The recent events at BetterWorks Systems, Inc. provide a snapshot of the devastating cost of sexual harassment allegations at a start-up, according to a report from Bloomberg. The CEO of BetterWorks Systems Inc., which makes human resources software, resigned after a former employee filed a lawsuit alleging that he had sexually harassed and assaulted her and that management had done nothing about it. Following the employee’s claims, the company’s funding stalled, dozens of customers terminated their contracts and there was a 5-10% drop in annual recurring revenue. BetterWorks remains in flux, attempting to appoint a new CEO while battling a second harassment lawsuit against the former CEO.

Employees were reportedly surprised by the allegations, and described BetterWorks as “an inclusive, merit-based work environment that encouraged those values by using the five-year-old company’s own software to foster open communication and manage staff.” But even companies with ostensibly wonderful work cultures can be hurt by one bad actor and a management team that is not equipped to respond appropriately.

Accusations of harassment and the perception that management is not taking action can take a toll on a company. It pays to invest in harassment trainings, policies and periodic internal audits.

For information about the LaunchPad Harassment Package, which includes an internal audit, a customized Harassment Policy and trainings for employees and supervisors, please contact us at Launchpad@leechtishman.com.

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