New Law Ends Pre-Dispute NDAs for Workplace Sexual Harassment, Assault Disputes

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On Nov. 16, 2022, the U.S. House of Representatives sent the Speak Out Act to President Joe Biden’s desk with a 315-109 vote. The legislation, which cleared the Senate unanimously on Sept. 29, aims to prohibit the use of pre-dispute nondisclosure and non-disparagement agreements, or NDAs, with regard to sexual harassment and sexual assault. After previously expressing support for the legislation, President Biden signed the bill into law on Dec. 7, 2022.

The law builds off the previous amendment to the Federal Arbitration Act, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021. That amendment gave individuals asserting claims of sexual harassment and sexual assault the option to file their claims in court, rather than be subject to pre-dispute mandatory arbitration clauses. The amendment also prohibited pre-dispute agreements that waive an employee’s right to participate in a joint, class or collective action in a judicial, arbitral, administrative or other forum relating to a sexual assault dispute or sexual harassment dispute. Both pieces of legislation are motivated in part by the #MeToo movement and are analogous to state laws passed in California, Illinois, New Jersey, New York and others.

Like its predecessor, the law only applies to pre-dispute NDAs that prohibit the discussion of sexual harassment or sexual assault claims. A bank and employee may still enter into an NDA, so long as the agreement is reached after the unlawful conduct is alleged. Furthermore, the law does not affect NDAs in other contexts, such as intellectual property, non-compete agreements, or severance agreements.

While the law prohibits the use of pre-dispute NDAs with regards to sexual harassment and sexual assault, it does not apply to other related discrimination claims such as race, age, gender or national origin. President Biden, however, expressed interest in advancing similar legislation that would apply to racial discrimination, unfair labor practices and others.

Even though the act has been signed into law, banks will not have to abandon NDAs entirely. NDAs will continue to be a useful tool for banks that wish to secure their confidential information. Bank board members will, however, need to update their employment handbook policies as well as any template NDAs. Additionally, it is important to remember that banks may still enter into NDAs regarding sexual harassment and sexual assault. Now, however, the choice will be in the hands of the employee after the unlawful conduct is alleged — and not the bank at the date of hiring. Additionally, it is also wise for a bank’s board of directors to keep pre-dispute NDAs intact for the other discrimination claims that the law does not effect.

Finally, after updating sexual harassment and sexual assault policies, it is always wise to ensure that a bank’s harassment reporting policy and investigation routine is effective at preventing and addressing harassment in the workplace. A comprehensive sexual harassment policy that encourages reporting, an open-door policy and quick and thorough investigations is the best way for board members to safeguard a bank’s work environment.

How HR Can Combat the Great Resignation

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Human resource executives continue to confront and address the ever-shifting priorities that are critical to helping companies maneuver current trends in the workplace.

The coronavirus pandemic, coupled with rising inflation, has disrupted the American workforce. In response, human resource professionals are responding intentionally and thoughtfully to tackle the rising challenges head on. But according to a Human Resource Executive’s survey published in January 2022, 86% report feeling more stressed as they continue to focus on remaining effective business partners. The following are some of the most pertinent talent and employment issues facing banks today and how they impact human resource divisions.

Pay Transparency Laws
An increasing number of states and municipalities require employers to disclose salary ranges to current or prospective employees, a trend that could spread nationwide as prospective employees seek pay transparency and equity at the interview and hiring stage. This requires HR executives to ensure that pay transparency laws are enforced, while demonstrating that salary expectations are commensurate with what the market will bear. Additionally, remote work further complicates the issue, as companies regularly recruit across state lines.

Aside from legal issues, employees today want to know how their current pay range is formulated and which promotional opportunities are available for their career path. Human resource professionals should be prepared for these conversations during onboarding. Without a proactive and well-thought-out message coming from management, employees may assume the worst and — at the very least — begin to explore what the market might pay them for their skills.

