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HR Leadership Column

A Game Plan for Risk Mitigation

As the National Basketball Association's handling of the Donald Sterling controversy moves forward, it should remind HR leaders that the path of "least litigation" may not always be the right choice.

Tuesday, May 13, 2014
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Our youngest son never watched Saturday morning cartoons. Instead, starting at the age of five, he got up early to watch ESPN. Any sport would do.

He's now an adult, but he's still fanatical about sports. This means that while I don't really like to follow sports, I try to keep up with how "his" teams are doing in the playoffs/ the Super Bowl/ the Final Fours, etc., so that I can better understand his current mood.

Even though my son now lives and works in Los Angeles, I really didn't know a lot about the L.A. Clippers, the National Basketball Association franchise there. And I certainly didn't know anything about its owner, Donald Sterling. At least, that is, until a tape was released of Sterling spouting his racist views.

I couldn't help myself. I went to one of the sports-reporting sites involved in releasing the damaging material and listened to the entire taped conversation. It was the audio equivalent of watching a car crash, where you hate seeing it, but can't stop watching it unfold: I hated listening to the tape, but couldn't stop listening. I needed to hear for myself how someone making a fortune from owning a predominantly minority basketball team could actually have a plantation-owner sensibility. Incredible, but true.

Anyone who's worked in HR knows that bigotry hasn't been eliminated from the workplace. Progress has been made, but certainly more needs to be done.

So for me, the most interesting aspect of the Sterling tapes wasn't their content, which was awful. It was what happened after the tapes were leaked.

Adam Silver, the relatively new NBA commissioner, addressed the issue promptly and publicly. He listened to the tapes, investigated and confirmed with Sterling himself that he was, indeed, the person speaking on the tape, and then imposed the greatest sanction he was authorized to impose. He banned the owner from the sport for life and imposed a fine of $2.5 million. He went on to announce that he was going to do everything in his power to encourage the owners to force Sterling to sell the team. Bam! 

The reaction has been overwhelmingly favorable: from the owners, the players, the players' union and the public. He demonstrated through his action that "sentiments of this kind are contrary to the principles of inclusion and respect that form the foundation of our diverse, multicultural and multiethnic league."  He walked the talk.

In the week leading up to his announcement, I'm sure the commissioner spent time with his general counsel, reviewing what legal options he had available to him to address the situation. As an attorney himself, I'm also sure he knew that there were risks to what he planned to do. Litigation was/is likely, because Sterling is also an attorney and he's been the subject of numerous lawsuits in the past. 

But I believe that, in addition to being personally appalled, the commissioner did a risk assessment, and determined that failing to take strong action posed a greater risk to the NBA than that of probable litigation. He concluded that, from a financial, cultural and reputational perspective, the NBA was much better off acting promptly to ban Sterling from the sport, rather than just slapping his wrists or just distancing the league from Sterling's actions.

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I highlight this because, sometimes, in an effort to avoid litigation at all costs, HR professionals fail to step back and do a broader risk assessment. They look at the narrow facts in front of them -- the who, what and where of an employee-relations dispute -- and forget to consider the broader context in which things happen. They probably come by this focus honestly -- there's usually legal counsel somewhere in the background directing them to manage the situation in a way that eliminates any risk of litigation.  

But there are situations -- such as the one confronted by Commissioner Silver – in which taking the path of "least litigation" is not the right path.

A broader risk assessment of the Sterling episode shows that a path limiting the chance of litigation really was the riskier path. There was greater risk in failing to take strong action because inaction would, at a minimum, harm employee, player, and customer engagement and loyalty, as well as tarnish the NBA brand.

HR executives have to understand the broader business context of the issues they grapple with. By undertaking and providing a well-reasoned risk assessment, they will be able to guide a CEO or senior executives to take strong action when it's the right thing to do, even though it's likely to result in litigation.  

No HR executive wants to be in a position of advocating action that has a high risk of litigation, but HR executives shouldn't run away from making such a recommendation when they assess the risk and believe it's the better path forward. Think of it as your Adam Silver moment.

Susan R. Meisinger, former president and CEO of the Society for Human Resource Management, is an author, speaker and consultant on human resource management. She is on the board of directors of the National Academy of Human Resources.

 

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