CEOs and senior managers behaving badly have hit the news again and again over the last two years. In the most recent CEO Success Study produced by PWC, an analysis of CEO turnover in the top 2500 global listed companies, found that 39% of the top executives dismissed left under a cloud of being accused of ethical lapses including sexual harassment, and insider trading and other misconduct. This was the highest percentage of CEOs leaving in this context in the 19 year history of the survey.
So, what are we to possibly make of these figures, what do they mean for workplace culture in general?
The Damage Has Already be Done
By the time that the CEO leaves an organisation under an ethical cloud (proven or alleged), it is very likely that a vast amount of damage has already been done within the organisation. Many high profile leaders and CEOs leaving because of sexual misconduct (for example) leave long trails of bad behaviour in their wake.
For instance, Harvey Weinstein, Mirimax Film Producer and catalyst for the #MeToo movement was accused of sexual assault of a series of women as far back as the late 1980s. Similar stories were true of other senior executives, such as Roger Ailes of Fox News, actors, sports people and politicians.
Senior leaders do not get to their positions without skill, connections, influence and power. The question is whether accountability is also present, and visibly in the mix. For those leaders who demonstrate bad behaviour, due to a misuse of power, there can often be a culture of unaccountability. This protects them from the consequences of their poor behaviour.
When we see 39% of CEO turnover leaving because of ethical lapses, it is likely that this hides a tale of some organisations that have been historically dealing with bad behaviour from this and other managers over a long period of time, and that the workplace culture of these organisations has developed to allow, foster or even protect, bullying, unethical or sexist behaviour.
In our experience, in dealing with different kinds of workplaces across Australia, a toxic workplace culture starts at the top. Unfortunately, it does not stop there. The bullying behaviour, questionable ethics or sexually compromised behaviour of very senior managers can all too quickly permeate through to the rest of the workforce.
A difficult conversation that comes up in training workshops on values and ethical behaviour is when a middle manager says something like, ‘That’s all very well and good, but why should I behave ethically when my boss, or my boss’s boss’ is behaving badly?’
Understanding why unethical behaviour is left undealt with
In our experience there are several reasons why unethical behaviour is allowed to continue at senior levels in the organisations.
1. Measuring the wrong thing
In the kind of toxic workplaces which foster badly behaving CEOs, we often see the workplace culture valuing the very behaviours that lead to or demonstrate unacceptable workplace behaviour. The culture directly or implicitly rewards aggressive or bullying behaviour in the name of ‘effectiveness’ or ‘straight shooting’, or, where a culture identifies results (for examples sales targets or billable hours) as the key metric for performance, without any consideration of how those results were achieved.
Indeed, when it comes to measuring success, it is worth considering whether the CEO is held accountable for the culture under his or her watch. The aphorism, “what’s rewarded gets attention”, is useful to consider here.
2. The Panda Effect
The ‘Protected Species’ type of senior manager is the manager that is generally talked about within the organisation as untouchable. This could be for a number of reasons, including:
- the manager is a founder (or relative of the founder) of the organisation;
- they are viewed as a ‘rainmaker’ with connections and relationships to clients that the organisation does not want to risk; or
- they are a ‘golden child’ with excellent upward management skills – unanimously liked and anointed by other senior managers, but their lack of merit a universal blindspot.
3. Lack of Procedural Accountability at Senior Levels.
While many organisations have done excellent work in putting in place Conflict Resolution Procedures, these are often remarkably silent in relation to the most senior levels.
For example, a typical complaint resolution procedure might provide that in order to locally resolve a complaint, an employee might approach their manager to informally discuss the issues around the complaint, or, if the complaint is in relation to the manager, they might approach their manager’s manager. Most of the time, however, the complaint resolution procedures do not deal with what happens if your complaint is against the CEO or a member of the Board.
Similarly, many organisations have Codes of Conduct dealing with behaviour of employees but do not have similar Codes dealing with the behaviour of Board Members. This again is a fatal blind spot, particularly at a time of increased scrutiny in organisations and the emphasis on whistleblower processes and their enhancement for large companies from 1 July (now just a week away!).
Shining a light on bad behaviour
The best way to combat a negative workplace culture – before the CEO needs to be shown the door – is by putting in place strong processes that make bad behaviour more visible, even at the highest levels.
Some of the ways of shining a light on these behaviours are:
- Staff engagement surveys, particularly where they are tracked over a period of time and broken down to division to provide accountability to particular executives.
- Independent whistleblower complaints handling service
- Ensuring that exit interviews are conducted when senior executives depart the organisation. These interviews should be conducted by a Board member, to increase visibility of, and accountability to solve any early warning signs.
- Ensuring that the organisation is clear on what to do if a complaint is raised at senior levels. Have policies that deal with complaints about the CEO, board members and the chair of the board. Consider a procedure that uses a member of an independent panel when dealing with complaints against the board.
- Giving human resources a voice and leverage at the decision making levels of the organisation so that senior levels of the organisation understand the need, importance and processes for ensuring values are lived and championed.
- Recruit for ethical success – ensure that lived accountability and respect are key drivers when selecting your senior managers.
Too often, organisations learn the hard way, after a flawed CEO departs in a blaze of terrible headlines, bad blood, trashed values and bruised branding.
The time is now to support everyone in the organisation to act with respect and accountability. The CEO is key to that task and vision. If that is not the lived reality, you are a dead culture walking.
About Jodie Fox
Jodie Fox brings to Worklogic a wealth of experience gained working with clients from a diverse range of industries. Previously working as an employment lawyer at a top-tier law firm for almost 10 years, Jodie worked closely with a host of large and small clients.