Men. If you are paid multiple millions of dollars a year, you should be able to control your dick. Period.
This blog is not a morality tale, at least with regards to personal sexual or marital morality. Instead, it is a tale about a CEO who was indifferent to the potential risks that his sexual and emotional behavior posed to others. I am writing to express anger at leaders who think they are above the law, be it the real law or a workplace code-of-conduct.
Former McDonald’s CEO Stephen Easterbrook left his role after the company’s Board of Directors learned of Easterbrook’s consensual relationship with a staff member. In exchange for leaving, he is getting six months of severance and favorable treatment on options.
Easterbrook is divorced. We do not know the marital status or reporting relationship of the staff member. Those facts don’t matter, however, because the company policy forbade such relationships.
So why has this story so outraged me?
First, he has placed the company at risk. Easterbrook was in the middle of a transformation of a storied brand, trying to make McDonald’s “digital-first.” That would be a challenging conversion for any company, much less one with global scale and independently owned franchises. It was a costly strategy, too, involving acquisitions and significant capital improvements. No wonder some owners are pushing back on the degree, cost, and speed of change.
Being a leader during a significant transition is hard work, tireless work. And consistency in message and action is critical to enduring success. I had a boss who reorganized our department then exited the company a week later. His departure left our management processes in disarray, not to mention fueling political fights among the remaining leaders, each with brand new roles and no boss to help us work through turf battles.
The McDonald’s Board was smart to appoint an architect of the transformation plan (the former head of McDonald’s North America operations) as the new CEO. The change in leadership will be consequential, nevertheless. Workers, communities, shareholders, and franchise owners are at risk, as is the rest of his leadership team. The Chief Human Resources Officer resigned soon after Easterbrook’s departure, perhaps knowing the new CEO would want a new person in the CHR role.
Second, Easterbrook earns much more than his workers. Take the median salary of a McDonald’s worker and multiply it by 2,124 times. That is how much money Easterbrook made in 2018. With that pay differential, you owe your workers the best leadership possible, and it starts with abiding by company policy.
A Code-of-conduct is usually strictly enforced for those lower down the chain. A middle manager doing the same thing would likely have been fired on the spot with no golden parachute. Perhaps that, in the end, is the evil of high CEO pay – CEOs feel they can be fired plus wealthy, so why not put personal interests first.
Easterbrook had alternatives. He might have asked the woman to leave the company so they could pursue the relationship. His 2008 income of close to $16 million would have helped cover a period of unemployment for her, yes? Or he could have decided that his duty to his stakeholders took precedence over the desires of his heart. In this case, he would have taken steps to minimize contact with the woman once he realized he was developing feelings for her — such as by making sure the two of them never traveled together or met alone.
Instead, like our President (which may be why I am especially enraged about the McDonald’s story – I am at my limit this year of watching terrible leadership behavior), Easterbrook placed himself above the best interests of the organization he was leading. What was he/Trump thinking? I deserve it. I earned it. These rules do not apply to people like me. I control what’s right or wrong. Who cares – I want it.
Easterbrook is not one-of-one. Bloomberg News reports, “A record 18% of chief executive officers were replaced last year, with more top executives forced out for ethical lapses than were fired for poor performance or disagreements with their boards, according to a PwC study released Wednesday.” (See Chart) It was the first time ethical lapses were the leading cause (at 39%) of CEO exits.
Whatever the rationale, Easterbrook and his peers-in-ethical-lapses’ behaviors speak to characters not worthy of leadership posts. Trump’s behavior is an insult to the role of US President. First and foremost, leadership is a responsibility, not an award, or a justified place of honor, or a victory you win that allows you to behave with indifference towards those you lead.
The McDonald’s Board needs to do a far better job assessing character going forward. So do many other boards. So do voters.