Companies seek ways to ensure the business world’s reverence for power and competitiveness doesn’t bleed into misconduct.
Alan Shaw, CEO of Norfolk Southern, on March 22, 2023, in Washington, D.C. Shaw was recently ousted for having a consensual relationship with Norfolk’s chief legal officer.Having a romantic relationship with an employee didn’t used to be a fireable offense for CEOs. They would get canned for misappropriating funds to fuel the affair, or for not fully disclosing the details to the board when they eventually got caught.
But in the last few years, boardrooms across corporate America have recalculated whether they should be taking these kinds of ethical lapses as a warning sign of bigger problems. For the latest proof point, look at Norfolk Southern Corp. Last month, the railroad ousted then-CEO Alan Shaw for violating its policies by having a consensual relationship with the company’s chief legal officer, Nabanita Nag.
The 2015 hack of Ashley Madison — the site’s slogan is “Life is Short. Have an Affair” — gave academics a treasure trove of data to examine the connection between cheating at home and at work. One study found that companies run by the 47 CEOs and 48 CFOs who were paying Ashley Madison users were twice as likely to have had a financial misstatement or involvement in a class action securities lawsuit.
There are ways that companies can make sure they’re getting more of the asset and less of the toxic. Taylor pointed me to a paper on “cultures of compliance” by Georgetown Law professor Donald Langevoort, who lays out some ideas for how to make sure the business world’s reverence for power and competitiveness doesn’t bleed over into misconduct. Among them: Bosses shouldn’t set unreasonable goals or employees will “take it as a license to cheat,” he writes.
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