McDonald’s c-suite exits show #MeToo reckoning
Lapses that were once seen as minor are no longer swept aside, even for star execs
CHICAGO McDonald’s Corp. has been working hard to fend off accusations it overlooks workplace harassment and abuse.
So when it came to light that its chief executive was in a relationship with a colleague, the board had little room to manoeuvre: Steve Easterbrook had to go.
The world’s biggest restaurant chain announced Sunday it replaced Easterbrook with Chris Kempczinski, the head of U.S. operations. A day later, David Fairhurst, the company’s global people officer, was out the door.
Mason Smoot, a senior vice-president who oversees strategic alignment and staff, stepped into the HR role on an interim basis.
The rapid shakeup shows how executives’ behaviour is under a microscope in the #MeToo era — and transgressions that may once have been considered minor are no longer swept aside, even for star performers.
At McDonald’s, which for years has been a target of activists because of its wage and labour practices, the scrutiny is especially intense.
“If the CEO is allowed in engage in policy violations on this topic, the message to employees and to other stakeholders is that McDonald’s is not really committed to providing those protections promised in the policies,” said Lynne Anne Anderson, a partner at Drinker Biddle who advises companies and represents them in misconduct cases. “The level of conduct that is being required from executives in this #MeToo era is to set the tone and to lead by example.”
Easterbrook, who took the reins in 2015 amid a sales slump and oversaw market-beating share gains, put McDonald’s in an uncomfortable position — even if the relationship was consensual. As a bellwether for the fast-food industry, McDonald’s has become a principal target of groups like Fight for $15 and the American Civil Liberties Union, who say McDonald’s has tolerated workplace harassment and ignored safety issues. They say the company has failed to prevent misconduct including groping, inappropriate comments from supervisors and retaliation for speaking up.
The announcement quickly gave fuel to critics’ arguments. Fight for $15 said on Twitter that the company “has refused to listen to us” when it came to fighting sexual harassment.
“With the firing of Steve Easterbrook, we now know why.”
The group added “it’s clear McDonald’s culture is rotten from top to bottom.”
The company has countered criticism by revamping policies to include training for workers to deal with harassment and starting a hotline for victims, including other measures. But critics, including Democratic presidential candidates Bernie Sanders and Elizabeth Warren, have said McDonald’s moves “fall short” and send “the wrong message” by merely “encouraging” the franchisees who run most of the chain’s stores to adopt new policies, rather than requiring them to.
“What the research shows is basically if you’re in a position of power over somebody else, you’re really bad at recognizing the power you wield over them and how hard it is for them to say no to you,” said Vanessa Bohns, an organizational behaviour professor at Cornell University. Such relationships can also undermine how the more junior employee is perceived by coworkers, she said, and fuel concern about favouritism at work.
In departing, Easterbrook acknowledged the relationship was a mistake. McDonald’s said on Sunday that the board determined he had “demonstrated poor judgment” by engaging in the consensual relationship. Even so, McDonald’s gave Easterbrook severance of US$675,000, as well as letting him keep stock awards worth more than US$37 million.
Anderson, at Drinker Biddle, said he was likely entitled to severance because he violated policy, rather than a determination that sexual harassment or more serious misconduct had occurred.
McDonald’s declined to elaborate on Easterbrook’s severance and departure beyond its public statements and filings.
Since 2012, the Service Employees International Union has mounted a high-profile “Fight For $15” campaign demanding fast food giants raise pay and let workers unionize.