Neil Getnick on Corporate Cultures of Integrity

In the early 1970s, Neil Getnick and Andre Balazs were students at Cornell University. They were both involved in a student movement for social responsibility in Cornell’s university investment portfolio. The focus was on U.S. corporations doing business in apartheid South Africa.

Getnick went on to become a famed lawyer representing whistleblowers and pushing corporations to improve their corporate cultures.

Balazs went on to own a southern California boutique luxury hotel – the Chateau Marmont – the site of fancy Oscar night parties hosted by Jay Z and Beyounce.

Fast forward to the Covid pandemic when the hotel industry ground to a halt and thousands of workers were laid off. This led to predictable labor strife. The Chateau Marmont was no exception.

Balazs called on Getnick to help him settle the matter.

“We’ve had a long history together fighting for social and economic justice,” told the Corporate Crime Reporter in an interview earlier this month. “The issue at hand had to do with a bitter and rancorous labor dispute that arose after post-pandemic layoffs. Ministers associated with the Southern Christian Leadership Conference of southern California joined that protest. And that was meaningful, given the history – Andre and I and the Reverend Jackson, the Honorable John Lewis working together over the years.”

“At one point, Andre went down to the protest and asked to speak with the pastor who was leading that group – Pastor William Smart. And on Pentecost Sunday in June 2022, Pastor Smart reached out to Andre and invited him to sit down together with the head of the union, Kurt Petersen, to see if there could be a resolution.”\

Your friend Andre has liberal values from back in college. His liberal values apparently haven’t changed. How did it get to the point where his workers at the hotel went out on strike?

What were the issues?

“No one went out on strike. There ended up being a labor protest in the wake of the post-pandemic layoffs. As you might recall, in the spring of 2020, the hotel industry ground to a halt. That resulted in significant layoffs at the hotel and that in turn led to these protests.”

Were the workers saying – we know you have no business because of Covid, but keep us on salary anyway?

“There was simply a difference of opinion as to whether a policy could be pursued that was more worker friendly,” Getnick said. “That turned into a rather bitter and rancorous situation. It proved very helpful when Pastor Smart interceded and had everyone sit down together. When everyone sat down together, a path of resolution quickly presented itself. And that’s what everyone chose to pursue. It was pursued successfully and a lot more came out of it than just simply a collective bargaining agreement.”

Were you in on the meetings?

“I was part of the initial meeting in June 2022. When we sat down we believed the most important thing from the outset was to make clear who we were and where we were coming from and the sincerity of our efforts.”

“I recall very specifically saying at that first meeting – we are not here to tolerate or even to accept the workers and their union supported efforts. We are here to embrace them. Let’s work together. Let’s make that happen.”

“That was a surprise to the union president Kurt Petersen and his counsel Jeremy Blasi. And as we continued to talk, we realized that we had among all of us in that room, including Pastor Smart, a shared background, shared values, shared vision and a shared mission. One of the things that we discovered was that we all early had played a role supporting the United Farm Workers movement led by Cesar Chavez and Delores Huerta.”

“Once that was established, we were just off in a better direction. Negotiations started very quickly after that. Within two months we had a defined bargaining unit. And four months after that, they fully resolved the collective bargaining agreement. And as these things go, I’m told, that’s a rather speedy resolution.”

“Interestingly, I do not have a background in labor negotiations. And in an odd way, I think that worked to our advantage.”

Hotel Chateau Marmont is a boutique hotel. How does this labor resolution differ from how other larger hotels resolved their post-pandemic labor troubles?

“The Chateau reached a resolution in December 2022. When the rest of the industry in effect went on strike in July 2023, the Chateau was not part of it. Much of that has been resolved, but not all of it. The Chateau Marmont remains a positive model for labor and management relations in the industry.”

Race was central to this dispute. The Chateau was the site of last year’s Gold Party, hosted by Jay-Z on Oscar night. Last year, the party was picketed by labor organizers.

