Guidelines for VCs Writing Discrimination & Harassment Policies

By Ginny Fahs, #MovingForward, and Freada Kapor Klein, Kapor Capital & founding advisor at Project Include

Since the launch of #MovingForward in March, a number of VC firms have reached out to us for advice. Many have asked how to write their firm’s first ever policy on discrimination and harassment with a focus on external relationships (e.g. between firm employees and non-employees like entrepreneurs); others are looking to bolster an existing policy. Some are just looking to mitigate liability.

This post is intended for those whose path to risk mitigation is by creating a welcoming workplace and business environment. Many of us share the same goals: achieve a policy that is fair and flexible to fit a wide swath of scenarios; be as explicit as possible about what is acceptable and what is not, and how unacceptable behavior will be handled. Acknowledge the complexities and gray areas inherent in the issue.

The hunger for direction #MovingForward has sensed from our community drove this collaboration with Freada Kapor Klein of Kapor Capital and founding advisor at Project Include.Together we’ve developed a set of best practices for shaping harassment and discrimination policies — as well as some watch-outs gleaned from policies we’ve seen buckle.

We wrote this piece for VCs. No matter where your firm is in the process of developing your policy, considering these guidelines and weaving their spirit into your documents will help our industry move forward together.

Best Practices

A policy should reflect your firm’s values and the situations that arise in your particular practice — and it should be consistent with how you handle other important business issues and conflicts.

Start with legal requirements

Theory: Legal requirements are the absolute minimum standard for your policy. Laws differ by state, country and sometimes even by city. The U.S. Equal Employment Opportunity Commission (EEOC) oversees these laws federally, and each state has its own relevant regulatory body, like the New York Human Rights Commission in New York, the Department of Fair Employment and Housing in California, etc.

Practice: Search for relevant harassment laws for your state, and in any states where you have portfolio companies. Also consider this advice from the National Women’s Law Center.

Customize

Theory: Most firms use legal boilerplate for their policies, which hasn’t resulted in reducing harassment or discrimination, or in creating effective reporting mechanisms. A policy should reflect your firm’s values and the situations that arise in your practice; it should be consistent with how you handle other important business issues and conflicts.

Practice: Truly customized materials only emerge through intentional process. Giving your policy the thought and attention it deserves means discussing it at a partners’ meeting and/or all hands, talking to peer firms, and broaching the subject with companies in your portfolio — particularly those with a good track record on diversity and inclusion.

Collect examples

Theory: Policies exist to specify direction when incidents happen. It’s tempting to start by creating absolute rules — but more user-friendly documents are rooted in concrete examples. Examples can be baked into the policy itself (perhaps enumerated as anecdotes or collected in the appendix); alternatively, if implicit, they’ll serve to demonstrate how the policy fares when acted on in various situations.

Practice: Brainstorm encounters that could happen. Maybe someone comments on her appearance, or consistently compares him to an unrelated famous person of the same race. When does it count as harassment if it happens off the premises? Does foul language count as discrimination? What if it’s a joke? Does intent ever matter or just impact?

Ensure diverse authorship

Theory: The best and most realistic examples of harassment and discrimination come from people who’ve had to endure it. Invite people of different races, genders, ages, sexual orientations and backgrounds to participate in the creation of the policy — having these voices in the room will help avoid blind spots.

Practice: Identify 5 people who represent different race, gender, and sexuality than the majority of the leadership team, and start involving them in the process: Invite them to brainstorm examples, solicit their feedback on policy drafts, and ask them to help relay suggestions from others about what could be improved. So as not to embarrass individuals or violate privacy, have a mechanism whereby examples can be submitted in advance anonymously. Collect examples from research studies, lawsuits, and recent headlines, too.

Consider subjectivity and context

Theory: If it’s unwelcome to the recipient (either the intended recipient, or someone who observes or overhears), it should violate the policy, plain and simple. One can be harassed regardless of the initiator’s intent. “I was just joking” or “I was giving a compliment” don’t counteract the impact of the behavior on the recipient.

What’s more, context changes everything. Most of us respond differently to an inappropriate comment made by a stranger in a public setting than to the same comment by someone who can impact our career, livelihood, or reputation.

Practice: Recognize the importance of subjectivity by including words like “unwelcome” or “unwanted” in definitions of harassment and discrimination. For example, you could prohibit “unwelcome persistent requests for dates.” Because, if you want to go out with the person, it’s not unwelcome — and therefore not harassment.

