A steady uptick in sexual harassment reports within companies across all industries coinciding with the rise of the #MeToo movement in late 2017 has placed a premium on how ethics and compliance officers should properly address such allegations. 

In October 2017, allegations of sexual misconduct brought by dozens of women against Hollywood mogul Harvey Weinstein surfaced, provoking a wave of similar allegations against many other high-profile individuals in both the private and public sector—from politicians to media personalities to senior-level corporate executives.

Within companies across all industries, the overall rise in harassment reports was captured in the findings of NAVEX Global’s 2018 Ethics & Compliance Hotline & Incident Management Benchmark Report, which drew from data gathered in NAVEX Global’s EthicsPoint incident management system. In total, the data reflected findings gathered from 900,000 incident reports from 2,479 companies that had received at least 10 reports in 2017. This data represented 42.1 million employees across 31 industries, as categorized by the North American Industry Classification System.

In the NAVEX Global report, 72 percent of all reports concerned allegations of “HR, diversity, and workplace respect.” The category with the second highest number of allegations concerned “business integrity” issues, making up a median of 17 percent of reports.

Prior to the Weinstein sexual harassment story breaking, 9.8 percent of “HR, diversity, and workplace respect” reports concerned harassment. After the Weinstein story broke, harassment-related reports rose to 10.9 percent, said Carrie Penman, chief compliance officer and senior vice president of advisory services at NAVEX Global, in a Webcast discussing the results.

The 1 percent uptick in harassment reports might seem trivial, but keep in mind the #MeToo movement is still in its early stages. “I think this is just the tip of the iceberg,” said Scott Nelson, a partner at law firm Baker McKenzie. “Anecdotally, we are certainly seeing a lot more claims.” There’s also been an increase in the number of corporate clients seeking help with these investigations, he said. 

As NAVEX Global continues to calculate numbers on a quarterly basis, that figure is holding steady at that slightly elevated rate for the first quarter of 2018, she said. By industry, the accommodations and food industries overwhelmingly receive the brunt of “HR, diversity, and workplace respect” reports, showing an 85 percent median reporting rate in this category.

Response time

The worst thing a company can do is allow reports to fester, and yet many reports being made internally are not being addressed fast enough. According to NAVEX Global’s benchmark report, the median case closure time for all “HR, diversity, and workplace respect” reports was 41 days.

Closure time in cases overall increased slightly to 44 days (up from 42 days in last year’s report), significantly beyond the recommended 30-32 days, meaning that companies must continue to work on getting case closure time closer to this best-practice range, Penman said. “Cases that drag on too long send a message to employees that their issue is not being taken seriously,” she said.

“Cases that drag on too long send a message to employees that their issue is not being taken seriously.”
Carrie Penman, Chief Compliance Officer, NAVEX Global Advisory Services

The concern that the #MeToo movement has created for legal and compliance teams is that many companies are now hypersensitive to allegations of sexual harassment, driving them to respond more quickly than perhaps they should. On the employment law side, Nelson said he has noticed a “watershed change” pertaining to sexual harassment claims.

When a senior-level executive of a publicly traded company faces sexual harassment allegations, it’s a board-level event, “and so the response and settlement calculus to these claims have changed rapidly,” Nelson said. “Some companies are acting too fast, under pressure from their boards.”

In some cases, once it catches wind of a senior-level executive accused of sexual harassment, the company immediately terminates the individual concerned just to try to look like it’s doing the right thing, and then picks up the pieces later, Nelson said. That’s not necessarily the best approach to take.

“A lot of the allegations you see are just that; they’re allegations,” Nelson said. The company has a duty to approach the investigation with an open mind, find out what happened, and then decide how to respond. If you jump the gun and terminate an employee for sexual harassment, and it turns out that individual didn’t do anything unlawful, that incites a whole different kind of legal claim. 

Impact of Using a Unified Incident Management System

Organizations That Track Only Reports from Web and Hotline

Substantiated vs. unsubstantiated reports

The NAVEX Global benchmark report also showed a notable increase in the substantiation rate of “HR, diversity, and workplace respect” reports, jumping from a 38 percent to 44 percent substantiation rate, year over year. This is in line with all other reports, which also showed a 44 percent substantiation rate—a 10 percent overall increase over last year’s report.

“The increase in substantiated reports is notable and is an indication of maturing programs,” Penman said. “Higher quality, more actionable reports are coming into hotlines and other reporting channels, which in turn allows for more thorough investigations,” Penman said.

“This finding highlights the need to have sufficient resources available to review incoming reports in a timely way,” Penman added. Specifically, companies can get a more complete picture of their risks by documenting all reports in one centralized incident management system, she said.

The upward trend in substantiation of HR-related cases is of special interest to compliance officers and HR professionals, given that there has long been tension in companies as to whether compliance hotlines should accept HR-related reports. “This finding highlights the importance of allowing HR-related reports to come through the hotline directly,” Penman said.

Aside from hotline and Web submissions, it’s important that companies provide multiple reporting channels through which employees can make reports. According to the NAVEX Global report, 39 percent of all reports were received through “all other methods,” such as open-door walk-ins and through e-mail.

Among companies that track reports only from hotline and Web submissions, their overall report volume showed a median rate of 1.1 reports per 100 employees, whereas companies that track reports from “all other methods” showed a median rate of 1.8 reports per 100 employees. The overall median rate is 1.4 reports per 100 employees.

 Seems like we’re saying two different things here. On one hand, we say response time is to slow but on the other we’re saying perhaps companies are acting too fast on #MeToo claims.  Or is there a difference between “closure” of a case and taking action on an acusation?

Another positive finding is that 64 percent of “all other methods” reports were substantiated—up from 46 percent last year. This finding demonstrates the importance of ensuring that ethics and compliance are educating managers on the appropriate way to respond when issues—including sexual harassment allegations—are raised directly to them.

The continued uptick in sexual harassment reports coinciding with the #MeToo movement is not an issue legal, ethics, and compliance professionals can afford to ignore—from a legal, financial, or reputational standpoint. Given the propensity for companies to want to settle sexual harassment allegations quickly, and given how frequently new allegations are surfacing, “this is going to be a big issue for companies,” Nelson said, the full impact of which will not be felt until about a year from now, when these claims start to hit the courts.

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