What’s the Difference Between a Hook-Up, a Fling, and a Relationship?
In 2023, being aware of the distinctions between a hook-up, a fling, and a relationship is now essential knowledge for board directors of major companies. Recent resignations by high-profile individuals, such as Bernard Looney of BP and Edward Tilly of Cboe Global Markets, due to undisclosed past relationships with employees, have brought private behavior of business leaders into the spotlight. This raises the question of how closely directors should scrutinize the personal conduct of top executives, including workplace relationships, social media use, bullying, tax affairs, and even the accuracy of CVs.
Traditionally, board discussions have focused on product reliability, service quality, and compliance, rather than personal conduct. However, the emergence of reputational risk as a priority alongside financial risk has forced directors to assess what is considered socially acceptable in order to maintain the trust and confidence of staff, investors, and customers. Olivia Streatfeild, a board member at Reach, believes that board directors should be more engaged in shaping the overall vision, strategy, and culture of their company to prevent personal conduct issues from becoming major problems.
There are several reasons why preventing personal conduct issues is crucial for companies. Trust in both the leader and organization is at stake. Unexpected CEO departures and management upheavals can cause uncertainty and disruption for employees and investors, which in turn can affect share prices. Tolerating certain behaviors creates a culture that allows them to persist. Increased connectivity and media interest also exacerbate reputational risks, as executives are now more exposed due to their online presence and social media profiles.
Staff, particularly the younger generation, now have more platforms to voice their concerns and expect higher ethical standards from their superiors. Activist investors also put pressure on boards to ensure transparency and ethical behavior among top leaders. The Institute of Business Ethics is issuing guidance for board members to develop an ethical business culture, urging them to consider behavior when hiring and promoting staff and to provide training for directors and senior leaders to ensure corporate values are upheld.
To prevent personal conduct issues from escalating and damaging the company’s reputation, it is advisable to give more seniority to human resources (HR) directors. Elevating HR officers to leadership or boardroom roles allows them to directly advise the CEO. Additionally, headhunters can assist boards in scrutinizing potential hires, checking references, and confidentially gathering insights from trusted sources. However, while these approaches can shed light on an individual’s behavior in the workplace, they may not reveal much about their private lives.
Some executive search firms employ techniques, such as the “Daily Mail test” or scouring social media and open-source data, to identify potentially problematic behaviors or viewpoints. Hedley May, an executive search firm, emphasizes the importance of a leader’s character in addition to their competence, stressing the need for boards to understand the character of both the CEO and the broader leadership team. In the US, boards often go above and beyond to conduct thorough background checks, looking for any signs of integrity issues or questionable behaviors.
To protect against conflicts of interest and abuse of power, it is also essential to consider personal relationships within the company, such as friendships or familial ties, when assessing conduct. Establishing well-publicized codes of conduct, effective whistleblowing mechanisms, and ethics champions throughout the organization can empower employees to take action against misconduct. However, it is acknowledged that it is not realistic to catch every instance of misconduct, and some issues may go undetected.
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