Sexual Harassment at Infosys

Submitted To:

Mr. Vikrant Prashar

Asst. Professor,LHSB

Submitted By:

Prashant Gupta

RQ1903A22, MBA (H)

Lovely Professional University

 Sexual Harassment at Infosys: Phaneesh Murthy Case

Sexual harassment is all about expression of male power over women that sustain patriarchal
relations. It is used to remind women of their vulnerability and subjugated status. In a society
where violence against women, both subtle and direct, is borne out of the patriarchal values
operating in society, force women’s conformity to gendered roles. These patriarchal values
and attitudes of both men and women pose the greatest challenge in resolution and prevention
of sexual harassment.

Sexual Harassment affects all women in some form or the other. Lewd remarks, touching,
wolf-whistles, looks are part of any woman’s life, so much so that it is dismissed as normal.
Working women are no exception. In fact, working women most commonly face the backlash
to women taking new roles, which belong to male domains within patriarchy. Sexual
Harassment at work is an extension of violence in everyday life and is discriminatory,
exploitative, thriving in atmosphere of threat, terror and reprisal.

Studies find that sexual harassment is still endemic, often hidden, and present in all kinds of
organisations. Yet it is still not always viewed as a problem, which has to be systematically
tackled. The issue is of concern for both women and the employers as studies show that
sexual harassment touches lives of nearly 40-60% of working women.

Thus, combating sexual harassment involves developing understanding of what is sexual

harassment and change of attitudes in all- be it employees, colleagues, friends, administrators,
employers or the law makers.

Sexual harassment is any unwelcome sexually determined behaviour, such as:-

 Physical contact
 A demand or request for sexual favours
 Sexually coloured remarks
 Showing pornography
 Any other physical, verbal or non-verbal conduct of a sexual nature.

Sexual Harassment takes place if a person:

subjects another person to an unwelcome act of physical intimacy, like grabbing,

brushing, touching, pinching etc.
makes an unwelcome demand or request (whether directly or by implication) for sexual
favours from another person, and further makes it a condition for employment/payment of
wages/increment/promotion etc.
makes an unwelcome remark with sexual connotations, like sexually explicit
compliments/cracking loud jokes with sexual connotations/ making sexist remarks etc.
shows a person any sexually explicit visual material, in the form of pictures/cartoons/pin-
ups/calendars/screen savers on computers/any offensive written material/pornographic e-
mails, etc.
 engages in any other unwelcome conduct of a sexual nature, which could be verbal, or
even non-verbal, like staring to make the other person uncomfortable, making offensive
gestures, kissing sounds, etc.

It is sexual harassment if a supervisor requests sexual favours from a junior in return for
promotion or other benefits or threatens to sack for non-cooperation. It is also sexual
harassment for a boss to make intrusive inquiries into the private lives of employees, or
persistently ask them out. It is sexual harassment for a group of workers to joke and snigger
amongst themselves about sexual conduct in an attempt to humiliate or embarrass another
person.

Quid pro quo and hostile work environment are the two broad types of sexual
harassment:

Sexual harassment at workplace is generally classified into two distinct types. 'Quid pro
quo', means seeking sexual favours or advances in exchange for work benefits and it occurs
when consent to sexually explicit behaviour or speech is made a condition for employment or
refusal to comply with a 'request' is met with retaliatory action such as dismissal, demotion,
difficult work conditions. 'Hostile working environment' is more pervasive form of sexual
harassment involving work conditions or behaviour that make the work environment 'hostile'
for the woman to be in. Certain sexist remarks, display of pornography or sexist/obscene
graffiti, physical contact/brushing against female employees are some examples of hostile
work environment, which are not made conditions for employment.

The fall of a High Priest

This is a story of blackmail, sex, stalking, threats, oppression, hurt feelings and revenge.
Interestingly, all this happened in and around the US offices of Infosys,one of India's most
well-known and respected software companies, between October 1999 and December 2000.

As a result, Infosys became entangled in a scandal, that dented its reputation as a company
that had the best corporate governance structure in the country. The events that took place
during October 1999 and December 2000 became public knowledge in India only when
Phaneesh Murthy (Phaneesh), the head of the sales and marketing, and communication and
product services division of Infosys (and a director on the board), resigned from his post in
June 2002. Phaneesh said that he had resigned in order to focus on fighting a lawsuit filed
against him in the US. The lawsuit, filed by his former secretary, Reka Maximovitch (Reka)
alleged that Phaneesh had sexually harassed her and unlawfully terminated her employment.
The company's share price declined by 6.6% soon after Phaneesh left.
The case attracted a lot of media coverage since a sexual harassment lawsuit implicating such
a senior official had never been heard of in the Indian corporate world. It was also being seen
as an event that could make Indian companies stop ignoring the sensitive issue of sexual
harassment at the workplace.

While sexual harassment of female employees was prevalent in the country, it was either not
reported or ignored. Either the victims kept quite due to fear of social ridicule (laugh at) and
fear of losing their jobs, or the matter was somehow hushed up by the management. The
stance adopted by Infosys in this case seemed to go against its image of a company
considered to be a model of good corporate governance. Analysts claimed that the company
had kept the issue under wraps for a long time. Media reports blamed Infosys for neglecting
to formulate/implement a structured policy regarding sexual harassment and for
compromising on moral values for an'economically-valuable' person like Phaneesh.

