Boards warned to take staff complaints seriously

The swift departure of QBE chief executive Pat Regan has highlighted the increasing pressure on boards and senior executives to take employee complaints ­seriously.

The swift departure of QBE chief executive Pat Regan has highlighted the increasing pressure on boards and senior executives to take employee complaints ­seriously.

Having seen the damage done to AMP over its handling of complaints about sexual harassment from female employees, the QBE board was quick to move on Mr Regan, saying he was involved in “workplace communications that … did not meet the standards set out in the group code of ethics and conduct”.

The statement did not outline exactly what Mr Regan, who left following a complaint from a female employee, is supposed to have done wrong. But it shed some light by saying that QBE was “committed to having a respectful and inclusive environment for everyone” at the company.

Although it involves a complaint from a female employee, the issue is very different to the one that faced Regan’s predecessor John Neal — whose bonus was cut by $550,000 for not disclosing a consensual relationship with his personal assistant.

Tuesday’s sudden departure of Mr Regan, a member of the Male Champions of Change group of corporate leaders who support the promotion of women, was more about the increasing pressure on boards and corporate leaders to respond to staff complaints of inappropriate behaviour.

Chief Executive Women president Sue Morphet, said employee complaints about harassment or inappropriate behaviour in the workplace needed to be taken as seriously as workplace safety issues.

“We talk about physical safety and the prevention of workplace accidents,” she told The Australian on Tuesday.

“It’s now time for boards and senior executives to consider the mental wellbeing of people who are in our workplaces.”

While not discussing the specifics of the QBE case itself, Ms Morphet said corporate Australia needed to recognise changing standards of behaviour in society.

“We cannot have standards in our companies which are not the same as the social standards we would expect elsewhere,” she said.

She said boards could no longer afford to sweep any problem behaviours by executives or staffers under the carpet.

“Boards need to be aware of behaviour that is not appropriate. It’s not just sexual harassment. There can be all sorts of actions such as bullying or other incidents where there may be an abuse of power.

Know the appropriate expectations

“Good companies and good boards know the appropriate expectations. As shareholders we have expectations that boards will handle these things appropriately.

“It’s better to deal with things quickly and move on.”

Regan’s departure follows the exit the week before of AMP chairman David Murray and director John Fraser and the demotion of AMP Capital chief executive Boe Pahari, and a report by the Human Rights Commission on sexual harassment in the workplace in Australia released in January this year.

The report by Sex Discrimination Commissioner Kate Jenkins said Australia was once at the forefront globally of tackling sexual harassment, with the introduction of legislation in the 70s and 80s on sexual discrimination and sexual harassment.

But she said the rate of change since then had been “disappointingly slow”.

“Australia now lags behind other countries in preventing and responding to sexual harassment,” the report said.

The report recommended that the ASX Corporate Governance Council introduce sexual harassment indicators for ASX-listed companies to report against as part of their corporate governance principles.

It recommended that these include the specific mention of sexual harassment in guidance on company codes of conduct and the reporting of measures being taken by the company to combat sexual harassment.

It also recommended that the commission, in conjunction with the Workplace Sexual Harassment Council, develop guidelines on the best practice principles for the use of non-disclosure agreements in workplace sexual harassment.

The Australian Council of Superannuation Investors (ACSI) is backing the recommendations.

“ACSI supports recommendations by the Australian Human Rights Commission that look to improve how companies approach sexual harassment,” ACSI chief executive Louise Davidson told The Australian on Tuesday.

“Sexual harassment guidance should be disclosed in company codes of conduct and reporting indicators introduced by the ASX Corporate Governance Council,” she said.

“The Human Rights Commission should also develop best practice principles for the use of NDAs in workplace sexual harassment matters to inform the development of regulation on NDAs.”

The ASX Corporate Governance Council, which is independent of the ASX, had promised to review the recommendations on the next edition of its review of guidelines for ASX-listed companies.

But it points out that its current recommendations on corporate governance principles, which came into effect this year, already include guidance on diversity policies and comments on the importance of making it clear that “discrimination, harassment, ­vilification and victimisation” in the workplace will not be tolerated.

Greater transparency

Current guidelines on risk management for ASX-listed companies, the spokesman for the Council said, also included a recommendation that a company “should disclose whether it has any material exposure to environmental or social risks and, if it does, how it manages or intends to manage those risks.

“Investors increasingly are calling for greater transparency on the environmental and social risks faced by listed entities, so that they in turn can properly assess the risk of investing in those entities,” the spokesperson said.

“A company may determine that its social risks encompass nondisclosure agreements. Social risks include ‘the risks associated with … mistreating employees’.”

Company director and the former president of Chief Executive Women, Diane Smith-Gander, argues that companies should go further and specifically ban senior executives from having relationships with staffers.

“It is particularly sad that a code of conduct offering a safe workplace hasn’t made it clear that senior executives should abstain from relationships with employees,” she told The Australian.

“Now as women at all levels of organisations find their voice it is becoming clear what the code of conduct must mean in practice.

“Having more senior women makes it a lot more likely that these voices will be heard and appropriate consequences brought to bear.”