Archive for the ‘employees’ Category
Surfing Porn at Work
Filed under: employees, internet, privacy, productivity, scandal, sex |
Comments (4) As someone once said, ‘let he among you who has a free hand cast the first stone.’
Canadian Business recently reported that the head of Houston’s public transit agency has been suspended (for a week) for using the agency’s internet connection to look at porn.
This sort of conflict is likely to become increasingly common, since the only thing more ubiquitous in office settings than boredom are high-quality internet connections. And I suspect that under-prepared employers are likely to continue overreact, for no particularly good reason.
It seems to me that the point here should not be about porn; the point should be whether personal web-surfing at the office is allowed at all. There’s all kinds of deviant, transgressive, and socially controversial stuff on the web. Porn, per se, is far from the worst. So surfing the web for non-business purposes should either be allowed, or not. Either could well be a reasonable policy. A company can reasonably forbid use of company internet for personal purposes, just as most forbid use of corporate stationary or corporate premises by employees who are moonlighting. On the other hand, a company might reasonably allow a certain amount of personal usage as akin to making the occasional personal call on a company phone. But if employees are not allowed to use company internet for personal (including entertainment) purposes, that should be a clearly-stated policy.
There are of course a couple of circumstances in which an employer would have a legitimate interest in limiting the kind of stuff employees access online. One is size. If the employee is downloading large porn files (say, entire movies), that kind of thing could have an impact on the firm’s bandwidth usage, something that could cost money or just slow down internet access for employees engaged in legitimate work. Of course, the same would go for employees downloading the latest episode of Breaking Bad on iTunes. The second circumstance would be if there is a chance that the download would be visible and reflect badly on the company. If for some reason the fact that you’re surfing porn at work is liable to come to the attention of people outside the company, then, reactions to porn being as variable as they are, you should avoid drawing potentially unwanted attention to your company that way.
But in general, at least, the fact that it’s porn you’re looking at on your break, behind a closed office door, shouldn’t much matter to your employer.
None of this is to say, of course, that surfing porn at work is a good idea. It’s generally pretty dumb, especially if there’s any chance at all that co-workers are going to see and be offended. After all, we’re talking about the office, not your own living room. And so while employers have reason to allow their employees a certain amount of latitude, employees have reason to exercise a certain amount of discretion.
The Ethics of Closing Up Shop
Filed under: accountability, corporate citizenship, decision-making, employees, ethics, management, values |
Comments (1) 
At what point are a company’s misdeeds sufficiently grave that the right thing to do is simply to shut the doors, permanently?
As was widely reported yesterday, the printing presses at News of the World (part of Rupert Murdoch’s News Corp.) will be grinding to a stop after this Sunday’s edition. The paper’s shameful history of phone-hacking and other scuzzy “journalistic” practices has finally caught up with it.
Under what conditions is such a move the right one? When is a company obligated to commit the corporate equivalent of the ancient Japanese tradition of seppuku (a.k.a. harakiri), or even just to sacrifice a corporate “limb”?
Some people might say, “when doing so best serves the interests of your shareholders.” Others might say, “when doing so best serves the interests of the full range of stakeholders.” Still others might say that it has nothing to do with anybody’s interests, but rather with what’s in the the interest of justice. “Let justice be done,” as the ancient legal saying goes, “though the heavens fall.” So it may be thought that the organization, as a whole, needs to pay a penalty for its wrongdoing.
But there are of course counter-arguments that could apply, even where the corporate wrong is significant. For one, in shutting down an entire corporation for the wrongdoing of a few, you are effectively punishing a large number of innocent employees. And in some cases, that might be justified. Sometimes there is collateral damage along the road to justice. But surely that damage is not irrelevant.
In other cases, shutting a company down may amount to a cynical attempt to insulate sister companies or a parent company from fallout. Or to protect a favoured employee. In such cases, shutting the company is likely blameworthy, rather than worthy of praise. In such cases, surely the honourable thing to do is not to perform seppuku, but rather to stand to face the music. Accept the scrutiny, pay the price, and then rebuild under new management.
But all such considerations presume that the initial crime is sufficiently grave to make such an extreme solution plausible in the first place. In the News of the World case, the offence is serious and multi-faceted. Individual rights were violated; law enforcement officials were bribed; and the journalistic profession was arguably sullied. And all of that was perpetrated in pursuit of an utterly trivial objective, namely the production of yet more trashy tabloid “news.” Compare: there were few serious calls for BP to be dismantled after the Deepwater Horizon spill, despite that spill’s very serious human and environmental impact. But then, unlike News of the World, BP actually produces a socially valuable product.
