REPUTATION REPERCUSSIONS IN WAKE OF PRESIDENTS CLUB SCANDAL
In general, over the past year, positive reputation among business and charities has risen. Frustrated by seemingly arbitrary governmental intervention in industry innovation, the public is turning to business to address issues it is felt are ignored by other widescale stakeholders. But when influence is used for exploitation, and power undermines the foundations that drive organisational progress, a reputational crisis ensues.
As trust in business grows, so too does the importance of companies displaying a purpose in their mission statements. Beyond corporate social responsibility, purpose gets to the heart of why a company exists. It unites executives, employees and customers under a common value Indeed for many, the CSR model is outdated; purpose is a future-facing, futureproof way to adapt in the contemporary business environment. So, when the actions of stakeholders are not befitting to an organisation’s central purpose, reputational issues emerge. This fate has befallen the now-notorious Presidents Club Charitable Trust.
Last month, leading business newspaper the Financial Times published an expose on the Presidents Club’s annual black tie charitable dinner, held in central London’s five-star Dorchester Hotel. Nominally attended by wealthy patrons from a whole host of industries, including property, banking and finance, politics and entertainment, the Presidents Club had always attracted a certain amount of attention regarding conduct of the attendee – and its men-only attendance rule. However the evening’s purpose, to raise money for a host of charities including children’s charities, has seemingly made the trust immune to reputation-destroying criticism.
This is, until the 23 January, when the true nature of the Presidents Club came to light. The Financial Times report describes how women employed by the Presidents Club were chosen for their ‘height and looks.’ The waitresses were expected to keep the attendees ‘happy’ despite being subject to inappropriate advances throughout the evening – according to the FT, “At an after-party many hostesses — some of them students earning extra cash — were groped, sexually harassed and propositioned.”
Further, the FT notes that the business heads, company directors and well-regarded figures present made tawdry remarks and bid on lots such as plastic surgery opportunities to ‘Add spice to your wife.’ In a current climate characterised by movements such as #MeToo and #EverydaySexism, as well as the 100-year milestone of some women being granted the right to vote, actions of attendees at the Presidents Club are at best a rejection of a cultural and social paradigm characterised by the empowerment of women. And, for a business environment currently focusing on corporate efforts to address the gender pay gap among the sectors represented at the Presidents Club event, respect should extend beyond legislation and the boardroom.
Attendees are now addressing the potential of widespread reputational fallout in not only their respective companies, but their respective industries, too. The traditionally male-dominated real estate sector, in particular, is the subject of increased scrutiny. Many of its wealthy proprietors, a majority of whom inherited legacies from their fathers, attended last month’s event, providing yet another obstacle around which the industry must navigate from its reputation as the preserve of a Mayfair male elite. For the communications and advertising profession, the revelation that global advertising giant WPP had a table booked at the Presidents Club raised moral issues already fresh in the wake of scandals such as Bell Pottinger.
For an industry that has long prided itself on a high representation of women, pertained to high ethical standards and made steps toward achieving gender parity where other industries struggle, association with the Presidents Club is not ideal. WPP has announced the withdrawal of its support in any Presidents Club events going forward. Yet reputational damage is not limited to the attending corporations.
Putting strain on a corporate-to-charity relationship which can be difficult to navigate at the best of times, for the recipients of the Presidents Club money, reportedly £30 million in the last 30 years, and £2 million alone at the last dinner, a moral dilemma ensues. Do the charities accept the money raised, despite the accusations and resulting furore, and risk moral speculation? Or return the money, disappoint potential respondents – but retain moral integrity? This is what London-based children’s specialist hospital, Great Ormond Street Hospital, and Evelina Children’s Hospital, have done, in an environment where the correct course of action can sometimes be unclear. Yet, as the CEO of UK-wide Charity Commission, Helen Stephenson, says, "I am personally horrified by the reported behaviour. The commission has made clear that we consider [the dinner] has no place being undertaken in the name of charity, whether raising funds for good causes or not."
For the charities and corporations associated with the Presidents Club scandal, rebuilding reputation through transparency and commitment to purpose is the first step. And for the Presidents Club Charitable Trust, its 30-year history and the practices that have recently come to light offer a host of reasons for concern. Yet perhaps most alarming among a series of alarming revelations is the uncomfortable, uncompromised contrast between the generous philanthropy extended by attendees at the Presidents’ Club, and the utter lack of self-awareness in their behaviour.
Tal Donahue, senior account manager, Infinite Global
Corporate philanthropy, indeed the whole idea of ‘corporate social responsibility,’ has historically often been interpreted as ‘greenwashing’ by organisations looking to offset negative behaviours elsewhere. The Presidents Club dinner is at the more noxious end of this spectrum, an event billed as raising money for good causes, with patrons’ generous donations seemingly seeking to gloss over the latent misogyny and sexism on which the FT has shined a glaring spotlight.
It is little wonder that businesses of all stripes try to swiftly mitigate any reputational impact the merest hint of attendance at the Dorchester might have. Indeed, the property sector is still trying to come to terms with the fact that almost half the tables at the event were sponsored by real estate businesses. Clearly, charitable gifts cannot in-and-of themselves buy or defend reputation, and if the Presidents Club debacle teaches corporates anything it is that the ends certainly do not always justify the means.
The role ‘responsibility’ plays in corporate reputation is far more nuanced than just cutting a fat cheque, but should ideally go to the core of the values for which any organisation stands. Larry Fink, founder and chief executive of BlackRock, echoed the rising tide of change when he called for the CEOs of companies his firm invests in to demonstrate positive societal impact as well as financial performance.
In the wake of the Weinstein revelations and swift empowering of the #MeToo movement and adding to a reform agenda driven by policies like Gender Pay Gap Reporting, the hope now is that the demise of the Presidents Club will be a catalyst for corporate UK to recognise that practising what you preach really does matter.
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