ significant numbers of people, have your own offices and raise millions of dollars at valuations in the billion-dollar range, it's time get serious about these functions. And if you are a board member, you have an obligation to ensure these functions are in fact taken seriously.