Activision CCO Steps Into a Mess

Looks like Frances Townsend, the chief compliance officer for Activision Blizzard, is going through some things this week. The state of California just sued the video game giant for allowing a sexually harassing culture, Townsend then circulated an email to employees calling the allegations false, and now employees are furious at her statement.

This is a fast-moving story, so let’s start with the California lawsuit. The state’s Department of Fair Employment filed the suit on July 21, accusing Activision of a long-time “frat boy workplace culture” where female employees “are subjected to constant sexual harassment.” 

The harassment alleged in the lawsuit included “cube crawls” where male employees got drunk and wandered from one cubicle to another, ogling or harassing female employees; male employees hitting on female coworkers at company events or tradeshows; and even a tragic case where a female employee in a sexual relationship with her male boss killed herself while the two were on a business trip. The woman had been distraught, the lawsuit says, because male coworkers had been sharing explicit photos of her.

The lawsuit also alleges pay and promotion discrimination against Activision’s female employees. Women were hired for more menial jobs, offered lower pay than male coworkers in similar roles, endured more micro-managing (while male coworkers were hungover or playing video games on the job), and were promoted at slower rates. 

So, all around… yuck. This is not the way a company with $8 billion in annual revenue should be conducting itself.

Activision Responds; Townsend Infuriates

Activision, to no surprise, takes issue with the allegations in the California lawsuit. The company first issued a statement saying, “We value diversity and strive to foster a workplace that offers inclusivity for everyone.” Moreover, the California lawsuit “includes distorted, and in many cases false, descriptions of Blizzard’s past … [Regulators] rushed to file an inaccurate complaint, as we will demonstrate in court.”

The statement goes on to say Activision has implemented numerous measures in recent years to improve its culture and to make management more responsive to employee complaints. Those measures included more internal reporting channels, an internal investigations team, and a stronger commitment to diversity and inclusion (without offering specifics on what that stronger commitment might be). 

Then on July 23, senior executive J. Allen Brack (president of Blizzard Entertainment, one of the company’s largest divisions) sent out his own email to employees. Brack called the lawsuit allegations “extremely troubling”— but notably, he did not call them false. 

“Iterating on our culture with the same intensity that we bring to our games is imperative, with our values acting as our North Star,” he wrote, according to a gaming journalist who posted Black’s statement on Twitter. Brack then encouraged employees with concerns or questions to talk to senior management or to call the internal hotline.

That’s actually a solid statement to make if you’re a senior executive at a company under fire. Sure, it implies that if you’re “iterating” toward a better culture today, then you had a worse culture in the past; which suggests that perhaps those California lawsuit allegations have some merit. Brack has also been with Blizzard Entertainment for 15 years, so you wonder what he was doing for all that time if he finds these allegations so troubling now. Still, his statement hit the right notes. 

Then we have chief compliance officer Townsend and the statement she sent to employees. 

Townsend made a few provocative declarations in her statement, starting with this one: “A recently filed lawsuit presented a distorted and untrue picture of our company, including factually inaccurate, old, and out of context stories — some from more than a decade ago.” 

Most of Townsend’s statement does try to be supportive of Activision Blizzard employees today, and lists numerous measures the company has taken to support a respectful, fair corporate culture. Then she takes another swipe at the lawsuit in her last paragraph: “We cannot let egregious actions of others, and a truly meritless and irresponsible lawsuit, damage our culture of respect and equal opportunity for all employees.”

Ugh. If Townsend had just kept quiet about the lawsuit allegations, she might not have left employees livid. Except she did say the allegations are false, when the allegations presumably came from the very employees Townsend is trying to win over — employees who know full well (probably even better than Townsend does) what is or isn’t the truth at Activision Blizzard.

Where Are We Now?

Now employees are on the warpath. They launched a petition over the weekend calling management’s previous statements “abhorrent and insulting to all that we believe our company should stand for… To put it clearly and unequivocally, our values as employees are not accurately reflected in the words and actions of our leadership.” 

The petition, now signed by more than 2,500 current or former Activision employees, also specifically calls for Townsend to resign from her role as sponsor of the company’s women’s network. Employees are also planning a walkout on Wednesday from the company’s headquarters in Irvine, Calif. [UPDATE: Activision now says it will give employees paid time off for the walkout.]

Townsend joined Activision in March, after spending the 2010s working as general counsel for billionaire investor Ron Perelman’s holding company and the 2000s as a senior counter-terrorism official in the Bush Administration. Draw your own conclusions about whether experience such as that prepared her for the rigors of managing a young, modern, highly diverse and highly skilled workforce run by a bunch of older white-dude jerks. 

That seems to be a fair description of the company, by the way. Mike Morhaime, co-founder and long-time senior executive at Blizzard who left the company in 2019, has already released a statement saying, “I feel ashamed… The fact that so many women were mistreated and were not supported means we let them down. In addition, we did not succeed in making it feel safe for people to tell their truth.”

Well, employees seem to be speaking their mind about Townsend now. This will be a story worth watching.