Executives and their Income
Filed under: CEOs, compensation, contract, employees, finance, governance, pay |
Comments (11) I’ve blogged a number of times about what is commonly and loosely called “executive compensation.” The term is woefully imprecise. In point of fact, most “compensation” is not, in fact, compensation. The carrot dangled in front of a horse is not compensation; it is motivation. Compensation is what you give someone after the fact as reward for a job well done, or at least for a job that met contractual requirements. If I hire the neighbour’s kid to mow the lawn, and he does so, then I should compensate him. Most of the money garnered by senior executives at publicly-traded companies these days is not, in fact compensation. It’s money they get from selling shares in the company, shares granted to them as part of an effort to align their interests with the interests of shareholders.
The looseness of use of that word in the realm of finance is not at all unique. Witness the “bonuses” paid to AIG employees two years ago, which were not in fact performance bonuses at all but rather retention payments designed to keep key employees on what seemed at the time to be a sinking ship.
See more recently this piece by Peter Whoriskey for the Washington Post: With executive pay, rich pull away from rest of America. Here’s just a taste:
The top 0.1 percent of earners make about $1.7 million or more, including capital gains. Of those, 41 percent were executives, managers and supervisors at non-financial companies, according to the analysis, with nearly half of them deriving most of their income from their ownership in privately-held firms….
Notice that (contrary to the article’s title) the key factor in the growth of executive income here is not in fact “pay.” The key factor is investment income. And it’s not even “pay” in the loose sense of ‘money given by an employer,’ since there’s no indication here what portion of that investment income comes from shares in a CEO’s own company, say, versus a diversified portfolio. But it’s hard to hold Whoriskey to blame for the linguistic imprecision here; confusing pay and compensation and income is altogether standard.
The other point to be made here is about justice. According to Whoriskey, “…executive compensation at the nation’s largest firms has roughly quadrupled in real terms since the 1970s, even as pay for 90 percent of America has stalled…” Setting aside imprecision of language, that suggests a significant disparity — not disparity of outcomes (which are a given, here) but disparity of rate of improvement.
Now according to Leslie McCall, a sociologist quoted in Whoriskey’s story, people become concerned about such inequality “…when it seems that extreme incomes for some are restricting opportunities for everyone else.” And that may be true about people’s reactions. But of course, it’s very hard for people to tell when it is actually the case that extreme incomes for some are restricting opportunities for others. As economists often point out, income is not a fixed pile, waiting to be handed out. The way you distribute income actually changes the size of the ‘pie’ due to the way money incentivizes. Incentivizing executives with stock and stock options may on the whole be a failed experiment, but that doesn’t change the fact that it is impossible to know whether the average worker would be better or worse off had those incentives never been offered.
Should Rioters be Fired?
Filed under: crime, employees, law, privacy, risk, scandal, trust |
Comments (5) The post-Stanley Cup riots in Vancouver last week have generated a minor landslide of commentary. Much of it has focused on just who the malefactors were. In an age of social media, this has amounted to more than mere speculation: the identities of quite a few of the trouble-makers have come to light. Those who participated in the riots have thus brought very public shame upon themselves and their city. But what about the shame brought upon their employers?
Over at the “Double Hearsay” law blog, the question is asked from a legal point of view: Can employers fire Vancouver rioters? The short version of the legal analysis there is this. Any employer can fire an employee “without cause” as long as they give proper notice. In order to fire without giving a couple weeks’ notice, an employer has to have “cause:”
Generally speaking, an employee can be fired for his private conduct if that conduct is “wholly incompatible” with the proper discharge of his employment duties, or if it would tend to prejudice the employer….
The latter possibility is the relevant one here. If an employee participates in a riot and is widely known a) to have participated in shameful behaviour and b) to be your employee, then the employee has effectively done something “prejudicial” (i.e., likely to negatively effect your business).
OK, so that’s the legal side. Labour law draws a reasonably clear line around what you as an employer can do, and what the court will support your having done. But that still leaves open the question, should you even attempt to fire an employee who you know to have participated in a riot, say like the recent one in Vancouver or last year’s at the G20 in Toronto?
