A Chicago attorney
including the one that
to fire former CEO
Anne S. Jordan is an attorney with the Chicago-based firm Mandell Menkes LLC, advocate of strong corporate ethics standards, and frequent critic of well-intended but misguided corporate policies.
Many companies have policies that prohibit a supervisor from dating a subordinate. Beyond concerns of favoritism and the consequent impact on morale, such relationships can go from consensual to confrontational or harassing and ultimately disrupt a workplace. Along the way that can create liability for employers.
The McDonald’s situation
The latest high profile employee to run afoul of such a policy is Steve Easterbrook, CEO of McDonald’s Corp. until his termination on November 1. Is Mr. Easterbrook’s termination an example of a policy meant to protect employees working as it should or does it send the wrong message to those still at the fast food franchisor?
The policy that ended Mr. Easterbrook’s tenure as CEO — during which the company’s stock price soared — served exactly none of its intended purposes. It prohibits relationships between employees where one has a direct or indirect reporting relationship to the other. Since by definition all employees indirectly report to the CEO, any relationship between Mr. Easterbrook and another employee was prohibited.
The policy did not work to prevent the relationship initially. And the apparently consensual relationship had ended years ago, so there was no future harm to prevent. When employees spend a disproportionate amount of their waking hours at work, dating is inevitable. And considering such inevitability, policies to prevent harassment or relationships that are rooted in a boss’s abusing his or her power over a subordinate have a definite place in the policy canon. Here though, reporting suggests the other employee was several levels below Mr. Easterbrook.
It is hard to fathom why corporations think that overly broad policies such as this are a good idea. Is a sweeping prohibition covering not only boss / subordinate relationships but any relationship all the way down the chain of command required to effectively deal with the potential problems that might arise? Is it too hard to make policy prescriptions stop at the line that divides potential harm to the corporation from behavior with little or no negative impact on operations or other employees?
McDonald’s has policies targeting non-consensual relationships making the behavior exposed by the #MeToo movement a potentially fireable offense. Is there a need to go further, do consensual relationships broadly defined also have to be prohibited?
Laudable but ineffective
Despite the legitimate need for workplace rules, efforts that extend to what employees do on their own time and ignore that employees frequently socialize outside of work, will ultimately fail. They’re reminiscent of conflicts of interest policies (like McDonald’s’) that prohibit not only actual conflicts of interest, but also extend to things that could give rise to the “appearance of a conflict,” things that are often irrelevant to a corporation’s operating ethically or fairly. Placing actions that may create the appearance of a conflict off limits – a vague standard at best – exponentially increases the number of potential violators.
The same is true of McDonald’s policy requiring employees to comply not only with the law but the spirit of the law. Aspirational, no doubt. Laudable, absolutely. But in practice what these policies actually prohibit will vary widely across an organization with several hundred thousand culturally-diverse employees and multiple departments responsible for enforcement. And like the dating prohibitions, their application can result in an employee’s termination for something that most wouldn’t consider problematic.
Don’t get me wrong, companies are entitled to limit supervisor/subordinate relationships and they should. The workplace is better for it. But stop there – prohibit relationships of those in direct reporting relationships or one level beyond that. Require that the supervisor/subordinate relationship be disclosed so potential problems can then be addressed in light of the specific situation. Or realign the reporting order if employees opt to continue an otherwise prohibited relationship. This is, after all, about consensual relationships, by definition the polar opposite of #MeToo.
Sending a mixed message
In the end, creating rules for a fair workplace, one where a supervisor’s power can’t be abused, should result in consequences that a company’s management and board can get behind. That didn’t happen here. Instead, McDonald’s Board handed Mr. Easterbrook a soft landing, sending a decidedly mixed message to others inclined to break the rules.
Terminating Mr. Easterbrook was no doubt a tough decision for the Board and they get credit for that. To have done less would have sent the wrong signal — violation of company policies has little downside, or more to the point, has little downside when you’re a high-performing executive. But having made that decision, the Board then illogically gave Mr. Easterbrook severance, a prorated performance bonus and for purposes of his stock options, his leaving was deemed “not for cause”. The subliminal message was clear: the optics of not firing Mr. Easterbrook would make it seem like he was held to a different standard than others, so no room to maneuver there, but no reason to go any further and penalize Mr. Easterbrook for something that had little quantifiable, negative impact on the company.
In the #MeToo moment, let’s keep the focus on abusive and harassing workplace behavior. Policies that prohibit employees’ dating should only be broadly cast when there are articulable reasons to do so and management and boards are willing to terminate violators for cause in the literal meaning of that phrase. Policies that aren’t enforced or aren’t enforced as intended (“you’re fired, we hope a big severance payment conveys how badly we feel about that”) do significant harm to morale and can lessen compliance overall. If you can’t envision terminating a great employee for such violations – if they aren’t really going to be treated as if they were terminated for cause – it’s time for a policy rewrite.
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