How Can Activision Blizzard Rebuild Trust?

Values matter. Employee behavior matters even more. 

Activision Blizzard, for years a wildly successful American video game company, now finds itself in turmoil. A Wall Street Journal article reports that the company has fostered a toxic culture where women are treated horribly. According to The Wall Street Journal, Activision’s CEO, Bobby Kotick, knew about instances of sexual misconduct and alleged rapes of women by employees of the company. But he failed to inform the company’s board of directors of everything he knew even after Federal regulators began investigating incidents in 2018. Activist investors are calling for Kotick’s ouster with the company’s stock price dropping. Many employees staged a walkout. 

The company’s reputation has been tarnished. Where does Activision go from here? 

Activision’s Problems Go Deeper Than Its CEO’s Behavior 

Although activist investors are focusing on the ouster of the company’s CEO, Activision’s problems permeate the entire work culture. The Wall Street Journal reports numerous occasions of toxic employee behavior that demeans women. In fact, the California Department of Fair Employment and Housing filed a lawsuit in July alleging that the company ignored numerous complaints by female employees of harassment, discrimination, and retaliation. 

According to the lawsuit, Activision has “fostered a pervasive ‘frat boy’ workplace culture that continues to thrive. In the office, women are subjected to ‘cube crawls’ in which male employees drink copious amounts of alcohol as they ‘crawl’ their way through various cubicles in the office and often engage in inappropriate behavior toward female employees. Male employees proudly come into work hungover, play video games for long periods of time during work while delegating their responsibilities to female employees, engage in banter about their sexual encounters, talk openly about female bodies, and joke about rape. Unsurprisingly, [Activision’s] ‘frat boy’ culture is a breeding ground for harassment and discrimination against women. Female employees are subjected to constant sexual harassment, including having to continually fend off unwanted sexual comments and advances by their male co-workers and supervisors and being groped at the ‘cube crawls’ and other company events. High-ranking executives and creators engaged in blatant sexual harassment without repercussions.” 

The lawsuit also notes that “[f]emale employees receive lower starting pay and also earn less than male employees for substantially similar work” and do not achieve high-ranking management positions.  

The details of the court filings are even more troubling. It’s clear that at Activision, employee behavior is inconsistent with the company’s stated values that include responsibility and integrity. According to The Wall Street Journal, since the California lawsuit was filed, Activision has received more than 500 reports from current and former employees alleging harassment, sexual assault, bullying, pay disparities and other issues. 

The California lawsuit is not the only instance of regulators acting. As noted by The Wall Street Journal, “The Equal Employment Opportunity Commission, which has been investigating Activision since 2018, said in a complaint made public in September that employees endured ‘sexual harassment that was severe or pervasive to alter the conditions of employment.’ Activision said it agreed to pay $18 million to settle the EEOC’s case. The company said at the time it would take other steps to ‘prevent and eliminate harassment.’” 

The court filing and reports about management-level tolerance and cover-up of misconduct are troubling enough in and of themselves. They also contrast with a shift in societal expectations of businesses. The anger voiced by activist investors reflect this shift. In recent years, the rise of stakeholder capitalism reflects a growing expectation that companies align their profits with how they treat their people. And a growing number of job seeker and employees value diversity in the workplace, which contrasts with how Activision operates.  

What Activision Should Do 

Activision needs to get its house in order. Transparent communication is part of the solution. Fortunately, the company is taking action already. After first being dismissive of the California lawsuit in July, Activision faced sharp blowback. The company read the room, stopped complaining about the lawsuit, and announced a number of changes. For instance, Activision is adopting a zero-tolerance harassment policy in which those who were found to have harassed employees or retaliated against those who reported discrimination would be fired, rather than possibly receiving a written warning or other disciplinary action first.  

Activision will also issue an annual report about pay equity – which would make actually make Activision a vanguard in this area. According to Investis Digital research, few companies report pay equity.   

Activision also said that it “will be monitoring the progress of our business units, franchise teams, and functional leaders with respect to workplace initiatives and we will provide a status report quarterly. We also will be adding a dedicated focus on this vital work in our annual report to shareholders and in our annual ESG report with information on gender hiring, diversity hiring, and workplace progress.” This point is crucial. To rebuild trust, Activision needs to match its actions with transparent reporting. Right now, the narrative about Activism focuses on the behavior of its CEO. The company should also discuss more openly and widely what it is doing to address the larger cultural issues. To its credit, Activision is publishing updates on its website, as this example shows.  

So far, the company’s board has issued a statement pointing out the changes that Activision already committed to making. The board also extended a vote of confidence for its CEO (“The Board remains confident that Bobby Kotick appropriately addressed workplace issues brought to his attention”).  

But one voice remains conspicuously absent: women. We’ll know that Activision is making real progress when women come forward to discuss how the company is changing and improving. This is not happening right now. In fact, a woman who was named co-head of Blizzard (acquired by Activision in 2008), is leaving the company because she lacks faith in its ability to improve its culture, according to The Wall Street Journal and other news reports. 

Importantly, Bobby Kotick has been communicating to employees how Activision is acting. He also wrote to employees, “I truly wish not a single employee had had an experience at work that resulted in hurt, humiliation, or worse – and to those who were affected, I sincerely apologize. You have my commitment that we will do everything possible to honor our values and create the workplace every member of this team deserves.” He needs to discuss his contrition more openly and consistently in public, too. 

Activision is taking steps to improve. The company has a long road ahead to rebuild trust. 

Contact Investis Digital    

Investis Digital helps businesses build trust with all their audiences through an approach known as Connected Content, in which we align all aspects of a brand’s narrative with its values and culture. To learn more, contact us.