McDonalds Strict Adherence to Policy
Breaking news yesterday: McDonalds fired their CEO, Steve Easterbrook, for violating a McDonald’s company policy on relationships with an employee.
That is a serious consequence for the most senior executive of a publicly traded Fortune 500 company. The market responded in kind, and the stock dropped roughly 2% (at the time of writing) on Monday November 4, the first day of trading after the news broke.
Apparently, the relationship was consensual, and the Board gave Easterbrook was time to communicate to his staff prior to leaving. There are no other details, and that’s ok, because those are not really important.
The Reasons Why
There are a few apparent reasons for this drastic measure. First, it is a violation of McDonald’s company policy. Secondly, it demonstrated “poor judgment” by Easterbrook, per the McDonald’s Board.
Easterbrook violated policy against manager relationships with a direct or indirect employee. Because you are the Chief Executive, you effectively have a direct or indirect relationship with everybody in your organization. Because of that, it is hard to be seen as impartial or unbiased with decisions that relate to the employee in question. Think of important personnel decisions. Promotions, assignments, salary and bonus recommendations, and performance ratings. There doesn’t even have to be a real conflict of interest. Just the perception of one is enough to discredit and jeopardize actions and decisions.
The Implications
In addition, there are serious legal implications for the CEO and the company. Kate Bischoff of tHRive wrote a good blog article on the potential repercussions from a legal perspective. She mentions specifically harassment and retaliation. In this case the difficulty is, as Kate very well describes, that the case is difficult. It is very hard to even assess whether a relationship between a CEO and an employee is and remains consensual. And what if the relationship comes to an end?
So, dear reader, do two things, now. Take a look at your own employee handbook. Assess whether you have a sound policy on employee relationships. Secondly, make sure this is followed well. As we can see, the implications on an economical level are significant, and we haven’t even touched the personal side of these events. Lastly, protect your company and your employees, and take actions to avoid you having to write a press release like this.
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