When a CEO Crosses the Line

What happens when the CEO of a small organization is accused of inappropriate behavior?  In our experience, it is not unusual for business owners to report to no one but themselves. This provides the CEO with maximum autonomy in running the business. It also means that there is no one to whom employees can complain if they have an issue with the CEO’s conduct. 

We have seen many examples of CEOs who gain national attention because they are great at doing whatever it is they do.  That’s why they are able to be successful CEOs, after all. But recent news stories also highlight situations (as we have similarly found in workplace investigations we have conducted) in which the lack of accountability for the CEO’s own behavior turns into a dangerous achilles heel. 

Lack of Self Awareness

Irrespective of their good intent, CEOs often fail to appreciate the significance of the power disparity between them and the people who work for them. These senior leaders are fully cognizant of their title and the accompanying responsibilities.  Yet they can compartmentalize those responsibilities into the “manager” part of their role. In their day-to-day interactions, they view themselves as a regular employee.  They may commiserate about work and may joke around or flirt or do whatever it is they would do if they were just another team member.

The problem is that the manager's power never goes away.  Other team members may laugh at the CEO’s offensive jokes or accept the leader’s invitation for an after-work drink even when they don’t want to.  Because it is the boss who asked, and that boss is responsible for the employee’s livelihood.  It’s as if the senior leader is permanently wearing an invisible hat that reads “BOSS.”

The senior leader may forget that the hat is there, but employees always see it.  That power differential colors all of their interactions with the senior leader.  It leads them to go for drinks when they want to go home and it leads them to say “yes,” when they really think “no.”

When the senior leader is a CEO or business owner who reports to no one, there is no way to remind them about the invisible hat.  Inappropriate behaviors go unchecked because employees don’t raise the concern out of fear for their jobs, promotional opportunities and reputations.

Lack of Redress

Employees who have experienced inappropriate behaviors from a CEO or business owner have few options:

●      they can tolerate the behavior and/or try to avoid it as much as possible;

●      they can find a job somewhere else;

●      they can file a complaint with the Equal Employment Opportunity Commission (EEOC) or equivalent state or local government agency; and/or

●      they can sue.

All of those options are bad for business and the organization.  Allowing employees to suffer silently causes morale to plummet and productivity to decline. Watching employees leave impedes recruiting and hiring efforts, and eradicates the previous onboarding and training investment. Defending against an EEOC charge or lawsuit is expensive, time-consuming and distracting to everyone involved. 

Moreover, whichever of these roads the unhappy employee follows, they may first go onto social media and let clients, investors, customers and future employees know what they think is really going on inside the organization.  The business cost of that is unquantifiable. 

A Better Way

Business owners have other options that do not require changes to the governance structure of the business. Rather, simpler remedies involve creating a meaningful complaint-reporting option and the leader visibly demonstrating self-awareness and humility.

Meaningful Complaint Reporting

Even when CEOs think that all of their employees are “like family,” it is not reasonable or realistic to think that employees will come to the leader directly to share their concerns.  They don’t do it because of that invisible hat.  Employees are too nervous to risk the ramifications.

Business owners can engage one of a range of modestly-priced complaint-handling hotline service providers, through which employees can submit complaints about workplace behaviors. The third-party service provider receives the complaints, which can be anonymous, and will then report them to the business owner or a designated contact internal to the organization.

Alternatively, business owners can identify a third-party external to the business to whom employees can raise concerns - consider a mentor or trusted advisor, or outside legal counsel. The selected individual should be someone who can and will be frank with the business owner and call out inappropriate behaviors in which the senior leader may be implicated.  Employees should be advised of this designated complaint recipient.  It is helpful if at least some employees — those who are senior in title or years of service — are familiar with the designated individual and can vouch to other employees as to a degree of independence and accountability.

Self-Reflection

It’s not enough, though, to just put an avenue for complaints in place as a check-the-box measure. Once alerted to an employee complaint or concern, the senior leader needs to take it seriously. The leader may believe the complaint is unfounded, but reaching that conclusion without review or a more formal investigation will undermine the complaint-reporting process and leave employees feeling they still lack redress.

We have conducted hundreds of workplace investigations over the years, many involving senior leaders, and rarely do we find a complainant outright lied. Far more common are situations in which a leader or other individual may have been well-intentioned but did not recognize how the complained of behaviors were perceived by other employees.

Business owners need to be prepared to receive that feedback about themselves and act on it. At a minimum that requires self-reflection, but a better approach is one-on-one training or coaching. An experienced third-party can highlight blind spots in the CEO’s own behavior, offer a different perspective and suggest new approaches and techniques to leadership.

Business owners also should actively participaet in any training they offer to employees on preventing harassment and discrimination in the workplace. If sufficiently interactive and engaging, that training can bring out differing perspectives that a business owner previously may not have considered. The business owner’s attendance and participation also demonstrates a commitment to offering employees a respectful workplace.

Lessons Learned

No business owner wants to be the example others use when explaining “what not to do” as the CEO.  Building accountability into an organization’s processes — through viable complaint processes and a commitment to self-education and self-reflection — are modest cost solutions that can pay huge dividends in terms of employee morale and productivity, and in protecting reputations for the business and its owner.