Microsoft will update sexual harassment policy after ArentFox report

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Microsoft CEO Satya Nadella gestures during a session at the World Economic Forum annual meeting in Davos on May 24, 2022.

Fabrice Coffrini | AFP | Getty Images

Microsoft on Tuesday said it would update sexual harassment and gender discrimination policies after a third-party report showed shortcomings in how the company deals with complaints.

The report comes a year after Microsoft shareholders approved a proposal requesting that the board publish a review of workplace sexual harassment policies. In January, the board authorized the company to hire law firm ArentFox Schiff LLP to review policies, submit a report and make recommendations.

Microsoft published a 50-page transparency report from ArentFox on Tuesday. The report is significant in an industry that’s making pronounced efforts to improve diversity and ensure that sexual misconduct is taken seriously. At Microsoft, claims of harassment and discrimination have led to internal discussions that spilled over into public view.

“The board of directors and our senior leaders are fully committed to this implementation plan as we continually work to close the gap between our espoused culture and the lived experience of our employees,” Microsoft CEO Satya Nadella said in a company blog post.

The shareholder proposal was brought last year by Arjuna Capital. It followed a report about Microsoft co-founder Bill Gates’ departure from the company’s board after it investigated a claim that Gates had tried to start a relationship with an employee two decades ago.

Such proposals typically fail, and the company had recommended that shareholders vote against it. But it received 77.97% of all votes, according to a regulatory filing.

The report on Tuesday referenced the Gates incident and provided some details. Kathleen Hogan is the company’s head of human resources and executive vice president.

“On July 7, 2019, Person A, a Microsoft employee, reported to Kathleen Hogan that Bill Gates had subjected her to inappropriate communications and conduct,” the transparency report said. “In doing so, Person A made references to sexual harassment and the me too movement.”

Microsoft founder Bill Gates speaks during the Global Fund Seventh Replenishment Conference in New York on September 21, 2022.

Mandel Ngan | AFP | Getty Images

The woman met Gates for the first time in 1999, and they then met in person “intermittently” after that, the report said. The company hired a law firm to look into the woman’s assertions and found that that they did meet and communicate. Brad Smith, Microsoft’s president, discussed the assertions with Gates, who said that the relationship had been consensual.

In a statement, Arjuna Capital said the report, citing privacy reasons, doesn’t offer much new detail on the investigation of Gates. But it acknowledged significant changes Microsoft has agreed to make around holding executives accountable.

Microsoft said in its blog post Tuesday that it will add language, as suggested in the report, to its policy against harassment and discrimination, enhance executive training, reevaluate the terms of substantiated violations of the policy and look at ways to address concerns about negative career impact for those who raise complaints.

Microsoft received 721 employee complaints of discrimination and harassment in the U.S. between 2019 and 2021, and investigators found most allegations to be unsubstantiated, according to the report.

The law firm spoke with some of the people who brought complaints in 2021 and found that many worried that their actions or being part of an investigation could hurt their career prospects, even if complaints were substantiated. Some of these people said their promotions or pay increases were delayed because their alleged harassment or discrimination had weighed on their performance reviews, and they were unhappy that human resources had told them there was no way to deal with that sort of impact.

Some of the people the law firm interviewed said they disliked that investigators declared their complaints were unsubstantiated and not severe enough to violate Microsoft’s policy against discrimination and harassment.

Microsoft said it will provide data each year on harassment reports, the percentage of claims that have been substantiated and the company’s responses.

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