HR & Management
Managing the David Brent-esque senior executives who act out of turn
10 min read
12 September 2016
As David Brent’s new film hit the cinema last month, we were reminded of the challenge all businesses face from time to time, namely the senior executive or board member who says or does things the company would rather they didn’t.
Earlier in the summer, Kevin Roberts, the executive chairman of Saatchi and Saatchi, resigned after making comments suggesting the debate over gender diversity in the advertising industry was “over”. The volume and speed of responses in the media rebutting his point meant within six days of his comments going public, he was out the door.
These are not isolated examples – recent allegations regarding CEOs’ and politicians’ private lives highlight how often the issue can arise. The situation can also occur in an internal context at work – for example an inappropriate comment during a board meeting, in the course of a recruitment process or at a works social event. We all make mistakes – but when you are senior, the stakes are inevitably higher. How should an employer react when senior people misbehave?
(1) Establish the initial facts
In the heat of the moment, it is easy to lose sight of what in fact has been said or done. Identifying the offending statement or action is therefore imperative as this will determine what steps should be taken next.
(2) Calm the situation – consider a temporary suspension or agreed period of time away from work
In Roberts’ case, he was placed on a leave of absence by the board. This may in fact be somewhat easier to do with very senior figures, as the day to day running of the business tends to fall to others. Deciding whether to suspend a more hands on senior manager however can be hard. If this leaves the team without cover at a critical time, is that the right thing to do for the business?
However, all companies should have appropriate support systems in place to cover holiday and unexpected absences. It is worth checking that the employment contract allows for suspension. Otherwise, being asked to stay away from the office would amount to a reasonable management instruction and in any event, most senior executives in this position may well be grateful for a period away from the spotlight.
(3) Investigate the issue or allegation
Where senior individuals are involved and the allegation concerns more than just one incident, finding someone suitably senior and independent to investigate the situation can be difficult. Where the individual is a board director including non-executive directors, it may well be appropriate for the board to delegate investigation to a couple of other members, although it will need to bear in mind that they will report in due course to the board, at meetings which that member would ordinarily be expected to attend.
Arrangements need to be made for the individual board member to recuse themselves where their own conduct is under discussion. For some businesses, going down the external route is more appropriate and often lawyers will be asked to conduct the investigation and to advise the board on next steps.
(4) Maintaining confidentiality and reassuring witnesses
Whilst the original comment may be in the public domain, this is not always the case and care should be taken to ensure that the investigation is conducted as confidentially as possible. Where more junior members of staff are involved as potential witnesses, they should also be assured that providing information and evidence will not jeopardise their career prospects.
(5) Look at the contract…
It will be important to establish whether what has been said or done could amount to a breach of the individual’s contract. For senior executives and directors for example, their contract will often provide that engaging in activity which brings or is likely to bring either themselves or the company into disrepute or prejudice, will amount to grounds for termination.
Read on for the last five tips.
(6) …and internal policies
What do they say about this kind of behaviour? What is the company’s culture? If an organisation has decided, for example, to take a zero tolerance approach to any kind of discrimination, showing leniency to more senior staff who make inappropriate comments can lead to arguments of inconsistency and double standards. This in turn could give rise to claims of discrimination and unfavourable treatment from those who employees who have been disciplined. Upholding standards across the board may well mean therefore that action needs to be taken to send the right message.
(7) Consider external interests and stakeholders
The views of others, such as shareholders, funders, customers and clients also need to be considered. To what extent is the comment or action likely to significantly impact those relationships and the perception of the company externally? How essential is the senior executive or board member to current and future plans? How does what they have said or done sit for example, with recent statements or advertising campaigns? If their actions run directly counter to the branding message, then the impact of their behaviour may well be significant.
Equally the views of employees should be considered – how viable is it for a senior manager to remain in post in the circumstances – particularly where he or she is responsible for a number of other employees?
(8) Consider any regulatory reporting requirements and obligations
In certain businesses, including regulated ones, any conduct that calls into question the individual’s ability to carry out their job, and their fitness or propriety to practise, needs to be considered carefully and specialist advice taken.
(9) Disciplinary or negotiated exit route? Or can they stay?
In some cases the matter may be so serious that the individual should be invited to a disciplinary meeting (where they are an employee) or in the case of a non-executive director, a meeting of the board to discuss their conduct. Receipt of such an invitation may well trigger a resignation and terms for a smooth exit and handover can then be agreed. Where an individual wishes to fight their corner however, then an appropriate process should be followed – particularly in the case of an employee where significant financial sums are likely to be at stake on termination, such as share options, LTIPS and bonuses, and where a definition of “bad leaver” will significantly impact any entitlements.
Where the conduct is not significant enough to warrant dismissal, but the interests of the company are best served by the individual leaving the company, the best step is usually to negotiate an exit. In some cases, provided the individual still has the confidence of the Board, a public apology and other acts of contrition can be sufficient to allow the individual to remain with the business – albeit any future recurrence is likely to lead to their departure.
(10) Managing communications and the media
HR teams and internal and external communication and PR teams need to work closely together to ensure that the incident is handled fairly, promptly and with due regard to the interests of all those affected. The internal message can be just as important at the one to the outside world, and employees should not be left to hear about the news of the CEO’s departure from external sources.
It is also important to ensure that requests for media comment are directed to those with authority to speak on the company’s behalf, and that employees are told not to comment on the issue on social media. Ironically, the way in which an organisation responds to an issue of this type can often go a long way to address the harm caused by the original act or comment and can in fact help to portray the organisation in a more favourable light.
Marian Bloodworth is employment partner at Kemp Little.