THE INC. LIFE

#MeToo Has Ended Careers and Now It May Kill Its First Company

Culture can propel a company to greatness — or into the dust bin of history.

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BY Erik Sherman - 13 Feb 2018

#MeToo Has Ended Careers and Now It May Kill Its First Company

PHOTO CREDIT: Getty Images

The #MeToo movement has set off the implosion of a growing number of careers. Now it's on the brink of taking down an entire business: The Weinstein Company, with yesterday's announcement of a civil rights lawsuit filed by the State of New York.

At least 50 women, including high-profile entertainment figures, have publicly accused co-founder Harvey Weinstein of actions spanning from sexual harassment to rape. The chance the company will now collapse before finding a willing buyer is an extreme example of how corporate culture can destroy businesses as well as drive them to success.

New York Attorney-General Eric Schneiderman filed suit on February 11. The complaint alleged "a years-long gender-based hostile work environment, a pattern of quid pro quo sexual harassment, and routine misuse of corporate resources for unlawful ends that extended from in or about 2005 through at least in or about October 2017."

The lawsuit insists that sale of the company ensure compensation to victims "and that neither perpetrators nor enablers will be unjustly enriched," as Schneiderman said in a statement. That may have been the kiss of death.

The Weinstein Company had struggled since revelations of Harvey Weinstein's behavior and an employment contract that reportedly let him buy his way out of trouble. The news caused the company's new radioactive status in the entertainment business.

As top talent, their agents, and potential partners and distributors turned their backs on Harvey Weinstein and his brother, Bob (who was also accused of sexual harassment), the business was in trouble. A Variety story claimed that debt topped $500 million. Film releases were being canceled, choking revenue. One law firm long associated with the Weinstein Company walked away from its client over unpaid bills, according to the Hollywood Reporter.

The Weinstein Company needed a buyer that could take on the debt above a selling price and was in talks with a group. But the lawsuit could create a new level of debt that didn't previously existed and a court could impose significant restrictions on a deal's terms.

In other words, Schneiderman just dropped a Sunday night bombshell on anyone who might buy the company.

An existing deal to sell the Weinstein Company collapsed as a result, according to the Wall Street Journal. Too much was up in the air, and buyers were uninterested in taking on what could be an even bigger risk than they already faced.

Corporate culture is a tricky social dynamic to navigate. In some cases, it can propel a company forward as employees buy into an overall vision and incorporate attitudes and habits that benefit the business. Just as easily, a bad corporate culture can be a disaster, as with Uber.

A major change in management in such a company can sometimes usher in a new culture. However, such change is a race against time. Can you alter how people act and a company performs before the fundamental flaws -- and the problems they create -- engulf the business and burn it to the ground? This is like emergency life-saving surgery and there is always a risk that efforts will be too late.

That was partly what a purchase of the Weinstein Company could have meant.

Just as old nitrate-based film stock was a terrible fire hazard in the movie business, practices, cultures, and enablement of sexual harassment and assault are a big danger to the industry today. The Weinstein Company and its management may learn that no amount of fire extinguishers could be enough to save the day.

The lesson isn't one just for film and video companies. If there are basic problems in the culture of your company, you need to address them now. The longer you wait, the more they fester and grow. It's like buying business success on credit. The bill can one day run so high that you can never pay it off. And when you can't, it's the end.

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