May 27, 2018
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Maine firms contend with costs of misconduct after startup leader’s downfall

By Lori Valigra

Maine companies are grappling with how to handle the sexual harassment scandal that landed in their own backyards on Jan. 23, when a leader of the startup community admitted he behaved inappropriately toward two women.

Jess Knox’s behavior resulted in the loss of a prestigious grant as well as the shutdown of Venture Hall, a nonprofit he co-founded that helped startup companies grow.

“Has this ever happened before? Of course. But nothing this public,” said Megan Hannan, executive director of the Maine Women’s Fund, a public foundation that gives grants to girls and women to effect social change.

What’s changed recently is that, with revelations in Hollywood and elsewhere, more women are speaking out, she said. Companies are acknowledging the extent of the repercussions for harassment — from losing valuable employees to costly lawsuits — and taking action.

One local bank president reacted quickly after hearing about the sexual misconduct of NBC “Today” show co-host Matt Lauer.

Gregory Dufour, president and CEO of Camden National Bank, emailed employees in mid-December to reassure them of the bank’s no-tolerance policy on sexual harassment.

“The news over the past several weeks regarding the reporting of sexual harassment incidents in a number of workplaces across the country has caused me and the other executives to reflect on our own organization and ask what more we can do to ensure our workplace is safe for all stakeholders as well as support a culture where people feel they can report incidents that threaten that safety,” he wrote in the email, parts of which the bank provided to the Bangor Daily News.

Dufour said there had been incidents of sexual and other harassment at the bank, but would not provide details.

“We have zero tolerance,” he told the Bangor Daily News. “If it’s an employee, customer or vendor, they will no longer be associated with us.”

Camden National has a confidential whistleblower procedure that forwards a complaint to an audit committee and the board of directors. It also has strong human resources policies and regular training for employees, Dufour said.

“Part of training is to define sexual harassment, what people are comfortable with,” he said. “This is something we’ve got to focus on and get the conversation out there.”

Gregory Fryer, a partner at Verrill Dana in Portland, said the incidents prompting women to speak out have been building for a while.

“Companies in Maine realize certain kinds of conduct that were laughed off before are now perceived as toxic,” he said. “This is a conversation at the dinner table and at the board table.”

A lot is at stake. The average cost to settle a discrimination lawsuit is $125,000, while the median judgment in such cases is $200,000, according to White Men As Full Diversity Partners, a Portland, Oregon, consultancy on good workplace practices. It estimates discrimination costs companies $64 billion annually and causes more than 2 million workers to quit their jobs.

The lost opportunities for budding women entrepreneurs worry Kay Aiken, co-founder and CEO of Introspective Systems, a Portland engineering and simulation company.

Some men, including venture capitalists, may avoid meeting with women one-on-one for fear of being accused of misbehavior, she said.

“It is missing an opportunity to fund diversity,” Aiken said.

Hannan pointed to comments by powerful men including Vice President Mike Pence, who told The Washington Post and other media that he never dines alone with a woman who is not his wife.

“Women need to network, but women are seen as a potential enemy … It doesn’t help them move forward,” Hannan said.

A young woman who is scared off by misconduct in the startup community may miss out on important opportunities to grow her business, Aiken said.

“Jess [Knox] was very powerful. He brought money and attention to the startup community,” she said.

Susan MacKay, founder and CEO of ceramic filter company Cerahelix of Orono, agreed that Maine lost more than just money when the Kauffman Foundation rescinded its $475,000 grant due to Venture Hall’s shutdown.

“It’s very prestigious to get a Kauffman Foundation grant,” she said. “People don’t want this to be the story of entrepreneurship in Maine.”

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