By Adam Turteltaub
In the last few weeks, there have been a dizzying number of CEO departures not for financial malfeasance, disappointing performance or major legal issues. Instead, they have left because of violations of the company’s code of conduct. Papa John’s, Texas Instruments, Intel and Clarks all saw their CEOs exit the building.
Each departure, I would argue, is a sign that Boards are increasingly aware of the importance of compliance, ethics and setting the right tone at the top. Decades ago, maybe even a few years ago, some of the offending behavior might have been tolerated or led to a quiet slap on the wrist. Not anymore.
In each case, the CEO wasn’t given a pass. The company’s values were the company’s values, no matter if you stood behind a counter in a store, or on an assembly line or in the C-Suite.
As painful as this has been for these companies and the individuals involved, it’s a sign of a significant change in business, and it carries with it two powerful messages.
First, for each company in which the CEO left, employees heard probably the strongest tone at the top that they have ever heard in their careers. An email from the CEO or Board chair talking about the company’s values speaks strongly. A termination of a company leader shouts: we take this seriously. If anyone was wondering if the company means all that stuff in the code of conduct, they don’t anymore.
Second, for the rest of the business community the message is clear: boards are recognizing that you can’t look the other way at misconduct from anyone. They have to act and are acting, and, increasingly, it’s going to be hard for boards who don’t act to justify their own behavior.
And, as a corollary, board members need to ensure that they fully understand what the compliance and ethics program is, what the risks are, and how to support the program, especially when there is an issue involving top management.
Once that happens, we’ll likely have fewer weeks filled with CEO departures.