One of the biggest issues in corporate India is trust. With corporate governance taking center stage, reputation risk has become an issue as every single action of Corporate India comes under scrutiny by media and social media. The fine balancing act of Compliance versus trust is an issue which is as old as corporate India.

Sexual Harassment and the associated laws are becoming another area where corporate India is grappling with the issue of trust and reputation risk. Let us look at the impact of trust and reputation on Corporate India.

India has nearly 7,000 listed companies across both NSE and BSE. On top of that increasing compliance requirements and the advent of social media means that issues which were internal to the organization till few years back were now just a social media post away and from blowing out of proportion.

While most organizations tend to focus on compliance from a financial, statutory and legal framework, there is a new set of compliance which has come into the picture of late are compliances with respect to sexual harassment laws and its impact is something that organizations take seriously as it directly impacts “Reputation”.

An organization spends a lifetime building a business and its reputation is a currency which determines its interaction with other stakeholders. To set a perspective, bankers and investors trust a Balance sheet of an organization with a higher reputation management all things being equal. In fund raising, organizations with a higher reputation find it easier to raise money.

In the Sexual Harassment domain the, the reputation risk is multi-fold:

1. Compliance Risk and Reputation Management — Organizations with weak internal compliances regards to sexual harassment open themselves to various penalties including risk to cancellation of business license. The basic compliances include:

· constitution of Internal Committee at all offices of the Company

· Conducting awareness programs for employees

· Organizing orientation sessions for the Internal Committee and senior management

· Conducting capacity and skill building programs for the Internal Committee

· Display of Fair and Robust Investigation process

Organizations with weak internal compliances face a reputation risk if an aggrieved employee chooses to challenge the findings of the Internal Committee and the issue comes in public domain.

2. Ethics and Reputation Management — One of the risks on the reputation arises on the issue of Ethics and fairness. If the process of Internal Committee and Investigation isn’t fair, it opens the question of corporate ethics especially on the HR process. The reputation management arises when employees take the issues on the public domain. It also comes when external stakeholders like investors, directors become impacted due to the consequences of a sexual harassment complaint

3. Business continuity and reputation management — One of the biggest issues with sexual harassment is with the involvement of senior management in the cases. If the senior management is involved it has an impact on the business function as serious management bandwidth gets diverted in managing the sexual harassment case. This has business and revenue impact and also takes the bandwidth of the Board.

4. HR and Reputation Management — One of the biggest challenges today is to recruit the right talent. A weak policy and process on sexual harassment becomes an impediment to attracting and retaining the right talent. Organizations which are listed and organizations with external investors would do well to set up strong internal processes for addressing issues of sexual harassment thus ensuring that their HR reputation doesn’t suffer.

In a nutshell the world is now interconnected and with social media, reputation management is a serious issue. Sexual Harassment and its compliance ensure that organizations build a healthy workplace environment and have the ability to handle challenges to its reputation.

Arjun Sinha Roy

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