Explainable Salary Ranges
Wages are increasing faster than they have in the past 20 years. It is critical that HR professionals educate all internal stakeholders on the methodology they use to develop salary ranges. Typically, HR managers at community banks purchase a mere two or three third-party salary surveys that are used to formulate expected pay ranges for all positions in the company.

In contrast, a documented and communicated compensation methodology can decrease concerns about pay disparity and discrimination. Due to inflation, companies may want to analyze base pay levels semi-annually this year, as opposed to the end-of-year norm, to retain talent.

Reexamining Variable Pay
Strategic HR teams are often involved in crafting departmental scorecards that align performance with board priorities. Something I often say is, “The right bonus program, with the right incentives for the right people, can drive performance.”

Creating a stretch goal structure or modifying who is eligible to participate in an annual bonus program based on corporate results can alter the dynamics of a bank’s compensation strategy and overall financial performance, which is why this topic should be a conversation between the chief human resource officer and CFO. Banks can bolster their talent acquisition strategies by regularly reexamining their incentive payouts and targets to ensure they are delivering a positive return on investment and are competitive.

Embracing a Changing Work Culture
Many financial institutions are enhancing their benefits to demonstrate they truly value their employees. That ranges from shorter vesting periods for paid time off to pet insurance. However, one of the most desirable benefits is a hybrid/remote work arrangement. Banks that refuse to embrace this new model — where it makes sense — need to be prepared to pay more in order to get the attention of top candidates.

However, those benefits cannot be considered in a vacuum. Executives and their HR teams should consider work expectations and their impact on corporate culture as well. In the past, some firms expected employees to work long hours and on weekends in the office in order to advance. But studies are showing a different outcome: burnout. The expectation that employees will forgo a work/life balance for their career is no longer the norm. A culture of self-care for all employees will go much further in promoting a productive and purposeful workforce.

2022 is already proving to be one of the most taxing for HR teams in terms of talent acquisition, management and retention. Banks will continue to face challenges as inflation, salary expectations and work culture changes. But there are proven ways to produce an effective corporate strategy that builds and supports a healthy organization, and generates a good return for investors. Remaining agile, promoting a culture of self-care and paying competitive to market rates will remain fundamental to the success of high-performing banks.

Improving Bank Culture By Being an Ally

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Tuesday, March 8, is International Women’s Day, a global celebration of women’s historical, social, economic, cultural and political achievements.

This day is also a call to action for accelerating gender equality in all aspects of life. The theme for 2022’s day is #breakthebias, to create a world free of bias, stereotypes and discrimination, and that is diverse, equitable and inclusive.

I feel tremendous pride when I see my fellow women leaders succeed, whether they lead a country or a company. I also feel tremendous pride at the steps Securian Financial has taken to draw on the diverse talents and creativity of our team to maintain our workforce and our commitments to our policyholders. One of the ways we’ve done that is through the gender equity work of our associate resource group, which seeks to foster an environment that supports, educates and empowers all women at our company and in the broader community.

Creating gender equitable cultures can result in stronger corporate reputation, earnings and a greater ability to attract and retain talent. A diverse and equitable workforce can increase creativity, increase collaboration and provide better job satisfaction for employees. But the right policies alone cannot shift culture; it’s critical that employees become part of the cause. That’s where being an ally comes in.

What does it mean to be an ally?
I get this question a lot. For too long, gender equity issues were seen as a women’s problem to solve. Yet, these issues are actually leadership issues for all to address and conquer. This involves action, advocacy and the desire to create change. It is an understanding of how power operates, and who has it. It is learning and appreciating the history and issues that women face in the workplace.

Being an ally means creating an environment that nurtures, builds community and demonstrates paths to successful career advancement. Here are some ways executives and employees at any company can practice allyship:

  • In the Moment: Speaking up in the moment when sexist comments are made is a great way to reaffirm that sexism won’t be tolerated in your organization.
  • Listen: Be a sounding board. Avoid offering your perspective unless asked, and resist the urge to fix the situation.
  • Ask: Don’t hesitate to ask female colleagues how you can be an ally. Ask about specific issues or changes that the workplace or management can make, and be willing to take responsibility for change.
  • Feedback: Provide specific and quality feedback to women for developmental goals.
  • Mentor and Sponsor Women: Commit the time and energy to mentor women in the company, and connect them with opportunities to network and showcase their talents.
  • Engage: Engage in women’s initiatives and events. Be present and be willing to be part of the conversation.

