No company wants to be surprised with the sudden emergence of the type of allegation the #MeToo movement has brought forth—and not just for legal or business reasons, but since that’s where my expertise lies, it’s where I’ll focus. Immediate impacts include operational issues, internal dissension, reputational harm and legal liability. In today’s environment, boards are trained in how to respond to #MeToo issues once they arise.
Less obvious, though, is whether it makes sense for boards to undertake preemptive strikes—that is, to try to get ahead of potential issues by commissioning “clean bill of health” investigations before allegations arise. Companies may also consider vetting potential talent acquisitions through an additional #MeToo lens. In this landscape, the lines between allegations and proof can be blurred, and consideration and preparation are key in moving to authorize a preemptive review.
Is it a moral failing for a company to say “no” to a preemptive investigation? No. If truly preemptive—and no facts are known or suspected—then morality is simply not a question. But as with any investigation, once authorized, if a preemptive investigation uncovers facts that require remedy, remedy must follow. The one thing a board cannot do is acquire knowledge only to ignore it.
Once an allegation is uncovered, the scope of any preliminary investigation expands and will follow where the facts lead. Investigations—even those that are preemptive—are then, by their nature, uncertain: what you think you know about your company culture and personnel may only be part of the narrative, and there may be another story altogether lurking below the surface.
What makes #MeToo issues particularly complex is that the passage of time between an alleged incident and the present cures little. There is no “statute of limitations” for conduct that falls within the umbrella of the #MeToo world.
On an increasingly frequent basis, companies are undertaking preemptive investigations—trying to surface problems and, hopefully, limit the surprise factor while demonstrating a corporate culture intolerant of malefactors. However, it is important to understand that preemptive investigations run the risk of shining light on unsubstantiated rumors or un-provable allegations.
Once authorized, investigations may take on a life of their own, as conventional burdens of proof are reversed: a lack of supportive proof cannot remove taint or resolve an issue. Rather, emphasis is placed on the ability of the accused to show innocence in a battle royale for reputation and career—not to mention trying to limit collateral damage in one’s personal life. For boards, the preemptive investigation provides an opportunity to address issues proactively and with more minimal operational disruption, but it should be undertaken with deliberation and care—with follow up steps in place to handle issues appropriately.
All considered, the most important consideration in determining whether a preemptive review is advisable for a company is its purpose. For instance, in the context of a major transaction, the longevity of surviving leadership can play a critical role in market reaction, corporate continuity and obtaining expected benefits. In this regard, a preemptive investigation is akin to thoroughly vetting candidates before a nomination to public office, and serves to reduce risk for the company.
The same review may be appropriate when significant investments in talent are under consideration—it is no exaggeration to say that in a new environment where allegations are given the significant weight they deserve, there is not just an ethical risk, but a risk to a company’s bottom line to hire a star performer with a problematic history. Even without a specific investment on the line, there are benefits in being proactive in monitoring the health of a company culture, which include allowing a company the opportunity to get ahead of issues that may otherwise take on a life of their own. Consider your purpose in deciding to be preemptive in an investigation, but—more than anything—be prepared to act thoughtfully and swiftly in addressing newfound issues.
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