The gender pay gap at organisations makes sexual harassment more likely
Members of the Confederation of British Industry (CBI) – which calls itself “the voice of business” in Britain – have voted on a revamp of the organisation following allegations of misconduct, sexual harassment and rape in recent months. The City of London police is also investigating the reported misconduct.
The business lobby group that represents 190,000 companies, which fund its operations, has seen an outflow of big name members including John Lewis, BMW, Virgin Media, O2, Aviva and Mastercard following these allegations. Both the UK Government and the Labour party have also severed ties with the organisation. This leaves its future representing business interests to politicians very much in doubt.
A rival group from the British Chambers of Commerce has already stepped forward to “design and drive the future of the British economy”. It has attracted members including BP and Heathrow Airport.
In a bid to keep its place, the CBI has put forward a plan to redeem itself in the eyes of its members and the public. This includes a review of its company culture and a refresh of its board. The new plan received 97 per cent of 371 votes cast at a member meeting on June 6. The CBI did not disclose how many organisations were eligible to vote and while it represents 190,000 firms, many of those are via trade associations.
But it comes after accusations of brushing aside concerns and complaints, and a failure to remove alleged offenders – never mind a failure to recruit staff with appropriate attitudes and values in the first place.
It’s extremely difficult to achieve a culture reboot without altering an organisation’s core beliefs and assumptions, and redesigning its governance power structures. Changing these difficult-to-measure elements takes more than the right words. It requires a fundamental overhaul of an organisation’s power structures.
How can sexual harassment at work still be happening?
Harassment happens when attitudes and belief systems uphold power differentials among people based on their gender or other attributes. These systems also help to deny, rationalise and ultimately prevent abuse from surfacing. Institutions that reflect certain attitudes and beliefs about gender stereotypes enable these systems, while powerful organisational actors maintain them.
In the case of the CBI, for example, rather than sack alleged offenders, its leadership tried to find a resolution before the harassment complaints became public. Other major institutions such as the World Health Organization, Oxfam and the aid sector more generally have reacted in similar ways.
The #MeToo movement has shown that sexual harassment is systemic in many organisations. It is often deeply ingrained in company culture and characterised by pay and power inequalities. Research by the UK Government’s Equalities Commission in 2020 found 72 per cent of the UK population has experienced at least one form of sexual harassment in their lifetime – with 43 per cent suffering this in the last 12 months.
Money and power are interconnected, so disparities such as the gender pay gap make sexual harassment more likely. But harassment also lowers the earning capacity of those who experience it by worsening their mental health, increasing absenteeism, and causing silent withdrawal. Employee harassment can cost companies an average of $22,500 (£18,136) in lost productivity per harassed person, according to some measures. The actual costs to society are likely to be much higher.
Organisational culture: reflecting values
A recent emphasis on organisational culture reflects a shift throughout much of the western world of work from the management of skills to the management of values. Employees’ commitment to their organisations can enhance firms’ performance by fostering innovation and creativity. But the focus is often on visible rituals, marketing slogans and corporate image – the superficial elements that academic Edgar Schein called “visible artifacts”.
Values are much harder to address. They are often unconscious assumptions about the world. And so culture change programmes run the risk of leading to superficial compliance, rather than a real commitment to the profound shifts that organisations such as the CBI really need.
Organisational culture is not a physical, measurable thing that can be visibly altered to enhance performance or win support. Instead, its a collective mental state that’s in flux and so must be constantly renegotiated by the organisation. In the 1980s, US academics Caren Siehl and Joanne Martin called organisational culture “the glue that holds members of an organisation together by encouraging them to share patterns of meaning” or ways of understanding values and beliefs and how to behave.
Some of the (female) leaders of former CBI member companies understood this when speaking out about the need for CBI management to shift towards promoting lived values rather than “corporate bullshit”. Those holding the power in an organisation need to be willing and truly committed to examining their own assumptions and values to achieve this. So how can they do that?
Invisible power structures
Research on the effectiveness of boards shows corporate governance failures (even by companies with otherwise excellent governance records) happen when there is a separation between ownership and control of an organisation.
Independent, non-executive directors can provide much-needed checks and balances to ensure that executive members represent the organisation’s interests, not just their own. However, their impact will be minimal if they merely “rubber stamp” executive decisions.
A lack of diversity in terms of age, gender, expertise, experience or ethnicity on a board can lead to groupthink in such situations. This promotes unanimity and cohesion over accountability. Recruitment of certain types of men, while excluding women, and the development of informal networks among board members can also reinforce poor decision-making.
Finally, we often assume that board and leadership actions emerge from rational considerations, ignoring the role of unconscious bias and power dynamics that can better explain a sexist and misogynistic culture.
The CBI is governed by a president and an executive committee chaired by a director general, who also sits on the non-executive board. The president, due to leave in January 2024, has said he has lost the board’s confidence. Ex-director general, Tony Danker, was sacked in the wake of the rape accusations for an unrelated reason. In a BBC interview he apologised for making some staff feel “very uncomfortable”, but said his name had been wrongly associated with claims that had allegedly occurred before he joined the CBI.
The new director general, Rain Newton-Smith has returned to the CBI following a stint at Barclays. Previously the lobby group’s chief economist, she has also worked for the Bank of England. Newton-Smith must now prove to members – and the wider public – that the CBI can overhaul its culture in order to survive. Ensuring these informal networks do not affect the organisation’s decision-making processes and accountability will be key to this.
The leadership of the CBI – and other organisations like it – must consider neglected or silent points of view or risk failing to rebuild appropriate governance structures and a more equitable culture.
Marianna Fotaki is Professor of Business Ethics and lectures on Governance and Corporate Responsibility on MSc Management, MSc International Business, MSc Management of Information Systems & Digital Innovation and the suite of MSc Business courses. She also teaches People and Organisations on MSc Marketing & Strategy and MSc Business Analytics, plus Ethics in Contemporary Business on the Undergraduate programme.
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