In addition to becoming an ally, executives can initiate a review of the following through a gender equity lens:

  • Job descriptions.
  • Marketing materials, including gender-inclusive imagery.
  • The types of meetings you are having — even conferences.

In today’s challenging environment of hiring and retention, an organization’s commitment to gender equity can make a substantial difference. While we regularly celebrate women’s milestones in the workplace, we still look to give women equal opportunities to exist and succeed in the workplace.

Having equal opportunities strengthens communities and the industry. With diversity of thought and background, as well as gender, we can find a well of strength in times of change and transformation.

The views expressed here are Jennifer Ortale’s own and do not necessarily represent those of Securian Financial.

Do Banks Pay Women and Minorities Less?

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“The time is always right to do right,” Rev. Martin Luther King Jr.

Among the many attributes of community banks is that they tend to focus on creating great places to work. They contribute to local organizations and encourage staff to stay active in their communities. They often offer regular work hours. But, when it comes to pay equity, they have work to do, according to Christie Summervill, the CEO of BalancedComp.

Summervill, who has 21 years of experience consulting with community banks on how much to pay their staffs, has compiled data recently from 300 banks and credit unions to see what disparities existed between women and men, and between ethnic and racial minorities and non-minorities.

What she found surprised her. With some exceptions, banks tend to pay female employees who are salaried, which means they are classified as exempt employees, less than male salaried employees, and salaried minorities less than non-minorities. When they were paid less, it ranged from about 2.8 to 4.4 percentage points depending on the asset class; it was 2.4 to 4.5 percentage points for minorities.

Summervill presented BalancedComp’s findings at a Bank Director Compensation & Talent Conference in November in Dallas, but did not divulge sample sizes for each asset class.

Banks Tend to Pay Salaried Women Less Than Men

Asset size Average Male Compa Ratio Average Female Compa Ratio
$100M to $200M 86.2% 85.9%
$200M to $400M 100.6% 99.2%
$400M to $600M 101.2% 97.2%
$600M to $1B 100.7% 96.3%
$1B to $2B 103.5% 99.5%
$2B to $4B 99.61% 98.3%
$4B to $8B 99% 96.2%
$8B to $12B 103.1% 99.8%

 

Banks Tend to Pay Salaried Minorities Less Than Non-Minorities

Asset size Average Minority Compa Ratio Average Non-Minority Compa Ratio
$100M to $200M N/A N/A
$200M to $400M N/A 99.5%
$400M to $600M 98.1% 100.7%
$600M to $1B 97.4% 101.9%
$1B to $2B 103.4% 103.5%
$2B to $4B 94.7% 99.3%
$8B to $12B 97% 99.4%

Source: BalancedComp. Includes data on nearly 300 BalancedComp clients across 50 states. Data pulled in August 2021. The Compa ratio is the percentage of the market rate. The system is bridged to client payroll systems without compromising individual privacy.

It was a different story for hourly staff, classified as non-exempt employees, where few pay disparities exist. Summervill thinks banks struggle to find hourly staff these days, and so they may pay more attention to competitive pay levels for hourly workers.

She thinks pay inequities exist among salaried workers because of a lack of discipline in salary management. For instance, community banks may set salaries based on what people said they expected, rather than dissecting the data. “It doesn’t come from an ugly heart,’’ she says. “Community banks are so employee-centric overall. It’s a lack of discipline.”

The Equal Pay Act of 1963 requires that employers pay men and women equal pay for equal work, and some 42 states have expanded the act with various laws of their own, raising potential liability issues for banks, according to the compensation firm Aon. States with the strictest laws include California, Colorado, Louisiana, Massachusetts, New Jersey, New York, Oregon and Pennsylvania.

