I read a LinkedIn post from Wharton Professor Adam Grant in response to a Washington Post piece, More companies are buying insurance to cover executives who sexually harass employees. Grant wrote, “Seriously, companies: instead of buying sexual harassment insurance, how about you stop promoting sexual harassers into positions of power?”
Unfortunately, we see it all too often in sports and now it’s coming to light in business in an unprecedented way. It’s almost common place to see sports teams pick up or keep athletes who’ve been involved in things that would cause termination in almost any other business. Why? Because of talent and the impact on the bottom line. Now we’re seeing that many businesses have been doing essentially the same thing for some of their top talent.
I don’t disagree with Grant’s assertion that businesses should do much more to vet people before moving them into positions of greater power. However, I had a problem with many of the ignorant comments to his post because too many people didn’t know what they were talking about. I’d venture to guess most didn’t even read the article that prompted Grant’s comment.
I’ve been in the insurance industry for more than 30 years so I want to share some insights. Businesses can buy a product called Employment Practices Liability Insurance (EPLI) to cover financial losses from things like sexual harassment, discrimination and wrongful termination. Why is the coverage needed? Simple – to protect the business from serious financial consequences or possibly ruin. This includes covering attorney’s fees, even if the allegations are proven false. A side benefit is more compensation available for those who’ve been harmed by someone in the employ of the business.
Imagine this for a moment. You own a small business and an employee does something really dumb – stops a bar on the way home from work while driving a company car. He gets in an accident shortly after leaving the bar and is found to be just over the legal limit for drunk driving. I’m sure you’d be darn glad you had a business auto policy to protect you and your company. He on the other hand might be spending some time in jail and will certainly see his personal insurance premium skyrocket.
Now imagine you own that same business and unbeknownst to you an employee does something (sexually harasses someone or makes an offensive racial comment) that leads to a lawsuit against your company. Depending on the size the lawsuit it could force you into bankruptcy unless you had an insurance policy to help protect you.
Here are some things to think about:
- Would you want to lose your job if you worked in one of those companies because their doors closed?
- If you invested in one of those companies wouldn’t you want management to be careful and have protection in place, just in case?
- If you were a separate organization that depended on the company being sued, wouldn’t your business life be easier if they could keep operating as opposed to shutting down?
- What if it turns out a court finds the lawsuit was without merit?
- Here’s the biggest question – if you’re the one who was harmed, wouldn’t you want to know compensation is available?
In each case, there’s a risk that needs to be protected against and insurance companies are willing to offer protection for an appropriate price. Please note: The insurance won’t keep a wrongdoer out of jail if he or she is found guilty of a crime! The insurance is to protect the business.
Many of the comments I saw (nearly 200) in response to Grant’s post were laughable because so many people don’t understand what the insurance is and what it does. Should we do away with auto insurance and simply tell businesses to hire better drivers? There’s already an incentive in place to hire good drivers – lower insurance premiums – but sometimes bad stuff happens. Here are just a handful of comments that show no understanding of the issue as it relates to insurance and protecting a business:
- “I didn’t even know that such a type of insurance exists. Awful.”
- “Really? This absolutely stupid!”
- “We really do live in a profoundly sick society.”
- “Wow! Can’t believe this even exists.”
- “You’re kidding. Let’s not solve the problem; let’s just CYA with insurance. This is just wrong.”
Why this post this week? Perhaps to protect you. There’s an old proverbs that says, “Even a fool, when he keeps silent, is considered wise.” Today that could also apply to jumping into an online conversation before you have all the facts. Think first, do a little research, or at least read the article being referenced before you offer an opinion because it might help you avoid looking foolish.
Brian Ahearn, CMCT®, is the Chief Influence Officer at InfluencePEOPLE. His Lynda.com course, Persuasive Selling, has been view more than 100,000 times! Have you seen it yet? If you want to learn how to ethically engage the psychology of persuasion throughout the sales process then you’ll want to watch it.