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Avalara CEO Scott McFarlane. (Avalara Photo)

Seattle-based tax automation startup Avalara hired an outside law firm to review “internal complaints this year about employees, including executives, drinking to excess at work-related functions and using questionable judgment,” the company’s CEO Scott McFarlane wrote in a memo to employees, obtained by GeekWire.

The memo did not go into detail about the complaints or what “questionable judgment” means in this case. Avalara confirmed the authenticity of the memo but declined to comment further.

While the law firm’s findings “don’t add up to the kinds of troubling stories we’ve seen recently about men abusing their power in various ways, there is no doubt that it is time for a change here at Avalara,” McFarlane wrote. “It is time to take action to evolve Avalara into a more inclusive and professional workplace for everyone.”

He added, “Let me be the first to acknowledge that I have contributed to our ‘fun’ culture that sometimes has led to excess, particularly, but not exclusively, in the early years. However, our company has matured in many ways, and so should our culture.”

McFarlane wrote that he was “not declaring the end of fun. That will always be part of Avalara. But I am insisting that we build a more mature, professional and inclusive culture, and operate under a shared understanding of what that requires in terms of behavior, performance, and respect.”

In the memo, McFarlane lays out several steps the company will take to address culture issues. McFarlane plans to meet with other company leaders who report directly to him to discuss modeling professional and inclusive behavior for employees. The company will also hire a new leader focused on diversity and engagement. Early next year Avalara will begin conducting “Respectful Workplace” training.

Avalara is one of the Seattle region’s top startups, ranked number two in the GeekWire 200, and is a frequently mentioned IPO candidate. Last year, the tax automation startup landed a $96 million funding round from Warburg Pincus, Sageview Capital, Technology Crossover Ventures and others for growth and acquisitions, and to buy back shares from earlier investors. It has raised more than $340 million in its lifetime.

Avalara employs more than 1,400 people worldwide. It has been steadily adding to its leadership team, bringing in five new executives this year alone. Avalara automates the process of sales tax collection for retailers across different jurisdictions. Avalara tracks tax rates in more than 12,000 jurisdictions and supports more than 100 countries.

GeekWire reported last week about the upcoming departures of two key Avalara executives: Peter Horadan, executive vice president of engineering and chief technology officer, and Matt Tormollen, executive vice president of research and development. The company said the executives’ departures are part of an organizational shift and are unrelated to the new memo detailing culture changes.

Next year, the company will move into a new headquarters, near CenturyLink Field in Seattle. Avalara leased 100,000 square feet there last year, with an option for more.

Here is the full memo from McFarlane to Avalara employees describing the culture changes the company plans to make:

Hello everybody,

With the end of the year upon us and a new year approaching, I want to take a moment to discuss our company culture.

As you may know, we received some internal complaints this year about employees, including executives, drinking to excess at work-related functions and using questionable judgment. We hired an outside law firm to review those matters and I have met with them to discuss their findings. While the conclusions in this report don’t add up to the kinds of troubling stories we’ve seen recently about men abusing their power in various ways, there is no doubt that it is time for a change here at Avalara. It is time to take action to evolve Avalara into a more inclusive and professional workplace for everyone.

Let me be the first to acknowledge that I have contributed to our “fun” culture that sometimes has led to excess, particularly, but not exclusively, in the early years. However, our company has matured in many ways, and so should our culture. Of course, I am not declaring the end of fun. That will always be part of Avalara. But I am insisting that we build a more mature, professional and inclusive culture, and operate under a shared understanding of what that requires in terms of behavior, performance, and respect.

So, what steps are we taking to ensure change? First, I am meeting with all my direct reports to discuss responsible, professional, and inclusive behavior. This applies to all aspects of our day to day work, from interactions with colleagues to our responsibility at Avalara functions. I expect all leaders to set the right tone and standard for our company culture and for all employees to match that level of integrity. Second, we have hired a new leader to drive our engagement and diversity efforts. You will be hearing more about her role in the new year. Third, we will be conducting company-wide, live “Respectful Workplace” training starting in early 2018.

As always, our human resources and legal teams are here to listen to any concerns or suggestions you may have. As a reminder and for everyone to review, the anti-harassment policy section from our Employee Handbook is attached. Please contact Shaunna Duffy or Alesia Pinney at any time if you would like to discuss issues or offer feedback. And, I encourage you to contact me directly; I am committed to leading Avalara and its culture through a transition that will ensure we foster an even better, more inclusive environment for all of our employees, contractors, vendors and customers.

I look forward to an Avalara that grows in many ways in 2018. And I wish you all a safe and enjoyable holiday season.

Editor’s Note: Avalara is a GeekWire annual sponsor.

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