Gayle Appelbaum, a partner and compensation consultant for Aon, says banks tend to be more interested in analyzing pay equity when they have operations in states that mandate pay equity. She has performed pay equity studies for bank clients and has found there has been progress in gender pay gap disparity in recent years. On average, she says the gender pay differential falls in the range of 5% to 8% across the banking industry, when using advanced methodologies to sort, analyze and compare employee census data.

Because of the liability in such studies, many banks involve their general counsel or outside attorneys before delving into such reports in order to ensure attorney-client privilege for their findings. “There are still some disparities, but the data shows that a lot of improvements have been made [in closing the gender pay gap],” says Appelbaum.

Banks striving to diversify their employee base should pay careful attention to pay equity, she says. When disparities exist, they should be examined to make sure they are within a reasonable range and based on established workplace criteria, such as education levels, performance or tenure, and not based on bias or unfair pay practices.

Summervill says she’s seen banks come up with strange reasons for paying women less, though. For example, one bank asked a female employee to avoid certification for a certain position within the bank so she could perform tasks that a certified employee was prohibited from doing. She complied but was paid $36,000 less annually than a certified male employee who did the job at the same bank — all for doing the bank a favor.

Summervill suggests bank boards ask human resources to conduct pay equity studies because human resource departments may be reluctant to initiate such studies on their own, since the results can be contentious.

BalancedComp’s data on CEOs and executive pay was mixed. Banks tend not to have many female or minority CEOs. For the few community banks that had female CEOs, they tended to make more than male CEOs in their asset classes, possibly because there are so few of them and competition for female CEOs is high. In five of the eight bank asset groups, female executives were also paid equal or more than male executives. Only two groups out of BalancedComp’s eight asset ranges had a minority CEO, and four out of the seven asset groups had no minority executives.

Summervill says banks should correct any inequities right away. After all, it’s the law. “The conclusion is that pay disparity exists,” Summervill says. “It’s not intentional but it’s absolutely there.”

Building a ‘Truly Great Place to Work and Bank’

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FS Bancorp’s cultural revolution kicked off about a decade ago. It’s a journey that’s still ongoing for the holding company of 1st Security Bank of Washington, according to CEO Joseph Adams.

The predecessor of Mountlake Terrace, Washington-based FS Bancorp was a credit union from its founding in 1936 until 2004, when it converted to a mutual state savings bank. In 2012, upon converting from a mutual to stock ownership structure, Adams and his team began to reconsider the bank’s business lines and culture.

“We had to figure out what we wanted to be when we grew up,” says Adams. “We had difficulty attracting top talent in our market.” The bank posted a 0.5% return on assets as of December 2011, according to S&P’s Capital IQ database.

But that has changed. “If you look at the financials of this organization, for the last 10 years, you will see a hockey stick,” says Adams. “You will just see it growing and growing.” FS Bancorp reported a return on assets of 2.1% at the end of 2020. Overall performance drove FS Bancorp to place No. 1 among the Best Community Banks in the 2022 RankingBanking study, based on a variety of metrics including profitability, growth and total shareholder return, which totaled 125% over five years (2015 to 2020). Executive leadership, board oversight, innovation and growth were also examined, with FS Bancorp topping the Best Leadership Teams subcategory.

The $2.2 billion bank focuses on five areas: deposits, home lending, indirect consumer lending, commercial & industrial (C&I) and commercial real estate. But its business lines aren’t the sole driver of the bank’s success. Adams points to a cultural shift that started around a decade ago, when Adams promoted Vickie Jarman — previously part of the consumer lending group — to lead a team focused on transforming the bank. They proposed a new set of core values, along with a mission and vision for the company. It’s pretty simple: FS Bancorp wanted to create a “truly great place to work and bank,” says Adams. “We believe if you build a great place to work, it will be a great place to bank. We intentionally put those words in that order.”

