Five Lessons From the Ellen Pao Trial

The trial shaking Silicon Valley offers takeaways that'll transcend a verdict

Silicon Valley Awaits Verdict in Pao-Kleiner Trial

Closing arguments in the gender discrimination case against the venture capital firm Kleiner Perkins Caufield & Byers ended on Wednesday, March 25. Jurors are currently deliberating and will soon decide if gender was a significant factor in the decision not to promote and eventually to fire the 45-year-old former junior partner Ellen Pao.

Silicon Valley, to put it bluntly, is captivated. The case has pierced through the typically dull conversational haze around smartphone penetration and software disruption and touched on more sensational topics, such as the messy breakup of an interoffice romance and the uncomfortable idea that an industry that preaches meritocracy might instead be a hotbed of bias. Regardless of the outcome, important lessons can already be gleaned from the proceedings. While we wait for a verdict, which could come before week's end, they're well worth considering.

No organization is too small for an HR department

Kleiner Perkins didn't have an internal human resource department or clear policies around hiring and firing. The firm, with around 40 partners, said it was too small to need such an internal function; partners referred to themselves as a family that sorted out its business informally. They are now paying the price. Pao's attorneys pointed to a lack of clear guidelines around the improper conduct of a male employee and argued that it contributed to a delay in firing him. The firm also could have benefited from clearer ways to communicate to junior employees about their prospects for advancement. Pao presented herself as waiting for a promotion that never came.

Fostering diversity is a good business move

Venture capital is a boys club. Only 6 percent of VC investors are women, down from 10 percent in 1999, according to a 2014 study out of Babson College. (At Kleiner, 20 percent of the partners are women.) Studies repeatedly show that a diverse workforce with evenly balanced leadership committees make better decisions. At the time of some of the alleged conduct, the operating committee at Kleiner was mostly men over the age of 60. Not surprisingly, they missed some early opportunities to stop the case before it metastasized into the current imbroglio. Plus, companies are now voluntarily releasing annual diversity reports and are held publicly accountable by employees and outsiders for their numbers. Fostering a balanced workforce and leadership team blunts potential outside criticism and is the best way to avoid lawsuits like the Pao case. It's also the right thing to do.

Beware subconscious bias in the workplace

Pao's lawyers have largely asserted that she was the victim of the kind of subconscious bias that's frequently discussed by Lean In author and Facebook Chief Operating Officer Sheryl Sandberg. Do women get assigned more of the office "housework," such as taking notes in meetings? Do people favor qualities in men (hard-driving, sharp focus) while penalizing the same behavior in women? As Pao's lawyer asserted in closing arguments, negative factors in her performance review, such as the fact that she could be too aggressive and didn't work well in a team, were also cited in the review of male junior partners—but the men got promoted. Bias in the workplace often takes more subtle forms than overt sexual harassment, and everyone should be aware of it.

Find allies if you're going to file a discrimination lawsuit

Here's a lesson for prospective plaintiffs. Unlike class actions against investment banks and media companies, Ellen Pao stood alone in this case. Combined with some of the stranger elements of her personal story, this allowed Kleiner's attorneys to target her character and question her motives. Pao has said that there were other women at the firm, including three unnamed admins, who also expressed concerns about gender bias. Kleiner disputed this fact, and these unnamed colleagues didn't join her on the stand. (Kleiner's lawyers argued that Pao made up much of her evidence once she realized she was going to be fired. "As sometimes happens when a clever employee sees the writing on the wall, Ellen Pao went on the offensive," attorney Lynne Hermle said Wednesday.) If other women had joined Pao's case as co-plaintiffs or as part of a class action, she may have avoided some of the personal arguments that have come to define her case in the press and, perhaps, with jurors.

Silicon Valley no longer gets a free pass

Early in Apple's history, Steve Jobs famously said he wanted to be a pirate instead of joining the navy. That attitude has defined the business community here ever since. The tech industry values disruptors who do everything differently and run their companies with a tenacious focus, at the expense of everything else. But look around the valley now, and all you see is the navy. This is now the business establishment. And that means the same set of rules—around treatment of employees, paying a fair share of taxes, and yes, gender discrimination, are going to increasingly apply.

It's perhaps no accident that since the Pao trial started, new discrimination and harassment lawsuits have come against Facebook and Twitter, along with allegations of other forms of harassment and even rape threats in the workplace. Companies here, as everywhere, are going to be held accountable for their employee's actions.

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