Governance Watch - Issue 26

by Dina Medland in London

#TimesUp And Reputation

Boardrooms all over the world are having to come to grips quickly with the wave of female anger that has been unleashed as women unite to tell their stories of sexual harassment and abuse in the workplace. The #MeToo on Twitter -  representing a ‘hands up’ by those who relayed their experience of sexual predators – was fast followed by #TimesUp after Hollywood came together in a bid to exorcise the sexual workplace ethos now associated with Harvey Weinstein

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Those senior corporate figures who do not participate in social media and remain dismissive should beware. Because this week we had another good demonstration of the power of human storytelling (which social media is very good at conveying) to result in near immediate action.

Under the strapline ‘FT Investigation Sexual Misconduct Allegations,’ the FT ran a story headlined Men Only: Inside the charity fundraiser where hostesses are put on show. It reported “groping and sexual harassment at a secret black-tie dinner.” The President’s Club Charity dinner, described as a “mainstay of London’s social calendar for 30 years” manages to include a large chunk of the British establishment in one form or another. The paper sent two people to work undercover as hostesses and others to attend. 

There are many corporates and blue-chip organisations named in the piece, individual financiers and businessmen identified by the seating plan.  Among businesses named as sponsoring a table is WPP, the FTSE 100 advertising firm.

The revelations were uniformly deemed to be shocking, as media and social media relayed it around the world. The news spread rapidly as the FT made it ‘free to read.’ It also had immediate results. 

Before 10 am the next day the BBC was first with a story saying that WPP was withdrawing its support for the charity dinner, which it updated with news that Great Ormond Street hospital was to return donations from previous dinners. Sir Martin Sorrell, WPP CEO, is not known for quick reaction to pressure – on pay, for example. But these bits of news received little attention on social media, as I tweeted:

The FT itself had a short story on the WPP position an hour later. The fall-out continued as this piece went to press, with resignations and denunciations all round. 

The continued high-profile media coverage of sexual harassment, misogyny and gender inequality in the workplace is essential for more transparent and meritocratic workplaces. 

Boardrooms need to understand that the media clips that fly around with this story will be the FT reporter talking about how she was groped – and the names affiliated with the event. They will not be the corporate damage control. 

A complicating factor worth noting is that is that all media outlets are struggling for survival today. Reliable sources say that some of the mainstream business media has been struggling to retain female readers. Revelations around sexual misconduct, inappropriate behaviour, and gender inequality in the workplace are not going to go away anytime soon for that, if for no other reason. Using the jargon, stories are followed for the “eyeballs” they command. 

There has been shock and horror widely and publicly expressed at this event. It’s unlikely to be a coincidence that the story (about an event four days before) was published just as Davos was well under way. The shudder is worse today that the so-called corporate elite can behave in this manner, even if any black cabbie in London will tell you about his routine trips full of corporate parties to the clubs that flourish on the same behaviour. 

Carillion

It’s hard to know where to begin in the sad tale of Carillion to date, except in the certain knowledge that it is a disaster of corporate governance on so many levels. Once again, the failure of that governance looks as if it will be paid for by its workers.

Its former chief executive and chairman are among those facing a joint inquiry by the business and the work and pensions select committees, as The Guardian reported earlier this week. It said the Financial Reporting Council (FRC), the accountancy watchdog, is also to be questioned about the audit of the company’s finances by KPMG. MPs to quiz bosses over Carillion collapse reported Sky News. 

I covered some interesting findings by Comres in its stakeholder research done for the FRC recently in my blog Board Talk in Carillion, A Plane From The Sky And Other Warnings.

Because when it comes to Carillion, it is clear that counting the human cost goes back to looking at the numbers. This letter to the editor in the FT sums it up well, headlined Carillions woes may point to a much deeper problem.

An extract: “Carillion’s accounts reported profit that was anticipated. They also seemingly failed to apply prudent judgment in determining impairments and liabilities. This is akin to an airline allowing a plane to fly with a fuel gauge that gives overstated readings, implicitly assuming that mid-flight refuelling (ie injections of fresh capital) would be available if needed. Given the dire consequences of running out of fuel, would we take this risk?”

“Carillion is yet another canary in the coal mine. How many more do we need for the government to properly scrutinise our accounting rules?” It ends. 

It’s a good question, particularly when you look at what the institutional investors think in the stakeholder research.  

The letter is signed by Natasha Landell-Mills of Sarasin & Partners, Robert Talbut-  an independent director-, Martin White of the UK Shareholders Association, Kevin Dowd of Durham University and Dr Atul K Shah of the University of Suffolk Business School. 


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