What’s developed is a culture that values collaboration and humility, according to three FS Bancorp executives I spoke with in October: Adams, Chief Financial Officer Matt Mullet and Jarman, the bank’s chief human resources officer. Self promoters often don’t feel at home there, explains Mullet.

FS Bancorp wants “smart, driven, nice” people, says Adams. “Jerks” need not apply. “We all have to work someplace. Why not work someplace where we have each other’s back, where you wake up every morning excited to go see the people you get to work with?” he says. Getting all three qualities isn’t easy, so the bank makes prospective hires go through hoops to join the organization — the more senior, the more hoops. “Our head of retail, she joined us about four years ago, and she had 16 interviews,” says Adams. “But she kept coming. And she’s here, she does a great job.”

By all appearances, the lengthy hiring process isn’t keeping FS Bancorp from adding the talent it needs to drive growth. The company had 78 employees when its transformation began, says Jarman; now it employs more than 500.

Building a strong culture requires constant work and attention. FS Bancorp has worked with a corporate coach for more than a decade; Adams is also an avid reader of books on leadership and organizational development, including Jim Collins’ “Good to Great” and Simon Sinek’s “Leaders Eat Last.” Combined, the books shine a light on leaders that put their organizations ahead of their egos. Adams wants to adapt those concepts to FS Bancorp, and he’s working with their corporate coach to do it. That will include building a training process to help FS further develop its leaders so they get the culture, too. “It’ll probably take us a year or two, as we move into the future, to get it to a point where we believe we’ve really nailed it,” says Adams.

And they’re putting practices in place that take care of employees, including raising the starting wage to $20 an hour in July — in line with rates paid by big banks such as Bank of America Corp. and First Republic Bank. It was Mullet’s idea, says Adams. “He was concerned — with how expensive things are in the Seattle area — that we have a livable wage,” says Adams.

Adams was an attorney before becoming a banker but says he’s truly passionate about organizational development — getting the right people in the right positions to excel. “We work really hard to get people in roles that play to their strengths, not their weaknesses,” he says. “If you get somebody in a role that plays to their strengths, they do wake up every morning excited to do that role.”

That passion for people comes through in how Adams leads the organization, according to Jarman. “Joe isn’t someone who comes in and says, ‘OK, what do you have on your plate today?’ … He says, ‘Hey, how can I help you? What are you working on?’ It’s from a different angle. It’s not at you. It’s with you, and it’s supportive.”

“Playing to different strengths, and creating a collaborative environment where people are encouraged to think differently, builds a stronger bank,” Jarman continues. “We’ve created a space where people do feel safe saying, ‘I don’t agree with you’ or, ‘Can we try it this way?’” she says. Providing employees with the culture to foster those types of questions builds future leaders, and it comes from the top. “That’s what Joe does,” says Jarman. “He gives us the opportunity to grow.”

FS Bancorp CEO Joseph Adams will be part of a panel discussion at Bank Director’s Acquire or Be Acquired event in Phoenix, Jan. 30 – Feb. 1, 2022. Click here to access the agenda or learn more about the conference.

Combatting Employee Malaise During the Pandemic

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The coronavirus pandemic has upended how people work, and how they feel about that work — changes that may persist over the long term.

While many companies have adjusted to working remotely, the uncertain duration of the pandemic has left some employees feeling a sense of malaise and listlessness. Bank Director reached out to Brendan Smith, who holds both a clinical therapy degree and an MBA, to learn more about how office workers, managers and business leaders can address these feelings and prepare for the future.

As “The Workplace Therapist,” Smith helps companies eliminate workplace dysfunction through workshops, executive coaching, consulting and content on his blog, podcast and books. This conversation has been lightly edited for length and clarity.

BD: What is your read of where the U.S. workforce is, five months into the coronavirus pandemic, based on what you’re hearing?
BS: 2020 has been an interesting year from the workplace standpoint. The biggest word I’m hearing from people who come to me is “motivation.” They’re not motivated anymore. Part of the reason why is they’re stuck. Every day is the same thing: coming down into their office, getting on the same Zoom calls at the same time. There’s no variety.

