Microsoft to Adopt New Sexual Harassment Policies After Gates, Misconduct Audit

(Bloomberg) -- Microsoft Corp. will adopt a series of new sexual harassment policies, following recommendations made by a law firm the company hired to review its practices after reports of misconduct and employee complaints.

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The 50-page report, released Tuesday, outlined 11 recommendations for the software giant, including requiring leaders to disclose consensual relationships with employees. Microsoft in a blog post said it will address all the recommendations by June 30, including releasing an annual review of internal harassment claims with how many were substantiated and what kinds of action were taken as a result. The inaugural report will come by Dec. 1.

“Our review revealed that the Company strives to follow best practices,” wrote lawyers from the firm ArentFox Schiff LLP, which prepared the report shared with Bloomberg News by Microsoft. “Nevertheless… we recommend that the Company consider implementing certain enhancements to their existing policies, procedures, and practices.”

Among the other changes Microsoft has said it’s making: The company will fix a tool that failed to adequately remind senior leadership to take required harassment training and it will consider adding questions to a survey launched in March 2022 for workers on their experiences with the sexual harassment investigation process.

Microsoft shareholders in November 2021 passed a non-binding resolution asking for an internal review of policies and practices in response to sexual harassment allegations at the company, including those made against co-founder and former chairman Bill Gates.

“It’s an unprecedented piece of work,” said Natasha Lamb, managing partner at Arjuna Capital, the firm behind the proposal. “I’ve never seen this kind of report be publicly published. It’s extremely comprehensive. It provides a model for other companies to follow.”

As part of its report, ArentFox reviewed how Microsoft handled various claims, including the board’s investigation of Gates, though it did not reopen any cases.

In its timeline of the Gates incident, ArentFox detailed a complaint made in July 2019 by an employee, who said Gates subjected her to inappropriate conduct while she was working at the company. Microsoft hired an outside lawyer to look into the claim. The lawyer confirmed meetings and communications between Gates and the employee. Gates also admitted to the conduct, but alleged it was consensual. The lawyer presented her findings to the board in November 2019; Gates resigned as chairman in March 2020. ArentFox did not comment on the board’s investigation.

“We had hoped to see more was in regard to the Bill Gate’s investigation,” Lamb said.

ArentFox also detailed the investigations into two Corporate Vice Presidents, referring to Tom Keane and Alex Kipman, who both departed in the wake of an Insider report on alleged misconduct that in Keane’s case involved bullying and verbal abuse. While talking to workers about those cases, ArentFox found that “there is and has been a perception among some employees that the Company tolerates and to some degree protects high performing senior executives who may be engaging in inappropriate conduct.”

The software maker said it will “emphasize that senior leaders will continue to be held accountable for substantiated policy violations and behavioral concerns.”

ArentFox reviewed the handling of sexual harassment complaints and policies from 2019 onward. The firm found most claims came from the sales and engineering groups.

The firm found that most of the investigations were conducted in a “fair, timely and thorough manner” as required by the company’s policies. But, more recently, the investigations process has started to lag due to various factors, including an increase in the volume of reports, ArentFox found. In Microsoft’s fiscal year 2021, 51% of investigations were finished within 30 days but that rate has dropped to 39% in the current fiscal year so far.

The firm also noted that while Microsoft has improved the percentage of women in its highest ranks, it still needs to do better. Microsoft’s median pay gap figures, released last month, found women in the US still earn 10% less than men do.

The law firm interviewed some employees who had raised complaints to ask about their experience with the process. They found most had switched jobs and some said they got negative performance reviews that held back their pay and promotions. Employees, particularly senior women, also alleged human resources, at times, discouraged workers from making complaints that would need to be referred to the investigation team

Some also expressed frustration that they were told there was no policy violation because the bad behavior wasn’t directed at one particular protected class. To paraphrase one witness: “It makes no sense that they found a pattern of bad behavior but told me my complaint couldn’t be substantiated because he treated everyone that way instead of just some people,” the law firm wrote in the report.

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