Business and #MeToo: expect more to come

Revelations of wrongdoing and sexism may just be the start of a new business-shaking #MeToo movement, says Matthew Lynn.

937-city-view
jwt_20181206_tedbaker_002_2018120613715480.jpg

Revelations of wrongdoing and sexism may just be the start of a new business-shaking #MeToo movement.

It has been a bad few weeks for the kind of dinosaurs of business who thought bottom-pinching, hair flicking, and the kind of "suggestive" remarks that would have been a little out of place even in a 1970s sitcom were nothing more than harmless office banter. On Monday, Ray Kelvin, the founder and chief executive of the fashion chain Ted Baker, left the company amid an ongoing investigation into harassment in the workplace. Kelvin is accused of more than 50 incidents that included "forced hugging", asking young female members of staff to sit on his lap, or massage his ears. Whether those claims are true remains to be seen.

For now, it was enough to force Kelvin out.

That comes just a few weeks after similar allegations were made against Philip Green, the retail tycoon whose Arcadia empire includes chains such as Top Shop and Dorothy Perkins. Despite his liberal use of gagging orders, and an army of lawyers, allegations have emerged of a long history of abusive and sexist behaviour, which include making women sit on his lap (which seems to be a common theme), groping, and an endless stream of inappropriate comments.

In Green's case, the company paid out settlements running into hundreds of thousands of pounds to settle the allegations and prevent them coming out. Green is still in office for now. But his already battered retail empire is looking more tarnished than ever. Will Arcadia remain intact by Christmas? You wouldn't want to risk losing your Top Man shirt on it.

In their own ways both Kelvin and Green were brilliant businessmen. Ted Baker was on a tear, with its shares rising almost tenfold in the decade from 2008 onwards. Its formula of accessible, affordable fashion was a hit on the high street. Green was a more questionable success his empire was built as much on debt, acquisitions and astute financial engineering as anything else. But still,Top Shop carved out a distinct positionfor itself, even if that was more to dowith Green's mostly female staff thanthe tycoon himself.

The important point is that there is no reason to think these two tycoons were exceptions. Depressingly, their behaviour may well have been normal within their industries, which is why they thought they could get away with it. If so, sexism is going to turn into a far bigger problem for British business. A #MeToo movement may be about to take off, emptying boardrooms, and triggering a wave of changes at the top of some very big companies.

Just the first domino to fall

But there is no reason to imagine it will stop there. The City is notoriously sexist, with trading floors that are often dangerous environments for anyone in a skirt, and nights out at lap-dancing clubs that are part of a very male culture. The media can often be the same; film and television production and advertising are often even worse. Other major professions such as law or accountancy are probably more sober, and industries such as pharmaceuticals or manufacturing have traditionally employed few women, making it less of a risk. Even so, any kind of hierarchical, male-dominated working structure that has tolerated a culture that might have been acceptable 20 or 30years ago, but which now ends up in a scandal, is vulnerable.

That may well end up having significant consequences for investors. As we sawin Hollywood and elsewhere, once a#MeToo movement gets going, it acquiresa momentum of its own. There will be plenty of women who see the downfall of the likes of Kelvin and Green and feel emboldened to come forward with similar allegations of their own. It might not happen right away. But don't be surprised if a whole series of senior business figures end up being disgraced by charges of bullying, and are forced to step down from the companies they run.

In the end, that will create a healthier culture, and businesses that are better run. But it will be a painful process getting there, and plenty of businesses will go through a difficult period of adjustment and shareholders will suffer some short-term losses inthe process.

Recommended

How long can the good times roll?
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
The British equity market is shrinking
Stockmarkets

The British equity market is shrinking

British startups are abandoning public stockmarkets and turning to deep-pocketed Silicon Valley venture capitalists for their investment needs.
8 Nov 2019
Robin Geffen: dividend cuts aren't all down to Covid
Stockmarkets

Robin Geffen: dividend cuts aren't all down to Covid

The seeds of recent dividend cuts and cancellations were sowed many years ago, says veteran investor Robin Geffen.
25 Oct 2020
Dividend payments will take a long time to recover
Income investing

Dividend payments will take a long time to recover

Companies are gradually resuming dividend payouts, but we can expect only a modest rebound in 2021, says Cris Sholto Heaton.
25 Oct 2020

Most Popular

The Bank of England should create a "Bitpound" digital currency and take the world by storm
Bitcoin

The Bank of England should create a "Bitpound" digital currency and take the world by storm

The Bank of England could win the race to create a respectable digital currency if it moves quickly, says Matthew Lynn.
18 Oct 2020
Don’t miss this bus: take a bet on National Express
Trading

Don’t miss this bus: take a bet on National Express

Bus operator National Express is cheap, robust and ideally placed to ride the recovery. Matthew Partridge explains how traders can play it.
19 Oct 2020
Three stocks that can cope with Covid-19
Share tips

Three stocks that can cope with Covid-19

Professional investor Zehrid Osmani of the Martin Currie Global Portfolio Trust, picks three stocks that he thinks should be able to weather the coron…
12 Oct 2020