The other interesting thing that happened is that when people first started working virtually, they said, “I have all this free time because I’m not commuting.” Everyone realized that and started using what would have been commute time to schedule meetings. A lot of people I talk to have meetings starting at 7:30 or 8 in the morning, and have meetings that go all the way to 6:30 in the evening.

BD: A lack of motivation is also a problem for workplaces even in normal environments. What’s different about this broader lack of motivation?
BS: The lack of motivation before was really tied to lack of growth: I’m not growing at the pace I want, I don’t have the right opportunities in front of me, I’m wanting something else. This is different. This lack of motivation is tied to feeling stuck or trapped: I don’t have options, I’m stuck doing the same thing over and over again, I can’t go out and explore. People feel like they’re out of options.

BD: Why is a lack of motivation detrimental to the workplace and why do employers and managers need to address it?
BS: The lack of motivation results in people doing the bare minimum. That’s detrimental right now because everybody has things they need to be working on: pivoting, changing, adapting to survive. Survival requires more than the bare minimum. If everyone at your company is doing the bare minimum, you’re a sinking ship.

BD: What are you telling people dealing with this unique lack of motivation? How can people adapt or transition to this new environment and new reality?
BS: What’s happening is that we thought things would come back to normal by this point but now, it feels more a rollercoaster: we’re going down another hill, and we’re not sure when the coaster will end. That uncertainty breeds anxiety, and it contributes even more [to the] feeling of [being] trapped.

Let’s talk about how you get out of this. There was a famous theologian at Emory University’s theology school named Jim Fowler who used to say “You want to give people hope and handles.” Hope and handles is the best antidote for the time we’re in now.

With hope — people need to anchor to something in the future that motivates and excites them. We know that there will be some kind of normal, at some point in the future. We just don’t know when.

What handles represents is “What can I do now?” In times of uncertainty, one antidote is clarity. While we can’t be clear on how things are going to look a month from now, we can be clear on this week. What’s something people can do this week that either leads them towards something they’re excited about in the future, or gives them what they need?

BD: Do you recommend fewer Zoom calls as well? Or is there anything that managers can do to bring hope and handles for their employees?
BS: Hope and handles is for everybody. But one thing that managers need to do in times of chaos is create more structure and consistency, while also mixing in some variety. Maybe it’s not always a Zoom call — I’ve been recommending people switch video calls into phone calls.

From a motivation standpoint, I think it’s healthy for managers to have some hope and handles conversations right now with members of their team, to help people reframe and feel a little more in control. Something like, “I know we’re stuck in this hamster wheel now, but when things get back to normal, what is one thing you want to either do more of, change or improve for your role specifically?” Or for something a little more structured, there’s a simple technique of asking three questions: Stop, start, continue. “What’s one thing that you think we should stop? What’s one thing we should start doing differently? And what’s one thing we should continue?”

The other thing I would say to managers is to really work on honoring and protecting boundaries. Boundaries are really important for us in life. The way technology has evolved has broken down all natural boundaries between work and home. For me, protecting boundaries is not doing work calls outside of certain hours. Managers need to recognize that everyone’s experiencing the blending of work and life now, and be respectful of people’s boundaries and the needs of their particular situation.

BD: I understand that a lot of the advice for helping people cope is to remind them of a more-normal future. But do you have any advice to help people become more comfortable with the ambiguity in the present?
BS: Let’s talk about this from a business or banking standpoint. There’s a school of thought that strategic planning is silly, because no one can see into the future and there are too many variables.

What you should consider doing instead is an exercise called “scenario planning.” You map out different scenarios and factor in the variables that may change; for example, rising or lowering Covid-19 infection rates. If it lowers and then everything gets to a healthy point, then what [does] the economy look like? If it goes up, what happens? If it stays flat, what happens? While you can’t predict the future, you’ve got enough different scenarios of what might happen so that when the future does start to unfold, you just map it to one of your scenarios.

