By Vanessa Fuhrmans and Julie Steinberg at WSJ
Companies struggle to confront misbehaving clients; for sales staff, career and commission hang in the balance
In the new era of sexual-harassment accountability, companies have learned they can no longer give a pass to star employees accused of misconduct. Confronting high-dollar clients may be harder.
At many companies, client relationships are the most difficult to police – and the most important to protect. The conundrum is how to square the customer-is-king ethos with complaints, especially from women in client-facing jobs.
A former vice president at market-data firm Research Now SSI alleged in a lawsuit filed in April that a senior executive from the airline Virgin America, Stuart Dinnis, began kissing and groping her without warning in a hotel elevator late at night during a 2016 travel-industry conference.
Though she said she repeatedly said no, Mr. Dinnis followed her to her hotel room, where he allegedly tried to push her inside by the back of her neck, saying, “You want it,” according to the lawsuit. She alleged that Mr. Dinnis didn’t leave until she crouched down in the hallway and refused to budge.
In a recent interview, she said she was terrified and also aware of the lopsided power dynamic between them. Earlier that day, she and her boss had discussed Mr. Dinnis, then Virgin America’s director of loyalty, as an important client to cultivate during the conference. “In the back of my mind, I was thinking: ‘This guy’s a business partner,’” she said.
The next day, she said, she sought to keep things polite when Mr. Dinnis continued to text her, including a photo of an earring of hers that had lodged in his jacket during the encounter. “Given our key partnership with your organization, it’s best we keep things strictly professional,” she wrote back, according to the lawsuit filed in federal court in San Francisco.
Mr. Dinnis declined to comment and hasn’t responded to the suit in court.
The woman, who lives in Texas, says her bosses were supportive after she told them about the incident, but she left her job soon after in part because it required her to travel alone, which made her anxious.
She now works at an airline and said she filed her lawsuit under the pseudonym “Jane Doe” to protect the privacy of her children and her career.
The suit names Virgin America, its parent Alaska Air Group Inc. and Mr. Dinnis as defendants, alleging that Virgin America knew he had a track record of being sexually aggressive with women at firms with business ties to Virgin America.
A spokesman for Alaska Air declined to comment, except to say that Mr. Dinnis left the airline before Alaska Air took it over. In filing a motion to dismiss the complaint, the airlines argued Mr. Dinnis’s alleged actions fell outside the scope of his employment. Research Now SSI declined to comment.
Bigger Blind Spot
Federal law holds employers just as liable for shielding staff from misbehaving third parties as from in-house offenders. But client harassment is a bigger blind spot for many companies, says Laurie Ruettimann, a consultant who advises companies on human-resources matters.
Bosses often assume they have little control over the behavior of someone who isn’t an employee or are loath to confront or drop a lucrative client, Ms. Ruettimann says. “When money is on the line, those conversations often don’t take place.”
The remedy companies often resort to is asking their worker if they want to leave the client’s account. But that can set employees back in their careers, or make it harder for the employee to meet revenue targets that often determine commissions.
Sarah Centrella, a former technology saleswoman, says she was harassed by a large percentage of her predominantly male clients but never told her bosses. “What could they have done—take me off the account?” says Ms. Centrella, who left her last sales job in 2017. “That’s how I made my money.”
Ms. Centrella, who worked for a few different companies, declined to name her former employers. She said she never brought the incidents up with the companies and feels they weren’t at fault.
She describes a frequent balancing act between sidestepping unwanted advances and taking pains not to offend clients. She also didn’t want her male bosses or colleagues to think she couldn’t handle an out-of-line customer. “I thought I was progressive because I wasn’t crying about it,” she says.
Conferences, where she was expected to book client meetings from morning to midnight, were particular minefields. At one Las Vegas trade show, she says, a prospective client insisted she accompany him to a strip club and promised other potentially lucrative customers would be there. She reluctantly agreed, worried she might lose a sale or have to explain to her boss why she canceled a meeting.
On the way, he tried to kiss and grope her, told her to “lighten up” and put her hand on his groin, she says. At the club, she says, her discomfort grew. “Because I had gone, he thought he had even more leverage over me,” she says. She soon feigned exhaustion and left, she says, and never clinched the sale.
Executives are beginning to speak out more about this issue. JPMorgan Chase & Co. Chairman and Chief Executive James Dimon said at a conference in December that women have asked him how to handle clients acting inappropriately. “I tell [women], don’t balance it at all, tell the client, ‘Don’t touch me again,’” he said.
But many women never tell their employers about their harassment. Among more than 7,000 female sales professionals, 57% reported receiving unwanted sexual advances or otherwise being harassed by clients, according to a recent poll by the National Association of Women Sales Professionals. A quarter of those women said they told a superior.
