December 10, 2007
This week's blog entry is reposted from the Harvard Business Review website.
The Red Cross announced on November 27 that the board of directors asked and received the resignation of CEO Mark W. Everson. The board made the announcement 10 days after learning that Mr. Everson had been in a personal relationship with a Red Cross employee. Mr. Everson acknowledged the relationship. According the Suzy C. DeFrancis, chief public affairs officer, the board "concluded that the situation reflected poor judgment on Mr. Everson's part and diminished his ability to lead the organization in the future." He had been the CEO for only six months.
Was this punishment too severe? Could the Red Cross have taken other measures such as a censure or a salary reduction? Could the CEO have remained to be an effective leader? After all, Mark Everson had performed extraordinarily well at his job. The dismissal was damaging and costly to both the CEO and to the Red Cross, which has had a hard time holding onto its leaders.
This situation raises an interesting ethical question. Where is the line that divides the public life and the private life of an individual?
Some might argue that this was a private affair that in no way affected either the CEO's or the Red Cross employee's performance. Had the relationship remained a secret and had the employee moved on and found another job, one may think that the CEO could have kept his job.
Others might say that the CEO -- or any leader -- is called to be a role model and should be expected to display exemplary conduct in both their private and public lives.
We do not know all the facts in this story, but here are some of the questions the board should (or maybe did) consider. These questions should be considered by management of any company when faced with an ethical lapse perpetrated by an employee.
- Did the individual violate the Code of Ethics of his organization?
- How has the organization dealt with similar situations in the past? Is management consistent?
- Did the individual come forward on his own initiative with the information of the activity in question or did the organization find out through a third party?
- What was the individual's attitude when his relationship became public? Was he apologetic or defensive?
- Did he have a prior history of such irresponsible conduct? In other words, was this a pattern of behavior or completely out of character?
The answers to these questions should help in determining the right course of action in such circumstances.
I believe the Red Cross made the right decision. Keeping Mr. Everson at the head of the Red Cross would have sent to wrong message to the staff and the public. They would be saying that such conduct is acceptable.
Furthermore, Mr. Everson did show poor judgment and therefore damaged his reputation as a leader.
Finally, I believe that it is fundamentally a question of character. Mr. Everson was a married man. How can someone who breaks a life-lasting promise and mostly likely lie about it be trusted? By his conduct he lost the respect and trust of his staff, the public, and donors.
Without trust it is impossible to lead.