McDonald’s Fires Its CEO

What Can We Learn from the Company’s “Leadership Transition” Announcement Strategy & Execution?        

11/4/19 – – It was a busy weekend for the senior management of McDonald’s Corporation. The fast-food giant’s board of directors announced on Sunday the firing of its well-regarded President and CEO Steve Easterbrook after determining that he had, “violated company policy and demonstrated poor judgment involving a recent consensual relationship with an employee.”

Canning your CEO for cause, referred to in corporate parlance as a “leadership transition,” creates a delicate communication challenge for companies of all sizes and prominence. In these situations it’s never easy to balance the competing objectives of transparency and privacy, speed and care. When handled poorly, an organization can suffer lasting internal and external damage.

So far, it looks like McDonald’s is doing very well. Here’s what I like about their announcement strategy and execution:

Forward-Looking

In Chapter 18 of The Crisis Preparedness Quotient — Measuring Your Readiness to Weather a Reputational Storm (“Dealing with Leadership Transitions”), I advise that, “In most cases, two thirds of the information in internal announcements and transition news releases should be forward-looking (news about the new person/people).” Consistent with this approach, McDonald’s leads with the news of Chris Kempczinski stepping into the roles of President and CEO. Easterbrook’s separation from the company is mentioned only once in the release, and that’s in the second paragraph:

CHICAGO, Nov. 3, 2019 /PRNewswire/ — McDonald’s Corporation (“McDonald’s”) (NYSE: MCD) today announced that its Board of Directors has named Chris Kempczinski, most recently President, McDonald’s USA, as President and Chief Executive Officer, effective immediately. Kempczinski has also been elected to the McDonald’s Board of Directors.

Kempczinski succeeds Steve Easterbrook, who has separated from the Company following the Board’s determination that he violated company policy and demonstrated poor judgment involving a recent consensual relationship with an employee.

The rest of the statement (linked below) focuses on Kempczinski’s background and accomplishments over the last four years as head of  McDonald’s USA. The message to employees, franchisees, consumers and investors is clear: We’ve dealt decisively with a sensitive matter and we’re moving forward in good hands.

Transparency

Without a lot of words, McDonald’s is reasonably forthcoming about what happened. There’s always a temptation (and plenty of pressure from attorneys) to stay silent about the reasons for a corporate divorce, especially when it involves sensitive personal conduct. The problem with withholding such crucial information is that all audiences are unsatisfied with the announcement. Reporters, analysts and employees go into overdrive trying to fill in the blanks. The explanations they come up with are often far more damning than the truth.

In this case, there still will be speculation about the identity of the other employee in this relationship, and a burning desire to learn her/his fate. I’m sure that issue was hotly debated with plenty of input from McDonald’s human resources and legal departments. While it does take two to tango (if romantic relationships are forbidden for one, they’re forbidden for all), when the second person in a consensual affair does not hold a senior management position in the organization, their name is traditionally withheld from public discussion. Of course, it’s a very different situation if unwanted attention and/or a workplace power imbalance were in play. The announcement suggests that was not the case here.

McDonald’s will be addressing the specifics of Easterbrook’s separation agreement (how much money he gets out the door) in an SEC filing later this week. That will be of great interest to employees, franchisees and the investment community. Will he be rewarded for violating the company’s code of conduct? Whatever is reported will send important signals to employees at every level of the organization regarding the seriousness of McDonald’s pledges and programs over the last year to create a safer environment (free of sexual harassment) at headquarters and the restaurants.

Timing

By making this announcement on a Sunday, prior to the financial markets opening on Monday, McDonald’s controlled some important elements in the media coverage, financial community response and internal reaction to the news. In addition to distributing the media release online, company spokespersons were made available to reporters throughout the day, and internal audiences received emails from Easterbrook and Kempczinski — ideally getting them the information before they saw it online or heard about it on the evening news.   

Dignity

Boards have a tendency when faced with such unpleasant tasks as firing their CEO to go overboard with retribution. No question, Easterbrook “demonstrated poor judgement” and deserved the board’s serious response. But recognizing his considerable contributions to the company — the value of McDonald’s stock doubled during his four-year tenure — the board allowed him the dignity of sending a farewell email message to employees. Here’s what Easterbrook said:

It has been an honour to work alongside all of you as we reinvigorated the McDonald’s brand. As I reflect on my tenure as CEO, these have been the most fulfilling years of my working life . . . As for my departure, I engaged in a recent consensual relationship with an employee, which violated McDonald’s policy. This was a mistake. Given the values of the Company, I agree with the Board that it is time for me to move on. Beyond this, I hope you can respect my desire to maintain my privacy.”

It was appropriate to keep Easterbrook’s voice out of the media release. But assuming that the workplace relationship truly was consensual, I like this final offering of respect.

This is an excellent case study for crisis communicators to monitor and analyze. The content of this week’s SEC filing will go a long way toward determining the final course of McDonald’s “leadership transition.” So far, so good.

 

https://news.mcdonalds.com/news-releases/news-release-details/mcdonalds-corporation-announces-leadership-transition

UPDATE, 11/5/19 – – McDonald’s made public the specifics of Easterbrook’s separation agreement. Looks very appropriate to me: severance of about six months salary and a beefed-up non-compete provision.

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