It sounded like a headline out of the 1990s or 2000s, when Wall Street banks began reckoning with high-profile gender discrimination lawsuits and adopting prohibitions of company outings to strip clubs. But on Monday, the Wall Street Journal reported that the sports apparel company Under Armour had ended the “long-standing company practice” of letting employees expense strip club visits to their corporate cards. The email ending the practice, the Journal reported, came earlier this year.
In addition to allegations of sexual misconduct or relationships that violated company policy involving a couple of high-profile executives, the story reported that “over the years, executives and employees ... went with athletes or co-workers to strip clubs after some corporate and sporting events, and the company often paid for the visits of many attendees."
The story was met with expressions of surprise by many on social media (“this actually happened? Amazing,” wrote one LinkedIn user), and lawyers said the expensing of strip clubs as business entertainment has been prohibited by most employers for decades.
But the connection between inappropriate behavior by executives and cultures that breed and promote superstars — whether internal or external — remains all too common, management experts said.
“Whomever you’re around, and is viewed as prestigious and makes you money — you may decide their behavior is not only good for them, but something you’ll emulate, too,” said Robert Sutton, a professor at Stanford University who has written extensively about employee and organizational behavior.
The #MeToo movement has provided countless examples of situations where the arms race to recruit or retain star talent has been linked with the toleration of inappropriate behavior or at least raised questions about how companies responded when confronted with past alleged actions of top executives. In industries like media and Hollywood, cultures that thrive on individual celebrities or revenue-producing rainmakers have been shown to ignore or even protect bad behavior. In others like technology, where engineering skills are in high demand, companies like Google have reportedly paid big exit packages to executives accused of misconduct that prevented them from working for competitors.
And as a sports-apparel company that recruited well-known athletes to sponsor, even an association at Under Armour with a star-driven environment could have had an effect on behavior, management experts said.
“In a superstar culture, very quickly your focus and attention goes on serving the needs of people who are extremely high status and viewed as essential to our success,” Sutton said.
Under Armour’s senior vice president of corporate communications, Kelley McCormick, said in an emailed statement that “we do not condone adult entertainment as a part of conducting Under Armour business. Earlier this year we formalized a policy to address a legacy issue, underscoring that the use of company funds for adult entertainment is not tolerated.”
In a letter sent to employees, CEO Kevin Plank and President Patrik Frisk called the article “tough to read,” saying “leadership means that when faced with scrutiny, criticism or accusations — the most important question to ask is if it’s deserved. At Under Armour, we own our truth.” They wrote that “we believe there is systemic inequality in the global workplace and will embrace this opportunity to accelerate the ongoing meaningful cultural transformation that is already underway at Under Armour. We can and will do better.”
Dylan Minor, an assistant professor at Northwestern University who has studied toxic workplaces, said that even having a policy in place recently that appeared to allow for the reimbursement of strip club outings “suggests a real blind spot,” he said. “The people you have around you reinforce and help you maintain that worldview.”
It can be particularly hard for companies to change cultural practices when they’re normalized as part of an organization’s business practices — such as what gets rewarded in performance systems or paid for in expense accounts, said Barie Carmichael, a senior counselor at APCO Worldwide and former communications executive at Dow Corning and Visa. Many companies that face such embarrassing headlines aren’t necessarily trying to hide past practices, she said, but suffer from inherent cultural norms that warp the way things are viewed.
“It’s obvious in retrospect, but it’s so embedded in the way you do business you don’t get an outside-in look,” she said. As companies grow, she said, such practices become “institutionalized, and it becomes harder and harder to say no” or to call it into question.
She said it’s possible that the revised expense report policy came out of an internal review. Many companies have been undertaking a comprehensive new look at their past policies and practices as the bright klieg lights of #MeToo raise questions about past practices and younger employees push companies to change. “If that’s the case, good for them,” she said.
But others are recognizing there are limits to the lengths companies should go to bring in superstar talent or retain them. “I see more and more companies saying it’s not worth it, it’s not worth the risk,” said Christine Porath, a professor at Georgetown University who studies civility in the workplace. “We just can’t signal this. We’ve got to stay true to our values.”