Sex and Ethics in the C-Suite

5/29/12

They say that sex sells, but apparently it can also be deadly to one's career. Recent headlines regarding the departure of Chief Executive Officers such as Stryker's Stephen P. MacMillan or Best Buy's Brian Dunn illustrate one of the dilemmas faced by CHROs. In both cases the CEOs were exited because of allegedly having sexual affairs with employees. In MacMillan's case it appears according to today's Wall Street Journal that he had requested permission from the board to date the employee after his divorce proceedings began, but that the board believed his affair had started before he began his divorce proceedings. So, the question is, was what he did ethically wrong? If so, what part of it was so wrong that the board felt a need to intervene? Was it having an affair while he was (allegedly) still married? Was it having an affair with a company employee? Would it have been OK with the board if he had an affair while still married, but to someone not linked to the company?

Over the past 10 years I have had fun asking CHROs the basic question of is it wrong for your CEO to have sexual affairs while married (with people unrelated to the company). It sparks some interesting conversations. Some suggest that personal morality and professional morality are completely independent, and so such behavior has no bearing on their fitness to lead the company. In fact one CHRO had a CEO who engaged in serial affairs, but was viewed as an extremely effective leader who was uniquely qualified to turn the company around. Others argue that the two are inextricably linked, and that if one exhibits immorality in their personal lives, they will ultimately exhibit it in their professional lives.

I am not attempting to provide an answer to this dilemma. However, I believe that how you answer the question above is critical to the long-term success of your firm. By that I mean that if you think that personal and professional ethics are independent, then when one of your leaders has an affair, the answer is easy: do nothing. However, if you believe there is a necessary spillover from personal ethics into professional ethics (as I do), then you will come to a potentially different recommended course of action.

I am also suggesting that this merits discussion among Executive Leadership Team members as well as boards. CEOs (and ELT members) often face the difficult position of having wealth, power, and fame, all of which can provide opportunities to go astray. It only seems fair to these executives that they be apprised of the ground rules.