Penguin Canada: How Not to Manage a Sexual Harassment Suit

Nothing throws egg on a company's face like the whiff of a sex scandal. But when Penguin (PSO) had a chance to rise above gossip and rumor in the wake of its dismissal of Canadian CEO David Davidar for sexual harassment, the company made a weak attempt to save face by trying to cover it up. That not only served to put the whole mess in the public glare, but exposed a serious management flaw in the process.

Management is on the front line when it comes to handling harassment: first, to ensure the workplace doesn't cultivate such behavior; second, to take immediate action if there is a complaint; and third, to follow through with consequences for the perpetrator.

In Davidar's case, what was dished up first was his abrupt resignation. On the eve of his 25th anniversary with the company, Davidar announced that he wanted space to "see if I could do something other than managing a company" and to complete his third novel.

The problem was that Davidar's star was still rising. Since his appointment to Penguin Canada in 2003, he helmed a turnaround in the imprint's fortunes by doubling revenues and raising its literary profile (Davidar signed Joseph Boyden, who snagged a prestigious Giller Prize for his fiction). Recently he was named head of the Penguin International division, established to enter new markets in the developing world.

So when he pulled the plug, the rumors started thick and fast. Why would one of the most successful publishers in Canada just leave? Penguin PR had an opportunity to say something about the charges and end the speculation with a clear directive.

Instead, the company issued a vague statement about succession. His next-in-command locally would be out on maternity leave at the time of his departure, so Penguin said the position would probably be eliminated and the Toronto staff would report to the New York office. Penguin later claimed it would seek to replace him.

As gossip mill churned, the sexual harassment charge came out along with a bunch of other dirty laundry. Penguin fired Davidar because he was being sued by Lisa Rundle, former rights and contracts director of Penguin Canada. Rundle also accused the company of wrongful termination and is seeking $423,000 in damages from the company for "harsh, vindictive and malicious" treatment and $100,000 from Davidar personally.

Here was another opportunity to set the record straight, yet Penguin Canada simply dismissed Rundle's wrongful termination claim, saying, "She advised the company of her decision to leave after having declined to pursue other career opportunities within the organization."

With respect to its misleading statements about Davidar's resignation, the company issued this nugget only. "Mr. Davidar was asked to leave the company last month and his departure was announced on June 8. Mr. Davidar will play no further role in the company."