Misdemeanours by Senior Leaders Must Be Handled Firmly and the Right Message Sent

Why Senior Leaders are Expected to be above Reproach and Role Models for Others

Senior Leaders are supposed to be role models for the rest of the organization to follow and emulate.

Moreover, they are the ones who articulate the organizational vision and actualize the mission for the Middle and Lower level employees and hence, they are expected to conduct themselves and behave in a manner befitting their position and role.

Indeed, Senior Leadership cannot afford to make mistakes, and worse, any misdemeanours by them would not only hurt the morale of the Rank and File Employees, but, would also cause immense damage to the Organizational Image and Brand Equity.

This is more so in the case of reputed and big organizations where the Media is often watching the Senior Leadership and the Regulators and the Board of Directors are another layer of Checks and Balances for their demeanour.

However, as we have seen in the cases of Phaneesh Murthy who was a Star in the Indian Information Technology Giant, Infosys, and in the case of Ramalinga Raju of another Software pioneer, Satyam Computers, Senior Leaders can behave in ways that bring disrepute to themselves and more importantly, to their organizations.

How Misdemeanours by Senior Leaders Hurt Organizational Health and Longevity

So, why should Corporates ensure that Misdemeanours by Senior Leaders are handled in a manner that does not rupture the organizational fabric and damage the firms?

To start with, it is as important to punish the offenders as it is to send a message down the hierarchy that such violations would be acted upon and punitive action taken, irrespective of the status of the violator and the power he or she wields.

Moreover, there is another compelling reason to act tough with Senior Leaders who are engaged in Misdemeanours and that is that, the rest of the Leadership and the Board are often held accountable by the Regulators and hence, the very survival of the organization might be at stake.

More importantly, the Equity Markets and the Media do not react favourably to organizations where the Senior Leaders are Caught in the Act and With their Hands in the Till, so to say, and this can result in a Media led Feeding Frenzy and the Stock Prices being hammered.

Both these are negative to the overall organizational health and longevity and hence, there is more the case to be made for treating such offenders more harshly than rank and file.

The Worst Thing that Corporates Can Do is to Cover up the Misdemeanours of Leaders

While we have alluded to cases of Wrongdoing earlier, they were in the past decade and in more recent instances, Vishal Sikka of Infosys was alleged to have favoured particular vendors in awarding contracts.

In addition, there is the case of the celebrated Rajat Gupta of McKinsey who was jailed for Insider Trading.

What these cases reveal is that more often than not, these violations create more than a Headache for the rest of the Leadership and a Huge Pain for the Board.

While one can say that all these cases resulted in the Offenders leaving the organization and being penalized for their actions, there were murmurs and indeed, loud Whispers of Cover Ups and Letting the Perpetrators off Easily.

Indeed, the worst thing that any Board can do is to cover up the Crimes of the Senior Leaders and Brush the Misdemeanours under the Carpet.

This not only sets a Bad Precedent but also sends a Wrong Message to all the Stakeholders mentioned earlier that Ethical, Sexual, and Criminal Misdemeanours can be done without much damage to the offenders.

Moreover, if Law Enforcement Agencies get into the act, there would be Much Hell to pay for the Organizations concerned.

The Need for Objective, Unbiased, and Agenda Free Investigation to Determine Guilt

Having said that, we are not suggesting that Misdemeanours by Senior Leaders treated as though they have committed Treason (though this term can be used as well) and hence, Guillotine is the only way out.

Moreover, there are many Errors of Judgements that happen in the course of organizational decision making and hence, using a Sledgehammer to Quash the Offenders would result in the demoralization of the Rest of the Senior Leadership.

On the other hand, the value that such offenders might have created for the firm and would continue to do so in the future must be weighed before jumping to conclusions. Of course, this does not mean that the line is that Crime Pays.

Rather, there is a need to tread carefully and diligently when dealing with Misdemeanours by Senior Leaders.

This is where a Firm approach must be taken and where Objective Evaluation of the Allegations and an Unbiased and Agenda Free Investigation be conducted to ascertain the facts and determine the Quantum of Punishment.

Indeed, there is nothing worse for organizations to be saddled with a Leader who is guilty and on the other hand, there is nothing worse than punishing the innocent until proved guilty.

Nurturing Ethical Future Leaders

Last, it is fact of life that Corporates do have many authority figures who routinely engage in questionable conduct.

Therefore, the only way to ensure that it does not rot the Organization is to have an Uncompromising Stance against Violations.

The Boys Will be Boys Culture must be discouraged as well. Above all, the recruitment and promotions of Leadership figures must be done after adequate Due Diligence as well.

More than ever, Corporates need Leaders of High Moral Standing and Fibre and hence, Middle Managers with these traits must be nurtured to Step into Leadership Roles and become Role Models.

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