Kleiner Perkins emerged victorious last week in their former employee Ellen Pao's heavily publicized sex discrimination lawsuit when the jury handed down a defense verdict after days of deliberation. Pao filed suit in Superior Court in California, alleging Kleiner failed to promote her to general partner because of her gender, failed to prevent gender discrimination, and that it retaliated against her and ultimately fired her for complaining. She sought $16 million in compensatory and punitive damages. Even though the venture capital firm is off the hook for damages, employers can learn several lessons from Kleiner Perkins to avoid such lawsuits in the first place (and the significant defense costs they bring).
1. Take employees' complaints seriously.
Pao offered evidence that one of her coworkers, with whom she had a relationship, was promoted even after senior partners received reports that the individual had sexually harassed a female colleague. A senior partner admitted he delayed acting on the complaint and that he erred in not immediately investigating it, but explained he was trying to respect the privacy of the female employee who complained because she was married. Employers should take any complaint seriously and promptly investigate. To let a complaint go unaddressed, as Kleiner Perkins did, leaves the door open for the accused to continue behaving inappropriately. Prompt and thorough employer investigations can help limit liability if the complainant later brings a lawsuit.
2. Document performance issues.
The defense gave testimony that Pao had performance problems, but those problems apparently were not communicated well to her at the time they arose. Kleiner Perkins attributed Pao's lack of promotion to her not having the interpersonal skills to succeed as a venture capitalist or to work well with other partners. While a lack of interpersonal skills can be a valid, non-discriminatory performance issue, shortcomings that have less to do with personality and "fit" and more to do with analytical skills are easier to document and defend as non-discriminatory. Kleiner labeled Pao as arrogant in her dealings with colleagues and simultaneously pointed out in her reviews that she was too quiet. Evidence thus suggested Pao received mixed messages for how to conduct herself at work—to speak up without talking too much, to exude confidence without being cocky. Kleiner Perkins may have curtailed this argument more easily if it had placed greater emphasis on Pao's ability to successfully handle venture capital deals (or lack thereof) and less on her personality.
3. Implement and publicize policies.
This one is simple. Draft anti-discrimination and anti-harassment policies, publicize them, and update them to comply with any developments in the law. When an outside investigator asked Kleiner Perkins for its policies, it could not locate any. The firm drafted policies only after Pao complained.
Employers should evaluate their current protocol in maintaining policies and handling employee complaints and performance issues. Developing good practices and staying on top of these items before a conflict occurs will help employers avoid lawsuits and will make it easier to defend them when they do arise.
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