Deciding if Embattled CEOs Should Stay or Go

Sometimes, to Get Out from Under the Clouds of Crisis, Heads Have to Roll         

10/23/19 – – Crisis management sometimes requires human sacrifice. No one has to be drawn and quartered, but it is often necessary to expel an individual from your company to demonstrate an adequate response to the challenges you’re facing. We’re seeing a number of examples of this reality in today’s headlines.   

We learned today that as part of SoftBank’s buyout/rescue of WeWork, the disruptive real estate company’s controversial founder Adam Neumann (who lost his CEO title last month) will be removed from the board of directors, relinquishing most of his ownership and control. In the wake of its aborted public offering and revelations of Neumann’s lavish lifestyle, WeWork had to assure all its stakeholders that planning and spending would no longer be out of control. Convincing them of that required severing ties with Neumann, who exits with a ton of money (reportedly $1.7 billion) but no meaningful leadership role moving forward.  

Boeing, still reeling from the continued grounding of its 737 Max aircraft, yesterday announced the firing of Kevin McAllister, who was heading the company’s commercial airplanes division. The board had already taken away the chairman title from CEO Dennis Muilenburg, who is scheduled to testify in front of Congress next week. Regarding McAllister’s departure, a financial analyst told The New York Times, “If nothing else, it gives Dennis Muilenburg something to point to when he is on the Hill . . . People are calling for action. Rightly or wrongly, he can point to this as a form of action.”

The CEOs of Nike and Under Armour, who have both faced harsh criticism for their company’s male-dominated cultures, yesterday announced their intentions to give up their chief executive titles early next year. Kevin Plank, who founded Under Armour in 1996, has admitted to frequenting strip clubs with other executives, and Nike’s Mark Parker has been trying to address a work environment that female Nike employees have described as a “toxic boy’s club.” Dozens of executives have been fired. Both Plank and Parker will stay involved with their companies as executive chairmen, but will turn over day-to-day management responsibilities to others. Interestingly, the stock market responded positively to both announcements.

In Chapter 12 of The Crisis Preparedness Quotient — Measuring Your Readiness to Weather a Reputational Storm (“The Five Rs of Crisis Response”), we focus on five elements of effective crisis response: Regret, Reform, Restitution, Reaffirmation and Recovery. Of the five, reform may be the most important in convincing key audiences that bad things are not going to keep happening. In addition to adopting new policies, procedures and priorities, you may also have to change personnel — at the highest levels of your organization. It’s very hard for people to trust that leaders perceived to be enablers of wrong doing will suddenly become champions of reform.

So, deciding if someone has to go is one of the most critical and difficult calls to make during a crisis.

NBA Commissioner Adam Silver has been wrestling with just such a decision. International fallout from the tweet by Houston Rockets General Manager Daryl Morey in support of Hong Kong pro-democracy demonstrators is putting pressure on Silver to act. He reported that the Chinese government as well as NBA business partners in China have asked him to fire Morley. In a speech last week, Silver explained: “We said there’s no chance that’s happening. There’s no chance we’ll even discipline him . . . These American values — we are an American business — travel with us wherever we go, and one of those values is free expression. We wanted to make sure that everyone understood we were supporting free expression.”

With the release this week of Ronan Farrow’s bestselling book, Catch and Kill — Lies, Spies and a Conspiracy to Protect Predators, the board of Comcast, parent of NBCUniversal, has to be debating the future of the leaders of the network’s News division. Farrow’s riveting account of his battle to get reporting of Harvey Weinstein’s horrific, sustained sexual harassment and assault on the air presents a compelling case that NBC News President Noah Oppenheim and NBC News Chairman Andy Lack bowed to pressure by Weinstein to kill the story. (I just finished the book, which I highly recommend. And I encourage you to read the current Vanity Fair article by Rich McHugh, Farrow’s producer before they both left NBC.) Farrow suggests that Oppenheim and Lack were especially vulnerable to Weinstein’s bullying because they were hiding the ongoing predatory behavior of their star, Matt Lauer; a charge both Oppenheim and Lack aggressively deny.

Shockingly, the New York Post reported today that despite all this and the disastrous hiring of Megyn Kelly, Oppenheim’s contract was recently renewed, and he is likely to assume the division’s chairman role when Lack retires. “We thought both he and Lack were about to be fired,” said one NBC “insider” to the Post. “No one has faith in them.”

You have to question whether viewers or employees can have faith in NBC News while Oppenheim and Lack are in command. Can reforms promised by NBC to clean up its culture be taken seriously? Those are important questions for the higher-ups at Comcast and NBCUniversal. It may be time for some strategic human sacrifice.

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