Define levels

Theory: Many policies offer a blanket response to discrimination or harassment, one that is fairly severe. This deters reporting and, quite frankly, just doesn’t make sense. An inappropriate joke should be met with different consequences than a physical assault — and in order for that to happen, you’ll need to distinguish levels of severity of harassment and discrimination, and articulate appropriate consequences for each.

Harassment and discrimination mean different things to different people, and a policy needs to standardize understanding of the severity of these behaviors, both within the firm and in interactions with third parties. This is another place where examples and enumeration can help. Presenting a variety of unacceptable behaviors and the levels at which they fall will help clarify the policy’s intent.

Practice: Look at other policies, as well as events that have occurred in headlines and lawsuits, and see if your team can agree about where to place them on a continuum from subtle to severe harassment and discrimination.

Encourage action

Theory: If something inappropriate is going on, others in the workplace often have a sense. People throughout the organization should be aware of actions they can take when they suspect discriminatory or otherwise inappropriate behavior may be happening.

Practice: Educate employees and affiliates as to how they might take action when they suspect discrimination or harassment could be at play in the organization.

At onboarding, all employees need to be trained on what inappropriate behavior looks like and how to avoid it. During onboarding employees should also be taught about the many available routes for raising concerns, both formal and informal, so they know the actions they can take — and what processes those actions will kick off.

Observers of harassment or discrimination should also have the power to take action. One possible action is “self-help”: speaking with the person who initiated questionable conduct directly, or with the person to whom it was directed to see if they were, in fact, offended. Another possible action is flagging observed behavior that might constitute discrimination or harassment, and surfacing it to management as a “data point,” not a formal accusation. The policy should be very clear as to what happens when someone speaks up about observing or overhearing or suspecting inappropriate conduct. This should also be part of employee onboarding.

Managers need to understand how to support employees who raise incidents, either about themselves or about others, and how to initiate both informal and formal reporting processes. This should be part of manager training.

It’s important to reinforce that the onus of reporting doesn’t just fall on those subjected to harassment or discrimination, but on everyone who’s been a witness, intentionally or accidentally. Bystanders have a special responsibility to speak up, as well as managers to whom an employee brings an experience for discussion. Change in culture requires effort throughout the organization, and everyone needs to feel they have a role to play when they encounter or hear about bias, discrimination or harassment, or signs of them.

Create multiple formal reporting channels

Theory: People have different preferences when it comes to bringing questionable behavior to light. Providing numerous options for notifying leadership will help reporting feel more within reach. Being able to choose the person to whom you report your experiences makes a difference. However, years of research point to consistent reasons why people don’t report experiences of harassment or discrimination, including fear that they won’t be believed, fear that they will be blamed, fear that they will experience retaliation (ranging from subtle ostracism to blatant demotion, termination, not being funded, being labeled a troublemaker, etc).

Practice: Make sure you’ve set up at least three of the following reporting options: designated reporting contact, third party reporting option, HR process, hotline, private meeting, anonymous form submission. The more options available, the better.

Formal complaint options generally trigger mandatory investigation. This needs to be clearly stated in the policy so that someone who comes forward isn’t blindsided when an investigation is launched.

Offer informal reporting channels

Theory: Voicing experiences to a designated neutral third party such as an Ombuds have been clearly documented to encourage people to come forward, whether they have observed or experienced or heard about inappropriate conduct. Allowing someone to retain control of their complaint is key. Ombuds offices can have one or more full-time employees or contractors or can be a third party, tech-enabled service.

Practice: There are a number of third parties working in this space: some handle reporting for all forms of bias, harassment, and unfair treatment (tEQuitable), some are specialized for more severe sexual harassment and detect serial perpetrators (Callisto). For a good demonstration of how to accommodate multiple formal and informal reporting channels within one policy, see Kapor Capital’s example.

Address consensual relationships

Theory: Consensual relationships will happen — better to spell out a process for how they will be handled than to deal with their messiness, both during the relationship and after the breakup. Consensual relationships can cause real or perceived unfairness and therefore have a negative impact on the work environment. It’s this aspect that employers and firms should deal with, not the details of the relationship.

Practice: See example language in Kapor Capital’s policy.

To minimize the risk of conflicts of interest and promote fairness, if an employee enters into a consensual relationship that is romantic or sexual in nature with another employee, they must notify People Operations. People Operations will review the situation and may construct a new reporting relationship for performance reviews and compensation if the relationship is between an employee and a member of his or her staff (an employee who reports directly or indirectly to him or her), or if one of the parties is in a supervisory capacity in the same department in which the other party works. People Operations will monitor the situation in an on-going basis to assess for general comfort within the department and organization as a whole.