The Hollwood Reporter ran articles about the labor dispute. In September 2020, employees shared with the Hollywood Reporter a variety of systemic workplace concerns, including “racial bias in hiring and promotion, racist treatment of guests, as well as racist comments alleged to have been made by the then-managing director toward staff. There is now a new managing director, and multiple civil lawsuits that were subsequently filed alleging racial discrimination have since been settled.”

Were the settlements of these lawsuits part of this labor resolution?

“There were significant disagreements about some of those allegations, in particular the Hollywood Reporter article. Having said that, I have no desire and I don’t think it’s productive to attempt to relitigate that. I will simply say that the two litigations that were associated with the labor protests were resolved. And they were resolved amicably during the course of the negotiations. Once people began to understand one another and put things in context, everything began to fall into place.” 

“There was a more problematic third lawsuit which was not associated with the union.  That one made the type of allegations cited in the Hollywood Reporter article which you have referenced. Suffice it say that lawsuit was dismissed for a failure to adduce any proof, with sanctions assessed against the claimant and counsel for their conduct which the adjudicator characterized as ‘vexatious.’”

You believe that this can be a model to resolve not just labor disputes, but other kinds of corporate disputes.

“This comes down to a distinction between law driven compliance and business driven integrity. Companies typically rely on law driven compliance rather than business driven integrity. Law driven programs seek to avoid punishment by meeting the letter of the law, often without developing a deeply rooted culture of integrity. And in many cases, law driven programs are only grudgingly tolerated by executives and employees and they often fail as a result.”

“By contrast, a business driven integrity program is much more likely to prove effective because business people from the top down, not just those in the compliance or legal departments, embrace and promote it as essential to the long term success of the company. A business driven integrity program is seen throughout the company as a profit center and as a competitive advantage and not as a cost center or an obstacle.”

“Let’s use that as the starting point.” 

Your friend who owns the Chateau Marmont has a mindset and politics amenable to this kind of settlement. But probably the vast majority of CEOs don’t have that mindset that is amenable. Is this a model just for a limited number of CEOs who head companies with a culture of integrity?

“It can and should be more significant than that. The Chateau Marmont now has an envied position in the hotels operating in Los Angeles, by virtue of the business model that has been able to adapt itself to the presence of unionized employees and still operating a master class luxury boutique hotel. There are many who have said in the past that luxury boutique hotels and unions are incompatible. We proved the opposite. The rest of the industry looks at the Chateau as having overcome that.”

“You mentioned the Gold Party hosted by Jay Z and Beyonce. That was not picketed in 2023, but in 2022 when the protests were taking place The more meaningful event that took place at the Chateau in 2023 was the annual celebration of SAG AFTRA after resolving its long standing union strike. Where did they choose to celebrate? They chose to celebrate at the Chateau Marmont because the Chateau was recognized as friendly ground. That speaks volumes to what was accomplished reputationally by putting good conduct into the business model, making it a competitive advantage.”

“That’s very important. What do we mean by good conduct? Integrity, transparency, good governance and social responsibility. It all sounds very soft. However, that good conduct has to be measured in profitability, productivity, effectiveness and efficiency. Those can be accomplished. And those companies that follow that program of developing such a culture can achieve that.“

“Last month the Southern Christian Leadership Council bestowed its Martin Luther King Beloved Community award on Andre Balazs, Kurt Petersen, the president of the union, as well as myself. That’s a big deal. It makes a strong statement. The beloved community was the culminating vision in Dr. King’s vision for a more just society.” 

“It was through the starting action of Pastor Smart that the Chateau Marmont and the union went on to achieve a mutually beneficial collective bargaining agreement. And make no mistake about it, that’s a good thing. But Pastor Smart led us to higher ground. A contract is transactional whereas a covenant is transformational. And we ended up with a covenant embodied by the present alliance of the hotel and the union and the SCLC that allows them to pursue a continuing initiative for social and economic justice. That goes beyond the four corners of the collective bargaining agreement. That’s the greatest statement of what it means to have and to act on a culture of integrity.”

[For the complete q/a format Interview with Neil Getnick, see 38 Corporate Crime Reporter 29(12), July 15, 2024, print edition only.]

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