All of a sudden, there is a new disclosure about the departure of the ex-Stryker CEO - Stephen P. MacMillan who left the Company about 3 months ago. At that time, ‘Steve’ resigned from the Company, citing ‘personal’ reasons.
The new disclosure came from the Chairman of Stryker, William U. Parfet, who said in a recent annual board meeting on 24th April 2012 - "Just to clarify, on behalf of the board of directors, we'd like to clearly state that Steve never violated any company policy nor any code of conduct."
What did Steve do that made the Chairman suddenly state this?
The background is that Steve had began 'dating' an employee (who was a flight attendant of the Company’s Jet plane) while he was the CEO.
Out of prudence, Steve asked permission from two of his board members if he could date the lady 'before' he got seriously involved with her.The board members gave him their consent, and advised that the lady quit her job first, so as to follow protocol.
This is exactly how Steve and the girlfriend played the rules - except that they had one dinner before the consent was asked.
This one single dinner event was deemed notable enough for the board to demand Steve’s ouster!!
Note that, while all this was going on, Steve was seeking divorce from his wife of 24 years of marriage.
To cut a long story short – this case is about a really capable, proficient CEO of a great Company, who made one mistake about stating whom he had dinner with - and landed up getting fired!
This case reminds me of the curious situation of Mark Hurd - who was forced out of the CEO position of HP after he was caught in the 'moral crossfire' of being in a relationshipwith a Company vendor!
I distinctly remember Larry Ellison of Oracle laughing at the decision of the HP board to fire Hurd. This is what Larry Ellison said, "The HP board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago. That decision nearly destroyed Apple and would have if Steve hadn't come back and saved them." Source
We all know what happened to HP after Mark Hurd left. The Company performance, its employee morale, and its stock price plummeted. In fact, just today, HP has announced massive layoffs and a very bleak looking forward forecast.
This blog examines the level of intrusion and interference of corporate boards in the personal lives of CEOs:
If Clinton could do what he did and still remain President, what really is the moral protocol to be followed?
Bill Clinton was the CEO of America. That's exactly what the position of the President of the USA means.
We all know what he did while he was in the White House, with intern Monica Lewinsky. Bill Clinton went through an impeachment but still remained President! And thank God for that! While he was President, he did a great job. He not only served his country well, but also maintained a degree of high decorum and dignity for the United States, that stood out as a nation respected and envied by the world.
The two Bush Boys (father and son) – one who preceded Clinton, and the other who succeeded Clinton, completely destroyed the USA’s global leadership political position.
It’s often stated that if Bill Clinton would have been allowed a couple of more terms, the horrific 9/11 incident would never have happened.
Now, comparing what Bill Clinton did with Lewinsky (remember the cigar incident?), I wonder, how grave and serious were the individual mistakes of CEOs Steve MacMillan and Mark Hurd?
To put this brutally in a context - Bill Clinton did what you see in porn movies with a White House intern and still retained his job. Steve MacMillan on the other hand forgot to mention whom he had dinner with and got fired.
Given that both incidents happened in the USA, I ask - what is the moral protocol that its citizens and public are really supposed to follow?
Isn't there a difference between an error of judgment and massive moral corruption?
I believe that Scott Thompson - the recent Yahoo CEO, who finally resigned a couple of weeks ago, deserved to get the firing he received from media and critics like me.
He lied about his college degree; skirted and maintained that lie for quite a while!
In the famous case of Infosys, its then Head of Global Sales – Phaneesh Murthy sexually 'harassed' Reka Maximovitch and was asked to leave Infosys. Phaneesh abused his corporate position to sexually harass a colleague and deserved to get the unceremonious dismissal he got. Source
These are two clear cases of deep corruption of highly placed individuals in power. No one can dispute these.
But, if someone like a Mark Hurd or Steve MacMillan forget stating whom they had a meal with it, does that error of memory fall in the same bracket as behaving like a sexual predator or being a habitual liar?
