Some time before June 2018, employees of international audit and consulting firm Ernst & Young (“EY”) engaged the services of Marsha Clark & Associates to conduct a training program for female EY executives in the areas of leadership and empowerment.
In June 2018, Marsha Clark & Associates delivered a leadership and empowerment training entitled “Power-Presence-Purpose” (“PPP”) for female EY executives at EY’s offices in Hoboken, New Jersey.
The summer of 2018 also saw the height of the “#metoo movement,” a global phenomenon aimed at eradicating sexual harassment and assault, particularly in the workplace.
On 21 October 2019, The Huffington Post published a report on the June 2018 PPP training in which it detailed numerous ways in which the training was out of sync with current attitudes and social mores regarding the challenges women face in the workplace. The Huffington Post report included coverage of EY’s history of issues with gender discrimination and harassment and, referencing EY’s fiscal year 2018 report, also pointed out the paucity of women in key roles at EY.
The general theme of the PPP training was that it is the behavior of women in the workplace–in manner of dress, style of communication, and other ways–that hinders their career advancement and leadership potential.
The training advised women to, among other things, avoid speaking in a “high-pitched or shrill voice” and to avoid “crying” or being “rambling and redundant” when communicating. Regarding attire, the PPP training advised: “Don’t flaunt your body – sexuality scrambles the mind (for men and women).” The training also included a comparison of the allegedly different ways in which men’s and women’s brains absorb information, using an unfortunate analogy involving breakfast foods.
The training seemed, for many of those present, to be at odds with contemporary attitudes, principles and values regarding women in the workplace.
Responding to an initial request for comment, EY reiterated its commitment to “fostering an environment of inclusivity and belonging” for women at EY. Furthermore, it maintained that the PPP training was not created at EY, but rather by “an external vendor.”
Subsequently, EY issued a statement admitting that the training “included offensive content” which was “inconsistent with [EY’s] core beliefs” and promised the “undertaking [of] a comprehensive review of our processes and controls around program content.”
Gaps In Risk Management
- Vendor Risk Management – Vendor risk management programs are designed to manage the risks associated with companies hiring third-party providers to supply goods and / or services to the company. Associated risks run the gamut from improper insurance carriage to inadequate protocols for the management of confidential information. In the instant case, the primary risk factor was the soundness of the services provided by the vendor. It took little time for the general public to arrive at the conclusion that the contents of the PPP training did not constitute sound advice to women leaders at EY in 2018. Had it been subjected to proper vendor risk management, the hiring of Marsha Clark & Associates should have raised some red flags. Three distinct possibilities arise: 1) EY did not have a proper vendor risk management program; 2) EY had a program, but by mistake or accident, the program was not applied to the hiring of Marsha Clark & Associates; or 3) EY had a program and it should have been applied, but the personnel or team responsible for the hiring of Marsha Clark & Associates deliberately and successfully avoided it.
- Training Development Oversight – Companies are responsible for the adequate training and development of their personnel. When third party service providers are brought in to render training services to company staff, those members of staff are likely to believe that the company has reviewed and has endorsed the material being presented. EY’s ex post facto statement that the materials had been prepared by “an external vendor” did little to convince the general public to absolve EY of culpability. While it cannot reasonably be thought that EY, as an organization, believes that women have “pancake brains” (to paraphrase the PPP training materials), the public may find it probable that senior members of EY’s training and development staff, with a mandate to represent the global organization in personnel training matters, reviewed the materials and found them worthy of merit. Independent of EY’s vendor risk management program, the personnel or team overseeing employee training at EY had a duty to properly vet the materials provided by Marsha Clark & Associates. Regardless of whether it is fair, the perception of the employee audience–and, if implicated, the general public–will generally be that the provided materials are an adopted portion of the company’s own training materials and program. If the training personnel or team at EY did not review the PPP materials prior to the deployment of the training, they failed in their corporate duties to the firm.
- Personnel Training & Development – It is overwhelmingly likely that one or more employees of EY did review the PPP materials prior to Marsha Clark & Associates delivering the training at EY. Regardless of whether they were from the vendor risk team, the training team, or any other team at EY, and furthermore, regardless of their biological gender, gender expression, age, race, national origin or any other personal characteristic, the EY employees who likely reviewed the PPP materials should have immediately identified issues of bias, discrimination and inequality within the materials and marked them unacceptable for the firm as a result. The PPP training incident highlights what is likely an issue within the firm itself: if any of EY’s personnel or teams reviewed the materials and approved them, those personnel or teams are not properly trained in the identification of gender bias and discrimination.
Costs & Impacts
- Brand Equity – EY has no doubt suffered damage to the value of its brand as a result of the open public outcry against its past deployment of the PPP training. The company is in the business of client services, acquiring new clients is of high importance to the business. However, prospective clients may be wary of associating themselves with the EY brand, and existing clients may dismiss EY for the same reasons. EY will likewise face issues from loss of brand equity in competing with other major audit and consulting firms in new talent acquisition, particularly in the Millennial and Gen Z segments. These are but two of the myriad possible impacts of EY’s diminished brand value as a result of the PPP training incident.
- Civil Litigation – As mentioned in media coverage of the PPP training incident, EY has been the target of civil litigation over claims of sexual harassment by former employees. As with past instances of media coverage of gender discrimination and harassment in the workplace, the coverage of EY regarding these issues may inspire new litigants to bring suit against the firm. Coverage of “#metoo incidents” has been a litigation catalyst in the past, and if there are other current or former EY employees with latent grievances against the firm arising from sexual harassment or discrimination in the workplace, the coverage of the PPP training incident may incite them to commence formal litigation against EY as well.
- Financial – It is difficult to quantify the amount or extent of financial damage that EY will suffer as a result of the PPP training incident and related media coverage. However, it is extremely likely that at least some amount directly related financial damage will accrue, whether from client losses, litigation awards, or both.
1. Companies should institute vendor risk management programs within their businesses as early as possible. With an ever-expanding inventory of the ways in which a vendor can expose its clients to risk, companies must take active measures to ensure that issues within their vendor firms do not infect their own corporate health.
2. Companies must take an active role in managing and owning all forms of training content delivered to their personnel. Even in cases where a vendor risk management program has vetted and approved a vendor to provide training services to a company, that company’s training and development function must specifically ensure that each and every piece of training material delivered by the vendor is in line with the company’s aims, objectives and values before it can be deployed in a training program for company personnel.
3. Companies must provide training for all personnel in the areas of workplace conduct and the prevention of harassment, bias and discrimination. A company’s position on these matters cannot be left implicit and to the assumed understanding of its personnel. Regular and detailed training programs on the identification and proper reporting of harassment, bias and discrimination are foundational elements of a corporate culture of inclusivity, which, in turn, is a company’s first line of defense against risk in these areas.
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