It probably would not be unhealthy for managers to do a bit of planning with their teams on how they want to handle the remainder of the year. We’ve got enough months under our belt doing this virtual thing that it would probably would be a healthy exercise for teams to create a plan of how you want to operate, assuming that this is going to be the way that that we roll.

What To Keep in Mind For Cultural Reviews In The #MeToo Era

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metoo-7-17-18.pngIn the wake of the #MeToo movement and broader conversations about sexual harassment and wage discrimination, many financial institutions are wondering whether any of these issues are affecting their organizations and, if so, how to address them.

Addressing specific incidents of sexual harassment or gender inequality is critical. But it is equally important to determine whether such incidents are symptomatic of deeper cultural or systemic issues. To assess this question, financial institutions are increasingly turning to internal cultural reviews. These reviews, in which investigators assess workplace cultural trends, can be a potent tool for identifying, understanding, and correcting issues affecting women in the workplace.

Many financial institutions are rightfully proud of their internal culture. Others may be less focused on culture. In either case, there could be significant value to conducting an internal cultural review, which can either identify the root cause of known problems, reveal previously unknown problems, or verify there truly are no serious issues. With that information, institutions can not only more effectively understand and, if necessary, improve their internal culture, but also mitigate legal and reputational risk, especially at a time when bank regulators are beginning to pay more attention to these issues.

Still, in conducting a cultural review, a financial institution must be prudent and balance the benefits of obtaining meaningful information with the risk of creating additional exposure. A well-developed investigation plan can address those concerns.

Maintaining confidentiality
An important factor in deciding to conduct a cultural review is the extent to which the institution can keep the results confidential. If not handled properly, the benefits of an investigation can be significantly outweighed by the potential risk of private plaintiffs obtaining the results or underlying documents in litigation. To mitigate that risk, many institutions choose to engage outside counsel to perform a privileged investigation. While privilege over an internal cultural review cannot be guaranteed, particularly if there is not a current threat of pending litigation, attorneys often can structure the review so as to maximize privilege protections.

Determining the client
In deciding to undertake a cultural review, the institution also should consider whether to conduct an “independent” review or one undertaken by company counsel. Because there are advantages and disadvantages to each approach, a financial institution should discuss with its counsel which approach is better, given the specific characteristics of that institution.

Defining the scope of the review
Unlike investigations into discrete instances of misconduct, the scope of cultural reviews can be potentially overwhelming. To obtain meaningful results, the cultural review’s scope must be well defined. Financial institutions should work closely with those performing the review to focus on the institution’s most important cohort. For example, depending on the institution, the review can assess a specific population, jurisdiction or line of business. If no one cohort appears an obvious choice, then institutions can also review specific data to help define the review’s scope. The investigation then should be designed to answer specific questions.

Identifying and reviewing relevant information
Once the scope has been determined, investigators will begin collecting and assessing relevant documents, such as, workplace discrimination and harassment policies, HR records, employee surveys, training programs, and prior efforts to improve culture. Other information also may be relevant, such as promotion rates for women and men in a particular area.

In addition to documents, investigators should speak directly with employees. In selecting those to be interviewed, investigators often will speak with executive management and both affected and unaffected employees. Employee interviews provide complementary insight, which allows investigators to understand the bigger picture. Interviews can be helpful in obtaining data about the institution’s culture, which can be difficult to ascertain from documents alone.

Consider engaging an outside consultant
Law firms experienced in conducting cultural reviews often retain consultants to assist in the review. There is a substantial argument that, under appropriate circumstances, the consultant’s work is protected by the work product doctrine and, thus, less vulnerable to disclosure to private plaintiffs. Consultants may provide quantitative and qualitative data based on employee surveys and focus groups, conduct pay equity analyses or implement a platform to facilitate the submission of employee complaints.

The takeaway
There is no one-size-fits-all approach to cultural reviews, and each financial institution interested in conducting a review should carefully consider the best strategies to meet its individual needs. However, at a time when the #MeToo movement has significantly raised the legal and reputational stakes, financial institutions should not ignore the benefits that an internal cultural review can provide.