McDonald’s CEO sacked after revealing relationship with employee

Global fast food chain McDonald’s has fired its CEO Steve Easterbrook after he revealed that he was in a relationship with an employee.

The US firm said that the relationship was consensual, but that Easterbrook had “violated company policy”. However, the British businessman, who earned more than £12m a year, is set to receive 26 weeks of full pay. He is also eligible for a bonus if the company hits set targets.

In exchange, Easterbrook agreed he would not work for a competitor for at least two years.

In an email to staff, Easterbrook acknowledged the relationship and said it was a mistake. He said: “Given the values of the company, I agree with the board that it is time for me to move on.”

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Industry reaction

Rebecca Thornley-Gibson, partner at city law firm DMH Stallard, said: “Most individuals spend more time at work with colleagues than with friends and family and therefore it’s not surprising that many people find themselves in a personal relationship of some kind with a colleague. Most of the time this won’t create issues and employers won’t interfere with the relationship. However, where there is a relationship that involves one of the individuals holding the balance of power in the workplace relationship, e.g. manager/supervisor/board member, then conflict issues are more likely to arise.

“If one of the parties in the relationship is responsible for the other’s appraisals, pay reviews, promotion opportunities and even work allocation, then there is danger of favouritism and from team members, perceived bias. There may also be issues where the more junior employee feels as though they cannot say no to amorous advances and this creates a real risk of later sexual harassment claims against the manager and employer.

“Stopping relationships is not likely to be practical for employers but putting in place steps to minimise any fallout from the relationship should be considered. This will involve having in place, and communicating workplace policies on conduct at work, equality and diversity policies with a clear zero tolerance towards sexual harassment and also requiring employees to declare relationships which are likely to result in a potential conflict.”

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Rules are Rules Especially for CEOs

Colin D Ellis is the author of ‘Culture Fix: How to Create a Great Place to Work’

I have some sympathy for Steve Easterbrook, the recently sacked Chief Executive Officer of McDonald’s. Under his stewardship, McDonald’s instigated a new strategy that included plant-based burgers, remodelling stores and leveraging new technology to speed up the customer experience. The financial markets liked what he did too, with the share price almost doubling under his tenure.

But. It very clearly states in the company policy manual that employees aren’t allowed to have ‘consensual relationships’ with other employees. You may think this is unfair or possibly even irrational, however, McDonald’s makes it clear that’s what it is, and it applies to everyone. Regardless of whether you’re flipping patties in a restaurant in Melbourne or walking the halls of the corporate offices in the USA.

A similar fate befell Intel Chief Executive Brian Kzanich earlier this year, who resigned before details of the relationship was leaked.

That’s the thing about corporate culture, it belongs to everyone and therefore applies to everyone. In organisations where the culture isn’t as strong it might have been easy for others to walk past Mr Easterbrook’s behaviour, explaining or excusing it away, ‘he’s divorced’, ‘he’s the CEO’ and so on. However, McDonald’s have rightly taken a hard line and Easterbrook himself admits that he ‘demonstrated poor judgement’.

As soon as you start having one rule for one, and one for another you create ‘special’ people who are above the law. This is the kind of action that undermines workplace cultures around the world and leads to falling productivity, engagement and profitability.

Culture runs through the heart of every organisation and if one person behaves outside of company policy then it’s important that it’s dealt with empathetically but quickly. Culture belongs to everyone, so everyone – including the CEO – must be held to account to it.

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Anna Elliott, partner in the employment team at international legal practice Osborne Clarke

Unlike the slew of other high profile #MeToo dismissals, this case raises the debate about an employer’s ability to prohibit genuinely consensual relationships that may not constitute sexual harassment.

Such policies are more common in the US and here, employers need to balance employees’ rights to have a private life against the broader interests of their business, for example, if the workplace relationship creates a conflict of interest or other prejudicial conduct. Whatever your view is on outright bans of consensual relationships at work, this case further signifies businesses’ willingness to take a very high profile stance on these matters and protect its values in the post-#MeToo era.

Whilst McDonald’s may have sent a strong message that it will uphold its policies at the highest level, a few days ago a sexual harassment class action was filed in the US alleging that McDonald’s ‘creates and permits a toxic work culture from the very top’, indicating that there is still more work to be done.