Business Behaving Badly

When Karen DeMichele learned that her parent company's chairman and CEO was planning an unexpected visit to Boston, the apprehension she felt had nothing to do with her performance. As a division president at the Wakefield-based temporary staffing firm Select Appointments North America, DeMichele was enjoying the best year of her 15-year tenure. She was on pace to generate $68 million in revenue and surpass her target of 20 percent growth. DeMichele would be proud to report that information. What worried her was that the CEO, Anthony Martin, might continue to express an interest in more than just her figures. In a lawsuit she filed later in Suffolk County Superior Court, DeMichele claimed that Martin had already asked her if she had ever cheated on her husband; at a holiday party, she said, he had commented on her breasts. “Whenever I saw him, there was always a bit of anxiety,” she says. “I would think, Please don't let him do that again.”

Her concerns proved well-founded. According to DeMichele's suit, Martin greeted her at the meeting, which took place at a company subsidiary on Milk Street, by saying: “The last time I saw you was in Greece; you had less clothes on. I could fix it for you to have nothing on here.” She asked Martin what had prompted him to fly in from England. “I'll show you why I'm here under the covers after hours,” he allegedly replied. During her presentation, she described one of her business lines as “not sexy, but very successful.” Martin interjected: “You're the sexy one I could be successful with.” The other division heads – all men – snickered.

Offended by the comments, DeMichele reported them to her superiors. Instead of being promised that the misbehavior would be dealt with, she says, she was told to consider turning over one of her most profitable units to a male colleague. Projects that had previously been given the go-ahead now met with resistance. Discussions about a new computer system she was acquiring proceeded without her. “It was a very bizarre time,” says DeMichele. “I knew on the one hand that I was doing a great job, and on the other, that I was being set up.”

Finally, DeMichele contends, the company abruptly informed her that it had accepted her resignation. She was stunned: She had never said she wanted to quit.

In the severance package the company offered DeMichele, it agreed to continue paying her $250,000-a-year salary, provided she would sign a noncompete contract. It did not mention her $250,000 bonus – a point duly noted in a letter fired off by her attorney. DeMichele rejected the deal. The company then sued her for misrepresentation, saying she pretended to be staying even as she secretly plotted to resign. DeMichele countersued, claiming the company retaliated after she complained of sexual harassment.

Last month, she won the case.

With Wall Street wracked by the likes of Enron, Tyco, and Jack Welch's profligate retirement package (disclosed only as a consequence of his affair with Harvard Business Review then-editor Suzy Wetlaufer), the focus of the corporate world has turned to misbehaving CEOs. But DeMichele's case – along with many others like it lurking behind Boston's office doors – demonstrates that shady transactions aren't the only ways that companies are flouting the rules. Down in the trenches, it's just different rules being broken – broken in ways that may not drive a company into bankruptcy, but have turned workplaces into frat houses, sending employees scurrying to their personnel directors, shrinks, lawyers, or the state office that handles discrimination and harassment complaints. What they aren't doing, however, is quitting. From a legal standpoint, proving harassment can be tough. But in a state that has lost 92,000 jobs in the last two and a half years, it's almost as tough to find a new position. “Prospects are so terrible right now that people are willing to endure a lot more,” says Boston employment attorney Charles Wagner. “They have nowhere else to go.”

If Paul Pereira was judged by the same standards as figure skaters, he would have gotten low marks for technical merit, but close to a perfect score for originality. Before he was indicted for swindling nearly $1 million through a fake HMO, the then-Somerset resident spent the early part of the decade running the Fraternal Dental Group, the Fraternal Travel Group, and the Fraternal Insurance Group, all of which were based on North Main Street in Fall River. According to a lawsuit filed by two of his former employees, Noella Santerre and Adele Cabral, Pereira called his staff into his office every Monday morning to regale them with descriptions of “his various alleged sexual exploits.” During one such gathering, another employee, Diane Sousa, left to take a call. She returned to find that Pereira had slipped a dildo into her coffee. On another occasion, Pereira asked Santerre if she wanted to see pictures of his pet. She agreed, and he handed her three photographs. The first two were of his dog. “The third,” the complaint says, “was of Pereira wearing nothing but his briefs.” A jury found that Pereira had committed sexual harassment, and Santerre and Cabral were awarded a total of $142,000.

Not all cases leave behind trails of evidence including fake penises and pictures of half-naked bosses. Trader Karen DeLuca sued her employer, Bear Stearns, claiming that after she complained about a particularly lewd male colleague in the Boston office, her supervisor responded by moving her desk next to the desk of the offending colleague, who continued to spew sexually charged chatter – only now from close range. Sheila Decter, former executive director of the New England region of the American Jewish Congress, says she was told in private that she was being let go to make room for younger leadership – then was accused of mismanagement in statements the organization's top brass made to the press. (Each of these claims was denied by the employer and was eventually settled out of court.)

