A New Double Standard: When does one’s personal life become the company’s business?
By Steve | July 18, 2007
Several of the highest profile ethics scandals of late have involved the personal lives of executives. Harry Stonecipher of Boeing terminated after an affair with a marketing executive. Julie Roehm of Wal-Mart unceremoniously sacked for (according to Wal-Mart) a variety of misdeeds, including accepting entertainment from vendors and having an intimate relationship with a subordinate. (As most readers of this blog will note, Ms. Roehm is vigorously contesting these allegations.) Paul Wolfowitz forced to resign after he aided a close companion also working for the World Bank. John Browne retired early from BP when news was due to break about a long time relationship of his. And last week David Colby of WellPoint was dismissed for unspecified reasons—but they certainly seem to be linked to the close relationships he had formed with women in Indianapolis and California, and the lawsuit one of them was filing against him.
In many parts of the world, executives, board members and even a voracious media would shake their heads at these terminations. The reasoning is straightforward: judge the executive based on whether he/she is performing the job.
The counterargument we have used successfully in many countries, especially in cases like Stonecipher and Roehm, is to examine the impact the behavior has on other employees. What do other employees think when an executive has an affair with a subordinate? Will the playing field be level? Will the subordinate get assignments, opportunities and compensation based solely on job performance? The issue becomes one of conflict of interest rather than an unsavory personal life.
While conducting a training session in Spain a few weeks ago, however, we were told that Spanish law prohibits penalizing an executive, including a mandatory transfer out of the reporting chain, when he has an affair with a subordinate. So clearly the US standard here is not universally embraced.
And then we come to David Colby. As of this writing, there have been no allegations that Mr. Colby’s pursuits were anything but extracurricular. No subordinates were involved—although he may have had a relationship with an employee at one of the predecessor companies to WellPoint. And still he was let go, presumably for violating his employment agreement which does not allow "conduct which tends to bring us into substantial public disgrace or disrepute."
Does this create a double standard? Absolutely. Presumably a customer service rep at WellPoint could have multiple affairs, and this conduct would not bring his/her employer into “substantial public disgrace or disrepute.”
Is a double standard warranted? Absolutely, as long as executives are held to a higher standard than employees. For better or for worse, executives are role models internally and ambassadors externally, and deserve to be held to the highest standard as a result.
However the Colby case also reaffirms that much of business ethics is cultural. For, as has been pointed out by the French media, for French executives or politicians to have an affair—or several—is not a problem, as long as they do their job. No “substantial public disgrace.” Mr. Colby, France awaits.