Jun 23, 2010

Kohler on sex and execs: how DJs got it right in the end

Why does a successful CEO -- Mark McInnes -- get his marching orders for reportedly trying to kiss a staff member, while an unsuccessful one -- Malcolm Jackman -- hangs on having halved the value of his company in a single day?

Alan Kohler

Business Spectator editor-in-chief

It's an interesting world when a successful CEO -- Mark McInnes -- gets his marching orders for reportedly trying to kiss a staff member, while an unsuccessful one -- Malcolm Jackman -- hangs on having halved the value of his company in a single day. The Elders CEO may well follow McInnes into hiding before long, but you certainly can't accuse his board of being ruthless A week after Mark McInnes' reign at David Jones came to such a shocking end, debate is still raging about whether the board did the right thing, and whether they are setting a standard for other boards and CEOs that is too high and too prudish. I think the DJs board has stumbled into doing the right thing: the end result is right and an important issue has been highlighted. To be honest, when I first heard McInnes had been fired for two incidents of "inappropriate behaviour" at staff functions, I thought he must have got drunk and groped some poor woman in a corner. Then when it was reported that he just tried to kiss her, I thought there must be more to the story. There was: on this occasion he "misread the signals" but apparently there have been plenty of other times, with other women, when he read them correctly, and the Prince and Cinderella then went off for a spot of quiet glass slipper fitting. McInnes was single -- though he's not now -- and while he wasn't in the Tiger Woods class perhaps, he certainly "enjoyed the company of women", to employ the phrase often used about him these days. And DJs is full of women whose company he might have enjoyed. However, if chairman Bob Savage is to be believed, he and the board knew none of this. The fact their CEO was what you might call an active heterosexual had not filtered into the boardroom. All Savage knew, he says, is the CEO came to him and said he'd been stupid with a female staff member and that the law firm of Rottweiler, Bull Terrier and Co was now on his tail. Even though this was a first offence and McInnes had more than tripled the company's value, Savage didn't hesitate: out you go then. One strike and you're out. They then took a week to negotiate the money -- $1.5 million on top of existing benefits, which is much less than McInnes would have got as a "good leaver" but still a fair bit for someone leaving in disgrace. As a result, the DJs directors are in the unhappy position of being criticised by just about everyone -- for getting rid of him too hastily and for paying him too much on the way out. Often when both sides of an argument are criticising your decision, you know you've done something right, but in this case the DJs board has just left themselves looking stupid for not knowing what McInnes had been up to, and weak for not following through on their tough stance. But in fact I think McInnes' behaviour has indeed been disgraceful and, yes, he should have been sacked. Whether the two incidents referred to in last week's statements, in which McInnes made unwanted advances on the same woman, consisted of sackable sexual harassment is a matter for the courts and for those involved. But where the DJs CEO has definitely behaved badly is in using his position over many years for sexual gain. It's no different to misusing your position for financial gain. If McInnes had been extorting money out of female employees in return for promotion and other advantages, he probably wouldn't have just been sacked -- he'd be in jail. But because he was simply a 'ladies' man' playing the field and reading signals, it's just part of corporate life. Just Mark being Mark. And anyone watching the TV series Mad Men knows this has been going on for a very long time. Well, I think 'seducing down' should now be formally put on a watch list, and not just when it is clearly harrassment and the 'seducee' complains. It is a delicate and complicated business to be sure, but in my view any manager who routinely cavorts with those under him or her, as it were, is suspect and should be formally warned, even if no one is complaining about harassment. A second offence should result in the sack. Some office relationships between a manager and staff member are not based on exploitation, but I think the manager's superiors should assume it is and act accordingly. They should think about the sex as money: if they found out the manager was asking for cash would they think differently, even if the staff member was paying it willingly? Companies should have a formal policy about office liaisons that are not harassment but may still involve exploitation. That policy should assume it's inappropriate, with the onus of notification and proof on the people involved. So should McInnes have been formally warned and given a second chance? Well, yes -- long ago. Two weeks ago he actually resigned, and the board had two choices: accept or reject. I suspect he just wanted out and it was best for all concerned for him to move on. And by doing it messily and giving the prurient press a field day, Savage has inadvertently highlighted an important and overdue problem.

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32 thoughts on “Kohler on sex and execs: how DJs got it right in the end

  1. Nigel Westrock

    Just kissed her. See how you go when he gives you a kiss Alan.

  2. John Bennetts

    Alan has been a bit savage on Savage. He got it right all the way through. There is no easy, mess-free way to clean up this type of stuff.

    Regarding workplace romances, there is a huge difference between a romance that develops outside the workplace between people who met at work and being heavied by the Big Boss.

    Quite simply, any kind of attempt at physical intimacy at the workplace is a big red light, regardless of the rank of the initiator.

    That is what appears to have happened here, and that is the problem. If a manager chooses to take a lesser mortal out to dinner (say) and that person agrees to do so, then there is a clear power imbalance, but at least a semblance of propriety.

    As to an onus of notification being put on both employees… what world are you living in? Nobody wants to publish their first kiss to the HR Department, let alone further developments. Get real. Provided that things are properly consensual and not happening at work, then it is not a corporate matter.

  3. Delerious

    There are laws in place in relation to sexual harassment. The board had a choice and accepted his resignation but that doesn’t stop the company being chased in court and being fined and all the other trimmings that go with this type occurrence. This won’t go away and I’m sorry the media is chasing the woman in question. He admitted it so leave her alone.

  4. John Wood

    Oh dear, what is it that Mr Kohler doesn’t understand about inappropriate behaviour?

  5. James McDonald

    I won’t win any popularity prizes for saying this, but there are a lot of happily married couples who hit it off that way.

  6. C.P.Quagmire

    He’s no great loss – Goddard and Zarha are the brains behind the operation.

  7. SusieQ

    Finally a company that has got rid of the problem and not forced the victim out, as is so often the case. DJ’s are to be congratulated for their handling of this matter, even if the Board did seem to have been walking around with their eyes closed for a long time. Another reason to have more women on Boards???

  8. SusieQ

    And I meant to add, if DJ’s had not dealt with this in the proper way, I for one would not have set foot inside one of their stores again.

  9. Socratease

    I had to read Alan’s piece twice because it meanders so much around the core issue. It wasn’t until I read …

    “But in fact I think McInnes’ behaviour has indeed been disgraceful and, yes, he should have been sacked.”

    … that I discerned his actual position on the matter.

    As for …

    However, if chairman Bob Savage is to be believed, he and the board knew none of this. The fact their CEO was what you might call an active heterosexual had not filtered into the boardroom.

    … this is the bit of the whole tawdry affair that I have difficulty in believing. Individual members of the board, especially those who have been there for some time, would have to be deaf, dumb and blind not to have been aware of McInnes’ reputation.

    The fact that the woman involved had to resort to using workplace lawyers to make her complaint indicates to me that she knew that lodging a complaint via the usual route would have been fruitless in getting the unwanted behaviour to stop.

  10. Socratease

    @SusieQ: The woman involved may now have been forced out by all of the media attention. I hope it’s not the case, but she has probably paid the traditional price of the whistle-blower.

    It’s up to Savage to make sure that the woman is not victimised within DJs, however with all of the media exposure involving her in the matter, I can understand if she now feels too uncomfortable to return to that workplace, and for that reason I hope that McInnes never lives down his own grubby reputation.

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