Ottawa situation highlights governance obligations in managing misconduct risks - LawNow Magazine

Ottawa situation highlights governance obligations in managing misconduct risks

Not for Profit Law ColumnNews earlier this year of the mass resignation of the Board of the Ottawa Lions Club should come as no surprise to followers of recent developments in organizational governance. The resignations came in response to a report commissioned by Athletics Canada into the group’s handling of allegations of sexual harassment and abuse. The report didn’t mince words about the organization’s governance shortcomings and fiduciary failures.

The allegations related to incidents that took place over many years, involved both male and female athletes and were made against more than one member of the organization’s personnel. The Ottawa group, one of the top track and field clubs in Canada, has had its reputation badly tarnished by the controversy. It drew fire for the original incidents, but more particularly for its ineptness in dealing with them.

Among the report’s 21 recommendations was a call for resignation of the Board. In response, the full Board decided to depart and let new leadership of the group deal with the continuing fallout of the allegations.

… due diligence should include not just identifying problems, but also thinking through processes for dealing with them.At least two Ontario arts organizations – a theatre company and a radio station – have seen board turmoil in the wake of misconduct allegations. From the various controversies it has become apparent that, while sometimes accusations involve staff and program participants, it is also common for frontline volunteers and/or individuals with governance roles to be the subject of allegations.

And anyone thinking these types of problems relate primarily to voluntary sector organizational governance can have that view dispelled by a recent American PwC study of leadership changes in major corporations, which found that ethical lapses (including sexual misconduct) were the number one reason for top executives leaving their jobs in 2018. That category even outpaced poor financial performance as a cause of CEO turnover.

There has clearly been a societal shift in attitudes around this issue, and a growing expectation for measures to identify and deal with this type of misconduct.

Among the steps recommended by the report on the Ottawa group were:

  • exclusion of coaches and former coaches from board positions;
  • establishment of an ombudsman to handle misconduct complaints; and
  • mandatory harassment training.

Where someone subject to an allegation has a governance role, it can make it particularly difficult to address the situation.

It is now well established that voluntary groups dealing with vulnerable populations need to have policies and protocols to manage the risk of harassment or abuse. Indeed, background checks and other proactive measures are typically routine for these organizations. It is increasingly apparent that the time has come for governing bodies across all sectors to routinely put in place harassment and whistleblower policies and other procedures to address improper behaviour wherever it may occur within an organization.

Neither legislation nor the courts have yet provided unambiguous guidance as to what directors need to do in this area to satisfy their fiduciary obligations. Uniform practice is probably unrealistic given the wide variety of circumstances and stakeholders across sector organizations. That said, the report on the Lions Club incidents pointedly noted “failings of fiduciary duties to athletes” by the Board of the Ottawa group.

In the absence of more specific direction, members of an organization’s governing body must turn their attention to the issue and adopt measures to manage the risk of harassment, abuse or other misconduct. It has become essential to do this to protect directors by allowing them to show that there was due diligence done in this area. That due diligence should include not just identifying problems, but also thinking through processes for dealing with them.

It is increasingly apparent that the time has come for governing bodies across all sectors to routinely put in place harassment and whistleblower policies and other procedures to address improper behaviour wherever it may occur within an organization. One of the harder aspects of this issue to grapple with is establishing a safe and effective process for responding to a complaint. As in the Ottawa case, allegations often involve people that are embedded in the organization’s governance structures. That’s why it is essential to have a Whistleblower policy to reduce the chances of retaliation against someone lodging a complaint, and more broadly to have open communication channels to ensure that even those in positions of authority can be called out.

Many boards limit themselves to interactions only with the organization’s senior staff person, or do not have routine in camera sessions at board meetings. Recruitment of directors, who are apt to bring more independent thinking, from outside the organization may not be a high priority. It is important for directors to consider whether, without these or other tools, enough opportunities exist for problems to be raised, or frankly discussed if they are raised. Unless the proper checks and balances exist, it may not be reasonable to assume an allegation will come to light, or can be dealt with fully and fairly.

One doesn’t have to have followed this topic closely to know that there have been countless instances where allegations of sexual misconduct within organizations have been – deliberately or through happenstance – ignored or poorly pursued. Or, that when the incidents eventually surfaced, the reputational damage suffered by the organizations in question was likely exponentially worse than it would otherwise have been. And, as the Ottawa group discovered, it doesn’t much matter whether the cover-up is deliberate or just the consequence of flawed governance.

While organizations will likely never be able to entirely eliminate sexual mischief in their operations, what boards can realistically do is make clear their willingness and ability to respond to bad behaviour when it occurs. In today’s world, doing so is strongly recommended.

Authors:

Peter Broder
Peter Broder is Policy Analyst and General Counsel at The Muttart Foundation in Edmonton, Alberta. The views expressed do not necessarily reflect those of the Foundation.
 


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