Dealing with Sexual Harassment When Your Company Is Too Small to Have HR

February 2, 2018 Karen Firestone

Ralf Hiemisch/Getty Images

The subject of sexual misconduct at work is dominating mainstream conversation and board room agendas. This doesn’t just mean men and women who run large global enterprises, Fortune 500 behemoths, film studios, and media platforms. The conversation is happening in small businesses as well.

In the U.S. 43% of employees work in organizations with 50 or fewer people. It would be a mistake to think that a smaller workforce means a decreased chance of sexual harassment. In fact, a few characteristics make small firms more susceptible.

For example, at a smaller firm, people may engage with each other more frequently and that proximity can make the impact of any harassment feel disproportionately large. It can be extremely disruptive if two out of twenty employees suddenly can’t work together and need to be separated. And the legal and punitive costs of sexual harassment cases can feel steeper to a firm with less money and fewer resources.

Importantly, many small firms, especially those with fewer than 30 people, do not have a formal HR department. There is often not enough work to justify a full-time HR employee. The absence of HR means that CEOs must take more responsibility when it comes to keeping current with changing laws, and designing, communicating, and monitoring rules regarding workplace behavior.  Another challenge is that without an HR department, more incidents might go unreported, since it may be easier for staff to talk to HR than the boss.

Managing all this is no easy feat for leaders who must also focus on running the business. At our firm of thirteen, the president and I, as CEO, handle all the hiring, compensation, performance, promotion reviews, and any personal matters that our staff brings to us. (Our business manager handles the rest of our “HR” functions like administering payroll, health insurance, and 401K enrollment issues.) Over the past thirteen years, I have brokered the reconciliation of some damaged relationships among colleagues, occasionally helping them through difficult medical and financial situations, and remained watchful for any unhappiness or anxiety. We have never had a sexual harassment complaint, but I’m on high alert for any signs, and I’m thinking more now about how to preempt them.

My CEO peers feel similarly. I surveyed 57 small business CEOs on how they were thinking about sexual harassment. Twenty-nine of these firms had fewer than 50 employees and 21 had no full time HR staff. Among the group, 30 had a written sexual harassment policy, 14 had held a company-wide meeting, and 10 had conducted a training session on the subject.

Two-thirds of the CEOs were male and the group ranged in age from 27 to 81. The majority (70%) said they are more worried now about sexual harassment affecting their business than they were a year ago. They attributed this heightened anxiety to the news focus on high profile cases and reverberations, rather than to any specific incident within their company.

They worried that allegations of inappropriate behavior would damage their office culture, but they were also concerned that hiring a consultant for a  day-long training session might be costly, redundant, ineffective, and cause tension about the reasoning behind such action. They were also nervous that the absence of a clearly written  harassment policy could hurt both recruiting and the firm’s reputation.

Despite the lack of organized meetings or programs, they seem to be trying to create a constructive workplace culture: 20 of them acknowledged that they are more aware of their own behavior today than in the past, and 16 said that they encouraged their colleagues to come to them directly with any issues or complaints.

Small businesses do not need HR to root out and prevent sexual harassment. But leaders need to 1) be conscious of the factors that lead to a toxic work culture, such as having a predominantly male executive staff, layers of hierarchy in power within the organization, and indifferent responses to previous allegations; 2) establish clear policies outlining what constitutes sexual harassment, which behaviors will not be tolerated, and what employees should do if they see or experience misconduct; and 3) enforce these rules by designating clear roles for people within the organization.  At my company I have told everyone they should come to me or my second in command immediately with any complaint. Should this ever happen, I would try to understand the incident by interviewing everyone involved, and I would likely ask the alleged harasser to take a leave until we understood the entire situation. Then I’d try to resolve the problem internally. If that was impossible, we would seek outside counsel.

So far, it’s not a dilemma I’ve had to face. Over a decade ago, we wrote up a sexual harassment policy that strongly denounced any form of sexual harassment. These included physical, verbal, or implied requests for sexual favors; inappropriate jokes and gestures; and intimidating behavior.  It also offered directions about reporting that misconduct. Each year we revise this, recirculate it, and have every employee sign it. We continue to discuss this policy at company-wide meetings, including one recently, following all the recent news stories on the subject. At that session, I asked everyone if we should do anything else, such as hold a sexual harassment training session; no one believed that necessary.

Since we have no HR department, we tell employees that should they experience sexual harassment, they need to come forward, at some point, to one of the top managers. We know that this won’t happen if they don’t trust us and feel that we care about their well being. To foster this kind of trust, I talk to my colleagues every day when I see them, make sure people are included in any discussions around their work, and ask them questions about their assignments and contributions. This may sound trite, but these actions will generate more trust than merely telling people to come forward with a harassment charge.

Every CEO of a small company has concurrent goals of growing into a highly profitable business and creating a vibrant and desirable office environment. If you turn a blind eye to sexual misconduct at work, you create a toxic setting for all of your employees, and face high financial, reputational, and energy-sapping costs of dealing with a sexual harassment lawsuit. The main way small businesses can prevent sexual harassment is to establish the right internal culture, which means paying more attention to the example you set. The well-being of your company could be at stake.


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