A Victory for Kleiner Perkins Should Still be a Red Flag for All Employers – It’s All About Your Culture”

As was discussed on Fox Business News’s Willis Report, Friday’s jury’s verdict in California rejecting Ellen Pao’s claims of gender discrimination and retaliation was undoubtedly a huge victory for the venture capital firm Kleiner Perkins. However, before employers start popping champagne corks, all companies should consider the lessons learned from this case.

A brief background: Ellen Pao, a junior partner at Kleiner, claimed that she had been harassed and discriminated against while employed there because she is a woman. Ultimately, she alleged that after she complained about this perceived discrimination, she was then terminated. She sought many millions of dollars in damages – and potentially multiples of that in punitive damages.

Some of the 24 days of testimony included tales of workplace romances, alleged sexual advances on business trips, and firm events which excluded women, like a high-end ski trip that was men only.” The jury, however, also heard from other witnesses, including women at Kleiner, who said that the firm was a fair place to work, that it was a competitive atmosphere for women and men alike, and that Ms. Pao was the cause of her own difficulties . Clearly, the jury believed Kleiner’ s version of events, rejecting out of hand all of Ms. Pao’s claims.

Looking at it from afar, many are already saying that – even with a loss – the Pao case has sent some powerful messages through the high tech industry in Silicon Valley.

But, if you are not in the high tech world, you are probably asking, What does this case have to do with my company?” The answer is: a great deal.

First, any time there is a high profile harassment, case – whether it results in a plaintiff’s verdict or not – it brings sexual harassment back into the media and the spotlight, raising the specter of a spike in new claims. Some women may see and hear about this case and be tempted to become the next Pao. Although a jury found that Pao could not connect the industry’s male-dominated culture to Kleiner’s failure to promote her or to fire her, the case underscores how a work environment can provide fodder for discrimination claims and shine a spotlight on your culture.

Second, all employers should remember that any victory like this comes at a huge cost for the defendant/employer. There are first the direct costs of hundreds of thousands (maybe millions) of dollars in legal fees. There are also indirect costs, like the time taken away from the business by senior management because of the ligation, and then the public airing” of the company’s dirty laundry in court and in the newspapers. No company wants either, and depending on your business the reputational harm from a case like this - win or lose- may be substantial. In fact, that’s what much of the post-trial press has been about: Pao lost in court, but her former employer may have lost in reputational terms.

Thus, the real win for a company is to avoid being the next Kleiner Perkins. But how can you do that?

All companies have harassment policies, so you do not need another lawyer telling you to review your policy – we talked about this in our March 12th blog post - you should review the policy and make sure that it is strong, and well publicized. You should also consider periodic training of all managers, including your most senior executives.

However, the harsh reality is that the majority of these cases happen in companies that have good policies, and thus do not turn on the strength or weakness of a policy. In fact, many executives will tell you that they know harassment is against company policy – but they do it anyway. No company can stop every bad act or prevent every off color” joke, drunken escapade or office romance. People are people and these things will happen.

A company can minimize these episodes of bad” behavior, however, especially within the office and at company events. It can minimize bad behavior – not with the words in a policy – but by the actions of its most senior management. Senior management must lead by example, and not condone, let alone participate in, the kinds of behavior that Pao complained about. Senior management can still have fun, but they should always be mindful that they are representing the company, and that their behavior sends a message to the more junior staff.

A company can also foster a culture where all employees are treated with respect, and efforts are made to ensure that there is parity among employees at the same level. For instance, if there is a women’s spa day” for female employees and clients, then the male employees should be permitted to do a guys” event of their choosing.

If there is an important dinner with senior management or an important customer, efforts should be made to invite a diverse group of employees, not just the most senior group, but some of the more junior people who worked on the project.

Finally, a company can control how it responds to allegations once they are reported. It goes without saying that claims of harassment or discrimination, whether by men or women, should be taken seriously and investigated promptly.

Investigation is not enough, however – a company that really wants to create the right culture must act when it does uncover any incidents of harassment or discrimination. This is not always easy, especially if the alleged bad actor is a member of senior management. However, if the incident is confirmed some action must be taken to address it. As always, actions speak louder than words, and other employees will see that swift action, and take heed as to how they behave in the future.

In short, whatever business you are in, as women rise higher in a company, senior management needs to be aware of how they are treated, be mindful of how all executives behave, and promote a culture which will not foster litigation like the Pao case.

The real victory of this verdict will be in the message it sends to all employers, to foster an atmosphere where all employees – male and female alike – can work and socialize in a way that fosters respect for one another.