Here are a few quick considerations:
1) The legal issue of an employee behaving in a way that is “prejudicial” to the employer is also of course a very reasonable ethical consideration. A riot like the one in Vancouver is accompanied by significant public outrage, and guilt by association is a very real problem. In many industries, a business lives or dies by its reputation. As Warren Buffett has said, “Lose money for the firm, and I will be understanding. Lose a shred of reputation for the firm, and I will be ruthless.”
2) By participating — even somewhat passively, let’s say — in a riot, an employee reveals quite a lot about his own character and judgment. Do you really want someone with that little judgment working for you? Your company, no matter how laid back its corporate culture, has some sort of authority structure. It’s fair to ask just how suitable an employee is to work within any authority structure when they’ve publicly egged on another human being in burning cop cars or assaulting firefighters.
3) Even from an ethical point of view, the legal notion of “due process” is relevant. So if you’re considering firing someone for taking part in a riot, you can’t in all fairness do so based on mere hearsay, or without giving him a chance to defend himself. The right process is at least as important as the right outcome.
4) Finally, it is worth considering whether there are alternatives to firing. Maybe being laid off for a few weeks is sufficient. Or perhaps the employee can demonstrate his contrition by doing volunteer work. But it should be remembered that the solution has to fit the reason for firing in the first place. If your worry is that participation in a riot demonstrates a fundamental lack of judgment, then volunteer work isn’t going to erase that worry.
As a lawyer friend of mine put it, “rioting seems to strike at the core of social order.” And social order is at the core of business. It’s not unreasonable to think that participation in a riot is a disqualification for employment — but such a conclusion still has to be implemented prudently and fairly.
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Thanks to Dan Michaluk for tweeting this story and bringing it to my attention.
Workers vs Machines
Filed under: economics, employees, productivity, protest, technology, workplace safety |
Comments (2) A recent item in the NY Times dealt with the fact that many companies these days seem relatively reluctant to invest in new employees, but comparatively willing to invest in new machinery. The evidence for that is mostly anecdotal, but interesting none the less.
Here’s the story, by Catherine Rampell: Companies Spend on Equipment, Not Workers
Companies that are looking for a good deal aren’t seeing one in new workers.
Workers are getting more expensive while equipment is getting cheaper, and the combination is encouraging companies to spend on machines rather than people….
The story gives the distinct impression that the issue here is not just an issue of machines or people; it’s about machines versus people, and machines are clearly winning the hearts and minds of employers these days. On the face of it, that sounds bad. Workers — people — matter, from a moral point of view, and machines don’t. So, other things being equal, it is better to spend money on doing something good for people (e.g., providing someone with a job) than it is to spend money on mere machines.
But two perhaps-not-obvious points need to be made, here.
The first point is that even when employers choose to purchase machines instead of hiring employees, that needn’t be a bad thing socially, nor bad for labour as a group. Machinery tends to boost productivity, and boosting productivity boosts wealth, so from a social point of view (including from the point of view of blue-collar workers) it is good when companies invest in machinery. Even if machines displace workers in a given industry, that needn’t spell trouble for workers as a class. In the early 19th Century, Luddites destroyed mechanized looms in a vain attempt to forestall the effect of the industrial revolution on employment patterns in the textile industry. And yet, in the long run, the industrial revolution did nothing to worsen the lot of labourers. Indeed, it ushered in an era of prosperity that made the lot of labourers as a whole vastly better. To be sure, changes in technology result in unemployment in the particular sectors in which new technologies are introduced. But that tends to be a temporary problem. The standard Econ 101 example is transportation. The advent of the automobile surely resulted in some unemployment among those who had formerly worked in the horse-and-buggy industry. But, in the long run, those workers eventually found jobs in the auto industry, and were no worse off. And so on.
The second point is that, even if we focus on the employees of a particular organization, labour and machines are not always (and maybe not even often) in competition. Machines and tools can make employees’ lives better, and in those cases, certainly, spending money on machines and tools is a good thing. The most obvious case is when the equipment purchased is, say, safety equipment, or when the machines purchased are ones with additional safety features or features that make work less back-breaking.
But purchase of equipment can also be good in another way. Machines and tools of various kinds can make labour more productive, and more productive labour is more valuable. Not everyone realizes that the productivity of labour — the amount of goods that can be turned out per hour of a worker’s time — varies vastly across the globe. An hour of an American worker’s labour, for example, produces far more output than an hour of a Chinese worker’s labour. And the reason has little to nothing to do differences in work ethic or intelligence or talent. The difference lies in national differences in access to tools, and to differences in organizational and managerial strategies. So investing in better equipment can be a way of investing in the productivity of your workers.
