Add Hollywood mogul Harvey Weinstein, Amazon’s entertainment chief Roy Price and KB Home’s Jeffrey Mezger to the growing list of executives making headlines for the wrong reasons.
One of the most powerful producers in Hollywood, Weinstein was forced out after national news reports detailed numerous incidents ranging from aggressive harassment to sexual assault of female employees, actresses and models, along with a culture of complicity within the Weinstein Company that included the use of nondisclosure agreements, monetary payoffs, and aggressive legal tactics to keep victims quiet. Weinstein’s deplorable behavior over several decades has been described as one of the worst-kept secrets in the industry.
The Weinstein fallout is spreading through the entertainment world, with Amazon suspending Price over allegations of sexual harassment, as well as Price’s close business relationship with Weinstein.
Mezger, the leader of one of the largest homebuilders in the country, lit up the internet in September after an audio recording from a home surveillance camera captured him shouting profanities and derogatory comments toward his neighbor, the comedian Kathy Griffin. In response to the PR crisis, KB’s board moved quickly and announced that it would cut Mezger’s bonus by 25 percent.
Until recently, boards found it easier to look the other way when executives acted badly. With social media able to spread the shame and public opinion on executives turning, public sentiment is changing when it comes to CEOs behaving badly. Execs should know by now that they’re only one bad decision away from a pink slip.
Writes the LA Times: The homebuilding company’s prompt reaction to its CEO’s public misbehavior suggests that the ground has been shifting beneath the feet of top executives who stray over the line. In years past, a board might take months to ponder discipline for a CEO who was caught using abusive language (typically against subordinates), engaging in sexual harassment or even consensual adultery, or doing something otherwise immoral. There would be an internal investigation, the commissioning of a report by an outside law firm, followed by a carefully calibrated punishment, up to and including dismissal.
Public tolerance is wearing thin, however. A survey earlier this year by Stanford’s business school concluded that the public wants to see punishment meted out severely and quickly to misbehaving CEOs. Lying about the company’s product was deemed the worst offense, with nearly two-thirds of respondents saying the CEO should be fired. Bad language and behavior, even in private, was ranked the second-worst offense, with more than half of respondents saying the executive should be fired, followed by having an affair, lying about other matters, financial chicanery, and holding inappropriate views.
There was a time when board members were inclined to look the other way when leaders abused their power and privilege. Many no doubt still prefer to sweep the details under the rug. But public tolerance for this kind of behavior is changing, and that means if you run the company, you could be held responsible for just about anything you say and do in public. And smile, you may just be on camera.
There’s a growing list of CEOs who have lost their jobs for their behavior, including (courtesy NY Times):
- Matt Harrigan of PacketSled ranted on social media on election night about killing President-elect Trump (2016)
- Scott Thompson of Yahoo was found to have padded his résumé (2012)
- Kenneth Melani of Highmark got into a fight with the husband of his then-girlfriend, who was also an employee (2012)
- Brendan Eich of Mozilla donated $1,000 in support of a ballot measure to ban same-sex marriage, causing outrage in Silicon Valley (2014)
- Klaus Kleinfeld of Arconic wrote to a hedge fund manager without the board’s knowledge (2017).
- Brian J. Dunn of Best Buy had a relationship with an employee (2012)
There was a time when board members were inclined to look the other way when leaders abused their power and privilege. Many no doubt still prefer to sweep the details under the rug. But public tolerance for this kind of behavior is changing, and that means if you run the company, you could be held responsible for just about anything you say and do in public. And smile, you may just be on camera.