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It has been quite a few weeks: from the high-profile resignation of Uber’s CEO to reports of sexual harassment by female founders (paywall) and the asymmetry of power amongst VCs and female founders in Silicon Valley to high-profile investors making apologies and leadership shake-ups at a high-profile accelerator. More stories about CEOs being sexually harassed by investors and being inappropriately propositioned continued to emerge. We’ve seen a woman write about how one of the accused men has only ever been generous with her and man write about how it’s perfectly fine for men to desire women and pursue them, irrespective of the circumstances and context. There was a story shared by an investor who set aside his attraction to a female founder until it was a more appropriate time.

Perception and What Guides Decisions

What inhibits some people – not just VCs – from perceiving harassment, abuse, and inappropriate behaviour in the workplace is a different values set, moral compass, and emotional awareness. At the end of the day, emotions drive decisions. This is also interpreted in our values and moral compass, which we frequently refer to in subjective, right or wrong decision-making situations.

Whether it is unwritten rules and common courtesy in the workplace, a different values set, moral compass, and emotional awareness defines how people interact with each other.

If there are established rules, a different values set, moral compass, and emotional awareness defines whether people break those rules or not.

What’s needed to perceive & prevent harassment: values set + moral compass + emotional awareness. (click to tweet)

It’s personal judgement, guided by a values set, moral compass, and emotional awareness. We each decide where on the spectrum of right or wrong, acceptable or inappropriate, an action could fall. We act and then get feedback from others. Some people learn from that feedback and adjust their behaviour and actions. Some people feel remorse when they had hurt others. Some people disregard the feedback or miss it entirely or purposefully ignore it and continue with their behaviour unchanged.

This isn’t a binary issue – there are no good people and bad people. It doesn’t matter how good someone is at their job or their leadership position. Our actions fall on a spectrum and we’re part of a feedback loop.

In my early 30s, I witnessed a director in my team punch an associate, causing his lip to bleed. There were several of us at an off-site conference and the incident happened after-hours after we had all been drinking. It went unreported. The associate didn’t want it reported. We carried on as if nothing had happened. One could argue that this didn’t happen during work hours nor in the office environment, so it shouldn’t be taken into consideration when evaluating the director. But how can you separate something like this? The associate carried on working for that director. Can you imagine the fear or imbalance of power that may have caused the associate to feel he had no choice but to not report it? Maybe he loved his work so much he didn’t want to jeopardize his job. Maybe he still really respected the director and his skill and intelligence. Does that make it okay that the director punched a staff member junior to him?

Sexual harassment, sexism, racism, ageism, abuse based on religious preferences, sexual orientation, and nationality – for some people, these are at times grey areas by comparison to the example of physical abuse I wrote above. But are they grey? Some people don’t think so.

What is Normal?

We’re talking about cultural and societal norms. There is a norm in investment banking and in Silicon Valley tech. In Canada, perhaps someone is less likely to get away with being a sexual harasser, but many get away with sexism and misogyny. What do we want our norms to be?

A wise friend once said this:

First, we decide and act based on courtesy. We act and speak based on convention and social norms. Courtesy arises from leadership as well as the collective actions by many. Leaders set a direction for behaviour and actions and, as part of the feedback loop I mentioned above, their community provides feedback about how acceptable that is. Loud, strong, and powerful voices get heard amongst this feedback. One could argue that the fair distribution of power ensures that a diverse set of voices and opinions are heard.

Second, is policy. When courtesy fails, we organize and establish guidelines that we think everyone should follow. This is the first step to rule-setting, but these rules can be broken and the penalty for breaking rules is established by the leaders and community that set them. Policy includes things like codes of conduct and ethical standards set by professional associations.

Third and lastly, is law. When we can’t figure out how to be nice to each other and fail to follow even simple guidelines, we establish law to define what is good or bad behaviour and penalize those that break the law.

Law is not written in stone. Law is made up by people — sometimes based on a mix of analysis and emotional decision-making, sometimes rife with bias. If an action is not illegal, it does not automatically make it fair and just.

An example of policy, venture capitalists are reported to be drafting a code of conduct (paywall) and planning to present it to the National Venture Capital Association.

Good Governance

VCs don’t intervene with respect to workplace abuses because there aren’t always the processes to do so in an appropriate and effective manner. In short, governance models are often lacking.

VCs are owners of companies, collectively with whoever else owns shares. With organizations of a large enough size, for reasons of efficiency and efficacy, owners select Board directors to govern the company on behalf of the owners.

I have invested in a number of tech startups, evaluated governance structures, and have had to negotiate terms on how Boards would be structured and established. I have turned down investment opportunities because of poor governance structures. Pique Fund is an angel fund and typically, given current norms, our check size doesn’t afford us Board seats, however I am frequently called upon by CEOs and other investors for advice on governance and investor relations. I’ve sat on a few not-for-profit Boards and joined a very well-organized Board of an established not-for-profit last year, where I received governance training (this Board follows the Carver Policy Governance model). Thanks to the training and the experience of Policy Governance have an enriched perspective on governance.

VCs, and other shareholders and investors in all circumstances, are stewards of the resources organized as a company and that responsibility of stewardship is delegated to Boards. The Policy Governance school of thought is that the Board works to understand what is important to owners, sets direction for an organization, that direction is communicated via the Board chair to the CEO, and the CEO executes within certain limitations. The Board does not get involved in the execution. With that in mind, owners – in the case of this question, including VCs – communicate what is important and the impact they want to achieve from the company’s collective efforts. The role of the Board is critical in setting the direction based on the owners’ desired impact. That CEOs typically sit on Boards and sometimes in the role of Chair and who makes a good Board director is a separate discussion altogether.

This is not to say that Policy Governance is the answer, but it does provide a framework from which to start. Through the Policy Governance model, the “owners” of not-for-profits can be defined quite broadly, but for for-profit companies, the owners are typically equity holders. This is also why I think it is important that ownership is diverse and this is a source of the link between diversity and fair treatment of employees and suppliers, community impact, and corporate culture. It’s why, in my book, Integrated Investing, I advocate for investing as taking care of the village. Without diversity at the investor level, who cares about fairness, impact, and inclusion and is in a position to do something about it?

To learn more about Integrated Investing, buy the book now. Available at all major online book retailers.

Too Much Focus on Leadership, Not Enough on Governance and Decision-Making

There is too great a spotlight on leading and doing whatever it takes, at all costs. What happened to governance and stewardship? The focus is mainly on the outcomes and not on how the decisions are made nor the impact of those decisions.

We have seen the issue of governance play out in a disorganized fashion over the last couple of weeks. From the focus on Uber’s Board to the role of VCs to the focus on limited partners investing in venture capital firms. For example, better reference checking isn’t enough because if a culture of inclusive and stewardship is lacking, reference checking still risks being rife with confirmation bias. Experiential due diligence is helpful, if the basis of due diligence includes a values set, moral compass, and emotional awareness that screens out harassers and a culture of harassment.

We also should be looking at power, shifts of power, how people use power and influence, and the impact of power asymmetry. Not everyone uses power, capital (financial and social capital), and influence in the same way.

We are in an interesting time where all of this – governance, stewardship, decision-making, power, values, morals, and emotions – are being challenged. I hope fairness, diversity, and inclusion will prevail.


This post was originally published on Quora. Ask me anything on Quora.

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