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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?

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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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