Departure of McDonald’s CEO Reflects Companies’ Sensitivity in #MeToo Era

Even consensual relationships between executives and subordinates are under scrutiny

Dana Wilkie By Dana Wilkie November 15, 2019
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​Two weeks ago, McDonald's fired its CEO upon learning that he'd had a romantic relationship with a subordinate. Last year, Intel's CEO resigned after his company learned he'd done the same thing.

While the relationships were consensual, the abrupt departures highlight how sensitive companies have grown—in this era of #MeToo—about their leaders dating employees.

"This is definitely an issue that has arisen more and more in our client workplaces, especially post-#MeToo," said Kelly Ann Bird, Esq., director of the employment and labor law group at Gibbons P.C. in Red Bank, N.J.

McDonald's said on Nov. 3 that its board discovered that CEO Steve Easterbrook engaged in a relationship that violated company policy. The company's standards of business conduct policy prohibits employees with a direct or indirect reporting relationship from dating or having a sexual relationship.

"It is not appropriate to show favoritism or make business decisions based on emotions or friendships rather than on the best interests of the company," the policy states. "If you are either in a relationship or plan to enter into a relationship that may violate Company policies, you must advise your Human Resources Representative or Director immediately."

On Nov. 4, McDonald's chief people officer, David Fairhurst, abruptly resigned. Although the company said Fairhurst's departure wasn't related to Easterbrook's relationship, Fairhurst's relatives told the U.K.'s Daily Mail that the company pushed the HR executive out because he knew about Easterbrook's relationship and did not report it.

Intel CEO Brian Krzanich resigned abruptly last year after the company learned he'd had a relationship with an employee, which violated the company's "nonfraternization policy" that applied to all managers.

"Boards are now asking themselves: Is this consistent with our culture? Is this how we want to be portrayed?" said Johnny C. Taylor, Jr., SHRM-SCP, president and CEO of the Society for Human Resource Management, in an interview with the Financial Times.

The Time's Up Legal Defense Fund and the American Civil Liberties Union filed a class-action lawsuit Nov. 12 alleging a "systemic" sexual harassment problem at McDonald's. Plaintiffs have filed more than 50 harassment complaints against corporate and franchise McDonald's restaurants over the past three years.

Policies on Dating

Many companies have policies about dating or sexual relationships at work. Sources interviewed for this article knew of few companies that ban dating completely—between any employees.

"It's impossible to stop romance in the workplace," said Jean Baur, author of The Essential Job Interview Handbook (Career Press, 2013). "A ban on relationships would be a way of saying, 'We don't trust you to make good decisions about your life.' And, anyway, it wouldn't work. Attraction is too strong a force."  

[SHRM members-only Express Request: Investigating a Harassment Complaint]

However, many companies do have policies that forbid dating or sexual relations between managers and their subordinates. Or, the policies require that such relationships be reported so the company can change reporting lines or take other action to avoid the appearance that the manager may be favoring his or her partner professionally.

"What I think smart companies do is to come up with guidelines so that romance doesn't lead to inequity or disrupt the work of others," Baur said. "A friend of mine … got involved with the CEO where she worked, and this led to resentment from other employees, plus many of them would complain to her about his policies and behavior. What she quickly realized is that she had to be very careful about what she said and couldn't retain her open relationships with her colleagues."

Allowing workplace relationships may depend on a company's size, said Mark Spund, head of the employment law practice at Davidoff Hutcher & Citron LLP in New York City.

"A large company where the subordinate does not report directly to the manager—they probably could have a relationship," he said. "A much smaller company—it could be problematic in terms of company morale."

A SimplyHired survey of over 900 employees—including those who'd been involved in workplace relationships and those who hadn't—found that "when sparks flew in the workplace, a large number of our respondents' relationships were forged between employees of the same level, and the majority of people felt most judgmental toward power-imbalanced office couples," said Carly Johnson, project manager for SimplyHired.

Pitfalls of Dating

Dating a senior executive—especially a company's CEO—can be so fraught with risk that "we recommend prohibiting any executive from having a romantic or sexual relationship with anyone at a company," Bird said. 

Among the problems that can arise, she noted, are:

  • The executive abuses his or her power in the relationship.
  • The relationship leads to actual or perceived paramour favoritism, including in business decisions relative to promotions, raises or other opportunities.
  • Discomfort among employees if they witness workplace affection.
  • Unprofessional or dysfunctional workplace dynamics when the relationship ends.
  • Gossip and speculation about the relationship that leads to lost productivity.
  • The executive, inadvertently or intentionally, discloses confidential information and other company matters that a subordinate wouldn't normally be privy to.  

"The real danger, both from a [legal] perspective and a morale perspective, is with relationships between supervisors and subordinates," said Chris W. McCarty, an employment attorney with Lewis, Thomason, King, Krieg & Waldrop in Knoxville, Tenn. "Co-workers will assume preferential treatment. And any break-up could arguably lead to an EEOC charge or suit. They are just messy, both as to legality and as to optics." 

Generational Differences?

Taylor told the Financial Times that he informally surveyed people at a conference about the McDonald's incident and discovered that older men tended to approve of the company's decision to fire Easterbrook but that younger women at the conference believed the company overreacted.

"This newer generation is saying: 'If it's not sexual harassment, if it's not quid pro quo, they should be able to do what they want,' " he said.  

"I think the older we get the more risk-averse we become," McCarty said. "Young people see situations where workplace romances are successful all the time. With age and experience, though, you will inevitably see some of those tricky, messy and costly problematic relationships, and then you start thinking that avoiding those at all costs just might be worth it." 

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