Board politics compromise Companies.
I have seen Start Up Companies being beaten to pulp in board meetings. Check out this real life incident that happened to me.
If cocky, vain, egoistical investors behave so badly in Start Up board meetings, I can only wonder what must go on in the boardrooms of the Fortune 500 Companies.
I envision cold, dark, teak wood, mahogany paneled, red chaired, oval tabled board rooms, in which old calculating men play cunning inter-personal games, rather than worrying about the Company they are supposed to preserve, protect and help prosper.
In the case of Mark Hurd and the absolute collapse of HP subsequent to his departure, it became clear that the board had made a terrible decision.
Board politics is well known in the corporate world.
It's no secret that Warren Buffett exercises a great deal of control over the Coke board, and it was owing to his interference that Coca Cola did not buy Quaker Oats. Warren Buffett actually torpedoed the deal. Pepsi subsequently bought Quaker Oats and used it to diversify into the 'good health' business.
If Companies and their political boards cannot rise above inter-personal, petty rivalry, then how can any small or large business in this hyper competitive world survive?
The practicality of morals
The old lady who is the surviving family member of the Stryker family said that the “reason they were firing Steve the CEO was because he lied about an extra marital affair (read dinner) while he was the acting CEO.”
In this massively fast moving world that mashes up people, travel, events, conferences, parties, retreats and off-sites, it’s almost impossible to conduct oneself in a manner that is saintly or God-like. If in a party, a CEO is a bit drunk and hugs a female colleague a bit too closely, does that mean he gets dismissed the next day?
Or if a group of senior executives in a karaoke bar flirt with the lady attendants, do you - as a nosy, stuck up, white haired, morally uptight board member, recommend their immediate dismissal?
I am sure that very soon boards all over the world, and in Companies big and small, will realize that:
- Talent at the top is very hard to find. Men and Women who reach there are driven people who have succeeded amongst the millions of others and have come out on top. These people need to be celebrated, not punished!
- Even CEOs are human! Each one has a soft, dark spot.
- As long as the behavior or action of the CEO is not immoral or pointing to a massive loss of judgment or character, boards must let the moral compass of the CEO to guide him through small personal troubles, rather than show them the door.
- There are no Gods available to run Companies. The Gods are busy managing this mad world, which has spun out of control. Trying to find God to be your CEO is a foolish, and let me add, a bankrupt idea.
Or like Wal-Mart firing its SVP, Marketing (Julie) and the agency DraftFCB for its 580m$ account.
Draft was actually living in with Julie for 6 months. Genuine cases. (Source)
awesome share, aditya!
If I were there, I would have asked one simple Question- Did Steve's act cause any Business Loss to the company? If No, then Business has got nothing to do with it.
If Yes, then an analysis has to be made whether CEO is competitive to the Business.Firing is no solution I believe
Sometimes beyond business objectives(p&L), there are people who think they should deliver the right message to others in the company. The examples quoted by Alok are certainly those who did not think on the big agenda.
But I am not sure we follow these examples in India except some extreme cases and the best part is that the decisions made here too are not based on business logic. They are just part of the prevailing "Chalta Hai" attitude.
People either miss the BIGGER picture or they make their own version of the BIGGER picture of "what will the people say".
Very well written and relevant. However, in the Indian scenario, this would have many more factors other than dinner and more related to work, authority, accountability and now need them, now don't
Its ridiculous that a dinner could be labelled as an "extra-marital affair". These incidents question the integrity of the company and the support that the team should rightfully give to their CEO.
who thought we'd be reading more about phaneesh murthy...?
I am let down..by his actions..he definitely got away first time and when his firm acquired Patni..(who was our biggest client back then)..we were hoping to see a lot of changes ..and he gave hope to vendors..however i felt let down..believing his words..I believe a CEO should definitely have high integrity ..and preferably not involve with some one @work..even if it happens..there should be a line drawn for either one of the involved to back off from the job...else..it...just causes too many complications..