Why NDAs for Workplace Discrimination or Harassment Harm More Than Help

This post focuses on the third tenet of the pledge: We commit to not forcing or mandating silence or confidentiality for the person coming forward.

The Pledge – We commit to:

Cultivating an open and inclusive culture for employees to feel comfortable coming forward when an incident occurs
Believing the person coming forward, investigating the incident, and taking appropriate disciplinary action based on the findings.
Not forcing or mandating silence or confidentiality for the person coming forward.
Removing relationships and cutting contracts with companies that perpetuate harm.

Why is this tenet important?

NDAs (non-disclosure agreements) catapulted onto the news cycle during the #metoo movement due to the restrictive nature they impart on the signer. While NDA is the broader term, we focus on the non-disclosure provision commonly found in a workplace harassment incident. This provision ensures that the affected parties do not discuss the settlement or situation with the public. While these provisions protect the company, they negatively impact the organization and the culture, especially when used regularly.

In a Forbes article from 2020, research shows that 54% of women report sexual abuse in the workplace. At the same time, 95% of their abusers receive no punishment. Additionally, 90% of workers experience bullying, and 61% of their bullies are their superiors. Further, 60% of US workers experience or witness discrimination, and 40% experience retaliation after reporting. Lastly, estimates indicate that 1/3 of the workforce is accountable to an NDA. These statistics may suggest that US companies focus on preserving their image over their employees.

The Broader Issue

A 2020 article in the Human Resource Development International Journal states, “[…] what appears on the surface to be a responsibility towards employees, from a structural perspective, is little more than damage control. […] remaining silent about sexual harassment [is] framed as protecting the reputation of both the individual and the institution. Any opportunity for organizational learning, change, and improvement is lost.” Companies use NDAs for many reasons, but this evidence highlights the core issue with silencing individuals: the culture is unchanged. Many companies operate under the assumption that the person reporting the incident is somehow an outlier and not indicative of a more significant issue.

As stated above, many entities miss out on learning opportunities and growth by mandating confidentiality. The message confidentiality sends to employees is the company does not want you coming forward and reporting (see the first two tenets). If you do come forward, you may face retaliation. Additionally, the company’s culture is one in which the image of the company is more important than the people. These assumptions damage the organization overall, and if this behavior goes unchecked, it becomes a more significant cultural issue that could impact both recruiting and retention. It is paramount that the insurance industry places a strong emphasis on cultural change.

The Current Situation

The talent shortage in insurance started in 2019. As of 2021, it is labeled a crisis. The attrition of current staff and the expansion of business operations create a gap that is widening. The apparent talent pools are with the younger generations: Millennials and Gen Z. These generations like connection, flexible work environments, and resoundingly support accountability and transparency in their workplace. Millennials represent more of the workforce than any other generation. As a result, cultural issues are difficult to ignore in the coming years as the industry looks for more talent.

Learn & Grow

If we take a different perspective and review NDAs from a project management standpoint, the NDA ends the process before learning and growth happen. When conducting a project of any kind, one of the most crucial steps is how you close out. Are you taking lessons learned from the project to implement and improve your organization the next time it occurs? If not, how do you change or prevent future outcomes?