Of course, past some threshold, when labour is more productive, employers may decide they need less of it. The most famous example of this is in farming, where one man with a big tractor now often does the work that a dozen men might have done in years gone by. But the devil is in the details. We should at least recognize that investment in machinery is not automatically contrary to the interests of labour.
Beer, Burgers, and Pretty Girls
As business models go, it’s all pretty straightforward: beer, fried food, and pretty girls who smile a lot and show some skin. And it’s successful, too. The ‘Hooters’ chain has made a lot of money that way, but so have a number of other chains. For evidence, see this story by Jason Daley, for Entrepreneur: ‘Breastaurants’ Ring Up Big Profits.
Franchises inspired by the Hooters model–such as Celtic-themed sports bar chain Tilted Kilt Pub & Eatery and faux mountain sports lodge chain Twin Peaks–have expanded rapidly over the last half decade, while corporate-owned chains like Brick House Tavern + Tap and Bone Daddy’s House of Smoke are picking up steam regionally. In fact, for the next couple of years, this segment (often referred to as “breastaurants”) is poised to be one of the fastest-growing restaurant categories….
OK, so it works. But it is also a business model that draws its share of criticism. A man doesn’t have to be a total prude to find himself thinking, “hmm…would I want my daughter / girlfriend / sister working there?” And if not, “why am I so comfortable with other people’s daughters / girlfriends / sisters working there?”
And being vaguely “uncomfortable” with such restaurants (if that’s your reaction) is a perfectly reasonable moral position. This is just the kind of case to use to illustrate the point that ethics doesn’t have to be done in terms of binary, go-or-no-go, ethical-or-unethical evaluation. The ethics of a business model that uses sex (or at least the idea of sex) to sell food is pretty grey. It’s easy to sketch a very rough kind of ethical justification of that business model, cast in terms of a commercial transaction between consenting adults, etc. It’s also easy to prejudge the situations, intentions, and attitudes of the women who work at a place like Hooters, and to cry out “exploitation” without truly understanding, say, the point of view of an actual Hooters Girl. But both of those options are too quick, and neither does much to increase our understanding. But it’s also worth seeing that refusal to opt for either extreme is not the same as shrugging your shoulders — it can be a principled point of view.
Besides, restaurants like Hooters or Tilted Kilt are part of a much larger spectrum, along which various restaurants and chains locate themselves. You certainly don’t have to go to a “mancave” restaurant of that sort in order to see either short shorts or low-cut tops on the waitresses and bartenders. That’s not justification for any particular business practice, but it is reason to question singling out particular chains for especially harsh criticism. And it’s also worth noting that in many cases, outside of these chains, it’s individual waitresses who make their own wardrobe decisions. Again, that fact doesn’t obviate the option of (or indeed the need for) social critique; it just means that we can’t reasonably roll our eyes at the very notion of a place like Hooters, and then merrily skip down to the neighbourhood bar where the waitresses wear short skirts and tube tops all summer.
Finally, it’s tempting to think there’s a sort of arms race going on here: that restaurants in this category (and some individual waitresses) will compete by having skimpier and skimpier outfits. But that seems unlikely. For one thing, the picture painted in the Entrepreneur piece is much more complicated than the ‘beer-and-boobs’ stereotype. Cleavage and short skirts may get men (in particular) through the door, but any restaurant that wants return business is going to have to do more than that. After all, if it were just about the boobs, then the “businessman’s lunch” offered by many strip clubs would be a lot more popular.
Ethics of Golden Handshakes
Filed under: boards, decision-making, employees, governance, leadership, pay, stakeholders |
Comments (2) When an executive leaves in disgrace, what does the organization owe him or her? How should a Board handle such situations? In some cases, contractual obligations may seem to settle the matter, but contracts can be contested. Should they be? Does the IMF’s Dominique Strauss-Kahn deserve a quarter million dollars?
For further food for thought, see this story, by Tom Hals and Dena Aubin, for Reuters: Strauss-Kahn severance revisits CEO pay dilemma
The IMF now faces a challenge that keeps members of corporate compensation committees up at night: explaining why they may have to pay a handsome severance package to an indicted executive.
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Former International Monetary Fund managing director Dominique Strauss-Kahn, facing charges of attempted rape in New York, resigned his post from the global lender on Wednesday.Strauss-Kahn’s contract entitles him to a one-time severance payment of $250,000, the IMF said on Friday….
