After 47 years, Microsoft issues first sexual harassment and gender report
Faint praise: Windows giant tries to follow best practices and wants to improve
Microsoft on Tuesday published a 50-page transparency report on how the company handles complaints about sexual harassment and gender-based discrimination, the first in its history.
The report [PDF], accompanied by a company plan [PDF] to implement recommendations in the report, was compiled as a result of a shareholder proposal at Microsoft's annual meeting in 2021.
The shareholder proposal, supported by 78 percent of investors, was put forward by Arjuna Capital, a sustainable impact investment firm, in response to sexual harassment allegations against Microsoft co-founder Bill Gates and other claims, but only covering 2019-2022.
The allegations, publicly reported in May 2021, date back to the year 2000 when Gates was running the company and prompted the company board to begin an internal investigation in late 2019. In March 2020, while the investigation was underway, Gates resigned from the board of Microsoft and from investment firm Berkshire Hathaway.
“Microsoft has taken an unprecedented step forward to effectively address sexual harassment in the workplace,” said Natasha Lamb, managing partner at Arjuna Capital, in a statement. "The transparency report and implementation plan provide a leading example for companies to follow."
Lamb contends that sexual harassment and gender-based discrimination represent material business risk that must be dealt with through transparency and accountability. A recent study suggests companies with high levels of sexual harassment underperform in the stock market – to say nothing about the harm to harassment victims.
Yet, as Arjuna Capital observes in its press release, the report, compiled by law firm ArentFox Schiff LLP sheds little light on the claims made against Gates.
The report says company president Brad Smith met with Gates about the allegations. Gates, the report says, admitted that he had engaged in the communications and conduct reported by a former employee identified only as "Person A," but alleged the conduct was consensual.
"In the interests of protecting the privacy rights of Person A and consistent with our scope of work, we do not believe it is appropriate to disclose further details beyond the results of the investigation described above," the Transparency Report says.
The report also addresses claims made about the hollowness of Microsoft CEO Satya Nadella's promise to clean up the company's toxic culture.
The report says that of the three senior executives discussed – an Executive Vice President and two Corporate Vice Presidents – one resigned March 29, 2018, prior to the report's review period, and the others resigned June 8, 2022 and July 5, 2022 respectively.
The charges against those executives are not addressed in the report, which renders only observations – e.g. "there is and has been a perception among some employees that the Company tolerates and to some degree protects high performing senior executives who may be engaging in inappropriate conduct." – and recommendations for improvement.
Somewhat more enlightening is the data. According to the report, 781 sexual harassment and gender discrimination claims were made internally from 2019 through 2021. Of these, 446, or 61.86 percent were deemed "unsubstantiated" by Microsoft. The number of "substantiated" claims deemed to have violated policy amounted to 140, or 19.42 percent, during this period.
According to the US Equal Employment Opportunity Commission (EEOC), sexual harassment and sex-based discrimination allegations from 2016 through 2020 were deemed to have "no reasonable cause" at a rate of 54.44 percent and 64.92 percent respectively. "Meritorious" EEOC claims for sexual harassment and sex-based discrimination were 23.44 percent and 17.58 percent, respectively.
"Although the categories used by Microsoft and the EEOC are not identical, it would appear that the percentage of substantiated complaints is slightly higher at Microsoft with respect to sexual harassment claims (44.76 percent v. 23.44 percent) and lower for discrimination based on gender (7.06 percent v. 17.58 percent)," the report says.
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When complaints are sorted by business group, the situation is clearly worse in engineering (39.67 percent) than elsewhere – sales (24.55 percent), anonymous/unknown (14.01 percent), marketing (13.45 percent), and corporate (8.32 percent).
The report makes 11 recommendations, which involve strengthening policies and procedures, and putting more women in positions of leadership. It also argues for taking steps to minimize the perception that senior leaders are not held accountable and proposes publishing anonymous remediation data, to suggest that someone is being punished for something.
"Our review revealed that [Microsoft] strives to follow best practices in these areas, and espouses a dedication to continual improvement," the report concludes.
Katie Moussouris, founder and CEO of Luta Security, and a former Microsoft security program manager who was involved in a gender-based discrimination lawsuit against the company for four years, starting in 2015, told The Register that issuing a report isn't sufficient.
“Microsoft has a very long way to go to be a safe, supportive workplace for women and historically marginalized groups to survive and thrive," said Moussouris in an email. "This is, at best, a first step and, at worst, another deceptive gesture designed to placate shareholders without enacting any meaningful change."
In 2019, after being denied class action status over pay disparities, a decision upheld on appeal, Moussouris and two other plaintiffs dismissed their claims, seeing no way to make the case financially viable for a law firm.
"An increasingly conservative judiciary has severely curtailed the ability of employees and consumers to bring class actions in recent years, and our case was a victim of that unfortunate trend in the law, although the underlying merits were strong," she wrote in a blog post in the wake of that decision. "Gender discrimination in the workplace is very real – but the ability of the legal system to challenge it is under attack." ®