As in DeMichele's case, abuse of power can also take the form of unwanted advances. John Koch, a former lecturer on Celtic literature at Harvard, hired one of his students, Marcheterre Fluet, to be his teaching assistant, only to subsequently (and unsuccessfully) try to solicit her with suggestive e-mails, including one that compared their relationship to “a riddle wrapped in an enigma wrapped in a flaky puff pastry.” Or the mischief can be just plain crude: As part of a stepped-up diversity initiative, Amtrak pulled the plug on pornographic movies that sometimes played in the engineers' lounge in Boston, and removed explicit pinups from the walls of a common area. On Beacon Hill, a former assistant state attorney general will stand trial in November for lewd and lascivious behavior, assault and battery, and indecent exposure for allegedly accosting four cleaning ladies. One claims that he masturbated in front of her.

What these situations have in common is that they all wound up in court. And in that, they represent exceptions. Most victims aren't in a position to sue; research has shown that what experts have come to categorize under the broad label of “workplace bullying” is four times more prevalent than illegal harassment and discrimination. “There's no requirement that people be treated well in the workplace,” says Dahlia Rudavsky, a Boston employment attorney. “We tell people you can have a boss that yells and screams, throws things, and reduces people to tears. But unless he does that only to women or minorities, you likely don't have a case.”

Many companies involved in such disputes follow a different rule of thumb: They just want the problem to stay out of the papers. In a survey of 119 major Boston-area employers by Boston magazine, 18 acknowledged disciplining nonmanagement employees for sexual harassment; at nine of those companies, employees accused of sexual harassment were dismissed. Twelve companies said they had disciplined management-level employees for sexual harassment; seven of them said managers who were implicated had been dismissed. But almost half the area employers surveyed declined to answer the question at all. “Nowadays,” says one Boston employment attorney, “companies are just scared. Any hint of scandal, and they think it's best to just get rid of the potential problem.”

Employers are not only guilty of covering up misdeeds. They're often also responsible for bringing out the worst in their workers in the first place. “All of us are capable of both selfish and selfless behavior, and we tend to go in the direction of our surrounding social circumstances,” says Harvey Hornstein, author of The Haves and the Have Nots: The Abuse of Power and Privilege in the Workplace . . . and How to Control It. “In certain companies, it gets communicated that a little blood around the office is okay – we're concerned with how well you produce for us.”

At some Boston-area companies, the sagging economy has created environments in which the standards of civility have been shredded like so many documents at Arthur Andersen. Some law firms, for example, raised their associates' salaries – an increase often financed out of partners' own pockets – in an attempt to prevent startups from luring away their brightest prospects during the dotcom boom. Now the bubble has burst, and legal billings have plummeted. “The partners are hostile and pissed off,” says a former summer associate at one top Boston firm. “The situation is tailor-made for screamers.” Take, for example, one of the firm's preeminent rainmakers. “He's an extremely intense person. When you meet him, he's practically vibrating,” says another ex-associate of the firm. “Halfway through my first year, I worked until midnight for several nights in a row to finish a project. The next day, he calls me on the phone: 'Is English your first fucking language? Get up here!'”

Law firms are hardly alone in granting leeway to their top performers. The staffers at the Harvard Business Review, of all places, were at first unfazed by their own editor's bawdy tales, not to mention her affair with a 22-year-old assistant. Because the Review had thrived under Suzy Wetlaufer, her dalliances were accepted as more of a personality quirk than a leadership flaw. Only when her interview with former General Electric CEO Jack Welch turned into a love story did a hullabaloo break out: Two people quit in protest, and Wetlaufer was ultimately forced to resign.

Just as Wetlaufer seemed to be protected by her impact on the bottom line, Nick Lopardo was insulated by the $700 billion in assets he added to the ledgers of State Street Global Advisors during a 14-year reign that ended last year. It was stunning growth that allowed Lopardo to stay at the helm even after testimony in a discrimination lawsuit – later settled for undisclosed terms – depicted the office he presided over as sometimes resembling a fraternity house. In what came to be known as the “Legend of the Pink Pump,” a high-heeled shoe allegedly landed on the desk of any male employee who declined an invitation for a night out with the boys. On the trading floor, Meg Ryan's classic fake orgasm scene from When Harry Met Sally was purportedly installed in one of the computer terminals; the clip played anytime someone tapped a key.

