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Johnny Taylor, an independent director at logistics company XPO, discussed a “hot topic” at a recent gathering of board members in New York. This topic, beyond the usual concerns of shareholder activism, cyber threats, and artificial intelligence, revolved around Bernard Looney’s sudden resignation as BP chief executive.
Looney’s departure, due to the non-disclosure of past relationships with colleagues, has brought attention back to the reputational risks associated with romantic and sexual relationships in the workplace, particularly when they involve the chief executive.
According to Johnny Taylor, who is also the chief executive of the US Society for Human Resource Management (SHRM), boards are now differentiating between what is considered acceptable for the average employee and what is acceptable for top executives, especially CEOs and members of the C-suite. Candidates for chief executive roles are now routinely asked if they have been or are currently in a relationship with someone at the company, and are required to disclose this information to ensure transparency.
Looney is not the first, nor will he be the last, chief executive to face consequences for failing to adequately disclose relationships with staff members.
In a similar case, Jeff Zucker had to resign as president of cable news network CNN Worldwide after an investigation revealed his consensual relationship with Allison Gollust, then CNN’s chief marketing officer.
McDonald’s chief executive Steve Easterbrook was also fired in 2019 for initially failing to admit to a consensual relationship. It was later alleged that Easterbrook had engaged in three other sexual relationships with employees and had approved a significant stock grant for one of the women involved. Easterbrook faced charges for misleading investors and paid a civil penalty.
The focus on prohibiting chief executives from starting new relationships with colleagues once in office is driven by the desire to avoid wider reputational damage, in addition to legal risks. Boards are not asking CEOs to abstain from relationships altogether, but they are setting boundaries to protect the company’s image.
The #MeToo movement has shed light on inappropriate relationships and potential abuses of power by senior executives. Even in a consensual relationship, there is a power imbalance that can affect salary and promotion decisions and create a toxic atmosphere in the workplace.
Stricter policies against workplace relationships are often applied at the executive level, while a more permissive approach may be taken for junior employees. However, enforcing strict policies may lead to relationships being kept secret.
A SHRM survey conducted in February revealed that 27% of US workers have been involved in a workplace relationship. This percentage remained steady during the pandemic despite remote work reducing opportunities for office romance.
“People date at work, and only a few of those people are ever going to become CEOs,” said Johnny Taylor. However, for those few in top positions, boards are becoming increasingly vigilant. “Anything that jeopardizes the company’s reputation and goodwill is unacceptable.”
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