Corporate directors do little to protect employees from hostile workplace culture.
The recent press revelations about Nike’s hostile culture toward women throw up questions about the sportswear company’s corporate governance model.
Nike has 12 board members, several of which are big names in the corporate world. They include Tim Cook, CEO of Apple; Travis Knight, son of Nike founder Phil Knight and CEO of film animation studio Laika; and Michelle Peluso, chief marketing officer at IBM.
Three board members are on the corporate responsibility and sustainability committee at Nike, including Peluso, one of only two women on the board (the other is Elizabeth Comstock, former vice chair of General Electric). The committee is charged with overseeing issues that involve reputation risk to the company, including labor practices.
But the revelations of workplace harassment at Nike suggest board members play a limited role ensuring oversight of codes of conduct.
None of Nike’s board directors commented for this story. A spokeswoman for Travis Knight said he is busy producing a film and couldn’t be reached.
Greg Rossiter, Nike spokesman, said in an email the board takes an active role in the oversight of management of critical business matters.
“Management has consulted the Board on the matters raised recently relating to diversity, inclusion and respect, and the Board strongly supports the swift and decisive actions taken by Nike’s management.”
Nike board members earned an average of $284,000 in 2017.
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Emphasis is growing on corporate boards to take more of an active role in molding corporate culture, says Jeff Bird, an attorney at Lane Powell. The National Association of Corporate Directors has produced several recent articles making the case that company culture is an important corporate asset.
“Corporate culture is more of an important agenda item at board meetings so the board can understand and approve what corporate culture is and that it furthers the strategy of the company,” Bird says.
Other corporate governance experts point out the limitations of board directors to prevent workplace issues, such as sexual harassment.
Ryan Krause, associate professor at MJ Neeley School of Business at Texas Christian University, says it is difficult for boards to investigate problems with workplace culture because they are easy to hide. Directors also generally meet for just 15 to 20 days a year, limiting their ability to investigate issues, he said.
“They are dependent on management bringing it to their attention,” says Krause.
He adds there is more of an emphasis on corporate board members generally to ensure financial performance of the company. “A lot of board members don’t care about how it gets there.”
But the rise of the #MeToo movement and the recent collapse of companies embroiled in sexual harassment and discrimination cases is forcing boards to pay more attention to corporate culture.
Although Parker fired several male executives after the allegations of misconduct came to light, one wonders how much of the #MeToo movement influenced his actions. If it weren’t for #MeToo, would Parker have felt as much pressure to fire the executives?
Nike announced in March this year that Parker will remain chairman, president and CEO of Nike beyond 2020, despite the trend in corporate governance best practices to have different people hold these roles.
Will accountability at the board level for corporate culture at Nike change following the allegations of systemic sexual discrimination against female employees?
As corporate governance best practices evolve, “the days of treating this as just a HR issue are over,” says Bird.
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