Analysts wondered how a company that Forbes had once described as "a model of
transparency,not just for the rest of corporate India but for companies everywhere," do such
things! The saga of Phaneesh, Reka and Infosys and the issue of sexual harassment at the
workplace (in India as well as abroad) were debated heatedly in corporate and media circles,
as many more shocking events unfolded over the next one year.

Background Note

The sexual harassment of employees manifests itself in different ways, depending on the
social norms prevalent in various parts of the world. Broadly speaking, sexual harassment at
the workplace can be divided into two categories: 'quid pro quo' and 'hostile working
environment.' ridicule
Quid pro quo involves making the conditions of employment contingent on the employee
(prospective/existing) granting the employer sexual favors. The employer makes it very clear
that hiring, promotions, perks, facilities etc. would be possible only if the employee consents
to the former's sexual advances. This is a very 'easy to identify' and comparatively 'easy to
prove' form of sexual harassment.

The 'hostile working environment' form of harassment, which is the basis of most of the court
cases filed, is more difficult to identify and prove. As per a 1993 US Supreme Court ruling,
this has been defined as, "When the workplace is permeated with 'discriminatory
intimidation, ridicule, and insult that is 'sufficiently' severe or pervasive to alter the conditions
of the victim's employment and create an abusive working environment."

Thus, any employee who indulges in speech or conduct of sexually discriminatory nature,
without encouragement from/being welcomed by the employee so as to create an abusive
working environment and negatively affecting the employee's performance would fall under
the purview of this form of harassment. Though the law clearly defines sexual harassment,
the diverse socio-cultural environment of different countries complicates the matter.
Reportedly, the rather 'free' behavior of Japanese bosses towards their female subordinates
would come as a shock to people from the US or many other parts of the world. Even within
a country, organization or office, the exact nature of the incident depends on the attitude,
upbringing and behavioral patterns of the people involved.

Reka vs. Phaneesh & Infosys

Phaneesh was an integral part of Infosys' success story. While Chairman and Chief Mentor
Narayana Murthy and a few others established Infosys in India back in 1981, Phaneesh
successfully set up the company's overseas businesses.

He was often called the 'other Murthy' of Infosys and had many admirers within and outside
the company. Not surprisingly, he was the highest paid executive in the company with a take
home package of Rs 20 million. Belonging to a middle-class South Indian family, Phaneesh
graduated from one of India's premier business schools. Before joining Infosys, Phaneesh
was working with another software company, Sonata Software as a regional manager. He was
said to be one of the main reasons for the company's good performance. In 1992, Phaneesh
joined Infosys, then a $ 2 million company with a negligible presence in the US. Within three
years, Phaneesh became the head of sales at the company, and in 1996, he was made the head
of worldwide sales.

Reka Maximovitch, 30, an American citizen of Bulgarian descent, is behind Phaneesh

Murthy's abrupt resignation as Infosys Technologies' head of sales and marketing in the US.
Ms. Maximovitch, who had been Mr. Murthy's executive assistant, contends she was
subjected to verbal and visual sexual harassment and unwanted sexual advances. She also
contends that the company failed to take reasonable steps to keep the harassment from
occurring and recurring.
Timeline:

 18 October 1999: Reka Maximovitch joins Infosys as Phaneesh Murthy’s assistant

 December 2000: Reka Maximovitch quits Infosys
 January-June 2001: Reka takes out two restraining orders against Phaneesh; of
which she alleges at least one was violated
 17 December 2001: Reka files a case against Phaneesh Murthy and Infosys for
"sexual harassment and wrongful termination"
 January 2002: Phaneesh warns Nilekani of the possibility of a sexual harassment
case against him and the organization. Says he is innocent and the company is not at
risk
 23 July 2002: Phaneesh quits
 25 April 2003: Case settled out of court for $3 mn, payable in a month

According to the complaint, Maximovitch started working for Murthy around October 18,
1999. Immediately after she took over her job, "Murthy began subjecting the plaintiff to an
ongoing campaign of sexual harassment and pressured her to engage in a sexual relationship
with him.

Maximovitch alleges that it was a "do-it-or-else" situation for her from the word go. She
alleged that Murthy threatened to fire her if she did not comply with his advances. "Murthy
repeatedly told the plaintiff that he answered to no one regarding how he ran the US offices,"
the lawsuit claimed. For fear of losing her job, Maximovitch said she "capitulated to Murthy's
incessant advances and had a single, sexual experience with Murthy, which she immediately
regretted".

Even as uncertainty about the outcome of Reka's suit continued, Phaneesh seemed to have
moved on. Media reports mentioned how many IT companies in India were trying to lure him
to work for them.

It was also reported that Phaneesh was planning to promote his own business process
outsourcing (BPO) firm. Infosys meanwhile issued a press release that categorically stated
that Phaneesh would not be taken back after the case was settled. In December 2002,
Phaneesh and his wife Jaya Murthy launched Primentor (in California), an advisory firm, to
outsource consulting for clients and vendors.

