The #MeToo era has brought new scrutiny to a wide range of workplace misconduct — from discrimination to sexual harassment to assault — that was ignored, tolerated or even covered up in some corners of corporate America. Now the abrupt firing of McDonald’s Chief Executive Officer Steve Easterbrook over the weekend highlights how even consensual relationships between managers and subordinates are drawing greater scrutiny.
The situation
Many of the circumstances of Easterbrook’s dismissal remain unclear, but McDonald’s said Sunday that its board had determined he engaged in a relationship that violated company policy. Its standards of business conduct prohibit 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.
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Since announcing the leadership change Sunday afternoon, McDonald’s has declined to reveal further details about Easterbrook’s relationship, including the employee’s position in the company, how the board found out about the relationship and how long it had lasted.
On Monday, David Fairhurst, McDonald’s human resources chief, left the company. A spokeswoman for the fast food chain wouldn’t say if his exit was linked to the investigation into Easterbrook’s relationship.
Why it matters
The mere fact that a successful executive was fired because of what McDonald’s described as a “recent consensual relationship” reflects changing attitudes about romance in the workplace, employment lawyers and other experts said.
“It’s a sign of the times,” said Wendy Patrick, a business ethics lecturer at San Diego State University. “You’re under a microscope in a way today that you never were before, simply because our awareness has been raised as to the problems that could potentially cause.”
"It's a sign of the times. You're under a microscope in a way today that you never were before, simply because our awareness has been raised as to the problems that could potentially cause." — Wendy Patrick, a business ethics lecturer at San Diego State University
Those problems include conflicts of interest, as well as the potential for a relationship that ends badly to result in harassment and retaliation.
Similar actions
In recent years, other companies have taken similar actions penalizing workplace relationships. Last year, Brian Krzanich, Intel’s chief executive, resigned after the company discovered that he’d had a relationship with an employee — a violation of Intel’s “nonfraternization policy,” which applies to all managers.
“There has been a definite trend in the direction of written policies prohibiting romantic relationships between executives and their subordinates,” said Mark Spund, an employment lawyer in New York.
The policies can take a variety of forms. For example, many companies permit midlevel managers to have relationships with employees as long as they report the relationship. The rules for executives tend to be stricter.
“Companies in the aftermath of #MeToo have really understood that there’s an inherent power differential and what’s perceived to be consensual in the eyes of the executive may not be with the subordinate,” said Debra Katz, an employment attorney in Washington who has dealt extensively with workplace sexual harassment.
Still, sensitivity about workplace relationships — especially those involving a power imbalance — existed long before the #MeToo movement focused national attention on the misbehavior of men in power, shaking the entertainment, media and technology industries, among many others.
In 2012, Brian Dunn, Best Buy’s chief executive, resigned after engaging in what the company described as “an extremely close personal relationship with a female employee.”
Dunn and the employee claimed the relationship was not romantic. But an investigation by Best Buy found that Dunn had given the employee tickets to sporting events and concerts and that the pair had exchanged numerous phone calls and texts, some of which contained “messages expressing affection.”
And in 2005, Harry Stonecipher, Boeing’s chief executive, was forced to resign after he had a relationship with an employee.
Recent pressure
The decision to fire Easterbrook may also reflect the specific pressures facing McDonald’s, which has been criticized recently for sexual harassment at the franchise level.
»FROM MAY: 25 workers file sexual harassment claims against McDonald's
Several Democratic presidential candidates this year have joined striking workers in demanding better protection from harassment, as well as union rights and a $15 minimum wage.
McDonald’s may want to “send a message to their employees that any kind of power-driven relationship is out of bounds,” said Eric Schiffer, an expert on reputation management.
What’s next
In a regulatory filing Monday, McDonald’s said Easterbrook would receive six months of severance pay. That is likely to be about $675,000, or about half his base salary last year, according to the company’s 2018 severance guidelines. In the coming years, however, he stands to receive a total of more than $40 million in compensation, including stock options, according to an estimate by Equilar, an executive compensation consulting firm.
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