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No regrets?

1 May 2019

April French Furnell

Whereas once, business and its executives, had a simple life, with news about their deals and views likely to be seen only in the business pages, today the same story has the potential to be spun into front-page news, using the lens of a populist wave from Social Media and the Media. This powerful pair has brought us #MeToo; also, an aversion to all things plastic; and some militant views about executive pay. Only this week Disney executives are no doubt strategizing about Abigail Disney’s, headline views on their executive pay and wider comments on ‘the state of big business’.

Once the media gets a hit, the wave of people they can hook on to the same story becomes like a relentless wolf hunt seeking prey. It is a problem that for many, may not have an easy ending in sight. So, how can today’s successful business owners prepare a crisis management plan for the onslaught of attention that might suddenly face them?

Dragon’s Den: material impact

First let’s look at the roots of the new movement to ‘out’ business, says Dave King, CEO at Digitalis, an online reputation and digital risk firm, which he says can be traced back to the launch of The Apprentice and Dragon’s Den in 2005 which suddenly made business ‘sexy’ and moved it into popular culture. He adds, “This was soon followed by the banking crisis in 2008 and at that time the media’s view of business people changed. There was widescale anger, from the public, that bankers had created a mess which they weren’t being properly brought to account for. It increased scrutiny on executive pay and more importantly, if they had big salaries, how it was being spent. This ‘banker bashing’ saw business stories quickly become personalized,” explains King.

Beware media themes

This attention paid to business people, developed and has not waned. There is now no telling where it will go next. We are all aware of the #MeToo publicity movement which has raced through society with high-profile individuals caught in headlines for various claims. Sir Philip Green, who is Chairman of the Arcadia Group, who are successful retailers, was unexpectedly name-dropped by Labour peer Peter Hain in the House of Lords using an ancient parliamentary right. Green has said he “categorically and wholly denies” any suggestion he has been guilty of unlawful behaviour. Hain is now also in the limelight, as others debate if he should have made this move. The story continues unabated and according to Tim Robinson CBE, a partner at reputation and privacy law firm Schillings and an ex British Army, this is normal. He adds, “There are persistent themes any journalist loves to return to: Hypocrisy, abuse of power, fallen heroes, incompetence, fat cat rewards and poor personal conduct are favourite ingredients.” 

#MeToo in sales and acquisitions

“Sexual harassment allegations, and their impact on the valuation of a business, are also becoming a material concern in the due diligence process on sales and acquisitions”, said Jane Amphlett, partner and head of employment at Howard Kennedy, providing even more reason for business owners to take the issue seriously. Florence Brocklesby, the founder of Bellevue Law who specialise in commercial and employment disputes agrees and adds, “Since #MeToo, we have also seen a rise in allegations of inappropriate behavior in the workplace. I’d hazard a guess that there is not an increase in inappropriate behavior but that behavior which was previously deemed acceptable is no longer viewed that way, especially by younger parties involved and often women. Those on the receiving end are feeling emboldened to speak out”. She explains: “There has been a cultural shift in the perception of what is and more importantly isn’t acceptable behavior, across all of society which has pervaded the business place. Businesses need to ensure that all employees, no matter how senior, understand that”.

Diversity training

With perceptions changing from calm to ugly at lightening speed, what could businesses be thinking about or investing in to prevent these problems? “Whether you are a large organisation or an entrepreneurial business, you can never fully insulate yourself from the unlawful actions of a rogue staff member, but there are things you should do to minimise risk” said Dominic Holmes an employment partner at Taylor Vinters. “The starting point is to be clear within the business on culture, so what is and isn’t acceptable behavior. Lay the ground rules by having a clear written policy, it sets the scene. Following on from that, we encourage business owners to be proactive in training managers, if not the entire workforce, on diversity and equal opportunity, how to deal with complaints and how to nip any potential conflicts in the bud before they escalate”, he said.

Settlements 

If an incident does occur, or a claim is made against a business owner or senior member of staff, sometimes a mutually agreeable settlement might be appropriate. There’s been a lot of negative press about employers insisting on onerous confidentiality agreements in cases of sexual harassment, which can be an abuse of power. Yet, Holmes explained that there is a big difference between an agreement which unfairly prevents someone from seeking the protection of the law and an agreement which ensures someone cannot cause deliberate reputational damage by attracting media coverage. “In principle, it’s perfectly appropriate for employers to seek confidentiality obligations and non-defamatory obligations as part of a package with a departing employee. Confidentiality agreements often serve a legitimate purpose, provided they do not stop someone from blowing the whistle on unlawful activity by, for example, reporting potential criminal conduct to the police”.

Sensitivity and empathy

In most cases, a resolution will be reached explained Brocklesby. “Few end up before employment tribunals, which is reflective of most employment disputes in general. Many entrepreneurial firms need to handle an internal complaint, it is crucial to do this with sensitivity and empathy and if it is done well it may be the end of the matter. Only where an amicable agreement hasn’t been reached is there a higher risk of the case becoming public. Sometimes an individual is so aggrieved they don’t want financial settlement they want public recognition”, said Brocklesby.

Busy entrepreneurs at risk 

When it comes to entrepreneurs, they can sometimes find themselves more at risk of reputational damage. King explains: “We often find with first generation wealth that when someone builds a business quickly, they don’t have time to think about their reputation as most of their time is spent building up the company. Often things fall into the cracks including reputation, behavior, spending habits and training for staff”.

Online audit

King’s advice for the time-constrained is to “look after your online presence. If you might be the subject of news articles, you’ll want to check what information is already out there, assisting journalists. We find that people generally know only around sixty per cent of what is online about them, so understanding and taking control of your digital footprint is a good start. Check for tweets which might contradict your business ethos, inaccurate information, home addresses, names of family members, and make yourself as digitally private as possible. This not only helps when under media scrutiny but also from a security standpoint with the heightened risk of cyber hacks, blackmail, extortion and kidnap”.

Look after people but be prepared to defend yourself

Furthermore, Robinson advises: “As you take off, give time to the resilience of the organisation that underpins your creativity.  You can make it professional, without losing agility. Be authentic; try not to go around making enemies; be honest, humble and good to your word. Look after the people on whose shoulders you are carried.  And if someone tries to smear you, attack your work or steal your information, defend yourself robustly and boldly.”

Take me at face value

For entrepreneurs the risks are greater. “The person at the top of the tree and the tree are indistinguishable and they grow or fall together”, said Robinson. “Entrepreneurs have to find a way of being the irrepressible, driven, assertive risk takers they need to be to succeed, while anchoring themselves in values such as respect for others”. The consequences of not fostering an open culture is that “customers, clients, employees and investors will act with their feet”, said Amphlett. Which may cause an irreversible situation that not only you, but also your business will live to regret.

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