While the stock market soared in the '90s, so, too, did spirits in Boston's financial services sector. When the Dow nosedived, the kinder and gentler environment went with it. “We're seeing the reemergence of the cowboy culture,” says Nancy Shilepsky, a Boston employment attorney. Earlier this year, Freada Klein, a one-time Cambridge-based workplace bias expert, got a call from a Boston money-management shop that was dealing with the fallout from a barbecue three of its best young executives had thrown for the incoming crop of business-school graduates. “They did a little matching game to introduce the new class,” Klein says. “Some of the linkups were just silly, like 'Only wears clothing with Lycra.' Some were racially or ethnically oriented: An East Asian was labeled something along the lines of 'Drove a taxi until his English improved.' Apparently, there was one particularly attractive, shapely woman. Here she is, trying to earn respect – and she's introduced as a former prostitute.” Later that summer, Klein says, a black employee, attempting to spur a dialogue on race relations, e-mailed around an article that contained a photograph of a lynching. By this point, word of the high jinks at the barbecue had spread throughout the workforce. “They were going to fire the person who sent the e-mail until he said, 'Well, how much worse was this than what happened a few weeks ago?'” Klein recounts.

In the end, Klein says, no one was let go.

Harvey Schwartz, a Boston employment attorney, says that after something like this happens, “a lot of employers will just call in a diversity trainer. I'm skeptical of that because there usually isn't a lot of follow-through. The employees say, 'Well, that was a nice afternoon – we didn't have to work.' A certificate goes into their personnel files, and that's the end of it.” At least until the next incident arises, and the staff is convened for another lecture. “You've had all these prophylactic policies and practices springing up,” says Jody Newman, another Boston lawyer who primarily represents plaintiffs in employment disputes. “But they aren't getting at the real problem, which is attitudes and culture.”

So how does a company fix something so intangible? The first step is standing up to the bully. When the Swedish pharmaceutical giant Astra AB learned that Lars Bildman, then head of its Westborough-based U.S. operations, had been accused of pressuring female employees into romantic relationships and presiding over alcohol-fueled after-hours parties, the company placed him on paid leave. He was fired two months later. But getting rid of Bildman addressed only part of the problem: The company still had to dismantle the culture he had left behind. Following Bildman's orders, employees at the pyramid-shaped headquarters wore their gold Astra pins at all times and knew either to eat lunch during a rigid one-hour window or to do without it that day. Those rules were rescinded, and consultants were brought in to run training sessions about the company's newly revised sexual-harassment policy. Potted plants and family photos – both banned under Bildman – started to appear on desks.

For one of the corporate clients of Brookline's GLS Consulting, the solution involved a different type of redecorating. “This was in the late 1990s, and it was a manufacturer in the northern suburbs,” says Ann Lindsey, a principal with GLS. “The head of the shipping department had been removed for questionable business practices, and the domestic and international teams were not speaking to one another. Neither regarded the other as trustworthy, and they refused to share any information.” Through what GLS learned in a series of interviews, it arrived at this advice: Hold weekly meetings. And hire a carpenter. A central cafeteria was constructed, extending the benefits of the water-cooler chat to a larger scale. Cubicle walls, too high to see or be seen over, were lowered, and a fresh coat of paint was applied.

BrassRing, an online high-tech recruiter based in Waltham, attempts to catch emerging tensions – and potential liabilities – by surveying its workers twice a year. The first round, a survey written by Klein, includes an entire section devoted to inappropriate behavior. A shorter followup survey is used to track progress; 10 percent of managers' bonuses are dependent upon employee satisfaction. Last year, BrassRing noticed that about a third of respondents had complained of “unwanted sexual teasing, jokes, or remarks” – a dangerously high number. “The atmosphere had relaxed to the point where we were on the border of being subject to sexual-harassment claims,” says Gary Cormier, BrassRing's vice president of human resources. The company arranged for each employee to complete a course on the subject, and this year the percentage of employees who said “yes” to the question dropped to 18.

Another company that uses Klein's questionnaire discovered a high rate of public humiliation in its workplace. After studying the numbers, the company concluded that employee responses were off the charts in one department, but almost nonexistent in the others. “As soon as the CEO saw it,” Klein says, “he said, 'Oh my God.' He went and did more investigating and ended up firing someone known to be a very bright person.”

Karen DeMichele says she'd be willing to take similar steps, now that she's the one calling the shots. Last July, while awaiting the outcome of her case, she set up her own temp firm, Savvy Staffing, in Worcester. Like every entrepreneur, she's had to cut a few corners: “The other day, one of my employees said to me, 'Okay, so now can we buy a new copier and some pictures for the walls?'” she says. But DeMichele insists she won't skimp when it comes to protecting her workers. “I feel very proud to employ people,” she says, “and I know that what happened to me will never happen in my company.”

Last month – in a decision her former employer says it will appeal – the jury also saw it DeMichele's way. Her former company was ordered to pay her $2.1 million.