For clients, the services were to include partner/vendor selection, deal structuring and on-
going contract administration; for vendors, the services were to include strategy consulting,
service definitions, brand consulting, blueprints for the future, sales, and account
management training.

At the press conference, Narayana Murthy, Nilekani and Mohandas Pai (among others), made
public the entire sequence of events in the case. Firstly, Narayana Murthy made it very clear
that Phaneesh was very much a party to the settlement deal and that he had signed the
documents himself.

Also, Infosys had reserved the right to proceed against him for his conduct and for the fact
that he did not contribute financially to the settlement. Nilekani said that Phaneesh had first
mentioned the lawsuit to him in January 2002, portraying it as a very minor issue.

Recollecting the events, Nilekani said, "He told me he was innocent and that the charge was
without merit, and the company was not at risk. He did not tell me anything else about the
relationship or the other matters of things being filed against the company." However, when
the issue became more serious in June 2002 and Infosys was served a legal notice, the
company's board stepped in.

At the press conference, Narayana Murthy did not answer a question about the fact that Reka
did not seek redressal of her grievances through the company's internal systems. However,
his refusal to answer did not necessarily mean that the company's internal systems were still
not equipped to handle such problems.

In fact, Infosys had taken several measures to strengthen its grievance redressal procedures
and had designed and implemented an effective sexual harassment policy. Narayana Murthy
said, "The litigation is behind us. We have taken further steps to strengthen our internal
processes and improve the checks and balances to handle similar situations." Mohandas Pai
added, "We have conducted several training programs, widened the dissemination of
information and met employees on this issue." Infosys conducted a course for all its officers
and members (in India as well as abroad) on sexual harassment and the importance of being
sensitized about the issue. The code of conduct provided in the employee manual was
modified in line with the above decision.
Conclusion
The lawsuit filed by the Reka against Phaneesh Murthy for sexually harassing her at the
workplace. After the lawsuit the shares of Infosys has fallen down on the stock exchange.
The settlement between them was done out of the court. Infosys agreed to pay $3 million in
an out of court settlement with Reka Maximovitch, who had brought sexual harassment
charges against Phaneesh, then the company's director. Since Infosys was considered to be
one the ethical organisations in the country. Infosys settled this matter because it believed it
was in the best interests of the company to do so.

Narayana Murthy said Infosys had taken further steps to strengthen its internal process and
improve the checks and balances to handle similar situations.

"Besides checks and balances, we have made additional changes in the code of conduct and
trying to explain what sexual harassment is and how to handle the situation. We have held
training courses to all our management and other staff," Nilekani said.

Lessons to be learned from this case

 Though out-of-court settlements were the norm for most workplace sexual harassment
suits the world over, it clearly was not the best solution.
 Instead of addressing the problem, this solution simply paid off the victim, so that the
accused could walk away.
 The larger issue of the emotional, physical and financial damage caused to the victim,
could be dealt with only if strict policies and guidelines regarding sexual harassment were
established by the companies.

Policies to Adopt to Prevent and Address Sexual Harassment:

 sexual harassment policy,

 general harassment policy,
 policy about how sexual harassment investigations are conducted in your company, and
 policy that forbids an employee in a supervisory role from dating a reporting employee
and that details the steps required should a relationship form.
 Strategies for Prevention
There are a number of steps that you can take to reduce the risk of sexual harassment
occurring in your workplace. Although you may not be able to take all of the steps listed
below, you should take as many of them as you can.

 Adopt a clear sexual harassment policy. In your employee handbook, you should have a
policy devoted to sexual harassment. That policy should:

o define sexual harassment

o state in no uncertain terms that you will not tolerate sexual harassment
o state that you will discipline or fire any wrongdoers
o set out a clear procedure for filing sexual harassment complaints
o state that you will investigate fully any complaint that you receive, and
o state that you will not tolerate retaliation against anyone who complains about
sexual harassment.

 Train employees. At least once a year, conduct training sessions for employees. These
sessions should teach employees what sexual harassment is, explain that employees have a
right to a workplace free of sexual harassment, review your complaint procedure, and
encourage employees to use it.

 Train supervisors and managers. At least once a year, conduct training sessions for
supervisors and managers that are separate from the employee sessions. The sessions should
educate the managers and supervisors about sexual harassment and explain how to deal with
complaints. To learn more about dealing with employee complaints, see Nolo's
article Guidelines for Handling Discrimination and Harassment Complaints.

 Monitor your workplace. Get out among your employees periodically. Talk to them about
the work environment. Ask for their input. Look around the workplace itself. Do you see any
offensive posters or notes? Talk to your supervisors and managers about what is going on.
Keep the lines of communication open.

 Take all complaints seriously. If someone complains about sexual harassment, act
immediately to investigate the complaint. If the complaint turns out to be valid, your response
should be swift and effective. For more about dealing with complaints, see Nolo's
article Guidelines for Handling Discrimination and Harassment Complaints.