How culture of transparency has put HR in the spotlight



The gender pay gap reporting regulations and the bravery of harassment victims speaking up as part of the #MeToo movement have driven a new culture of transparency. This means HR teams have now become the custodians of good corporate behaviour, writes Michael Leftley.

When the world first started to hear the allegations about media mogul Harvey Weinstein in 2017, few could have imagined the extent to which they would impact corporate culture.

Looking back we can now see how the case represented a tipping point that has led to far greater transparency in corporate behaviour, and an understanding of the huge impact transparency has on how people act.

There is a thread that can be drawn through the leadership behaviours exemplified in sexual harassment cases involving clothing retailer Ted Baker in the UK and Uber in the US, through to the impact of legislation such as the Modern Slavery Act and Gender Pay Gap Regulations and, most recently, the damning report of Alison Levitt QC into supply chain labour force issues at fashion retailer Boohoo.

The Gender Pay Gap Regulations 2017 are illustrative of the power of transparency. Those regulations required employers with more than 250 employees to start reporting annually on their gender pay gap data, yet they contain no specific sanctions and confer no enforcement powers on the Equality & Human Rights Commission.

This perceived lack of teeth was much criticised at the time; however, three years on it is clear that the regulations have had a huge impact. Gender pay equality is on the board agenda at UK plc in a way that it has never been before; organisations are committing to specific and stretching targets to address their pay gaps; and consumers are making choices about what to buy and where to buy it based on their perceptions of a business’s commitment to gender equality. That is the power of transparency.

Increased scrutiny

This sea change in scrutiny and expectation means that organisations have had to change how they approach issues such as equality and allegations of discrimination, harassment, bullying, whistleblowing and so on. Historically a business faced with such allegations may have looked to sweep them under the carpet, perhaps entering into non-disclosure/settlement agreements with complainants in return for financial compensation. Sometimes organisations would conclude a settlement without any real assessment of the complaint that had been made. That approach is no longer possible nor appropriate in 2020.

The Solicitors’ Regulation Authority and other regulators have introduced rules around the use of NDAs. That’s not to say that it isn’t appropriate to settle complaints through the use of settlement agreements containing confidentiality provisions. Issues in the workplace are rarely clear cut and even where the facts aren’t the issue, the perceived intent and the impact can be very different. We all view particular events or behaviours through our own individual lens.

What it does mean is that where issues are raised they need to be appropriately investigated. The organisation may ultimately decide to resolve a complaint through a settlement agreement but it will need to be able to demonstrate that the particular issue was appropriately investigated first.

Where HR fits in

In my view, this change in culture also means that the role of HR is changing as well. The function now has a greater responsibility as the custodian and proponent of good corporate culture and behaviour at all levels.

When it comes to investigating alleged wrongdoing, an organisation’s starting point should be to assess what type of investigation would be appropriate. At one end of the spectrum it could be an internal process overseen by the HR team, and at the other a fully independent investigation where the outcome is outside of an organisation’s control. The Boohoo investigation is an example of this; the advantage of a fully independent investigation is the power of it where it exonerates an organisation. The disadvantage is obvious.

This change in culture also means that the role of HR is changing as well. The function now has a greater responsibility as the custodian and proponent of good corporate culture and behaviour at all levels.”

There are various alternatives along the spectrum including outsourcing to external HR consultants, an organisation’s retained law firm, or to a law firm that doesn’t usually advise the organisation. With each option there is a trade-off of control for independence.

Using a law firm also means that the ultimate report can be privileged. Depending on the circumstances it may be entirely appropriate to retain control. The investigation and report may be the start of a remediation process within an organisation to address systemic or cultural problems and that exercise may not be assisted by very public findings of an organisation’s failings. In others, it may be appropriate or desirable for the findings to be public.

The trend towards more transparency in business is undoubtedly a positive one which will help drive cultural change where needed. For now an increased use of investigations to address issues in the workplace is here to stay.

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