Whether a Board of Directors should attempt to fight in order not to pay severance to an executive who has brought disgrace upon the organization is clearly going to depend on the circumstances. But it serves as a good example of the conflict between two different styles of moral reasoning. On one hand, a Board thinking primarily in terms of consequences might well reason this way: “Look, we need to get past this unfortunate incident. Let’s pay this guy the money his contract says he is owed, and be done with it. It’s better for the firm, overall, if we pay and get this finished.” On the other hand, a Board might think primarily in terms of justice: “This guy has brought shame (or at least notoriety) upon the organization. He doesn’t deserve a dime. We should fight for what’s fair.”
The tension between these two styles of moral reasoning is an ancient one, and it’s perfectly reasonable to find something attractive in both styles of reasoning. But the fact that both kinds of reasons might occur to a single group of people — a Board of Directors — in a single situation implies an interesting question. Even if we were to agree (even for sake of argument) that a Board of Directors’ main obligation is to serve the interests of the organization and its shareholders, that still leaves open this important question: should a Board of Directors seek the best outcomes for the organization and its shareholders, or should it seek justice for it and for them?
Workplace Accommodation of Masturbation
Here’s an odd story, to say the least. A woman in Brazil has apparently won the legal right to masturbate at work — frequently — and to watch porn on her work computer as part of that activity.
Here’s the story, from David Moye blogging for the Huffington Post, via the Employer Handbook blog:
In a decision that can only be described as touchy, a Brazilian judge has reportedly ruled that a 36-year-old female accountant can legally masturbate at work and watch porn on her work computer.
Ana Catarian Bezerra successfully argued that she suffers from a chemical imbalance that triggers severe anxiety and hypersexuality, according to a viral news story….
It’s a story sure to engender plenty of giggles, but it’s also another example of a bizarre little story that serves as a pretty decent starting point for consideration of more serious issues.
A couple of quick points:
1) It’s worth considering the gender issue, here. People’s reactions to this story clearly have a lot to do with the fact that the individual involved is a woman. I wonder, if the employee with the habit of excessive on-the-job masturbation had been male, would people’s reaction change from giggles to disgust? I suspect so. I suspect a male with this proclivity would garner far, far less sympathy. Now in making this observation (or, I should say, this educated guess), I am emphatically not claiming reverse discrimination. I’m not saying there’s anything wrong with the fact that many of us would judge a man more harshly in this situation. In fact, that makes a good deal of sense to me. Men account for the vast majority of sexual predators and are the more frequent perpetrators of sexual harassment in the workplace. So it’s not surprising if our primary reaction to a male with a masturbation-at-work habit would be critical, rather than supportive. That’s not to say that a man wouldn’t deserve the same workplace consideration that the judge in this case mandated; it’s just to say that a man might have a harder time getting sympathy. I’m not sure what to do with that distinction, but it’s worth noting.
2) The woman in this case is basically arguing that she has a kind of disability, one that the workplace ought to accommodate. All obvious jokes aside, it’s an issue that ought to be considered seriously — as the court in this case clearly did. Now, the woman in question claims a chemical imbalance that triggers her odd behaviour. And of all the odd behaviours that take place in the workplace, something of a private and sexual nature certainly isn’t the oddest or most disruptive. But refusal to accommodate this particular disability wouldn’t need to be based in a repressive Victorian view of human sexuality. The very fact that humans — and I’m thinking in particular of co-workers here — have the reactions they do to the thought of other humans pleasuring themselves means that such behaviour, especially when publicized is bound to be disruptive, even if it happens out of sight. But then again, our society is still crawling slowly towards truly embracing the notion, enunciated most forcefully by John Stuart Mill, that we shouldn’t have rules against behaviour that doesn’t harm anyone, and that, hence, what goes on between consenting adults behind closed doors is nobody else’s business. But it’s not clear just how that rule of thumb applies when the ‘business’ in question is actually someone’s business, and when the closed door involved is an office door.
McJobs, and Height as Bona Fide Employment Qualification
Filed under: discrimination, employees, Uncategorized, workplace safety |
Comments (15) 
Questions of employment discrimination and of what counts as a “bona fide occupational qualification,” are always challenging.
See, for example, this story published yesterday in the Globe & Mail: Starbucks sued for firing dwarf from barista job
The U.S. government is suing Starbucks Corp. … saying the coffee company fired a barista in El Paso, Tex., because she is a dwarf.