Watch Outs

No policy

We’ve seen firms claim that they “don’t need a policy.” Some say they’re too small with no capacity (“We don’t have a full-time HR team”), while others think that having a woman or person of color in firm leadership should make them exempt.

We disagree. Discrimination and harassment can happen everywhere, and it’s important to be prepared both mentally and legally. Besides, policies against harassment are mandated by law in many places for employers of any size. For instance, all California employers must distribute this document to new employees. Since it defines sexual harassment and tells employees how to sue, it’s in everyone’s best interest to get in front of the issue and offer definitions and reporting channels.

Search and replace policy

“Search and replace” refers to using another firm’s policy as your own, asking a law firm to draft a policy, or otherwise outsourcing it. As tempting as it may be, a boilerplate policy is a ticking time bomb. It won’t really fit your firm and therefore won’t provide guidance when you really need it. Worse yet, a search and replace policy may commit you to a definition or approach to handling complaints that you don’t actually want to adopt.

Lawyers should bless the policy at the end of the process, but it’s important that the firm leadership do the legwork of developing a policy that fits culture, goals and objectives. We recommend later involvement from lawyers because a lawyer’s job is to mitigate risk — and as such, it’s common for them to recommend policies that are overly restrictive of behavior (e.g. “no sexual jokes ever”) or overly vague.

Zero tolerance & strict policies

“Zero tolerance” refers to policies that unilaterally institute a formulaic punishment, like a financial penalty for a first infraction or a different set penalty for any specific violation.

Zero tolerance policies sound good on the surface, but they present several significant issues, including: First, they can be used to shut down constructive conversations on what actually constitutes harassment or discrimination and how it should be handled. Next, their hard-line stance is often unfairly enforced: well-regarded employees at the firm get let off the hook, while others get dinged opportunistically. What’s more, zero tolerance doesn’t allow for any nuance or context; most situations of subtle harassment have baked-in complexities that merit unique consideration.

Outlawing romance

Office romance will happen, so it’s unrealistic to ban it. Outlawing romance means that employees will just keep their affairs quiet, which leads to a host of issues: members of the couple may unfairly favor each other during the relationship, and the more junior member of the couple can be left unprotected after the relationship.

Requiring consensual relationship reporting when it involves two people, one of whom has significant control over the other’s career, reputation, or opportunities protects both members of the couple, and makes for a more equitable workplace throughout the lifecycle of the relationship, whatever that may be.

The senior ranking person should be asked to report their relationship to a designated person so the situation can be monitored. This protects co-workers from the adverse consequences of unfair treatment, and it protects the less powerful person if the relationship ends.

As for asking out, each company should make its own decision, but if it’s a peer relationship, where someone feels free to decline without consequence, we think asking someone out once is fine. As for what’s acceptable between a VC and an entrepreneur pitching their firm (now or in the future), we feel that it’s fine to ask out once, but only after passing on funding, and with no opening for another round. If there is any funding potential at all, there is a power imbalance, and asking out becomes inappropriate.

Writing in a vacuum

Know what’s out there, and what other firms have committed to, as you put your materials together. This work should not be siloed — we have so much to learn from each others’ evolutions. See the open-source policy gallery on the #MovingForward site and resources from Project Include as a starting point. Make sure that those involved in setting every other important business policy are involved in this process, too.

Concluding Remarks

Part of the problem we’ve observed is a general assumption that bias, harassment and discrimination are unexpected, niche incidents — unlikely to happen. But looking at the data, it’s more likely that incidents will touch every VC firm, whether through its own employees, portfolio companies, or co-investors. The “unthinkable” will happen statistically, which is why it’s so important to be prepared with thoughtful, customized materials.

In this piece we’ve provided guard rails for creating great policies and complaint channels. These mechanisms are very important. And even so, the research (and the headlines!) demonstrate that they cannot be effective on their own. Every Hollywood studio and talent agency had a policy and reporting mechanism; many had anonymous hotlines.

There is no substitute for leadership and commitment from the top when it comes to eliminating harassment and discrimination from the workplace. True commitment means enforcing the policy, revising it as new situations and understandings come to light, and taking seriously the complaints surfaced by reporting channels, regardless of who is being accused.

If you’re a VC firm who has already taken some of these steps and made a public commitment to #MovingForward, big thank you. If you haven’t yet, but you’re ready to commit to a more positive environment for your entrepreneurs and portfolio companies, you can join #MovingForward here. Over a hundred VCs strong, we’re united in our commitment to move the needle in our industry, making venture more diverse, inclusive, and harassment-free.