“The message you get is: ‘You’re an entrepreneur – you should be able to handle your own client or prospect,’” says Cynthia Barnes, the organization’s CEO. She says the group’s consulting arm is developing a plan to urge employers to develop anti-harassment policies specifically for clients.
A March survey conducted by the Society for Human Resource Management showed 35% of more than 500 HR officials said they had received harassment complaints from employees in the past 12 months. But only one-fifth of those HR managers said they had dealt with allegations involving a customer or other third party.
Morgan Stanley says it has processes in place to address allegations of sexual harassment of employees at the bank. However, the bank has maintained and expanded its relationship with a lucrative Chinese client, property developer Agile Group Holdings Ltd., since an alleged incident involving Agile’s founder and chairman, Chen Zhuo Lin, and a Morgan Stanley banker. On a 2006 trip to court investors after the bank helped take Agile public, Mr. Chen allegedly entered the woman’s London hotel room and tried to force himself on her, according to people familiar with the matter.
Bank executives learned of the allegation months later, in 2007, people familiar with the matter said. A senior Morgan Stanley banker then spoke to Mr. Chen, some of the people said.
The bank neither discussed dropping Agile as a client nor reported the allegation to outside law-enforcement authorities, people familiar with the matter said. Some bankers who were aware of the alleged incident tried to avoid creating situations where female bankers would be alone with Mr. Chen, some of the people said.
Some of the people familiar with the situation said the woman was asked whether she wanted to be moved off the Agile account. She declined. The bank continued doing business with Agile: In 2008, a real-estate fund managed by Morgan Stanley bought a 30% stake in a resort property it developed jointly with Agile. Morgan Stanley sold the stake to Agile last year for $900 million, resulting in a profit of over $100 million for the firm and its investing clients. Morgan Stanley and other banks advised Agile on spinning off a unit in Hong Kong in February.
Citing privacy considerations, a Morgan Stanley spokesman declined to comment on details of the allegation but said any incident involving harassment of its employees was of great concern. “Our employees have always been encouraged to escalate issues,” he said.
Lawyers for Mr. Chen said he denies the allegations and calls them “wholly inaccurate and baseless.” “Our client definitely did not try to force himself on anyone in any hotel during the roadshow,” the lawyers added. The lawyers also said The Wall Street Journal hadn’t provided enough details about the allegations for Mr. Chen “to have a fair and proper opportunity to respond.”
In 2013, Mr. Chen was charged with committing indecent assault in 2012, according to company filings from Agile. Hong Kong police said at the time that the incident involved a 28-year-old woman. Hong Kong prosecutors decided not to pursue the charges after Mr. Chen pledged not to commit indecent assault, according to the Hong Kong Department of Justice. According to media reports, Mr. Chen’s lawyer at the time said in court the chairman had been drinking and had misread the situation. Mr. Chen’s current lawyers said, “Our client continues to have a clean and unblemished criminal record.”
Agile said it had no comment beyond a 2013 filing that said the matter hadn’t affected its business. The filing also said Mr. Chen had told the company’s board he pleaded not guilty.
Courts have more recently grappled with how far employers should go to protect workers once they learn of harassment allegations against a client.
In a lawsuit filed in 2014, former AstraZeneca PLC sales representative Katherine Cozad alleged that the drugmaker hadn’t done enough to protect her. She said that on a sales call to a family-practice physician in the Fresno, Calif., area, the doctor suddenly grabbed her crotch and kissed her. After the alleged incident, her manager said she no longer had to call on the doctor and stopped sending other primary-care sales representatives to him, depositions from AstraZeneca supervisors show. Yet, according to their testimony, the drugmaker didn’t admonish or question the physician about Ms. Cozad’s allegations, and another AstraZeneca sales team continued to visit him.
In 2016, a federal judge in California said she wasn’t convinced the drugmaker had done enough to stop the physician from harassing again. AstraZeneca, which reached a confidential settlement with Ms. Cozad shortly afterward, said that when such allegations surface, the company tells any employee interacting with that doctor that they can stop making those calls or visit the doctor in pairs. In some cases, it said, it has dropped physicians altogether from its call lists. “The safety of our employees is of utmost importance to AstraZeneca,” the company said.
Some employers say the only way to make employees feel protected is to put the onus on the customer. Francine Katsoudas, chief people officer at Cisco Systems Inc., says that in harassment cases, it is common procedure for the technology giant to confront the client. When one of its sales executives reported earlier this year that she had been harassed by someone at a Cisco client, a senior Cisco manager took up the issue with her counterpart at the other firm, which removed the person from the Cisco account, Ms. Katsoudas said.
“In that situation, there’s a risk because you do business with this partner,” she said, “but we’re very clear on what the right thing to do is.”
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