When the employee asked for a stool or small stepladder to perform her job, Starbucks denied the request and fired her that same day, claiming that she could be a danger to customers and workers, according to the U.S. Equal Employment Opportunity Commission….
As several commenters on the Globe story point out, the space behind a Starbucks counter is not a great place for an employee to stand stationary on a stool. It’s a fast-paced workplace in which people work with hot coffee and scalding jets of steam. So, Starbucks is at least not being entirely unreasonable in suggesting that allowing their would-be employee to stand there on a stool. That, I take it, is the key legal question.
But it seems to me that there’s another issue here, which has to do with just how critical this particular job is to this particular person. How critical the job is reveals the extent to which the company’s refusal to accommodate counts as an impediment to the would-be employee’s interests. Consider a different kind of example. Consider a situation in which the job in question is a high-paid unionized job, in a town with few employers. In such a situation, having that job might be really, really important. Or consider an employee who is moving up a corporate ladder. Imagine that the job at the third rung of the ladder (but only that one) requires that the employee receive some form of accommodation. Here, accommodation is crucial not just for the job, but for the employee’s entire career trajectory.
So there are, arguably, jobs for which accommodation is exceptionally important. But (with all due respect to the nice people who make my grande no-whip mocha) most of us don’t think of a job at Starbucks that way. We think of a job as a barrista as basically just another McJob, one which pays maybe a little over minimum wage and which is interchangeable with lots of other kinds of jobs in similar industries.
On the other hand, Starbucks likely doesn’t see its jobs that way, and doesn’t want to. At least, that’s the impression one gets from visiting the company’s Career Centre. So even if it turns out that Starbucks isn’t legally required to accommodate this person, doing so might be consistent with the values they claim to embrace, and the kind of workplace image they want to project.
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Thanks to Dominic Martin for showing me this story.
Should Boards Monitor CEO Morality?
Filed under: accountability, boards, CEOs, character, crime, decision-making, employees, governance, leadership, privacy |
Leave a comment A Board of Directors is responsible for overseeing the management and direction of a company, and that task includes monitoring the full range of risks to which a company might be subject. But what if the company’s CEO is one of those risks? What should a board do when a CEO’s off-the-job behaviour raises concerns? The IMF’s Dominique Strauss-Kahn is a case in point. Long before his recent arrest, Strauss-Kahn’s behaviour towards women raised eyebrows. Should it also have spurred the IMF’s Board to act?
See this story, by Janet McFarland, in the Globe and Mail: When and how to confront a wayward leader
Most corporate directors find it hard enough to confront a respected CEO about work-related poor performance, but it is even harder to tip-toe into the minefield of rumours about problems in an executive’s personal life.
(I’ve blogged before about whether ‘private’ vice is a business issue. I’ve also written about whether a CEO’s divorce is a purely personal matter or not.)
McFarland quotes me in her story, but let me give a slightly fuller version of my comments here.
To start, it’s worth making a distinction. There are personal vices that are strictly personal (including most of what goes on between consenting adults behind closed doors.) And there are personal vices that are very likely to impinge upon the workplace or on performance at work. A tendency to engage in sexual harassment is an obvious example, as is heavy drug use.) But, when you’re a CEO of a name-brand organization, that distinction tends to break down. High profile means that personal vices can turn public very quickly, and affect the organization.
Also, bad behaviour on the part of those in the public eye can easily lead to blackmail, which can result in misuse of position and other kinds of bad decision-making. This is another example of why great power brings great responsibility.
On the other hand, there are lines boards should be hesitant to cross, on principled grounds. A CEO’s sexual orientation, for example, should be off-limits. This is obviously less of an issue in 2011 than it would have been in 1951, but even today a gay CEO might be seen as a risk factor (especially for an organization with a conservative customer base) but boards should take a principled stand against taking an interest in their CEO’s sexuality. The board has fiduciary duties to protect the company, but even fiduciary duties have their limits.
The last point I want to make here is that, when faced with a CEO’s bad behaviour, a Board faces more than a yes-or-no question. The ethical question here is not just a matter of whether to confront the CEO, but how to do it. A Board in such a situation needs to formulate a plan — a method of proceeding, including answers to questions like:
- Will the Chair of the Board approach the CEO solo, or should an ad hoc committee do it?
- Should they raise the issue explicitly, or obliquely?
- Should they give the CEO an ultimatum, or ask his or her suggestions for how things might improve?
- Given various anticipated responses by the CEO, how will the Board/Chair plan to react in turn?
The Business Ethics Blog 