Last year more corporate CEOs were ousted for either personal or organizational ethical lapses than for any other issue. That’s one of the key findings of the latest annual CEO Success Study by Strategy&, a division of PwC:
- The study defines CEO dismissals due to ethical lapses as “the removal of the CEO as the result of a scandal or improper conduct by the CEO or other employees.”
- 39% of the 89 CEO ousters in 2018 were due to ethical misconduct, compared to 35% for poor financial performance and 13% for struggles with board members or activist investors.
As Martha Turner of Strategy& told the Washington Post, “There’s a new call for transparency and accountability, especially with issues regarding the #MeToo movement and other indiscretions for which there is increasingly zero tolerance….[There’s more] reluctance for the board to give CEOs the benefit of the doubt.”
In contrast, a recent Deloitte Study of 400 CEOs found that more than half of their organizations lack:
- (a) the ability to analyze events and predict their reputation impact, and
- (b) a plan to acquire new tools to manage reputational risks including crisis response capabilities.
While cyber security has become the number one risk management/crisis issue at most organizations, ethics and culture are close to the top. At CommCore, we often call the CEO the “Communicator-In-Chief.” However the CEO acts and whatever he or she says impacts the organization’s reputation to internal and external stakeholders and the media. As crisis counselors we advise clients to:
- Develop/sharpen internal communications protocols for early detection of potential unethical conduct in all areas of the organization
- Update crisis communications and reputation management plans to track most the critical issues
- Test the plan regularly with simulations and training across all operating units
- Share crisis plans with the Board of Directors to instill trust that the CEO and Leadership Team understand they hold themselves accountable
Is your organization crisis-ready? The CommCore Crisis Assessment can help you determine your organization’s readiness to handle ethical lapses, reputation and more.