Recent reporting has revealed that the Financial Conduct Authority (FCA) is proposing tougher rules against perpetrators of workplace sexual misconduct and companies that fail to appropriately address abusive behaviour at work. These changes are designed to provide clarity around how City workers can be struck off for failing to meet FCA “fit and proper” tests for non-financial misconduct offences.

These latest developments have arisen following the FT’s publication of several serious sexual misconduct allegations against Crispin Odey, and questions about the FCA’s oversight of Odey Asset Management. However, they are also part of a larger, more systemic issue across business and institutions regarding the uncovering of both historic and current allegations of misconduct in the workplace.

This is a critical risk for firms, who are increasingly taking significant reputational hits as a result of the behaviours of senior rainmakers. In this special report, we examine of the role of communications in managing misconduct investigations, as well as the measures to be put in place by organisations to futureproof their businesses should an issue arise.

The issues at stake are complex, emotive and challenging, requiring careful navigation by all those involved – from management to legal and communication advisers. Each case is very different but the pressure to take action is clear.  There is increased external and regulatory concern (see the FCA’s steps last month); an increased desire to discover misconduct cases (see the two-year investigation into former Abercrombie and Fitch CEO, Mike Jeffries) coming from multiple stakeholders; and intense scrutiny when these issues do come to light (see Russell Brand) by the media and the general public. Given that so many of these examples surround historic allegations, it is highly unlikely that this is a trend in decline.

Building your preparedness

There are, however, measures that firms can put in place now to build preparedness. Below we explore what firms can do to ensure their governance processes are robust, and they are prepared to do and say the right thing should historic allegations against senior figures or a prevalent abusive culture arise in the future.

1. Are your policies and procedures fit for purpose?

Reviewing the policies you have in place is an important starting point. Points to consider are:

• Are they up to date and reflective of the current size, structure and day to day operations of the firm?
• How old are they? Were they written by an older generation, and if so, have they been road-tested with a younger workforce that is more attuned to current working practices.
• How accessible are they? Have they been shared throughout the organisation, and do your teams – right through to the newest hires – know they exist?
• Who polices them? Is there a credible, independent individual or team within the organisation that has the trust and credibility to ensure you are compliant with your own policies?
• Is the company culture fit for purpose? Are policies seen as lip service, or do leaders endorse and champion a fair and open culture of management?

2. Do people feel they can come forward with an allegation?

In too many cases, we have seen that alleged victims or witnesses have hesitated in coming forward as a direct result of the obstructive culture of the firm.

The raising of concerns, no matter how small, is important. Assuming they are dealt with appropriately and promptly, they are the sign of a trustful and open reporting culture.  Firms must make sure the channels for reporting such concerns are therefore accessible, simple, and well-known internally.

3. Review your record keeping

Records will allow you to review any past complaints, building a clearer picture in the face of often unclear circumstances. This will be important not only when an allegation arises (and will often be a priority port of call for the investigator), but also in building your risk management and preparedness.

Ensure the appropriate staff are well briefed to record all exchanges of concern immediately and have access to the tools and resources to do so.

Organisations today that have no reported issues should not be complacent – a lack of reports from employees coming forward should be questioned – are there really zero issues or, perhaps, are systems and culture failing?

4. Build your resilience

When misconduct issues come to the surface, the reaction will be hard, unforgiving and fast. In today’s world stakeholders will step back quickly to avoid reputational contamination, potentially leading to a spectacular implosion.

An allegation must not be the starting point to talk about your approach to misconduct – stakeholders must know your culture, approach, and how seriously misconduct issues are taken before any allegation surfaces.

This will buy vital time when external scrutiny takes place.

This is not a drill: When serious allegations lead to investigation

At this point, firms will need to act swiftly and calmly to maintain trust. The steps you take now will determine the intensity and duration of the crisis, and the aftershocks on your business, as well as outcomes for individuals involved.

In our experience, the following actions will lead to better outcomes.

1. Your policies and procedures: Follow the book

A commitment to established protocols, thoroughly reviewed as part of your preparatory stage, signals a dedication to impartiality and due process, reassuring employees and stakeholders that allegations will be handled objectively. Deviating from established processes without good cause can erode trust, creating scepticism and undermining confidence in the organisation’s ability to address misconduct effectively.

2. Disentangling the entity from the individual

Leaders are often synonymous with their organisations in media representation and stakeholder perception. Given their influence over the organisation, it is often a challenging reputational necessity to separate the identity of a well-known, senior figure like Odey from that of the organisation.

Increasing the visibility of your executive committee, diversifying spokespeople, alongside clear and consistent messaging about the steps taken by the firm, will build resilience and confidence in the continuity of the business.

3. Open your reporting channels

When conducting an already complex investigation, the reputational instinct of executives is occasionally to discourage further allegations – an instinct that helps neither the victims nor the firm. Individuals must be given a very clear and simple route to report misconduct directly to you, and that they can be confident you will listen to and act on the allegation swiftly and appropriately, with no fear of reprisal.

4. Don’t wait until it becomes a reputational issue

In the case of Odey Asset Management, it took an FT investigation to prompt meaningful change. The perception of his alleged victims was that allegations up to that point had little effect on his influence within the firm. After the investigation was published in June this year, the firm unravelled spectacularly, as clients rapidly lost confidence.

Draw up a plan, communicate your policies carefully, and make sure your stakeholders are considered from the off.

In today’s climate, the impact of a major misconduct investigation will come hard and fast. Stakeholders will step back quickly – often within days. The ability to rapidly calibrate how to respond, making an objective, 360-degree assessment of your communications is critical. If you haven’t already brought in external communications and legal advisers, now is the time to do so.

That being said, the earlier you start to consider reputation the better. At times like these, your reputation going into the crisis will impact on how you come out of it.