The Real Repercussions of CEO Indiscretions

Why do the revelations of a CEO’s affair with one of his subordinates tell us more about his lack of respect and good judgement than the titillating events themselves? If the CEO is hired to profitably grow the business, then his first priority is to increase the probabilities that his key constituents (customers, shareholders, employees and others) will see their best interests served by his actions and his beliefs. I have assumed a “he” here because the overriding number of transgressions are from male CEO’s.

Some will argue that in this decade, the personal and professional lives of CEO’s are “separate”. Does that point of view have merit particularly where the CEO’s actions directly impact one or more key constituents?

The CEO position in mid to large-sized organisations has over the past 40 years become a powerful brand in its’ own right. That brand is built  on trust, fairness and equity.

  1. “Trust” in the form of putting the organisation’s  interests ahead of their own (corporate vs. personal risk and rewards).
  2. “Fairness” in the form of showing respect to their peers, subordinates, customers, shareholders and others they serve (leadership decisions consistent with the organisation’s core values and beliefs).
  3. “Equity” in the form of displaying good judgement commensurate with others and the position they are entrusted with (reward, recognition, ownership and so on).

When association with the CEO’s indiscretions has a negative impact on the organisation’s brand, all individuals concerned must be held accountable by the Board. When the Board elect to turn a blind eye, they are in fact diluting by proxy their own power and influence, not just the CEO’s, and their ability to positively impact the organisation’s future (results). That outcome is NEVER positive for any of the key constituents.

© James Berkeley 2014. All Rights Reserved.

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